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North Texas restaurants received at least $473 million in federal loans, but is that enough to save them?

The Texas Restaurant Association is lobbying for another round of PPP aid specifically for restaurants.

Of the thousands of North Texas businesses that secured federal aid through the Paycheck Protection Program, restaurants received at least $473.5 million in rescue loans.

Newly released data from the Small Business Administration shows that restaurants accounted for 1,049 loans out of the more than 15,000 North Texas companies that were granted loans over $150,000.

Local restaurants that were approved for PPP loans include M Crowd Restaurants, the group behind Mi Cocina, Taco Diner and The Mercury, which received $5 million to $10 million; T.G.I. Fridays, which received $5 million to $10 million; Mesero Restaurant Group, which received $2 million to $5 million; Babe’s Chicken Dinner House, which received $5 million to $10 million; and Flavor Hook, the restaurant group over Neighborhood Services, Town Hearth, Montlake Cut and Desert Racer, which received $2 million to $5 million.

Nick Badovinus is chef-owner at Montlake Cut, Town Hearth and more.
Nick Badovinus is chef-owner at Montlake Cut, Town Hearth and more.(Louis DeLuca / Staff Photographer)

The SBA released range amounts only for the loans, so it’s unknown just how much each company received. The SBA also released limited data on businesses that received loans under $150,000, but those companies were not named by the SBA. But previous Dallas Morning News reports named restaurants such as Lucia and Macellaio, as well as TJ’s Seafood, that received smaller federal loan amounts.

Nick Badovinus, owner of Dallas-based Flavor Hook, said the loan program was instrumental in keeping his restaurants open. He wouldn’t say how much his restaurants received in federal aid or if all of those funds have been used, but he said the $2 million to $5 million loan allowed him to bring back all of his staff, pay landlords and electric companies, and keep up with other operating expenses.

“We were able to do all of those things without drawing down whatever available cash we had in the business to zero. Reopening is expensive. You’re re-inventorying; you’re retraining; you’re doing all of those things, and what they all have in common is they’re expensive,” he said. “Without access to this program, I can’t say that we wouldn’t have been able to do it, but it would have been very, very, very, very different. It would have taken a business that is already at its nature very hard, and for us would have turned it into almost mission impossible.”

As helpful as the PPP loan was in getting through the shutdowns and reopenings of his dining rooms, the future of his restaurants will ultimately depend on marketplace demand, Badovinus said.

National restaurant chain T.G.I. Fridays, which received a $5 million to $10 million loan for its restaurants, including its D-FW locations, said in a prepared statement that the federal loan came at a time when the company’s sales took a steep nosedive.

“Overnight we had to close our dining rooms and bars and operate only curbside take-out and delivery. We were only generating 10-20% of sales with the new restaurant regulations. The Payment Protection Program enabled us to invest in new growth layers to protect our business, retain and rehire furloughed employees, continue partial payment to our landlords and provide for our local communities, first responders, essential workers and more,” the statement said.

While the program offered critical life support to many restaurants, a large number of small, independent restaurants without relationships with big lenders were left out of the rescue loan program, said Emily Williams Knight, CEO of the Texas Restaurant Association. Restaurant owners without access to major banks like large restaurant groups and restaurant chains were “last in line,” she said.

Because of this, and the fact that many restaurants are in a more dire financial position than they were when the first round of PPP money was distributed, the Texas Restaurant Association is lobbying for a second round of PPP aid to be allocated specifically to the restaurant industry.

The association is proposing that the funds be distributed based on losses rather than a first-come-first-served approach that favors businesses with banking relationships. Under this proposal, restaurant owners who demonstrate a sustained loss of 50% of their sales would qualify.

“I think the fair way to do it would not be who does and who doesn’t have a lender history, it would be that you would have to certify the losses you’ve experienced. From a taxpayer’s perspective, this money should go to those who have been hardest hit and those who have been unable to recover,” Knight said.

According to data from the National Restaurant Association, restaurants across the country expanded payrolls over the past two months, and Texas led the charge by adding back 185,800 jobs in May ― more than any other state.

Despite this positive growth in staffing levels, the majority of Texas’ independent restaurants are still in a critical state. Knight estimates that Texas is still down about 650,000 restaurant jobs.

“In order to get people back working, we need to use the PPP mechanism, refund it, put additional monies in it, target it to the industries that have been the hardest hit, and give them a lifeline to the end of the year,” she added.

To truly aid the restaurant industry where it needs it the most, Knight said, the program must be reworked to get money to the scads of small restaurants on the verge of collapse.

“This is turning out to be about the haves and the have-nots,” she said. “If you’re a fast-food restaurant with three lanes of drive-through, you’re crushing it. ... It’s the small independents that have put even more personal money in to survive, and that’s why we’re imploring our legislators in Washington to get this done.”

Claire Ballor . Claire Ballor is a Dallas freelance writer.

claire.ballor@gmail.com
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