Testimony of Cheetie Kumar, Garland — Senate Small Business Committee, March 30, 2022

Summary

Written testimony of Cheetie Kumar, chef and co-owner of Garland in Raleigh, NC, before the U.S. Senate Committee on Small Business, dated March 30, 2022, addressed to Chairman Cardin and Ranking Member Paul. She asks Congress to refill the Restaurant Revitalization Fund for the 177,000 restaurants that applied and did not receive a grant. The testimony cites survey figures on businesses without grants, including 42% in danger of filing for or having filed for bankruptcy, and states restaurants and bars have lost more than $280 billion in sales. It describes supply chain effects on independent restaurants, citing a Producer Price Index report of food prices rising 12.8% over the past year. She states she received an RRF grant and serves on the Board of the Independent Restaurant Coalition.

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                                  Testimony of Cheetie Kumar
                                   Chef and Owner of Garland
                            U.S. Senate Committee on Small Business
                                         March 30, 2022

Chairman Cardin, Ranking Member Paul, and members of the committee, thank you for inviting
me today to talk about the supply chain in the restaurant industry and how this committee and
Congress can help.

I am the chef and co-owner of Garland in Raleigh, NC. In the same building as Garland is our
music venue and basement cocktail bar. I am a self-taught chef who studied recipes while
touring across the US as a guitar player alongside my husband and business partner, Paul Siler.
Seeing every corner of this country with our band, Birds of Avalon, showed me the value of an
independent, artistic spirit and that informed how we connect to our downtown Raleigh
community.

Let me start by thanking this Committee and especially Chairman Cardin for all the support you
have shown independent restaurants throughout this pandemic. You have given us a lifeline to
survive in the Restaurant Revitalization Fund (RRF) and we are eternally grateful.

I would be remiss if I testified before this committee and did not advocate for refilling that fund
to take care of the 177,000 restaurants who applied and did not receive a grant. They desperately
need help, and the Congress could ensure the success of a generation of independent restaurants
by providing the money to fund all the outstanding grant applications.

One hundred thousand restaurants have already closed permanently. Many of my friends and
colleagues are hanging on by a thread and have taken on crushing personal debt as they fight
against joining the growing list of closures. More than 80% of restaurants who did not receive
the RRF report they are on the verge of permanent closure.

Data collected from a January survey of nearly 1,200 members of the independent restaurant and
bar community in all 50 states demonstrates the dire situation the pandemic has created for these
businesses, especially those that did not receive federal RRF grants.

   •   49% of businesses that did not receive RRF grants were forced to lay off workers because
       of the Omicron surge
   •   42% of businesses that did not receive RRF grants are in danger of filing for or have filed
       for bankruptcy
   •   28% of businesses that did not receive RRF grants have received or are anticipating
       receiving an eviction notice
   •   Restaurant and bar owners who did not receive an RRF grant are taking on more personal
       debt. 41% of people that did not receive RRF reported taking out new personal loans to
       support their businesses since February of 2020. This is only true for 19% of businesses
       that received an RRF grant.
The Census says that restaurants and bars have lost more than $280 billion in sales. Chairman
Cardin, I have been on calls with a number of strong, wonderful restaurant and bar owners in
Maryland and they are past their breaking point. The same is true for Kentucky, Washington,
Florida, New Hampshire, and every state represented on this Committee.

I know you invited me to talk about the supply chain and I will do that as well, but I did not want
to pass up on the opportunity to ask you for the help we so desperately need.

I am proud to be here representing the hundreds of thousands of independent restaurants across
the country and their millions of employees. My story is not very different from so many others
in the restaurant industry. With my family, I immigrated from India to the Bronx at the age of 8
and eventually settled in the South to play music and open my restaurant. Our industry is full of
these stories – from folks all across the country and all around the globe. Women, minorities,
single parents, veterans, and so many others get their start in restaurants, build their lives
working in restaurants, or make a career out of working in restaurants. Frankly, restaurants
represent America more than any other industry.

I am a member of the Board of the Independent Restaurant Coalition – a group borne out of
crisis. Chefs and independent restaurant and bar owners from across the country gathered in the
first days of the pandemic to advocate for help for the restaurant industry. Together we have built
a grassroots movement to secure vital protections for the nation’s 500,000 independent
restaurants and the more than 11 million restaurant and bar workers impacted by the coronavirus
pandemic and build a more sustainable future for our industry.

Two years later I sit before you, in person finally, to talk about the supply chain, how the RRF
has helped, and how we can fix the supply chain. And, make no mistake, when we talk in general
terms about the “supply chain,” what we are also talking about is the rising costs that result from
a broken or damaged chain.

Independent restaurants play a unique role in the food supply chain. They both push items into
the supply chain and pull items out of the supply chain. Think about kale. For many years the
largest purchaser of kale was Pizza Hut who used the leafy green as decoration on their salad bar.
According to the Department of Agriculture, U.S. kale production increased by nearly 60 percent
between 2007 and 2012. The increase in demand came when chefs started serving the nutrient
dense green in salads, soups and slaws. Kale went from lowly decoration on the salad bar to
becoming the darling of celebrities and food media. Kale sales continue to rise, in 2020 the leafy
green accounted for more than $225 million in sales. That collective growth is often spread
among smaller farms supporting local agriculture systems since independent restaurants
individually source at smaller volumes.

My restaurants adapt to supply chain issues every day. We look for less expensive cuts of meat
with great flavor and potential to be featured in dishes. So long as they remain affordable, we can
serve them. In the case of flank steak, it was a less expensive cut of meat, so it was on a lot of
restaurant menus. Then the demand for flank steak increased as home cooks discovered it. Flank
steak is a long, flat, thin, boneless and lean cut of steak, whose grain runs lengthwise. Like most
cuts of beef there are two flank steaks per cow, one on each side. With limited supply and
increased demand, prices increase to the point where it doesn’t make sense for our menu and
margins, so we make changes.

When hundreds of thousands of restaurants closed or severely limited capacity at the beginning
of the COVID-19 pandemic, it created a giant gap in the supply chain. Millions of dollars’ worth
of food spoiled or was thrown away. In the best circumstances, food was donated to those who
needed it. In the worst of circumstances farmers and ranchers were forced to destroy or euthanize
their crops and animals. With each surge of the virus and change in consumer demand the supply
chain has struggled to keep pace with the market.

Right now, the Producer Price Index (PPI) report released by the Bureau of Labor Statistics
(BLS) indicated food prices rose 12.8% over the past year, including major jumps for ingredients
critical to restaurants like beef and veal (43.9%), grains (22%), shortening and cooking oils
(36.4%), and eggs (40.9%). the price of our non-GMO oil rose from $38/ 5-pound box to as high
as $110 and currently is hovering around $85 if it’s even available.

At Garland we source our food and supplies locally as often as possible. When we were forced to
close in March 2020, I watched my suppliers suffer too. Overnight they lost hundreds of
thousands of dollars in sales. And the recovery hasn’t been easy for them either. For instance,
my seafood supplier – Local’s Seafood in Raleigh – goes to the coast and brings fresh catch into
town twice a week. They lost most of their customers in the matter of a few when the pandemic
began. Their operation is large enough operation that they could pivot to offering direct to
customer sales. As restaurants have had uneven recovery - I return to near capacity operations in
March but my neighbor can’t reopen fully till June. Locals faces a challenge of prioritizing
restaurants as customers while still serving their direct-to-consumer market. We’ve seen a lot of
small farmers and purveyors simply close because so many restaurants have closed or because as
a variant rages through our community, restaurants have had completely unpredictable revenue
and volume of sales which directly impacts these producers.

While some of the dramatic price increases, we’ve seen over the past two years have leveled off,
most ingredients and supplies needed to operate our business are significantly more expensive
than they were in 2019. And while I have always been able to manage changes in prices, it is
nearly impossible for independent restaurants who did not receive RRF grants to manage months
of back rent, personal debt, supplier bills, unpredictable dining demand, labor issues, and supply
chain uncertainty at the same time.

I was lucky enough to receive an RRF grant, and I am eternally grateful for that. As a result, I am
struggling to deal with supply chain disruptions, but I am able to do so in the same way I was pre
pandemic. But those who were not as fortunate are compounding their pandemic problems with
supply chain issues.

As this Committee and others consider ways to work on the supply chain and how to help
businesses like independent restaurants, the IRC stand ready to work with you. While we remain
focused on getting relief for those independent restaurants hardest hit by the pandemic, we are
also working to give voice to those same restaurants on farm policy, fisheries policy, labor and
employment issues, and other things that are so crucial to our members. Independent restaurants
are the tip of the spear on supply chain issues and very good at labor cultivation.

Again, thank you for holding this important hearing and I look forward to working with you on
refilling the RRF and these other critically important issues.


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