How the $1.9 Trillion COVID-19 Bill Will Impact Restaurants

The House looks set to pass a $1.9 trillion COVID-19 relief bill this week named The American Rescue Plan which has major implications for restaurants, small businesses and franchises in all industries. With $1,400 stimulus checks for millions of Americans, increased unemployment benefits, and $25 billion in relief for restaurants, here’s what the industry can expect.

Stimulus Checks

The bill’s $1,400 stimulus checks for Americans making under $75,000 — which President Biden says could start hitting accounts this month — have the potential to lift restaurant sales by low-to-mid single digits for up to seven weeks, according to Bloomberg Intelligence analysis reported by Nation's Restaurant News.

The $600 checks in the last stimulus package boosted restaurant sales by 3% for casual-dining concepts and 5% for quick-service locations for three weeks, the study showed. 

This round, Bloomberg researchers predict another 5% boost in sales for QSRs like McDonald’s, Dunkin’ and Burger King, as well as another 3% same-store sales gain for casual-dining chains like Bloomin', Brinker and Darden. 

During Domino's Q4 earnings call, CEO Ritch Allison said, "There is no question that the stimulus dollars and the enhanced federal unemployment insurance certainly puts money in consumers' pockets and allows them to go out and buy food."

$25 Billion in Restaurant Relief

The $1.9 trillion stimulus package also includes the Restaurants Revitalization Fund, which would provide $25 billion in relief for restaurants.

The plan would provide up to $5 million in grants for individual restaurants, bars, caterers, breweries and tasting rooms, or up to $10 million for restaurant groups affiliated with fewer than 20 locations. Restaurants owned and operated by women, people of color and veterans will be prioritized for the first three weeks of the grant period. One-fifth of the $25 billion funding is also dedicated for businesses that grossed less than $500,000 in receipts in 2019.

In February, the National Restaurant Association surveyed 3,000 restaurant operators, 14% of which said they would “probably or definitely” close their doors within the next three months if they didn’t receive any federal aid. 

Unemployment and Other Benefits

The American Rescue Plan extends a $300 per week boost to unemployment benefits through Sept. 6 and also includes an expansion of the child tax credit, rental payment assistance and funds for COVID-19 vaccine distribution and testing. It directs money to state, local and tribal governments, along with schools.

In addition to stimulus checks, increased unemployment benefits and additional rent support could increase the spending power of the average American consumer. The bill’s vaccination plan could also help get American consumers back in place where they feel comfortable going out to eat, although how quickly customers will be willing to return to normal is still uncertain. According to Nielsen, 24% of Americans say they’ll spend more dining out once a vaccination is widely distributed, but 22% said they'll spend less. 

The foodservice industry is already seeing early signs of improvement, with restaurants and bars hiring 286,000 employees in February, the U.S. Department of Labor reported Friday.