Chefs, restaurants thankful, but need more
Loan programs and grants fill void as industry struggles
Chicago chefs and restaurateurs are reacting mostly favorably Thursday to the state’s Hospitality Emergency Grant Program and the Illinois Small Business Emergency Loan Fund, both announced Wednesday. But while they agree that the help is welcome and needed, they say that the industry — and especially furloughed workers — need more.
“The grants are wonderful news, exactly what’s needed,” said Paul Fehribach, chef and owner of Big Jones in Andersonville. “To be honest, it’s not a lot of money, but grants of $10,000 to $25,000 may make the difference for a lot of businesses just trying to stay afloat with a skeleton crew, as we are. Our revenue hole looks like it will be more than $100,000 a month, to put it in perspective.”
The Hospitality Emergency Grant Program, announced by Gov. J.B. Pritzker Wednesday, provides grants up to $25,000 for restaurant and bars with $500,000 to $1 million in revenue in 2019. Bars and restaurants with less than $500,000 in revenue last year could apply for up to $10,000. The program has $14 million available, but that includes funds for hotels as well.
Fehribach was less enthused about the availability of low-interest loans. The Illinois Small Business Emergency Loan Fund offers loans up to $50,000 for businesses outside of Chicago. A separate program, the Chicago Small Business Resiliency Fund, announced by Chicago Mayor Lori Lightfoot March 19, covers those within the city and also offers up to $50,000.
“While I appreciate these offers of debt during a time when ordinary credit channels may be closed, the suggestion that we all take on new debt to stay in the game is foolish and shortsighted,” Fehribach said. “We still have no idea when we will be able to reopen regular operations, and more importantly, what business conditions will be like. In an industry challenged by thin margins in the best of times, we could see these funds help many restaurants bridge a shortterm gap, only to fail under burden of debt if, as is likely, business conditions are poor on the other side of this and revenues fall short.”
“I am happy to see ‘supercharged’ unemployment insurance out of DC, which will help furloughed workers,” he added. “My biggest concern right now is undocumented workers, who work and pay taxes, but now are unable to claim benefits. Larger grants would help us make payroll and keep more of these folks employed.”
“I think this is a great first step from our local government to provide another tool in our belt to get the job done,” said Philippe Andre, partner at Oceanique restaurant in Evanston. “I don’t believe this is entirely enough, but at this point we need everything possible to get us through the next two to three months and still have fuel in the tank to reopen.
“We are taking every step afforded to us to come back strong; we are currently negotiating with our landlord of 31 years to donate our rent and are raising immediate resources for our staff to safely shelter at home with their families through a GoFundMe. Our number one goal is keeping our staff and their families safe, and then providing them with the opportunities we all work so hard for when the coast is clear. We are all fighting together as an industry in various ways and I’m very proud of what I’m seeing across the city and the country.”
“Yes, it helps, especially keeping people employed,” said Peter Burdi, owner of Il Poggiolo and Nabuki restaurants in Hinsdale. “But it only helps for a short time; if this (shutdown) continues for an extended period of time it won’t keep restaurants from closing. Also, we have to make up the loss we have all sustained thus far without government help.”
“Once cash-flow is turned off, most restaurants need a loan just to get to a positive balance,” said Kevin Boehm, co-founder of Boka Restaurant Group. “This fund, in tandem with the economic stimulus bill from Congress, can help restaurants not only get open (after the shutdown ends), but survive the inevitable ramp-up period. The fund could especially be helpful if the money is easier and faster to access than the federal money; people need help now.”
Michael Lachowicz, chef and owner of George Trois, Aboyer and Silencieux restaurants in Winnetka, described the programs as “a Band-Aid on a gaping head wound.”
“Every little bit counts,” he said. “We will be applying for sure; it will provide liquidity until we get on firm ground again, whenever that may be. In the interim, I’m just above break-even with curbside carryout. And those gratuities are all helping out my hourly employees. The hitch in that giddy-up is that we’re dealing with some very serious unknowns and unforeseen potential popups. Is $25,000 going to help in the long haul? My hopes are yes.”
“If you do the math, I don’t think it’s enough money,” said Mario Santiago, chef and owner of May Street Cafe in Pilsen, “because you have to spread it out with zero income coming in. Even without the employees, you still have bills coming in. I have a partner, so I still have to make money for two households plus all the bills. I’m lucky that I don’t owe my vendors anything, but there are others who do, and if you let the electric, gas and water bills slide to keep keep people on payroll, whatever money they give you will be eaten up right away. You also have to start from zero — you still have to pay back whatever rent or mortgage you owe — so these have to be grants that you don’t pay back, or give us a larger sum.”
When the COVID-19 crisis is over, Santiago predicts that many restaurants will find it difficult to reopen.
“It’ll be like opening up a new restaurant; how are you going to do that?” he asked. “It’s a lot of money to start over, and I guarantee you banks are not going to lend money for people who want to open up restaurants, and there will be a lot of rules and regulations after this. Fast-food restaurants will probably do well; event spaces will tank, and large restaurants will never be the same.”
Bernie Laskowski, chef and owner of Craft Urban Kitchen in Geneva, said he thinks small-business loans will only delay an inevitable collapse.
“Loans are double-jeopardy for small businesses,” he said. “Most restaurants in that revenue category are barely making 5% profitability and are over-leveraged as it is. Our economic model cannot afford us to accrue any benefits to be paid out to our employees. Offering a loan to use to pay our bills, which already are in arrears, will almost guarantee that those businesses will eventually default due to the margin for financial error coming to an almost unobtainable level of existence.” “We don’t need low-interest loans,” Laskowski said. “We need forgivable grants that allow us to become flush during the financial vacuum. Borrowed from future sales/income/payroll tax. Zero interest and zero penalties for all bills left unpaid.”
“The emphasis next needs to be directed to insurance companies on doing the correct thing,” Laskowski said. “We have paid exorbitant premiums for protection in situations like this. They have a clause against government stoppages due to viral causes. We are not institutions with huge stockpiles of cash reserves; at most, we have one month of operating capital, which is being used up at an alarming rate.”
Trevor Teich, chef and owner of the upscale, fivetable Claudia in the West Loop, praised Pritzker and Lightfoot for making “fast and critical moves” to support the industry, but said, “I don’t think this presents a solution as a whole,” Teich said. “I see it as a muchneeded action to help put the pieces back together in this crisis. I think it’s too early to say what impact these monies will have in the long run, because there are new developments nearly every hour and every day.”
Several chefs pointed out that a grant program that awards money to restaurants with revenues between $500,000 and $1 million leaves a lot of restaurants empty-handed.
“It kills a large portion of our city,” said Erick Williams, chef and owner of Virtue Restaurant in Hyde Park, of the grant program. “Anybody with 30, 35 employees that you see — these guys have revenues of $2 million, and some up to $10 million,” Williams said.
“People hear $10 million in revenues, and they think, ‘those guys must be rich,’” Williams said. “But the profit margins don’t change; you just have more staff, and those places are in higher rent districts. I think that both the city as well as the state are moving quickly, and I’m happy to see them making forward strides, but they missed the middle.”
Robert Garvey, owner of Robert’s Pizza and Dough Co. in Streeterville, said his single-unit pizzeria wouldn’t qualify under the current revenue range. Chef/owner Tony Priolo said that of his three restaurants — Maillard Tavern, Nonnina and Piccolo Sogno — only the tiny Maillard Tavern would qualify.
“If we were relying on that (loan program) alone, I would be out of business,” Priolo said. “They need to come up with a better bail out plan that helps small restaurants.”
“I still have hopes that the state and city are going to get it right,” Williams said. “We know they’re working diligently. We need people to speak up and get them accurate information, so they can continue to do the great job they’re doing.”