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MN hospitality industry demands relief ahead of 4-week shutdown

Industry leaders warn restaurants will close, thousands will be unemployed without assistance.

New statewide COVID-19 restrictions that require bars and restaurants to go to takeout-only for four weeks has dealt another blow to an already struggling industry. 

Many restaurant workers will again be filing for unemployment, while business owners will try to weather another closure at a time when they're typically busy hosting Thanksgiving and holiday meals.

“The majority of us, we’re like retail, right? You get in the black in the fourth quarter,” Bill Kozlak, owner of Jax Café in Northeast Minneapolis, told the Business Journal

Minnesota Licensed Beverage Association (MLBA) Director Tony Chesak said in a statement earlier this week that this four-week shutdown of in-person dining will be "devastating" on the industry.

"It will most certainly mean significantly increased unemployment and further permanent loss of our bars and restaurants across Minnesota," Chesak said. "The hospitality industry has shifted heavily to protect both staff and patrons and is still barely afloat. The short timeline we are now given for indoor closure will also result in unused inventory left to perish and leave small businesses further in the red."

Following Gov. Tim Walz's announcement of the new restrictions on Wednesday night, dozens of bars and restaurants offered deals on drinks in an effort to get rid of some inventory before having to turn off the lights. 

Meanwhile, the MLBA encourages people to order takeout and buy gift cards from local bars and restaurants to help support them during this "bleak" holiday season, Chesak said. 

'Ripping the industry apart'

The state's hospitality industry is also calling on the state and federal government to support workers and small businesses. 

The MLBA, Hospitality Minnesota, the Minnesota Craft Brewers Guild and the Minnesota Events Coalition sent a letter to Walz on Thursday with ideas for emergency relief, saying "there are grave concerns that many businesses will not survive" the next four weeks. 

"Hospitality businesses and their workers – already on the financial precipice – are at the center of these new state closures and limitations and the financial devastation that is ripping the industry apart," the letter reads. "The hospitality industry is a key driver of economic activity and tax revenue, supporting 1 in 10 jobs in Minnesota. It cannot be allowed to collapse."

The letter says more than half of all of Minnesota's restaurants face permanent closure. Meanwhile, the sector has lost 80,000 jobs and is projected to lose another 70,000 "in short order if no action is taken."

The groups urge Walz to fight for a comprehensive plan to specifically help the hospitality industry. Among their suggestions, based on the needs from their member businesses: 

  • Targeting relief to "distressed" hospitality businesses (those that have experienced a 35% reduction in sales).
  • Establishing a $200 million emergency grant fund to help businesses pay rent, taxes, insurance, etc. 
  • Expanding DEED's no-interest loan program.
  • Offering targeted sales tax forgiveness, property tax reductions, and waiving state and local regulatory fees. 
  • Freezing commercial evictions on hospitality tenants.

Walz has called on Congress to pass a stimulus package as soon as possible, especially since previous federal relief provisions are set to end at the end of the year. 

"I would settle for a scaled-down package that targets small employers and workers, particularly regarding the hospitality industry," Walz said Wednesday.

He sent a letter to Congressional leaders this week with his request, saying in a statement: 

“The current situation is simply untenable. As the virus surges and demands pauses on our economy, we need federal support to ensure Minnesotans can make ends meet. We need Congress to act immediately to help keep our businesses afloat, our workers paid, and our families with food on the table. I will continue to fight with every fiber of my being for that support that you need and deserve.”

The governor is hoping Congress will provide federal money for businesses because Minnesota is facing a projected $4.7 billion budget deficit due to the pandemic, making finding state money for COVID-19 relief tricky.

On WCCO Friday, Walz said he's "more optimistic" than he has been that Congress will get something passed. If that doesn't happen, he has been talking with his advisors about what the state can do. 

"We're turning over every stone. I think we all need to be able to go a long ways," Walz said, adding that if Congress doesn't pass anything "We need to act in the moment. This is not as if these folks can hang on until we decide everything's OK in February and March. "

"So we need to be able to go as far as we can. I think we need to be creative," the governor added, noting he thinks there's a bipartisan commitment to helping those impacted. 

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Meanwhile, some state lawmakers are prepared to discuss helping businesses when they return for another special session next month. 

State Rep. Dave Baker, R-Willmar, who is a former restaurant owner, said in a news release he wants to move quickly to help businesses by using unspent COVID-19 relief funds, allowing establishments to sell to-go alcohol in up to 64-ounce containers, waiving or delaying sales tax payments and delaying loan repayment dates.

"Without quick action, we could lose hundreds or thousands of the Main Street businesses that are fixtures in our communities, and provide employment for thousands of Minnesotans," Baker said in a statement. 

House Majority Leader Ryan Winkler, DFL-Golden Valley, has called on Congress to provide emergency economic assistance and says state support should be offered to impacted businesses and families. 

Winkler told MPR News that there are bipartisan discussions underway on how to help, noting there are state resources available to pay for relief, including from budget reserves and potential tax revenue from people who can pay it. 

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