The coronavirus pandemic delivered a brutal hit to the U.S. economy, but few industries took quite as bad a beating as restaurants. A report from the Washington Post, published June 21, 2022, estimated that around 78,000 more restaurants closed in 2020 than a typical non-pandemic year — just under 12 percent of the 660,000 restaurants operating before the pandemic.
While that number came in below many of the dire predictions made by industry groups like the National Restaurant Association, it still represents a decimation of the industry.
The federal government stepped in to try to stem the bleeding, which likely lowered the final count. The Paycheck Protection Program (PPP) and the more industry-specific Restaurant Revitalization Fund (RRF) helped many restaurants, but those were bolstered by a myriad of smaller grants and loans. One of those was the Safe Start for Taverns and Restaurants (SSTAR) fund administered by Public Health – Seattle & King County (PHSKC).
As part of a Real Change series examining the county’s use of federal pandemic relief funding, Real Change requested a record of all applicants and awardees of the SSTAR fund in order to find out if that money landed with restaurants most in need of them. Canlis, a fine dining spot, for example, installed an entire tiki-themed restaurant in its parking lot, while many smaller restaurants struggled to afford patio heaters from Costco.
The SSTAR fund was seeded with $500,000 from the King County Office of Emergency Management; $100,000 went to the purchase and distribution of personal protective equipment (PPE), while $400,000 was earmarked to help restaurants pay for the costs of complying with the state’s coronavirus lockdowns and mandates, many of which were specific to the industry.
These costs included everything from PPE to plexiglass shields to carryout containers. While the program did not initially cover cuts taken by app-based delivery services, it pivoted to allow them as an expense after Gov. Jay Inslee issued a mandate prohibiting indoor dining.
“We wanted this fund to be specifically a restaurant, food sector, drinking establishment assistance. Especially [because] we also heard ... anecdotally from just being out in the field that, you know, that a lot of these small, what we call ‘mom and pop shops’ were not getting the grants and other, bigger funds that were coming from other programs. They were just competing with a lot of other businesses,” said Sinang Lee, an environmental health program manager for PHSKC who oversaw the SSTAR fund distribution.
To target the most impacted restaurants, the county selected high-priority zip codes by combining a map of coronavirus cases with its equity impact score, which assigns areas a priority ranking based on the “life expectancy, health and socio-economic indicators” documented in that zip code. It also imposed a revenue cap of $500,000 in 2019 and a limit of 10 full-time employees to narrow it down to truly small businesses. PHSKC got the money in September and had until December to either give it out or give it back, Lee said, which made her and her staff a little more freehanded in approving applications.
The program also came out of the gate with information in 11 languages, Lee said, while most other grants launched an English version and followed it up with translations. PHSKC worked with a number of community organizations, like Friends of Little Saigon, to identify good candidates and distribute information on the fund. Besides getting the word out, PHSKC’s environmental division temporarily converted its existing staff of restaurant safety inspectors to outreach and technical assistance workers.
“We use every avenue possible ... because ... this is not something that the restaurants have seen. It’s usually we give them a directive; we don’t give funding,” said Jasmine George, one of those inspectors. But once the word got out, she said, applicants started flooding in. The county made the application very simple — it was effectively a checklist indicating whether you met the priority criteria — which helped a lot, George added.
“I really think that the simplification of that application was also a contributing factor to drawing as many businesses as we did at the time,” she said.
Despite the rush, the county managed to distribute the money pretty closely in line with its goals, documents indicate. The cohort is dominated by small Asian restaurants, which were plagued both by a loss of business and widespread racial animosity in the initial days of the pandemic. Joining them are a number of small Mexican and Middle Eastern restaurants, along with a few neighborhood Italian places and pizza joints. And, according to a report reviewing the program’s results released by PHSKC, “77% of SSTAR Fund recipient survey respondents identified their business as minority-owned (BIPOC, LGBTQ, women).”
The county got the majority of the money out by December. Only $11,408.95 remained unspent, mostly because some of the final awardees didn’t have time to pull together all the necessary receipts before the deadline, Lee said. Of the 183 applications the county reviewed, only 40 were not approved for the grant. Of those, six are now closed. Two of those six didn’t get the grant due to being outside of the priority zip codes; two didn’t get it because they were over the revenue cap for 2019; one more for both of those reasons; and one did not respond to the approval before the program’s deadline.
Encouragingly, within the microcosm of the SSTAR program’s applicant pool, the closure rate is significantly lower than the rest of the country. Only 20 applicants of the 183 reviewed are currently closed, according to Google listings and the Washington Secretary of State’s business lookup tool, representing just about 10 percent of the total cohort. Compare that to the 12 percent figure from the Washington Post. That 12 percent figure is only the extra closures in 2020 due to the coronavirus — the total number of failed restaurants is more than double that.
The only problem with the program, as Lee and George see it, was that they couldn’t extend it to more applicants. Of the 254 applications received, 69 applications weren’t even reviewed because the program had already allocated all of its money. Those applicants probably could have used the money too, Lee said. There’s also the fact that, even if a business made more than $500,000 in 2019, the pandemic might still have put it on the ropes.
“We had one business owner come back and share, like, ‘My business is just a bit over, but we’re still in need.’ And I was like, ‘Well, we’ll put you on the waitlist.’ It was really just challenging to really say no when we know they have a need,” Lee said. “And, yes, ideally, more money would have been able to allow us to be able to provide more support to all the restaurants.”
Read more of the Nov. 16-22, 2022 issue.