What is the Restaurant Revitalization Fund?

The Restaurant Revitalization Fund was established as part of the American Rescue Plan Act that was passed in 2021. The grant program offered $28.6 billion to restaurants to help offset the revenue loss from pandemic-related restrictions and mandates.

The U.S. Small Business Administration administered the program.

Applicants could apply for an RRF grant and receive up to $10 million per business for revenue loss or $5 million per physical location.

rrf grant

The fund was open not only to restaurants but also:

  • Caterers
  • Food stands, carts and trucks
  • Bakeries
  • Bars, taverns, lounges
  • Snack and beverage bars
  • Breweries
  • Tasting rooms and taprooms
  • Wineries
  • Inns

The funds did not have to be repaid as long as the business was using them for eligible expenses, which included:

  • Business payroll costs
  • Rent or mortgage payments
  • Utility payments
  • Debt service
  • Maintenance
  • Supplies
  • Food and beverage expenses
  • Supplier costs
  • Operating expenses

More than 278,000 restaurants submitted a RRF grant application and were awarded $28.6 billion in funds. But an estimated 177,000 eligible applicants never received any RRF funding. An estimated $43.6 billion in unfunded applications remains.

The fund closed in May 2021 when it ran out of money.

The Senate Failed to Pass RRF

When the Restaurant Revitalization Fund grant program ran out of money, a bill was introduced to Congress to replenish it with $60 billion in funds that would be sent to the SBA. That bill would have provided much-needed funding for the remaining applicants who have been left in the dark.

Additionally, separate legislation was introduced that would replenish the fund program with $48 billion.

Unfortunately, the legislation was not successful. It received only 52 of the necessary 60 votes it needed to pass. Restaurant owners who applied but did not receive the grant were devastated by Restaurant Revitalization Fund news.

How the RRF News is Affecting Restaurant Owners

Many restaurant owners are sharing, through multiple online channels, their own stories of how the RRF impacts their business. A few of the most common topics include:

  • Owners and this is common among stories, experienced significant financial losses. Many owners were left unsure whether their business would ever recover. They have had to close dining rooms earlier and even lost staff. The fund seemed like a solution to the industry until the funds ran out.
  • Some owners are going through emotional turmoil, where they are hopeful for one week and then feel like politicians do not care for the industry and nothing will change next week.
  • Multiple people mentioned that their funds were revoked. Some of these dedicated owners worked for 70+ years, and the pandemic put their businesses in shambles.
  • Owners feel like politicians do not care about the industry and that due to policy changes, they were put into even worse situations. For example, many owners are dealing with supply chain issues, fuel surcharges, and skyrocketing food costs that are only continuing to lower profit margins or force restaurants to raise prices to the point of many consumers being unable to afford eating out.
  • Senate failures are a major talking point, with a lot of owners projecting that upwards of 40% of restaurants will go out of business. Other owners state that small businesses are being overpassed by big business needs, leading to many wondering, “can we just get a little?”
  • Disappointment is one word that is popping up a lot in talks about the RRF update. Owners state that the fund disproportionately helped restaurants, with some receiving funds and others left with scraps or no funds at all.

rrf funding

Updates to the revitalization fund challenges are discouraging and are listed below.

Restaurant Revitalization Fund Update Challenges

Eligible businesses that applied for funding but never received it now face a new set of challenges.

For starters, they’re at a competitive disadvantage against businesses that did receive RRF grants. A labor shortage is one of the biggest challenges facing restaurants today. To attract workers, food service businesses are forced to pay higher wages.

Businesses that received RRF funding are at an advantage because they can afford to pay their staff higher wages. Those who did not receive any funding, on the other hand, struggle to compete. They may not be able to offer the same level of pay that RRF-funded restaurants can offer.

Those that do manage to offer the same level of pay may be hanging on by a thread, struggling to keep the lights on and maintain service.

Other Funding Options Add Debt to the Pile

Business owners who did not receive the RRF grant are told that funding may be available through other avenues, such as EIDL loans. However, these are still loans that must be repaid, whereas RRF grants do not have to be repaid.

Restaurants that did not receive any RRF funding are more likely to default on loans, be evicted from their location, or file for bankruptcy.

Financial Challenges are Just One Piece of the Puzzle

Financial struggles are just one of the challenges being faced by restaurant owners. Many are also facing mental health issues not only from the pandemic itself but in the aftermath of it all.

Recently, the Independent Restaurant Coalition (IRC) partnered with the Better Help organization, which provides mental health services through its online platform. Through the partnership, IRC members can receive free counseling. While the IRC can’t disclose any figures, the organization has stated that the partnership has been well-received by members.

Failing to replenish the RRF program has left many restaurant owners unsure of how they will stay in operation. Many will be forced to close their doors for good. While loans are still available through various programs, many business owners are simply unable to afford the additional debt.