Emergency measures such as accelerated permits and waived fees have saved San Francisco restaurants money, but operators say they're still deeply in the red
Half of small businesses could permanently close without federal action, according to the head of the Golden Gate Restaurant Association
The Restaurant Act, a $120 billion relief bill for food and drinking venues, was approved by Congress on Oct. 1, but restaurateurs worry that gridlock will stall the bill
San Francisco isn't the easiest place to do business in the best of times. But with summer waning and loans drying up, local restaurant owners warn that without further relief measures, many more of them will close for good.
Depending on the neighborhood, a combination of city-imposed fees, rising rent costs and restrictive zoning have made it onerous to open or operate a small business for years in San Francisco. Take North Beach, which recorded a 10.25% vacancy rate in a 2018 survey by the North Beach Neighborhood Association, compared to the City’s overall retail vacancy rate of around 3% that year.
Add in a pandemic with no end in sight, and already-stressed small business owners say they’re in dire need of support as the months drag on and winter approaches. Restaurant owners, who need steady business and full tables to meet their margins, warn of further closures without government support.
If it weren’t for funds from the Payment Protection Program funded by the Small Business Administration, Laurie Thomas, the executive director of the Golden Gate Restaurant Association, says she would have had to close her two restaurants permanently.
“We’re in a world of hurt here,” she said. “There’s no sugar-coating it.”
From a policy perspective, the COVID-19 crisis put a spotlight on how San Francisco planning policy has burdened independent restaurants and retailers. According to a 2019 analysis by the Board of Supervisors’ budget and legislative analyst, it takes new businesses between six months to a year to secure the permits and approvals to open, during which time they may already be paying rent.
“We knew prior to COVID that it was fast approaching time to take a holistic view of our policies and how they’re working,” said Sheila Nickolopoulos, a senior planner with the City’s Planning Department, at the Urban Land Institute’s recent Annual Symposium.
“COVID has accelerated the process,” she added.
The City convened city leaders, industry leaders, nonprofits, and other stakeholders into a San Francisco Economic Recovery Task Force in an effort to accelerate relief measures and stimulate the economy. For small business, a cornerstone of the plan is the Shared Spaces Program, which allows businesses and restaurants to use the outdoor spaces around them to dining and shopping.
The program is a lifeline, said Thomas, but it isn’t enough.
In an effort to further reduce the financial burden of restaurants and small businesses, the City also extended the Commercial Eviction Moratorium through November 30. Mayor London Breed has the authority to extend it again through March 2021.
The City also waived table and chair fees associated with sidewalk dining, among other permit feed and taxes associated with expanding into outdoor operations. It adds up, said Thomas.
“My permit fees were $2000 a year and our table and chair fees are $3000 a year. So with this measure alone, it’s saving us $5000 a year, which is real money,” she said.
As a result of the waived fees and the Shared Spaces Program, Thomas was able to add two parklets on either side of her restaurant, Rosie’s Cafe, which sits on a corner. More than 1,300 Shared Spaces have been issued since so far, according to SFMTA.
“It’s been huge,” she said. “We’re seeing about 65% of our normal sales right now.”
Still, Thomas said her businesses are losing tens of thousands of dollars a month. The PPP loan is keeping her restaurants afloat, but she worries about what will happen when the weather turns cold and rainy.
The City says it will continue to comb through its policies to ensure that businesses have a chance at survival during and after the pandemic. Prop H, a proposal on the November ballot, would amend the City’s planning code to grant more flexibility to retailers and food sellers, allowing more improvised pop-up uses among other changes
“The codes need to change to promote flexibility,” Nickolopoulos said. “That’s something we’re focused on in planning right now. We need to allow businesses in a functional way to be able to do multiple things in a single space.” She used the example of an existing bookstore opening a coffee bar, which, when it is an option, is a cumbersome process laden with fees and paperwork.
Nickolopoulos and Thomas both understand the limitations the city has when it comes to providing small businesses and restaurants with relief.
“The need is so tremendous that the city can help in little ways but not in these huge ways that are needed to sustain businesses long-term,” Nickolopoulos said.
Without federal relief, Thomas fears the impact of coronavirus will be devastating.
In June, Congressional lawmakers introduced the Restaurant Act, which would establish a $120 billion fund to provide grants to independent food service or drinking venues devastated from the coronavirus pandemic. The bill was approved by the House of Representatives on Oct. 1, but bar and restaurant owners worry that Senate gridlock will stall the bill.
In the meantime, the clock is ticking.
“We will easily see a 50% permanent closure rate amongst small businesses in San Francisco,” Thomas said. “And now that negotiations for a relief package have stalled again, I just don’t know how we’re all going to make it.”