Foodservice distributors, restaurants, seek federal support

Foodservice distributors, restaurants, seek federal support

Industry advocates are pushing administration officials and lawmakers to provide funds that would assist foodservice companies suffering because of the ongoing coronavirus COVID-19 outbreak and subsequent restrictions on restaurants.

In a March 18 letter to the White House and Congressional leaders, the United Fresh Produce Association and the International Foodservice Distributors Association (IFDA) asked for federal funds for foodservice distributors who rely on sales to restaurants.

“We fully support the creation of a recovery fund at the Department of Treasury that includes foodservice distributors,” the letter said. “Such a fund would help the industry meet the immediate needs of paying employees and suppliers while covering company operations.

The letter, signed by United Fresh president and CEO Tom Stenzel and Mark Allen, president and CEO of the IFDA, said the groups also support enhanced loan and insurance protections to “ensure that these facilities are able to stay in business over the long-term.”

Staggering losses

The letter said foodservice distributors, including produce companies, are facing “staggering losses” after the sudden shock of restaurant and hospitality closures following the government’s national emergency declaration in response to the coronavirus COVID-19 outbreak.

“Restaurants and other foodservice outlets account for as much as 40% of fresh fruit and vegetable sales,” the letter said. “Right now, those  (restaurant) tables are empty; these restaurants are closed, and our members are shouldering undue financial stress because they have paid farmers for produce that they cannot deliver and that restaurants cannot pay for.”

Initial estimates from distributors point to immediate lost business ranging from 50% to 90% because of reduced operations.

Distributors are faced with having to furlough employees they will need to resume operations once the crisis eases, the letter said, and many others are at risk of bankruptcy due to the inability to collect receivables from restaurants, combined with debts to their suppliers.

“Our distributors are working with local non- profits, food banks and municipalities to donate fresh food they cannot sell, but it is clear they will not survive without assistance similar to what is provided to their restaurant customers, with whom they are directly linked,” the letter said. “We are asking for your attention and assistance now to ensure these businesses remain open during the response to, and recovery from, this national emergency.”

Restaurant relief

In a separate letter to government leaders, the National Restaurant Association said the group expects U.S. restaurant sales to decline by $225 billion during the next three months. That will result in in the loss of between five and seven million jobs, according to the group.

The NRA asks federal leaders to provide direct/targeted financial relief, including:

  • Authorize the Department of Treasury to create a $145 billion restaurant and foodservice industry recovery fund;
  • $35 billion for community development block grants for disaster relief assistance;
  • Assistance in allowing businesses to defer mortgage, lease and loan obligations;
  • $100 billion in federally-backed business interruption insurance;
  • Federal loan program equal to lost revenue;
  • $45 billion in expanded access to effective, efficient and affordable federal and conventional loans;
  • $130 Million in disaster unemployment assistance;
  • Assistance in allowing businesses to delay, defer, or forgo tax obligations.
  • Tax credits for businesses that are retaining employees;
  • Reduced credit card interchange fees; and 
  • Temporary payroll tax cut that increases economic activity.

“Taken together, these proposals will ensure that restaurants have increased liquidity and access to necessary financing to help them survive the dramatic loss in profits caused by the coronavirus,” the NRA letter, signed by executive vice president Sean Kennedy concluded.


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