Restaurants are key to downtown Dayton’s post-COVID recovery. What is needed to ensure their survival?
Restaurants have more minority leaders and owners than any other sector of the economy, and they have been among the hardest hit businesses of the pandemic. “The catch is, I cannot keep doing it myself; I need help,” says Carmen’s Deli owner Haitham Imam. (Photos by Stephen Starr)
A federal funding program that prioritized eateries helmed by women, veterans and people of color ran into legal challenges and fell far short of meeting their needs.
By Stephen Starr, Elevate Dayton
It’s a little after noon on an April afternoon and the line of customers at Carmen’s Deli in downtown Dayton snakes out the door and into the lobby of the adjacent Stratacache Tower. Owner Haitham Imam and his team are furiously taking orders and preparing food.
“Today was the first day it’s been this busy in two years,” says Imam, after the rush subsides.
“But I am sure today is a once-off.”
That’s because Imam, who emigrated from Israel at the age of 24, fears only a tiny percentage of the 5,000 people who once worked in the downtown core have or are ever likely to return to their offices full-time, due to employees’ preferences for working from home. Moreover, a number of banks, including JP Morgan Chase, closed nearby branches during the pandemic. As a result, Carmen’s Deli saw a drop in sales of 70 to 80% in the first year of the pandemic.
“Cooking oil? Oh my god. I used to buy it for $20, now it’s $45. How do I maintain that?” asks Imam.
Federal relief targets “disadvantaged” businesses
The past two years have been a perilous time for restaurants and cafes. In a typical year, 50,000 restaurants close in the U.S. During the pandemic, that number climbed to 110,000 in December 2020 and rebounded slightly to 90,000 in May 2021, according to estimates from the National Restaurant Association.
Thousands more restaurants likely would have closed if not for the federal government’s Restaurant Revitalization Fund. The $28.6 billion aid program launched in March 2021 as part of the Biden Administration’s American Rescue Plan Act. The funding helped more than 100,000 restaurants, bars, taverns, bakeries, food truck companies and others cover costs, including outdoor seating, staff salaries and debt.
The program stands apart from the Paycheck Protection Program in that it was designed to help women- and minority-owned businesses. Although Congress clearly stipulated in legislation that the U.S. Small Business Association (SBA) should prioritize the most vulnerable small business owners under both programs, the PPP program did not collect data on race, gender and socioeconomic status, and many of its early loans went to larger businesses and wealthier business owners who did not necessarily need the funds. Some ended up returning them.
By contrast, the RRF reserved the first three weeks of the application period for “priority groups” – small businesses owned by women, veterans, or socially and economically disadvantaged individuals, which the SBA defines as business owners “whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business who are not socially disadvantaged.” As a result, it is one of the few federal aid programs that allows the government—and the public—to see just how much money flowed to minority- and women-owned businesses, as well as those in underserved and underinvested communities.
COMING FRIDAY: Restaurant grant data for Dayton reveals racial funding gaps
Of the $28.6 billion awarded, SBA distributed approximately $18 billion or 63% to women-owned ($7.5 billion), veteran-owned ($1 billion), socially and economically disadvantaged-owned ($6.7 billion) small businesses, and businesses owned by representatives of multiple underserved populations ($2.8 billion), said Laura Schafsnitz, spokesperson for the SBA.
An Elevate Dayton analysis of SBA data shows that 90 businesses in the metro Dayton area received a total of $15.7 million through the RRF last year. In all, 23 Dayton-area business owners qualified as socially or economically disadvantaged, 44 were women, and six were veterans. They own restaurants (44), bars/saloons/lounges (20), and a mix of distilleries, bakeries, food trucks, caterers or eateries categorized as “other.”
Heather Scott, owner of Moe's Loco Tacos, first heard about the Restaurant Revitalization Fund through her bank, U.S. Bank, which she says has proved helpful in these challenging times.
Ultimately, the number of eligible applicants far outstripped available funding. By last June, when the program ended, funding requests had reached $75 billion, with one-third of the applications coming from women and nearly one-quarter from disadvantaged business owners. In all, 100,650 businesses across the country received RRF last year, according to data available from the SBA’s website, which administered the fund.
But an additional 177,000 businesses, which represents nearly 20% of the restaurant industry, applied and received nothing. Haitham Imam says he applied within hours of the opening period.
“I got a letter later saying I didn’t get any funding. How is that possible?” he says.
Thousands of applicants who were initially awarded funds later had their grants rescinded due to legal challenges to the use of priority groups. In June 2021, conservative groups filed suits in Texas and Tennessee on behalf of White business owners, claiming that prioritizing funding to women and minority business owners was discriminatory and violated the equal protection clause of the U.S. Constitution. Judges upheld the suits, prompting the SBA to halt payments to priority applicants. As a result, funding that had been promised to close to 3,000 disadvantaged businesses was revoked.
“The Restaurant Revitalization Fund awarded grants to nearly 3,000 Ohio restaurants to weather the COVID storm – but too many were left out,” said Sen. Sherrod Brown (D-OH). “Small businesses are the engine behind our state’s economy and the lifeblood of our communities and employ nearly half of all Ohioans. By replenishing the fund and supporting these small businesses, we can continue to support Ohio’s entire economy.”
Brown was co-sponsor of the Restaurant Relief Fund Replenishment Act, which would have provided another $42 million in aid to eateries. But on May 19, a Republican-led filibuster blocked a vote on the bi-partisan bill, essentially killing the chances of further support for the 177,000 food businesses that missed out on the first round of funding. Ohio Republican Senator Rob Portman voted against the bill. His office did not respond to requests from Elevate Dayton for comment.
“While there are valid questions about government spending and inflation, restaurants should not be caught in the crossfire,” National Restaurant Association president and CEO Michelle Korsmo said in a May 19 statement. “These restaurant owners believed the creation of the Restaurant Revitalization Fund was a down payment, and that the Senate would complete the mission with this vote.”
Restaurants key to downtown revitalization
Despite challenges to its prioritization strategy, the RRF helped keep tens of thousands of establishments open. A National Restaurant Association survey found that 96% of first round RRF recipients said the grant made it more likely that they would be able to stay in business.
The survey also found that nearly 50% of restaurant operators who did not receive RRF grants felt they were unlikely to stay in business beyond the pandemic without a grant. That could have devastating effects on minority restaurant owners, employees, communities and local economies.
According to the National Restaurant Association, restaurants have more minority leaders and owners than any other sector of the economy. Unlike almost any other industry, restaurants have welcomed immigrants and people of color, says Gerry Fernandez, the president of the Multicultural Foodservice & Hospitality Alliance (MFHA), a Providence, R.I.-based non-profit that helps minorities find employment and to advance in the restaurant industry. It is one of the few that attracts “first-time workers, new immigrants, and people with limited skills,” Fernandez told Forbes Magazine.
“Our local restaurants and bars were among the first to relocate into long-vacant buildings, and in many cases, never left, even during the hard times."—Jason Warner, Downtown Dayton Partnership
For post-industrial towns such as Dayton, the survival of minority-owned restaurants, especially those situated in the downtown core, isn’t just critical to their owners and employees: they are essential to rebuilding resilient communities and economies.
Even before the pandemic closed offices and forced employees to work from home, small and midsize “legacy cities” like Dayton were struggling to revitalize their urban cores. According to a 2017 report from the Greater Ohio Policy Institute, these cities often lack major corporate headquarters or significant anchor institutions, assets that have been leveraged to successfully regenerate cities whose economies used to rely on manufacturing. Therefore they must rely on building strong downtowns. “Strong regions are built around strong central cities, and strong cities are built around strong downtowns,” the authors wrote. “Regardless of the demographic, building mixed-use downtowns with bars, restaurants, retail, and housing appears to be a winning strategy for many cities.”
As Dayton and other cities work to rejuvenate their downtown cores, restaurants, cafes and other dining establishments are central to their success.
“Restaurants and bars are among the most important tenants in Ohio’s revitalizing commercial districts. They are what bring longtime residents and new people passing through into our historic downtowns and nearby neighborhoods,” Jason Warner, director of strategic engagement for the Greater Ohio Policy Center, told Elevate Dayton.
“Our local restaurants and bars were among the first to relocate into long-vacant buildings, and in many cases, never left, even during the hard times. Particularly in our older neighborhoods and public squares, these small business owners are what makes Ohio’s communities so special.”
According to data provided by the Downtown Dayton Partnership, a nonprofit that works to develop a thriving downtown core, 33 food and drink businesses have opened in downtown since 2017, three of which have since closed. Seven more are in the works.
Inflation and labor shortages take their toll
For Heather Scott and business partners of Moe's Loco Tacos, a minority-owned restaurant situated off Salem Avenue in northwest Dayton that opened last year, the RRF assistance their company received, while very welcome, was hardly a game changer.
“We really just used that funding to offset the fact that the cost of beef is two-and-a-half times what it was before (and) that we had to go to different distribution channels to get Styrofoam (packaging),” she says. Scott said she first heard about the RRF through her bank, U.S. Bank, which she says has proved helpful in these challenging times.
As well as the restaurant, Scott and her partners’ business includes running four food trucks collectively called The Rolling Oasis. When the pandemic hit in March 2020, the food truck business lost 180 of its 220 bookings in one day, Scott recalls. On top of that, the cost of diesel for her food trucks is now more than double what it was in August 2020.
Scott and her business partners—a person of color and another who’s originally from the Middle East—chose to open a taco restaurant for specific reasons.
“With beef and chicken rising in price, we felt we had to pivot to a price point in this neighborhood that would sell,” she says. “Because to sell (chicken) wings for a profit, we’d really have to charge an exuberant amount because of the costs.”
The company currently employs 15 people and offers $2 tacos on Tuesdays.
“We don’t do any pork, and all of our meat is halal, so that puts us in a different stream of the supply chain.”
Rising food prices are just one of a new set of challenges, according to the National Restaurant Association. For many Dayton area restaurants it is already too late. El Greco’s Pizza Villa, a 60-year-old institution in West Dayton, closed in May 2020, while Corner Kitchen, a staple of Dayton’s burgeoning Oregon District food scene, closed the same year, before the space opened under new ownership earlier this year. A number of suburban restaurants in Englewood and Beavercreek have also shuttered for good due to the effects of the pandemic.
Today, food businesses are still closing, but for very different reasons: labor shortages and rising production costs.
That’s an ongoing concern for Heather Scott—one that she hopes can be better managed by the federal government going forward.
“I have tons of empathy and the pandemic has allowed us to understand the balance of work and home life,” she says. “(But) I think that when they provide grants for businesses and funding at the household level at the same time, that really does have counter effects.”
For Carmen’s Deli, a downtown fixture for over a decade that depends almost entirely on the office lunch crowd, the shortage of labor has all kinds of consequences. “Take the food delivery companies—in the past, their minimum order was $500. Now, they’ve increased that to $1,000,” says Haitham Imam. That means, Imam says, he has to personally shop for produce and other food products rather than having them delivered. The company has received funding support from Montgomery County and other sources, and Imam has been hosting trivia and karaoke nights in recent weeks, but staffing remains an issue.
“The catch is, I cannot keep doing it myself; I need help,” he says.
With officials and private businesses alike continuing to invest heavily in housing and hotels in downtown Dayton, Imam believes maintaining a vibrant food culture is an essential key to the overall success of the downtown.
“There are a lot of mom-and-pop businesses downtown. We are hurting—restaurants, like myself, who are inside buildings,” he says. Gesturing to the empty lobby and quiet street outside, he adds, “Look around.”