July 14, 2024

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Ritzy restaurants feast on federal funds as mom-and-pops struggle

Fat-cat food-industry heavyweights — and alleged felons — have feasted on millions from the Biden administration’s $26.8 billion Restaurant Revitalization Fund, while cash-starved mom-and-pop operators battle for crumbs at the bailout banquet, according to data released by the U.S. Small Business Administration.

More than 70 percent of restaurant applicants nationally were denied any funding. But here in New York City, chains and celebrity chefs hauled in huge windfalls. Even an accused swindler received more than $800,000 in federal taxpayer funds — a week after he was indicted by the feds.

David Chang’s Momofuku Group, which operates ritzy restaurants in New York City, Las Vegas, Los Angeles and Toronto, fattened itself on $6.9 million in taxpayer cash through the fund. Diners at Michelin-rated Momofuku Ko in the Bowery can savor the $130 tasting menu or a $35 spicy tomato pizza.

But at Two Maria’s Pizza next to the Baruch housing projects on the Lower East Side, where slices go for $1, immigrant owner Maria Morillo received just $1,816.38 — the lowest amount of any Manhattan eatery to benefit from the fund.

“I’m disappointed,” she said, speaking through a translator. “We’re trying to run a small business here. But they’re not concerned about us at all.”

Two Maria's Pizza
Two Maria’s Pizza received a staggeringly low amount of funds.
J.C. Rice for NY Post

The fund was signed into law in March as part of the Biden Administration’s American Rescue Plan stimulus package. The goal was to offset losses suffered by restaurants devastated by pandemic shutdowns.

With more money, Morillo said she could have hired new employees, including a delivery driver and pizza maker, providing two more jobs for her low-income neighborhood.

Momofuku spokesman Ryan Healy told The Post they are using their $6.9 million from the fund “across our restaurants in New York, Los Angeles, and Las Vegas” but that it “doesn’t even cover our losses since March 2020.”

David Chang
David Chang’s Momofuku Group received $6.9 million in taxpayer cash.
Ben Gabbe/Getty Images

Grand Central Joint Venture, which operates Bronx-based Zaro’s Bakery and provides bread to supermarkets and mail-order consumers around the country, was one of four NYC companies to receive the maximum $10 million handout.

Juice Generation, the upscale boutique chain in trendy neighborhoods affiliated with celebrity juicer Salma Hayek, squeezed $8.7 million out of the fund.

“This is crazy. The whole thing stinks,” fumed Patrick Hughes, the owner of Hellcat Annie’s and Scruffy Duffy’s in Hell’s Kitchen. “Some places weren’t even open and got millions. Many of us who worked our asses off to survive got nothing.”

Zaro's Bakery
Zaro’s Bakery was also a big winner from the fund.
J.C. Rice for NY Post

The only thing Hughes got from the fund was a denial.

But two restaurants just across the street on Tenth Avenue, Le Prive and Casa Del Toro, received $859,000 — even though their owner, Sanjay Laforest, was arrested on May 12 for his alleged role in his family’s $17 million embezzlement scheme.

The restaurateur and three co-defendants “laundered millions of dollars of the proceeds of their embezzlement scheme by transferring the money to other financial accounts owned by them and their family members … including two Manhattan restaurants owned by Sanjay Laforest,” according to a press release issued by the Manhattan U.S. Attorney’s office.

Laforest’s federal restaurant bailout was approved on May 20 – eight days after the feds indicted him for filtering stolen money through the same two restaurants. The scam was part of an effort to defraud a Manhattan electrical contractor that employed one of his family members, the charges allege.

When asked Saturday to address the charges against him, Laforest told The Post “I can’t answer that.” When asked what he might do with the $859,000 given to his restaurants, he repeated, “I can’t answer that.”

The SBA was mum, too.

Sanjay Laforest
Sanjay Laforest’s restaurant received federal funding despite him being arrested on May 12 for his alleged role in an embezzlement scheme.
Brian Zak/NY Post

“It is the SBA’s long-time policy spanning multiple administrations to not comment on individual awardees or borrowers,” said spokesman Matthew Coleman.

The SBA released the entire nationwide list of recipients following a Freedom of Information Act filing by the Independent Restaurant Coalition.

Some 101,000 eateries nationwide got money from the Restaurant Relief Fund. But more than 200,000 — 72 percent of applicants — got nothing.

The number of applicants were not parsed by region. But if the nationwide trends held true, more than 10,000 New York City applicants were denied money by the Restaurant Revitalization Fund.

Four NYC-based operations relished the maximum federal feed of $10 million. In addition to Zaro’s, Sweet Hospitality Group, a Broadway theater concessionaire; M & R concessions, a Dunkin’ franchisee that operates at least one coffee shop at JFK International Airport, among other locations; and State of Mind Holdings all fed from the $10 million trough.

Juice generation
Juice Generation got $8.7 million out of the fund.
Annie Wermiel/NY Post

Other high-profile operators, such as Brooklyn Winery and Peter Luger Steakhouse, poured $6.3 million and $5 million, respectively, into their coffers.

Among the outfits at the bottom of the bailout list, Yummy Yummy Chinese Kitchen, a takeout joint in Soundview, Bronx, received $1,900.98. Miss American Pie, a small largely takeout bakery in Park Slope run by the husband-and-wife team of Lindsey and Ryan Hill, received $2,251.36.

A total of 4,652 New York City restaurants, restaurant groups, concessionaires and food manufacturers received funds.

New York City-based businesses benefitted from a total of of $2.4 billion, nearly 10 percent the national total. The outlay was top heavy: 52 operations received $5 million or more; 682 got $1 million or more. More than 1,000 businesses received less than $100,000; 68 less than $10,000.

Dunkin
A Dunkin franchise with at least one store in the JFK airport was one of the businesses to get the maximum amount of funding.
J.C.Rice for NY Post

The average in NYC was $572,000 per recipient: 1,164 got more than average, 3,088 got less than average.

The program was also mired in legal controversy. It was originally intended to aid only women- and minority-owned operations. Three businesses successfully sued the program on the charges it was discriminatory.