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Coronavirus stimulus no simple solution for restaurant owners

Updated April 3, 2020 - 12:18 pm

“I’m reading every single piece of information that I get from people forwarding it to me, and every single thing is different.”

Natalia Badzjo sounds frustrated. She and her husband, Brian Buechner, are struggling to keep their two Big B’s Texas BBQ restaurants open using a pickup and delivery model. Like many Las Vegas restaurant owners, she’s not really sure what the various stimulus and relief packages being offered by the government are all about. And the information people are forwarding her isn’t helping.

“One says it’s a grant. One says it’s a loan. One says it’s only for payroll, but you can’t drop (payroll) more than 25 percent.”

It’s been a week since President Donald Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act into law. Among its provisions is the Paycheck Protection Program (PPP), which includes $349 billion in loans to small businesses such as restaurants. For much of this week, local restaurant owners have been trying to determine how those provisions, and other government responses to the COVID-19 crisis, apply to them.

Badzjo calls the provisions of the various programs “super confusing,” adding: “I’m not a CPA to know all the intricate details of every single thing that they’re asking.”

Tom Kaplan, senior managing partner of the Wolfgang Puck Fine Dining Group, understands her confusion. While he says CARES and the PPP are “incredibly important and will definitely have a major impact on the restaurant industry,” he also understands that in their current form they are far easier for large companies like his to access than they are for smaller businesses. He’s hopeful a second phase of CARES will rectify that situation.

“Part two, which is really important, is a Main Street business lending program. That’s going to be critical, in our opinion, to the small-business owner. Because the (Small Business Administration) loans are good, but typically as we saw in (Hurricane) Katrina and other instances, (they) miss the small, minority-owned neighborhood businesses that are not served by traditional banks.”

It isn’t just small mom-and-pop businesses that are confused by the terms of the PPP, however. While one basic assumption is that restaurants can borrow an amount equal to 2½ months’ payroll, and have it forgiven if it’s used to pay employee salaries and health care costs, rent and utilities, Jeffrey Bank isn’t so certain.

“You’re going to have to pay it back; that’s the first problem,” suggests Bank, CEO of Alicart Restaurant Group and owner of Carmine’s in the Forum Shops and Virgil’s Real BBQ at the Linq Promenade. “Everybody thinks this money’s free. It’s not going to be free. I’m not going to be open, so I’m not going to hit the criteria for it to not be paid back.”

Moreover, he says, the possibility of loan forgiveness is hampering his ability to negotiate with his landlords for rent reductions during the crisis.

“You can get up to two and a half months of your payroll, but then you can use that money for payroll, rent and utilities. Well, now I have every one of my landlords calling me going ‘Hey, if you’re getting stimulus money, don’t use it on your employees; pay your rent with it.’ ”

Bank says that while he appreciates that “the government is stepping up,” he thinks another solution could have a larger impact.

“The government should have backstopped the insurance companies to provide me what I already had: business interruption insurance. We all pay for insurance. We want to have insurance. Insurance is there for when we need it. Well, it turns out the COVID virus, and the government shutdown, is not covered by insurance.”

He’s not alone in his calls for a government plan that would reimburse insurance companies that agree to include COVID-19 shutdowns in their business interruption policies. Kaplan says that his partner, Wolfgang Puck, along with celebrity chefs Thomas Keller, Jean-Georges Vongerichten and Daniel Boulud, discussed that very issue with President Trump in a conference call on Sunday.

“Business interruption insurance, to date, is not covering those that have business interruption,” Kaplan says. “And Wolfgang and that group of people are very distraught about it. So they were able to get a call with the president and several of his senior staff members Sunday morning for a good half-hour. And they discussed this, and other ways that the president could help the restaurant industry.”

One thing that most restaurant owners seem to agree on is that more help probably will be needed.

“From what I’m seeing, it’s going to take more than two months to fix this problem,” says Brian Howard, who is hopeful that PPP funds could help him pay employees at his temporarily closed restaurant, Sparrow + Wolf. “And that money that I paid for payroll, rent and utilities, my overhead for two months, isn’t going to help for the duration of that period.”

Contact Al Mancini at amancini@reviewjournal.com or 702-387-5250. Follow @AlManciniVegas on Twitter.

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