Restaurant Revitalization Fund – Updated 4/1/21

Apr 01, 2021

The Restaurant Revitalization Fund (RRF) which provides federal grants to the hardest hit sector of the economy during COVID-19 is about to become a reality. President Biden is expected to sign a $1.9 trillion relief package, the American Rescue Plan today. As part of this plan $28.6 billion has been allocated to small and mid-sized restaurants for The Restaurant Revitalization Fund.

What is this new program?

The Restaurant Revitalization Fund allows eligible businesses to receive grants equal to their pandemic-related revenue loss, with a maximum of $10 million per business entity, or $5 million per physical location. How much you receive depends on the revenue your business lost due to the pandemic and if it received a PPP loan.

Businesses that were established before January 1, 2019, can calculate their grant amount by subtracting your 2020 gross receipts from your 2019 gross receipts. Businesses that were established during 2019 can receive a grant equal to the difference between:

  • Average monthly 2019 gross receipts, multiplied by 12
  • Average monthly 2020 gross receipts, multiplied by 12

Businesses that were established on or after January 1, 2020, can receive a grant equal to eligible payroll expenses, minus gross receipts from that year.

Who is eligible?

Eligible businesses include any location where patrons gather for the purposes of being served food and beverages: restaurants, bars, caterers, lounges, inns, taverns, saloons, brew pups, taprooms, tasting rooms, food trucks, food carts, or food stands.

Who is not eligible?

  • Restaurant chains that, together with affiliated businesses, own or operate more than 20 locations as of March 13, 2020
  • Restaurants that have a pending application for or have received a grant for shuttered venue operations
  • Publicly-traded companies, or
  • State or local government-operated businesses.

What can the grant funds be used for?

  • Payroll costs
  • Rent payments (excluding pre-payments)
  • Utilities
  • Principal and interest payments on a mortgage (excluding pre-payments)
  • Maintenance expenses including construction to accommodate outdoor seating and walls, floods, deck surfaces, furniture and fixtures, and equipment
  • Supplies (including PPE)
  • Food and beverage expenses
  • Covered supplier costs
  • Operational expenses
  • Paid sick leave
  • Any other expenses that the SBA deems essential to maintaining the eligible business

How and when can you apply for the grant?

Much like the Paycheck Protection Program, the Restaurant Revitalization Fund grants will be distributed by the Small Business Administration. Applications will be available on their website in the coming days. During the first 21 days of the fund launching, the SBA will give priority to restaurants owned and operated by veterans, women, or socially and economically disadvantaged individuals. If after 60 days, the funds have been exhausted, the SBA will have the discretion to administer grants to eligible businesses without regard to annual gross receipts.

Updates:

4/1/2021

During a Senate Small Business Committee hearing, senior SBA official Patrick Kelley confirmed the U.S. Small Business Administration (SBA) is targeting early April to launch a phased rollout of the $28.6 billion Restaurant Revitalization Fund (RRF). In addition, state restaurant associations have been meeting with Congressional leaders to learn more about details regarding applications, etc.

Key updates resulting from these  meetings include:

  • SBA will likely start posting relevant qualifications, instructions, and other information for restaurant operators over the next 7-10 days and give guidance on supporting documents needed to apply
  • SBA will open applications in April
  • SBA is currently planning the whole process will take place over the next 30-45 days
  • SBA also confirmed applicants for the  Fund program will not need to register for a DUNS number or on SAM.gov.
  • The process is slow on account that the SBA has to build a technology platform from scratch with the capability of dealing with the crush of applications and likely automating the process so it’s as efficient as possible. Once it’s up and running, the grants will function like direct payments to the applicants. The SBA is also in talks with third-party POS vendors to discuss accessing relevant sales data needed for application processing

We will continue to provide updates as the SBA releases additional guidance. Please check back periodically as we will post updates here.

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Kristin Metzger, CPA

Restaurant Practice Leader

kristin.metzger@wvco.com | 419.891.1040

Categories: COVID-19, Restaurant & Hospitality


How to Prepare For the Restaurant Revitalization Fund Opening

Mar 24, 2021

This story was updated on 4/1/21 to reflect a potential change in SBA requirements for the Restaurant Revitalization Fund (RRF). Restaurants will not be required to acquire a System of Award Management (SAM) number nor a D-U-N-S number as previously thought.

In a previous post, we examined the Restaurant Revitalization Fund (RRF) under the American Rescue Plan and outlined the program details, eligibility, and the qualifying uses for the funds. With more than $20 billion available for restaurant businesses of different sizes, we anticipate a high demand for RRF grants.

As the restaurant industry patiently awaits further guidance from the Small Business Administration (SBA), there are steps restaurant owners can take now to best prepare for the opening of the fund. We encourage you to take action now by:

Gathering your paperwork – Finally, you should begin compiling your receipts and financial statements to show your 2019 and 2020 revenues.

Unfortunately, as of the date of this advisory, the SBA’s application process is not yet open. Nonetheless, we expect the application to be available on the SBA’s website, and, once available, applications will be submitted directly through the SBA. It is important to keep in mind not everyone who applies for an RRF grant will receive funds. Much like the first round of PPP, funds will go fast. We highly recommend you take the steps above to best position your restaurant. If you have questions or need help, we are here!

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Kristin Metzger, CPA
Restaurant Practice Leader
kristin.metzger@wvco.com | 419.891.1040

Categories: COVID-19, Restaurant & Hospitality


Ohio Court Sides with Restaurant Group in Business Interruption Insurance Lawsuit

Feb 15, 2021

The U.S. District Court for the Northern District of Ohio recently ruled in the case of Henderson Road Restaurant Systems, Inc. vs. Zurich American Insurance Company, that the restaurant group is entitled to business interruption insurance coverage due to lost sales and increasing expenditures as a result of a government-ordered shutdown. Business interruption insurance has been widely disputed during the COVID-19 pandemic as many business owners have sought compensation for losses incurred during government-imposed shutdowns and curfews. The court ruled in favor of the restaurant group claiming it had a valid claim even though a provision within the policy denied coverage for any shutdowns caused by a microorganism. The Court argued the government orders were what caused the shutdown, not the actual novel coronavirus. Thus, the microorganism provision does not prevent the repayment.

In its defense, the insurer argued the restaurant group did not satisfy the requirement within the policy stating business income loss must be tied to “a direct physical loss of or damage to”. However, the court agreed with the restaurant group noting it lost its ability to use the insured properties for their intended purpose. The judge maintained the temporary state and local closure orders led to the restaurant group to suffer a covered loss because the orders prohibited them from allowing in-person dining, which was the foundation of their business model.

The case has been certified for an immediate appeal. If the court’s decision survives the appeal, all businesses in Ohio closed due to shutdown orders may be entitled to recover some form of their losses from their insurer. Policyholders and insurers in Ohio await a resolution of these key issues and will look for clarification of the policy interpretation rules by the Sixth Circuit or the Ohio Supreme Court.

For more information on our restaurant practice and the services we offer, please connect with our practice leader below:

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Kristin Metzger, CPA

Restaurant Practice Leader

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Categories: COVID-19, Restaurant & Hospitality


Restaurant Employee Relief Fund

Mar 31, 2020

The National Restaurant Association has created the Restaurant Employee Relief Fund to help aid employees who are experiencing hardship during the COVID-19 outbreak. This fund will offer grants to restaurant industry employees who have experienced financial hardship from either loss of employment or a decrease in wages. The grants will be awarded to individuals on a first-come, first-served basis while funds are available. Restaurant employees can apply for the grants beginning on April 2, 2020.

Employees that are eligible to receive grants must meet the following criteria:

  • Individuals must have worked on a part or full-time basis in the restaurant industry for at least 90 days in the past year; and
  • Individuals must have had their primary source of income be from working in the restaurant industry for the last year; and
  • Individuals must have experienced a decrease in wages or a job loss on or after March 10, 2020; and
  • Individuals must live in the United States, an overseas U.S. military base, or a U.S. territory; and
  • Individuals must be over the age of legal majority in their U.S. state or territory.

The $500 on-time grants are meant to help offset the financial burden that many restaurant employees are experiencing during the COVID-19 outbreak. Listed below are many of these expenses:

  • Home rent or mortgage
  • Car payments or other transportation costs
  • Utility bills
  • Student loan payments
  • Child Care expenses
  • Groceries
  • Medical bills

The National Restaurant Association, in conjunction with Guy Fieri, kicked off this relief campaign on Friday, March 27, 2020. The campaign has already raised $5.5 million for restaurant employees and 100% of the funds will be used to help these employees. There are numerous other founding partners of this relief effort including, PepsiCo and Uber Eats to name just a few. It is estimated between 5 to 7 million restaurant workers may become unemployed as a result of the COVID-19 outbreak. The restaurant industry, with over 1 million restaurants in the U.S., employs approximately 15 million people. Eligible workers can apply for aid by clicking here.

If you want to help make a difference in the lives of these workers? You can donate to the fund here.

Categories: Restaurant & Hospitality


Third-Party and In-House Delivery Risks, Costs & Opportunities

Mar 10, 2020

We’ve all seen or heard the commercials.  “[Insert insurance company name here] can save you tons of money and solve all of your insurance problems and needs.”  These commercials are usually clever and memorable.

For restaurants, considering insurance and liability when doing business with third-party delivery systems is often overlooked.  If your third-party delivery driver gets into an accident, do you know who is liable?

Most of you are aware of the financial struggles and inherent problems with third-party delivery programs. Restaurant operators are often faced with an array of challenges and must consider retaking control of the risks and rewards of their delivery operations.

Footing the Bill: Third-Party and Corporate Managed Delivery Risks

Businesses that hire third-party delivery providers need to be careful about the scope of the agreement. Restaurant owners take on huge liability when using third-party vendors. Many businesses using independent contractors (in this case, third-party delivery drivers) only discover this possible liability after a serious accident when it’s oftentimes too late.  The number one cause of workplace fatalities continues to be vehicle collisions, according to the National Safety Council.  Whether it’s an owned or non-owned vehicle, the risk for auto liability losses remains high.[1]

Third-Party & In-House Delivery Risks, Costs, and Opportunities

Though third-party delivery is new and shiny, make sure to read the fine print.  The contracts are not friendly to restaurants. Many contracts will state that the third-party is only the supplier of software to connect with a delivery partner and therefore, it assumes no liability if something happens when food is sent through that delivery partner.[1]

Traditional insurance products base premiums on industry averages regardless of the company’s liability profile.  As a result, little can be done to reduce costs and increase the bottom line.  Businesses must reassess the inherent risks, costs, and opportunities of a third-party delivery program versus an in-house program.

Adjusting the Recipe: Delivery Program with a New Platform

A new insurance platform and smartphone application, RoadWise, offers a solution for businesses to pay premiums based on actual miles driven.  Even better, there is no costly equipment to purchase.  RoadWise is an app that is installed on the delivery driver’s smartphone.

Measuring out the Technological Ingredients

RoadWise sends driver analytical data to a dashboard for management review.  The creators cite that the application is powerful enough to detect speeding, hard braking, rapid acceleration, unsafe maneuvering, and phone usage while driving.  Based on these results, it calculates a driving score that can be used to manage delivery drivers based on actual behavior.  The touted benefits include safer driving habits, increased safety awareness, reduced risks and liability, improved customer experience, and lower premiums through actual experience.

This pay-as-you-go platform also has geofencing capabilities to spot when a driver goes outside of the delivery boundaries or takes an unexpected or sub-optimal route.  The insurance is active for both the company and the employee if the application is running.  This new technology and insurance platform will go live on January 1, 2020, and more information is available at www.roadwiseinsurance.com.

Think back to one of those insurance commercials we discussed earlier.  It’s difficult to fully understand an insurance policy from a short commercial, but the take away here is that you have options to help your restaurant’s bottom line.  Cheers to minimizing risk, increasing profits, and taking back control of your operations!

About the Authors:

Amy Slates, CPA, CGMA is a Senior Manager with William Vaughan Company where she serves as the firm’s professional service practice leader. Amy has extensive advisory experience guiding her insurance and law firm clients through the myriad of challenges created by a growing technology-centric world. Her intimate industry knowledge allows her to deliver solutions that fit her clients’ needs and best position them for the future. For more information, visit www.wvco.com or contact her at amy.slates@wvco.com.

James Bailey, CPA, Senior Manager, leads Adams, Brown, Beran & Ball, Chtd.’s Restaurant Industry niche.  With over fifteen years of public accounting and restaurant consulting experience, he strategizes with ABBB’s Restaurant clients on the unique challenges they face. Additionally, James is a keen researcher of cutting-edge technologies in the industry.  For more information, visit www.abbb.com or contact him at jbailey@abbb.com.

Categories: Restaurant & Hospitality