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PPP gave Roanoke restaurants a 'shot in the arm,' but what happens now?
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PPP gave Roanoke restaurants a 'shot in the arm,' but what happens now?

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Restaurants saw their business plummet when COVID-19 hit.

Dining rooms shuttered and shifted to takeout-only models in March. Since then they’ve been inching toward reopening fully. Now, restaurants can serve customers inside, but social distancing is still required between parties, reducing the number of customers that can be served at any given time.

A number of restaurateurs in the Roanoke Valley say the Paycheck Protection Program has been essential to keeping their businesses afloat and employees working.

“I doubt we could have survived this long without them,” said Butch Craft, owner of The Roanoker Restaurant, which has been in business for nearly 80 years.

The Small Business Administration released in July information about recipients of loans greater than $150,000. The actual loan amounts do not appear; instead recipients were lumped into ranges. The restaurateurs interviewed for this story declined to provide the exact amount of funding they had received.

The SBA data indicates The Roanoker received between $150,000 and $350,000, which Craft confirmed. She said the money has been used entirely on payroll.

When the restaurant was doing takeout only, Craft said she retained just 21 of her more than 60 employees. She started bringing employees back when The Roanoker was able to open its dining room at 50% capacity. As of late July, 52 employees were working.

She said bringing back those employees would have been impossible without the PPP funds.

“People think, ‘Well that’s a big restaurant, it’s been in business all these years,’ ” Craft said. “But when you drop your incoming sales to about a quarter of what they were, [and] you’re still getting the bills in for electricity and rent and all of that, it would have been impossible to last this long if we hadn’t had the PPP.”

Things are improving, Craft said, but takeout is still about 50% of the business, given that people are being cautious about venturing out.

Numerous restaurant owners said it was difficult to keep up with the changing guidelines around loan forgiveness. Both the length of time in which the funds had to be used and the amount required to go toward payroll, rather than other expenses like rent and utilities, were changed.

For a loan to be forgiven, at least 60% must be spent on payroll. Since all of The Roanoker’s loan was put toward payroll, Craft said she’s now confident it will be forgiven.

“That was the one thing that scared me, is every day new information came out,” she said. “I’m thinking if I get this loan and it’s not forgiven, it could set us back. Thankfully it will be forgiven because we used it for the right purpose.”

Gary Walker, owner of Cabo Fish Taco, obtained loans in April for his restaurants in Blacksburg and Roanoke, which allowed him to offer a job back to everyone who’d been laid off.

He confirmed that the Blacksburg location, which had 44 employees prior to the pandemic, received between $150,000 and $350,000, per SBA data. Walker said the Roanoke location, which had a much smaller staff at 19 employees, received less than $150,000.

The funds helped him to get through the second quarter, but now that money is running out and business is far from returning to normal, Walker said he’s worried maintaining his recently expanded staff won’t be sustainable.

“A lot of our local customers have been ordering takeout and delivery so that’s given us some revenue, but we are still operating at a pretty big loss,” he said, even with dining rooms now open.

Yet the cost of doing business is higher in some ways. Servers aren’t making as many tips, Walker said, so their wages have been adjusted to make up for that. Each to-go container costs the restaurant 42 cents.

When employees first returned, Walker said the dining rooms had yet to reopen and there was only so much work to go around. But the PPP loan allowed him to pay them anyway. And, importantly, when he was able to reopen the dining rooms, both locations already had the staff necessary to do so. Walker said he knows of several restaurants that weren’t able to immediately offer dine-in services because they still needed to call back staff.

When Walker first accepted the loans, he took on a risk; guidelines around forgiveness were unclear at that time. Both Cabo Fish Taco locations used the funds solely on payroll, he said.

At first, Walker said, accepting the help made him feel a little weird. But he chose to look at the loans as an opportunity to support his employees, ensuring they could earn money during the pandemic.

Eric Terry, president of the Virginia Restaurant, Lodging and Travel Association, said across the state restaurants have largely reported positive experiences with the Paycheck Protection Program, despite some hiccups along the way.

However, Terry said he’s hearing that many restaurants are running out of the funds. He said another round of PPP loans is important for restaurants, given that they have been operating at a reduced capacity for much longer than initially anticipated.

Terry said he believes restaurants owners have real concerns about whether they can maintain staffing levels once the funds have been expended.

“People have been pretty slow to come back into restaurants,” Terry said. “So I think the timing of kind of running out of PPP funds and when the business levels are going to return are a little bit difficult right now.”

The National Restaurant Association this month unveiled a Blueprint for Restaurant Revival, which advocates for various forms of assistance including a second installment of the Paycheck Protection Program.

“I do think you have folks who really do need an additional round of PPP funding to sort of get them over the next few months,” Terry said. “I think it’s probably the most important piece of what’s being asked for.”

Marty Montano, owner of Montano’s International Restaurant on Franklin Road in Roanoke, also had a positive experience with the program.

“They’ve helped small businesses survive all across the country,” he said of the loans.

Montano said the funds helped restaurants bring back employees, supplementing their income to ensure they earn their usual wages even though business was slow. He offered all employees their jobs back, and with the help of the program returned around 25 to work.

While small businesses probably need another “shot in the arm,” Montano said, the PPP loans have been incredibly helpful.

The loan to Montano’s International Gourmet was also listed at between $150,000 and $350,000 in the SBA data, though Montano declined to confirm the accuracy of that information.

Local Roots in Grandin Village pared its staff of about 30 down to single digits when the pandemic first began affecting restaurants. But a PPP loan allowed the restaurant to offer everyone their position back, though not all returned, said Brian Sallade, general manager.

“As I believe they were set out to do, they really helped us pay and take care of our staff when we didn’t have the typical income that we had been used to,” he said.

The most challenging part of using the funds was the changing guidance, Sallade said, such as the timeframe in which the money had to be spent for the loan to be forgiven, or the amount required to be spent on payroll. But in other ways, the process was very simple. When the bank called to say Local Roots’ application was successful, he said, the funds were quickly deposited.

“I feel like every decision they made the intent was to be helpful to the businesses and the employees,” Sallade said. “Where it got messy is we’re all trying to figure out this pandemic together.”

Local Roots put the majority of its PPP money toward payroll, Sallade said, but also used some on rent and utilities. He expects the loan will be forgiven.

The SBA identified Local Roots as receiving between $150,000 and $350,000, which Sallade confirmed.

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