Colorado Bar and Restaurant Owners Explain Why The Paycheck Protection Program Isn’t Enough

Since first being implemented in early April, the Paycheck Protection Program (PPP) has been a source of both much-needed comfort and looming anxiety for restaurants across the country. The program — created under the CARES Act, originally signed into law on March 27 — was designed to provide short-term relief for small businesses affected by the pandemic. A PPP loan is set up to provide eight weeks of funds to keep businesses afloat, with a particular focus on incentivizing the rehiring out-of-work employees —  including offering possible loan forgiveness if all previous employees are fully restored to the payroll by June 30. The program provides cash-flow assistance through federally guaranteed loans — stipulating that at least 75% of the money be used for payroll purposes, with the remaining amount being used for utility payments and rent or mortgage interest payments. While the criteria for forgiveness is fairly complicated, Forbes has done a good job of detailing the requirements.

Shake Shack Denver. Photo by Brittany Werges.

Misgivings were reported by Eater NY as early as March 30. By April 16, the initial $349 billion authorized for loans had been exhausted — with growing concerns over corporate gourmandism culminating in a well-publicized recompense from companies including Shake Shack and Ruth’s Chris Steak House, as told by both the New York Times and Vox. On April 24, an additional $310 billion was authorized to the program — with a provision directing that $60 billion of the funds be used by community lenders, including state and federal credit unions. While the additional funds have helped to ameliorate some concerns, last week has still seen a noticeable downturn in demand for the loan, even with redoubled government efforts to keep money in the hands of small businesses. As recently as May 11, Congress has been putting pressure on Quantum Corporation — a data-storage company based in San Jose — to return its $10 million allotment, as reported by ABC.

This month, national frustrations regarding the structure and implementation of the PPP have been echoed in stories from across the country, with similar concerns being shared by restaurants across the front range. While dismay surrounding corporate appropriation has been well-founded, much of the personal unease has centered around issues with the schedule and confusion regarding how to find stable footing to ensure loan forgiveness. With the book continuing to be rewritten on a daily basis, many business owners are concerned they will wind up in debt.

Particularly troubling for restaurateurs is what many have deemed an unrealistic timeline for rehiring furloughed employees. “Our biggest concern was the date that the PPP started, it should have started the day they reopened the restaurants, not now. We are essentially paying a large number of staff members with sales that just do not match the need for labor,” said Justin Adrian, the Director of Operations for Vibe Concepts — the group behind TStreet Roadhouse, Boulder Depot, Kickapoo Tavern and others.

“We received the PPP loan in the first round, which is giving us the opportunity to pay our staff for eight weeks. The loan, unfortunately, will not help us to reopen and return to inside dining service,” echoed SALT co-owner Carol Vilate. “The timeline of the PPP loan makes re-staffing for any longer than the eight weeks impossible,” she continued. “We are grateful to be able to pay our staff now, but we need a longer-term plan to be able to survive the next two years. So much depends on the safety our guests feel and the experience we can give them.”

Photo courtesy of Urban Village.

For newer businesses, the path has been even more unclear. Urban Village‘s Ramesh Madakasira, has said the restaurant has been running into particular challenges, having only been open seven months. “First of all, we didn’t receive any PPP assistance until last week. We were offered an assistance of 5% of what we were expecting, and we are still in shock as to how the SBA or banks think we can run businesses with such an amount. While any help is a great help, the assistance that was offered felt like it was erroneous, and therefore we are thinking if we should re-initiate this process again with another vendor, hoping that error will be caught and we will get the approval soon,” he said.

Others, including Restaurant Olivia and Bistro Georgette co-owner Austin Carson, are more optimistic. “People have been too apt to talk about the doom and gloom,” he said, noting that the need for an almost daily reenvisioning of his restaurants’ approach has been no walk in the park. Observing the daily changes in both legislation and landscape, Carson and his team have been strategic in how they’ve been applying the funds. “We’ve been slowly ramping up, week five or six we will have a better idea,” he continued. “I have every intention of being here six months, one year, 20 years from now,” he noted. “I’m super grateful, especially for the neighborhood.”

Culinary Creative‘s Juan Padro has suggested that despite the shortcomings, the PPP has helped to provide the industry with a necessary fuel-injection. “As a society, we need to continue to function and redefine ourselves,” he said, noting the crippling effects on mental health brought on by mass unemployment and personal stagnation. “The way we’ve used it has worked for us.” Having initially furloughed close to 300 employees, he says that close to 250 are already back at work, participating in online Zoom classes and using Trainual to remain up-to-date.

Juan Padro. Photo by Alden Bonecutter.

Stephen Julia and Katsumi Ruiz — who run neighborhood bars Brass Tacks, Roger’s Liquid Oasis in Edgewater Public Market and Denver Central Market’s Curio — have been made keenly aware of the particular perils to hit cocktail bars, as compared with restaurants or groceries. The two also operate Green Seed, a small urban grocer, which has continued to see 40-50% of its original revenue — a number dramatically higher than that of any of the duo’s alcohol-based establishments. Julia and Ruiz hope that initiatives from state and city governments will help to fill in the gaps left by the PPP.

Katsumi Yuso Ruiz and Stephen Julia of Curio. Photo by Lucy Beaugard.

“Leadership from our governor and from our mayor has been very comforting, we’re just asking them to extend a lifeline because the road is longer than it looks, even right now,” said Julia. The two have been particularly grateful for the legislation allowing the sale of to-go alcohol — including prebatched cocktails, kits and full bottles — hoping these changes will be extended, even made permanent. Not stopping there, the duo has suggested “creative ways to subsidize rent — including allowing restaurants to apply their sales tax to rent through the end of the year, as well as passing legislation to allow restaurant owners to leave lease agreements with limited financial liability,” as possible solutions.

Frustrations and lack of clarity have become embedded in the general landscape, extending past the bureaucratic difficulties associated with the PPP. With everything in constant fluctuation, restaurateurs are remaining on their toes. “It’s a big lab right now,” noted Padro. “We shouldn’t be expecting perfection.”