How to save Wisconsin's restaurants.

Wisconsin restaurants continue to be in dire straits.

A recent survey by the National Restaurant Association showed that 33% of Wisconsin restaurants are unlikely to be in business six months from now if pandemic restrictions continue.

The association surveyed 3,500 restaurant operators from Aug. 26 to Sept. 1, and called the results "stark for Wisconsin and nationally."

Prospects for Wisconsin restaurants looked slightly better than the nationwide number — 37% — of restaurants that reported they were unlikely to still be operating in six months if no additional relief is available from the federal government.

Other state numbers in the recent National Restaurant Association survey showed that 68% of restaurant owners don’t expect their restaurant’s sales to return to pre-coronavirus levels within the next six months. Overall sales for Wisconsin restaurants were down 36% on average.

While sales were significantly lower for most restaurants, 53% of Wisconsin restaurant owners and operators said operational costs, as a percent of sales, are higher than they were before the COVID-19.

Some are already going under, as shown in this piece from Channel 27 in Madison, which visited a really good restaurant in Oregon (I've eaten there) where the owner says he couldn't make it after the PPP money ran out.

While the Federal Reserve’s “Main Street lending program” is supposed to be another source of sustenance for these types of businesses, Federal Reserve Chair Jay Powell told a Congressional panel today that banks aren’t giving smaller loans to smaller businesses, even with the backstop of the Fed.

“Extending credit in those small quantities would require a facility built from the ground that would be quite different than Main Street,” Powell said.

“It wouldn’t look like the current Main Street facility now. It’s just a very different kind of thing,” he added….

Powell said smaller business loans would be better handled with grants from the Paycheck Protection Program, which provided loans to small businesses that could be forgiven if they did not lay off their employees.

“Trying to underwrite the credit of hundreds of thousands of very small businesses would be very difficult,” Powell said. He said many of these small loans are based on personal promises.

But the temporary aid provided to businesses through the Paycheck Protection Program (PPP) expired last month, so there likely needs to be some new source of assistance if we want to see these types of businesses survive. One way might come as part of as a new stimulus package, either in the form of an extension of PPP (although it's too late for Charlie's in Oregon), or through a separate bill that Sen. Tammy Baldwin and others have sponsored, which is intended to give a bailout to the part of the food service industry that is most imperiled.

U.S. Senator Tammy Baldwin (D-WI) cosponsored the bipartisan Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive (RESTAURANTS) Act to establish a $120 billion revitalization fund to help independent restaurants deal with the long-term structural challenges facing the industry because of COVID-19 and support the reemployment of 11 million workers. “Local restaurants and workers across Wisconsin need our support now to survive this economic crisis,” said Senator Baldwin. “Many small and independent restaurants are operating at reduced capacity and may be forced to close their doors for good if we don’t act now. Our legislation will create the Restaurant Revitalization Fund that will help folks in Wisconsin and across the country get through this pandemic and keep our Made in Wisconsin economy moving forward.” …Small independent and franchise restaurants are more at risk of permanently going out of business because of the pandemic because consumer spending at these establishments has been disproportionately affected and they lack the same access to capital markets. In whole, the recovery fund would generate at least $183 billion in primary benefits and $65 billion in secondary benefits – more than double the amount of the proposed grants.

But Wisconsin’s governor doesn’t need to wait on Moscow Mitch and the rest of Congress. He can step up and publicly try to preserve these businesses himself. That's because Governor Evers had just over $200 million in CARES money that had yet to be formally set aside as of early September, and that money needs to be spent by the end of the year.

With outside dining/drinking season quickly coming to an end, and record COVID breakouts leading to a 60-day extension of the state’s mask mandate, many restaurants will be badly in need of funds to get through the winter. Or else these places might close their doors instead of take the losses.

What Evers could do is announce a grant program to give cash assistance to these restaurants, with an October 15 deadline to apply. And not just the $2,500 grants that went out from the All-In fund for small business, but how about $10,000 to help these businesses stretch through the winter? You could prop up 5,000 restaurants and other bars/music venues for $50 million, and likely prevent a whole lot of people from losing their jobs and/or ending their dreams of running their own business.

These independent business owners are seeing their profitability go down the drain through no fault of their own. It’s the Trump Administration’s failures on COVID-19 that have made people less likely to go out to these businesses, so it seems logical that federal money be used to keep these places alive. Whether it’s through CARES money or the RESTAURANTS Act doesn’t matter to me, but it needs to be done NOW, in order to avoid a large-scale disaster in the food service sector of the economy.