So, who really benefited from the Restaurant Revitalization Fund?

The SBA released a data set detailing approval dates, names, and dollars

Jul 11, 2021

Are we better off knowing? I don’t know.

The SBA responded to the Independent Restaurant Coalition’s FOIA request with a data set detailing the recipients of the grant money. I would’ve also like to see the information about those whose grants were rescinded because of the priority group kerfuffle and subsequent injunction, but I’ll take what we can get. (Weirdly enough, the original link to the data set on sba.gov is now posting a 404 error EDIT: It’s back up; looks like they made some updates to the file with it being marked as “Last updated 7/12”).

Of the 370 000+ applications received, less than a third (101 004) were funded. The median award was $125 631, and the average was $282 909. The average being at least $150 000 higher than the median brings me to the next point, which is 5% of applicants received more than $1M+. But this group of 5% ended up totaling 39% of the total $28.6B fund. It’s not to say that a lot the businesses receiving more than $1M didn’t deserve it—I’m sure many do, but I do have some thoughts below on some of those who received such a lump sum.

Shall we begin?

Disclosure: I filed the applications for the businesses that I am involved with and received funds for all of them. The numbers are readily available in the data set and the business entity names are fairly self-identifying.

Where did the money go?

Mapping out the money by state, we can see that the top recipients were: California ($5.7B), New York ($3.7B), Texas ($1.7B), Illinois ($1.4B), and Florida ($1.3B). Approximately 60%–70% of the funds received in these states were by those that self-certified as minority-, women-, or veteran-owned (priority groups).

If we take a look at the number of total grant recipients who belonged in one of these categories, we can observe the following (and yes, groups can overlap; I didn’t review the data for exclusivity):

44% of applicants stated they were women-owned, receiving a total of $10.2B in aid, which is only 35% of the total grant money available
34% of applicants stated that they were minority-owned businesses and/or in economically disadvantaged areas, receiving $9B in aid, which hovers at 31.5% of the total grant money available
6% of applicants stated they were veterans, receiving a total of $1.7B in aid, which is ~6% of the total grant money available

It becomes apparent that not all groups are created equal, with the largest disparity between number of women-owned businesses being approved for funds vs. not being awarded a comparable amount in grant money. Minority-owned and economically disadvantaged located businesses do better in terms of closing that difference, but it is only with veteran-owned businesses that we finally see a 1:1 ratio. While it’s difficult to scrutinize this large delta without reviewing the applications and amounts requested vs. granted, I can’t help but wonder where a lot of the money ended up going.

10% of grant recipients belonged to a franchise business

To dive deeper into the numbers, we see that franchisees took home ~$2.65B of the possible $28.6B available, which is comparable to the 10% total applicants who noted themselves as a franchisee. And of those grant recipients, the top ten franchise applicants received approximately $1B in grant funds.

Even more striking about those top ten franchises? Subway franchisees dwarf the number of applications compared to other franchises (McDonald’s didn’t even crack 100 franchisee applications) by a ratio of 7:1 with the next closest franchise (Dunkin’ and Dunkin/Baskin Robbins co-brand).

Subway

2868 applications granted
72% self-certified as belonging to one of the priority groups
$362M distributed to Subway franchisees

Dunkin’ Donuts (and Baskin Robbins co-brand)

404 applications granted
78% self-certified as belonging to one of the priority groups
$90M distributed to Dunkin’ franchisees

IHOP

295 applications granted
76% self-certified as belonging to one of the priority groups
$118M distributed to IHOP franchisees

Kona Ice

207 applications granted
61% self-certified as belonging to one of the priority groups
$15.5M distributed to Kona Ice franchisees

Menchie’s

147 applications granted
66% self-certified as belonging to one of the priority groups
$18.5M distributed to Menchie’s franchisees

Denny’s

137 applications granted
64% self-certified as belonging to one of the priority groups
$79M distributed to Denny’s franchisees

Jimmy John’s

131 applications granted
44% self-certified as belonging to one of the priority groups
$29B distributed to Jimmy John’s franchisees

Golden Corral

125 applications granted
64% self-certified as belonging to one of the priority groups
$277M distributed to Golden Corral franchisees

Charleys Philly Steaks

112 applications granted
92% self-certified as belonging to one of the priority groups
$32M distributed to Charleys Philly Steaks franchisees

Moe’s Southwest Grill

108 applications granted
73% self-certified as belonging to one of the priority groups
$22M distributed to Moe’s Southwest Grill franchisees

Even though there is an “owner” at the end of the day for a franchise business, they still have had quite the leg up in comparison to their local small business siblings. After all, franchisees benefit by building off of the established brand and receiving the coverage of continued regional and national advertising campaigns.

And with the high number of approved applicants for Subway franchisees, I’d venture a guess that the parent corporations also provided support in varying degrees for RRF applications. To contextualize the numbers, the sandwich giant had 2868 approved folks, which represents over 10% of all U.S. Subway franchise businesses (per 2019 data), whereas McDonald’s only saw 67 approved applications out its 13 175 U.S. franchise locations (per 2020 data). Smaller chains, such as Kona Ice and Menchie’s saw a large number of their franchisees receive grants as well, 16% (out of 1279 locations) and 41% (out of 358 locations) respectively, which leads me to believe that some parent companies were more willing than others to lend a hand in guiding applicants through the process.

Meanwhile in NYC…

An interesting data point this information release is the businesses that benefited the most after the injunction. What I ended up finding was that the June approvals included quite a few fine dining establishments, large caterers and venues, small business chains, and hotels (and a JFK Dunkin’ Donuts that received $10M). If it wasn’t made clear before the pandemic, it should be noted now: these businesses that command such capital and cachet are seldom operated by or have a majority shareholder that is a minority, woman, or a veteran.

To understand how much was at stake here by moving all the priority groups to the very back of the line, for the June recipients that received over $1M in grant funds, it totaled to $864M with some recognizable names:

Greenwich Hotel, $5M (approved June 4)
The William Vale, $5M (approved (June 25)
Le Bernadin, $5M (approved June 4)
Bowery Hotel, $5M (approved June 4)
Gabriel Kreuther, $4.86M (approved June 25)
Daily Provisions, $2.975M (approved June 4)

Granted, everyone applied at the same time in early May, but these amounts are also based on gross receipts where you can see how well-to-do these businesses are to begin with (and this does not count any licensing or other deals/businesses that the individuals may have). Where the Fund was meant to help the mom-and-pop shops, the injunction ended up dealing quite the blow and reinforced the message of who really matters in this ecosystem—those who are already at the top.

Chortle Chortle

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