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Stemming a Restaurant Industry Crisis: Legislative Watch

Take-out and delivery helped restaurants hang on during the pandemic, but a new wave of cases stands in the way of a return to pre-COVID operations and revenue. Legislative proposals aim to help.

The National Restaurant Association estimates that the industry could lose $240 billion in sales by the end of 2020 as the result of the pandemic, and predicts that as many as 100,000 locations could close this year. According to recent data from the U.S. Bureau of Labor Statistics, employment in food services and drinking places has declined by 2.3 million since February.

The Heroes Act includes $120 billion for a fund to help revitalize independent restaurants and bars. The Independent Restaurant Coalition is lobbying hard for Congress to act quickly, warning that 85 percent of its members could be forced to shut down by the end of the year. “Without passage of this restaurant relief program, there is no light at the end of the tunnel,” restaurateur Andrew Zimmern told the Washington Post.

Streateries, “ghost kitchens” (kitchens without a storefront preparing meals for delivery only) and the explosive growth of delivery services have helped many restaurants stay afloat. The public is embracing these options, and according to a new survey from Deloitte, the pandemic has accelerated innovation and consumer demand that can help restaurants generate more revenue even after indoor dining can resume safely.

However, new COVID-19 cases have been trending steadily upward since September and outbreaks are expected to worsen this winter. As federal aid for restaurants hangs in the balance, state legislators are looking for ways to support this important element of local economies. Here are some examples of recent proposals. 

District of Columbia B23-0942 amends an earlier program to allow restaurant “streateries,” extending the registration validity date from April 30, 2021, to Dec. 31, 2021. The intention of the amendment is to assure restaurant owners that investments in the equipment needed to operate streateries successfully will be worthwhile, and to signal support for this “vital engine of economic activity” throughout the pandemic.

S72, a Louisiana bill, provides a one-time refundable tax credit to restaurants and bars affected by the COVID-19 pandemic. The credit will equal the amount of any state license or permit fee for any month, or portion thereof, during which they were forced to close due to emergency public health proclamations.

A4765 in New Jersey would make it a third-degree crime, punishable by a fine of $15,000, for a restaurant employee to spit into the food or drink of a law enforcement officer. Employers would be required to suspend a worker charged with this crime and would face civil penalties if they fail to do so.

Pennsylvania H2860, the Hospitality Industry Restoration Act, establishes standards for restoring indoor service during the pandemic. One hundred percent occupancy would be allowed if a county has experienced no incidents of COVID-19 transmission in the past 14 days. Lower rates of occupancy would be determined on the basis of the number of cases per 100,000 residents: less than 10 for 75 percent occupancy, between 10 and 99 for 50 percent occupancy, and 100 or more for 25 percent. The bill also sets forward the testing method required to determine case rates.

S9046A, a New York bill, sets limits on the fees that third-party delivery services can charge to restaurants during the declared public health emergency. It forbids such services from charging an amount greater than 20 percent of an online purchase, plus card processing costs, for any combination of fees, commissions, delivery charges, etc. The delivery fee itself may not exceed 15 percent of the cost of an online order. Moreover, delivery services may not reduce compensation to workers as a result of these changes.

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Carl Smith is a senior staff writer for Governing and covers a broad range of issues affecting states and localities. He can be reached at or on Twitter at @governingwriter.
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