Restaurants seen needing new lifeline as Delta variant keeps grip on economy

For some restaurants, it’s starting to feel more like March 2020 than September 2021.

Cities across the country have tightened up on mask wearing, or are insisting on COVID-19 vaccination status as a way to instill confidence among customers and protect the community. However, in some regions, guests are once again afraid to eat indoors as the Delta variant casts a new cloud over the industry’s outlook.

In a consumer survey recently conducted by the National Restaurant Association, 19% of respondents said they’ve stopped going out to eat in response to the new wave of cases, and 37% said they are ordering takeout instead of dining in.

With fewer people dining out; revenues have started to fall as well. A rising number of Main Street restaurants are growing worried, and are in need of help.

“Getting people in the doors, we were averaging prior to COVID anywhere between 60 to 80 covers a day during our peak hours,” Antwan Smalls, who co-owns My Three Sons restaurant in North Charleston, South Carolina, told Yahoo Finance in an interview.

“Right now that's been substantially cut almost 50 to 40% of that,” Smalls added.

Earlier this year, the end of lockdowns and mass vaccinations spurred a boost in dining, travel and leisure that data suggests has begun to wane. That makes the situation for the hospitality industry more dire now than it was at the beginning of the pandemic, as already underwater businesses may not be able to endure another revenue downturn.

Smalls was able to get two rounds of the Paycheck Protection Program (PPP) and the SBA’s Economic Injury Disaster Loan program — but that wasn’t enough. He ended up dipping into his retirement savings to keep his staff employed and doors open.

While some of this debt is being forgiven, some owners aren’t saddled up to take on additional debt.

“We still have outstanding debt, I'm still paying on. And that was one of the reasons why I went into my 401k just to sustain that,” Smalls added.

Many small businesses have done everything to stay afloat during the past year and half. Some have pivoted their business model repeatedly, sometimes spending thousands of dollars to build outdoor dining structures to accommodate patrons nervous about indoor dining.

Others have spent money on gloves, COVID-19 testing, and implementing other CDC recommended practices to keep team members and guests safe.

Despite all the efforts, however, restaurants and bars are struggling with major headwinds with the virus still ascendant.

“At the end of 2020, we had accounted for 90,000 businesses that had permanently closed,” Erika Polmar, Executive Director of the Independent Restaurant Coalition, told Yahoo! Finance Live in a recent interview.

When long awaited federal aid for the restaurant industry finally became available in May through the $28.6 billion Restaurant Revitalization Fund (RRF), restaurants across the U.S. thought help was here to last.

Unfortunately for more than the 270,000 restaurants across the U.S. who initially applied, that lifeline never came. Only about 105,000 RRF applicants were awarded before the $28.6 billion pool was exhausted.

Smalls is but one of the applicants still waiting.

“It basically went from reviewing documents to waiting on funding, to SBA verifying, and then it just said it sat there. So I never heard, no, you're not getting it at all,” Smalls said.

Calls for Congress to replenish the RRF have grown louder ever since, but Congress has yet to take action.

“It’s past time to replenish the fund so that the hundreds of thousands that are in need of assistance can have some stability and get back to work,” Polmar said.

The situation is getting more desperate, with over 82% of operators seen permanently shuttered if federal money doesn’t come through, according to a new survey by the Independent Restaurant Coalition, which has urged the House’s Small Business Committee to prioritize restaurant relief during budget talks.

“We need some support to recover from the past year and a half and navigate the uncertain months ahead and to deal with things like the increased costs of goods,” Polmar added.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit