Requires extra funding after Hingham eating places obtain $2 Million in Reduction

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Photo by Michael Browning

September 13, 2021 by Claudia Chiappa

Kate Papaleoni was afraid that the catering company she had built for years was in danger. In 2013 she founded Kate’s Table with her sister Kelly Griffin. They put it together for years and received Boston Magazine’s Best of Boston in 2019. Then 2020 came and the pandemic hit.

Papaleoni said she watched the pandemic “decimated the food industry as a whole,” forcing business owners to lay off staff, curtail services and, in some cases, shut down completely. For Papaleoni, a prominent thought in her head: Can Kate’s table survive?

“It was unprecedented, it was scary,” said Papaleoni. “We were one of those people who said, ‘I hope we can do it.”

You made it, but recovery has not been easy. Kate’s Table received nearly $ 1 million in federal aid from the Restaurant Revitalization Fund (RRF) last June. The fund was established under the American Rescue Plan Act to provide financial assistance to restaurants and eligible businesses across the United States. Aid has been given to ten Hingham restaurants, but industry officials say the fund is not going far enough and are urging Congress to put more money into the RFF for troubled restaurants.

An online survey of 1,000 US adults shows that six in ten people have changed their eating habits because of concerns about rising Delta cases. Nine percent of adults have canceled existing dinner plans in the past few weeks. The survey also finds that one in three adults said they would be less likely to eat out if masks were required indoors.

In a letter to Congress, Sean Kennedy of the National Restaurant Association writes: “The majority of consumers have changed their eating habits in a way that is beginning to return acute pressure to the restaurant industry. This development is on top of food and labor costs, which are rising at the fastest rate in several years, persistent indoor capacity limits in 11 states, and the reduction in long-term debt burdens for countless restaurant owners. “

The letter calls on Congress to provide particular assistance to the 177,000 restaurants whose applications for RRF are pending.

“The rise in coronavirus variants like Delta threatens to bring these restaurants closer to permanent closure,” the letter said. “The small strides our industry has made on financial security threatens to be undone and the hopes of communities, entrepreneurs and consumers across the country.”

Local funding:

In the first round of funding, 10 Hingham restaurants received funding totaling over $ 2 million. Massachusetts companies received over $ 992 million in grants, one of the highest levels compared to any other state in the country.

Catering companies like Kate’s Table have received significant financial support from the RFF, and Papaleoni said it could be due to the nature of the business.

“Many caterers are unwilling to offer take-out and are not in the best locations to do so,” said Papaleoni.

Papaleoni received over $ 700,000 in aid, money that helped her get the business back on track and recover from subsequent losses.

“It was a really scary time,” said Papaleoni. “We put everything we had into this company, it wasn’t just the source of livelihood for my sister and me, families. I’m also very close to full-time and even part-time workers. We felt very responsible for everyone’s livelihood. “

Papaleoni said they were able to keep the store open for the first few months of the pandemic, offering curb delivery and contactless delivery. This allowed them to continue operations in the external circumstances until November, when Papaleoni said it had become clear that this system was unsustainable and the company closed for the first time.

Will Zhao, owner of Menchie’s Frozen Yogurt in Hingham and recipient of $ 169,089 from the previous round of RRF, said his business went through something similar. In 2020, Menchie’s had to temporarily close for two months. The partial reopening in May offered takeaway and delivery only, which, according to Zhao, meant around 30% of usual sales.

A spark of hope:

The store was partially reopened in summer 2020, while Menchie’s was able to resume regular operations in May 2021. Kate’s Table fully reopened in April 2021. This was around the time most of the country started taking the regulations back and reopening them. For many, it was the end of a long-lasting nightmare, the return to normalcy. And people’s joy was reflected in the parties and celebrations they hosted.

“It is pure joy and bliss,” said Papaleoni. “That is the nature of our business. People want to be able to gather and celebrate important life events. “

However, regular service did not mean regular profit. Despite the lifting of restrictions and masking requirements, companies are still struggling to return to their pre-pandemic profit. Zhao said the current sales account for about 80% of the business’s sales in 2019. Papaleoni also said the business is currently experiencing a little loss.

“There are a lot of people who haven’t gone back to work,” said Papaleoni. “Especially in a business where you are so proactive towards your customers, people are afraid to be out there again.”

In addition to the uncertainty and fear of customers, companies in the world had to face new challenges after the pandemic. One of them is a significant increase in delivery and operating costs.

“Everything is increasing: yogurt, toppings, everything essential,” said Zhao. “Gloves are three times as expensive as they used to be.”

Steve Clark, director of government affairs for the Massachusetts Restaurant Association, said it was a question of supply and demand.

“The cost of doing business has increased,” said Clark. “The entire restaurant industry is feeling the pandemic and is probably also the face of the recovery from the pandemic.”

The simultaneous reopening of thousands of companies across the state also meant a sudden need for employees. Nevertheless, many hesitate to work in companies with such close customer contact.

“The labor challenges are felt across all industries, and that is also causing some of the delivery problems, which drives up the cost of deliveries,” said Clark.

Slow recovery

The Restaurant Revitalization Fund helped Kate’s Table and Menchie’s recover from the previous year. Most of the money was used to pay off debt and break even, Papaleoni said.

“This fund has allowed us to get back on our feet without running into any more debt,” said Papaleoni.

Much like Papaleoni’s experience, Zhao said he used most of the money from the fund to keep the business going and pay off debts.

“Without this fund, I don’t know how many small businesses can really survive,” said Zhao. “We try to save every penny because we don’t know what will happen tomorrow.”

Other Hingham companies that receive money from the Restaurant Revitalization Fund include The Square Cafe with the second largest amount in Hingham of nearly $ 400,000, Raffael’s with almost $ 320,000, Jolley Cafe (DBA, Sadie Mae’s Cupcakes) with more than $ 250,000, Smokey Stax BBQ at nearly $ 170,000, Gelato & Chill at over $ 140,000, Ocean Kai at roughly $ 110,000, and Matick Enterprises, Inc. and Vida Mexicana at over $ 20,000 each.

While the RRF provided many companies with significant financial relief, several others were denied their applications. Of the 6,867 applications filed by Massachusetts companies, only 2,556 were approved. This has resulted in an unequal advantage, Clark said.

“Certain restaurants have received grants and some have not,” said Clark. “And they’re competing in the same city, they’re in the same Commonwealth, so we really need more money to go into this fund.”

Even for the restaurants that got back on their feet this summer, the future looks uncertain. The summer reopening celebrations were short-lived as COVID-19 cases pick up again with the Delta variant.

As of September, Massachusetts registered over 2,000 new COVID-19 cases in a single day, a number the state hadn’t hit since April 2021. The city of Hingham registered a total of 50 new COVID-19 cases Aug. 26 in the two weeks leading up to the report, a sharp increase compared to the 29 cases recorded in the two weeks leading up to the Aug 12 report.

The recent surge in infections is mainly caused by the spread of the Delta variant, which has proven to be more aggressive and contagious than the previous strains.

“It seems like we’re in a recurring nightmare,” said Clark. “I thought we were finished. But we are still in this spin cycle of negativity trying to recover from this pandemic. “

Cases had slumped in early summer and the state lifted all restrictions in May. It seemed like normal was back in Massachusetts, but the numbers started rising again in July. The public fears another lockdown as some cities begin rethinking their latest lax policies. The city of Boston reintroduced its mandate for interior masks on August 27th.

“A lockdown would be disastrous for the industry, it would be demoralizing for the industry, it would be demoralizing for employees, it would be demoralizing for customers,” said Clark. “We can’t go back.”

Kate Papaleoni agrees. “It’s very scary after what we’ve been through,” she said