Surviving Small Restaurants Push Forward as Pandemic Ebbs

This story was originally posted by Stateline, an initiative of the Pew Charitable Trusts.

CLARKSDALE, Miss. — For two years, Naomi King, an Australian native who owns Levon’s Bar and Grill in Clarksdale, Mississippi, pivoted her business model in more ways than one. The coronavirus pandemic forced her and her husband, Jonathan King, to cut the staff by half, reduce hours of operation and eliminate some high-priced menu items while increasing the price for others.

“We shut down [for six weeks]. We did the curbside thing for a long time. And we still haven’t set the seats back at the bar,” Naomi said, sitting next to Jonathan at a table in Levon’s on a recent March morning. “We don’t have chicken wings anymore. We can’t afford to do it.”

“I mean the price increase for us was like 250%,” Jonathan said as he looked at Naomi. “We used to pay about $60 or $70 for a case. Last time I checked, it’s still over $175 a case for chicken wings. Nobody’s gonna pay that price for wings.”

“Yeah, [a half pound] for like $16.95,” Naomi added.

At the onset of the pandemic, the Kings received federal assistance through the Paycheck Protection Program and the Restaurant Revitalization Fund to pay staff salaries and other expenses. The lingering effects of the pandemic have resulted in supply chain issues for the eatery, and some customers still are scared to dine in, further challenging the once jam-packed tourist attraction near the Sunflower River in the center of Clarksdale’s busy downtown. 

The pandemic caused many restaurants across the country to shut their doors permanently. About 90,000 restaurants and bars had closed as of May 2021, according to the latest data available from the National Restaurant Association, an industry trade group.

From staffing challenges and inflation to limited indoor dining options and incurred debt, many restaurants that remain open are struggling to survive. Restaurants are vital to the communities they serve, by providing jobs, community gathering spaces and economic investment. Their losses open a community void, especially in small towns.

Congress created programs to help businesses get by, and over the past year or so, more than half of states have enacted additional laws to help restaurants, such as by allowing the sale of to-go cocktails. This legislative session, at least 10 states have introduced or passed bills to help restaurant owners increase sales, according to Stateline research. Industry advocates say businesses need more help, though, because federal funds have run out for most and were never accessible for others.

The pandemic continues to cause instability for many restaurants, said Mike Whatley, vice president of state affairs and grassroots advocacy at the National Restaurant Association. Whatley said his hope is that state, local and county governments will use pandemic-related federal aid to help the restaurant industry recover as patrons begin to return. He added that states should pass laws to support to-go cocktails.

“A lot of us have developed habits during the pandemic where we haven't been out and about as much. We haven't gone and done things in a social environment,” Whatley said. “There's a huge opportunity there for local leaders to stimulate the economy without having to spend a single penny [of local funds].”

The National Restaurant Association projects sales this year to reach $898 billion and employment to increase by 400,000 jobs compared with 2021, totaling 14.9 million jobs, according to the organization’s 2022 State of the Industry report. Those projected totals would be an increase from $864 billion in sales in 2019 but a half a million decrease in jobs from 2019.

Despite that progress, advocates worry that some restaurants may not recover. They want states to use funds from the federal American Rescue Plan Act to help local businesses that are the economic engines of their communities.

“[Business owners] have sold their homes … and they’re doing that to continue to pay for their employees or to pay their rent so that they don’t receive an eviction notice,” said Erika Polmar, executive director of the Independent Restaurant Coalition, a trade group created by chefs and restauranteurs during the pandemic to advocate for more government relief for businesses. “Things are really dire right now, and restaurants … are in danger of closing any day now. And when they close, they take thousands of jobs with them.”

Federal and State Efforts

Since 2020, Congress has provided funding for several initiatives to help small businesses, including restaurants, stay afloat during the pandemic. This has included programs such as the Paycheck Protection Program, the COVID-19 Economic Injury Disaster Loan program, and the Restaurant Revitalization Fund, a grant program administered by the U.S. Small Business Association.

Naomi King said the aid she got was an “absolute lifesaver” for her business. Without that money, she said, the eatery would have remained closed.

But some restaurant owners, still in debt, may not have the capacity to pay back loans they received through the Paycheck Protection Program. Other applicants still await assistance. Roughly two-thirds, or about 180,000 people, who applied for aid from the Restaurant Revitalization Fund more than a year ago still had not received money, according to a June 30 report by the U.S. Small Business Administration. 

More than 80% of restaurants that did not receive a restaurant revitalization grant reported they are on the verge of permanent closure, according to data collected by the Independent Restaurant Coalition. It is unlikely Congress will replenish the fund as it has been dropped from the omnibus spending bill, according to the Nation’s Restaurant News. But groups such as the National Restaurant Association will continue to push the federal government for support, Whatley said.

“Congress just passed its latest spending bill and we’re really hopeful that a [Restaurant Revitalization Fund] replenishment would be in that bill, and it wasn’t,” Whatley said. “Restaurants are in a really precarious situation.”

Several states have acted this session.

In February, Rhode Island Gov. Daniel McKee, a Democrat, signed two measures into law that would permanently allow restaurants to sell to-go cocktails, beer and wine for takeout orders and temporarily allow restaurants to offer outdoor dining.

This month, Wisconsin Democratic Gov. Tony Evers signed two bills into law aimed to provide a financial boost for small business and restaurants.

In Massachusetts, the House passed a bill that would allow restaurants to sell to-go cocktails for a longer period of time, extending a practice that restaurants have said is critical to their survival. The bill now heads to the Senate. Pennsylvania lawmakers introduced a similar bill that would allow any business with a valid liquor license, except grocery, convenience and department stores, to sell mixed drinks for off-premises consumption. The bill has been referred to a Senate committee.

A bill in California also would expand upon prior legislation to allow the sale of to-go cocktails. And in Connecticut, the House voted to advance a bill that would extend a law that allows outdoor dining until April 30, 2023, previously set to expire March 31.

‘It’s Gonna Be Alright’

Since 1995, Rue Kenoy Harris, owner of Kenoy’s, a Clarksdale restaurant known for the two-fisted burger, has seen his share of challenges, but nothing like the pandemic. Because his restaurant is located near Coahoma Community College, his primary customer base has been students. But the pandemic-related disruptions to school have slowed his business. Harris, the only employee of his establishment, could not afford to shut down.

He changed his opening hours and increased prices slightly. To add another source of income, Harris opened a screen-printing shop inside his restaurant. 

While he doesn’t have as many customers as he used to, he makes do with what he has.

“The pandemic is what it is,” Harris said. “It’s gonna be alright.”

Other Clarksdale restaurants haven’t been as fortunate.

Ryne Gipson Sr. was the co-owner of BeeCee’s Place, a barbecue dine-in restaurant that permanently closed its doors in 2021, after first closing in March 2020, upending his family’s 30-year legacy in the food business. During the pandemic, Gipson, who served as the primary cook, stepped away because of the lupus he’s battled for years. The constant body aches, joint pains and fatigue caused by lupus—along with his concerns of exposure to COVID-19—factored into his decision to prioritize his health over cooking and running the restaurant.

After that, other staff members got sick. The extensive menu became a burden to fulfill. His wife and co-owner, Jessica, and one staff member tried to salvage the business by reducing the hours and changing the menu. The duo didn’t have the capacity or technology to handle curbside orders. Ultimately, customers stopped showing up.

“It got to a point where we were barely getting one customer. We were paying overhead and [were] ordering food. It wasn't worth it. All we could see was debt,” Jessica Gipson said. “It was difficult, especially seeing one employee let go. When we closed, I didn't have employment anymore either.”

The Gipsons decided against applying for federal assistance because they didn’t want to be dependent on it or tied to additional debt.