From 2020 to 2021, the marketplace for many small businesses was uncertain, and many owners and operators were forced to make many tough decisions.
The lack of clarity, along with new laws and local ordinances being passed, added new twists to an industry that was already complex and challenging. As we operate in the new normal, there are new viewpoints about the future of the industry, as well as new opportunities for growth and expansion.
The way that we serve and eat food has changed drastically in the post-COVID era. The consumer has also changed; there are now five different generations of diners seeking the same consumer experience, but with varying preferences. I like to call this “the experience dimension.” Some diners want a taste of something authentic and true to its roots, while others prefer convenience and a menu full of take-out options.
Whether it is a sit-down meal or a delivery from UberEATS, today’s diner is looking to be wowed, which may conflict with their loyalty and capacity for forgiveness. The need for hospitality and convenience presents new challenges and many ways to address them. A good approach is to thoughtfully look at your company image and how you are expressing yourself as a brand.
Many Citrin Cooperman clients are looking to technology to source solutions. Technology in the restaurant space has replaced traditional menus with new takes on integrative point of sale (POS) systems, for example. However, investments like this cost money, which is where the need for funding comes in. During the pandemic, business owners found themselves on one of two sides of the spectrum – those who were able to adjust and create a more successful business model and those who unfortunately could not pivot and were forced to make tough decisions.
Now that we are in the post-COVID era, there are new opportunities for growth for business owners. Acquisitions of brands or built-out spaces are likely to be a growing trend as organizations look to buy and add units and others look to get out of the business entirely.
This presents an opportunity for negotiation and development. Funding, in the form of loans and tax credits, are also viable options to many owners and/or operators. Since 2020, restaurant owners have had access to two rounds of Paycheck Protection Program (PPP) loans through the Main Street Lending Program, Restaurant Revitalization Funds, Economic Injury Disaster Loans, and Employee Retention Tax Credits (ERTC).
Currently, ERTC is the only program that is still available to eligible employers for wages paid in 2020 and 2021. In terms of foodservice operations, it is quite simple to see if your business qualifies for the tax credit. It is best to review your specific situation before applying so you can get the maximum benefits of the program.
The assistance available should be taken as a chance to get back in the driver’s seat. The pandemic took a lot away as business owners tried to keep their doors open and their staff paid. Now that things are in a place of stability, these assistance programs can tip the scales from being in the negative to being able to breathe easier.
The receipt of ERTC funds from the time of filing the claim is anywhere from six to nine months, at the earliest – though I have a few clients that have waited upwards of a year. My advice is, once you file and are approved for funding, expect to see the funding in about a year. This way whether it is late or early, you are not staking your business on it.
Depending on eligibility, the wage periods used to calculate the credit are from March 13, 2020, until September 30, 2021. In limited circumstances, an organization can receive credits for Q4 2021 as well, but this only applies to newly formed organizations. The deadline to claim 2020 credits is April 15, 2024, and the deadline to claim 2021 credits is April 15, 2025. If you find out that your business is eligible for the program, you should apply as soon as possible.
The time of overbearing uncertainty for our industry appears to be coming to an end, and business owners can decide for themselves where to go from here. I encourage you to look at the options and challenges ahead not as stumbling blocks, but as a fresh starting point.
Our dedicated Restaurants and Hospitality Industry Practice is here to help your business succeed. For additional information, please contact Bob Gilbert at bgilbert@citrincooperman.com or your Citrin Cooperman Advisor.
