2 Beloved Small Restaurants Receive Verizon LISC Small Business Recovery Fund Grants

Pedro Contreras is fighting hard to prevent COVID-19 from killing the business dream he has lived since he was 22.  So far, Pedrito’s Mexican Food in downtown Mesa is still standing after absorbing the pandemic’s sucker punches to the economy — the cancellation of spring training on March 12, a big revenue generator for local businesses; a series of executive orders that effectively shut-down non-essential businesses, including dine-in restaurant service; a historic surge in unemployment claims.

“Hopefully, this ends soon,” Contreras said. “Before this problem, I’m OK. Business is good. … It’s hard for me.”

Verizon has made things a little easier for Contreras.

Pedrito’s on Mesa’s Main Street and The Refuge Café in Phoenix received $10,000 grants from the Verizon LISC Small Business Recovery Fund. They were among the 55,000 applicants for the first round of grants focused on historically underserved communities. A second round of recovery fund grants is underway.

The $7.5 million fund helps small businesses reach the other side of the pandemic by helping to cover basic business costs such as rent, insurance, utilities and payroll.

“What this is supposed to do is stop the hemorrhaging,” said John Strawn, general manager of The Refuge Café, a social enterprise business affiliated with Catholic Charities Community Services. The grant will help absorb the pay costs of a skeleton crew of two people and help sustain the café, a Melrose District community hub that is closed temporarily because of COVID-19.

“This is going to help us move forward,” Strawn said.

The Verizon LISC grant was a relatively easy process compared to the technical, bureaucratic and other highly publicized problems associated with the Small Business Administration’s special COVID-19 responses, such as Paycheck Protection Program loans. But both restaurants received support in applying for the grant: Catholic Charities assisted The Refuge and LISC Phoenix partner RAIL Mesa provided technical assistance to Pedrito’s.

The cash also gives Pedrito’s and The Refuge breathing room to innovate in the current economic reality of a pandemic and to adjust business plans for the new normal when the public health crisis ends.

Contreras has been through massive disruption before. His restaurant had moved six times throughout the Valley before settling in 2012 at the current location at Country Club Drive and Main Street. Enticing construction workers with special deals and aguas frescas and connecting with the community where he lives helped him push through business challenges.

Pedrito’s survived three years of Valley Metro Light Rail construction and is now a mainstay on Main Street — a solid business open 14 hours most days and employing three people. COVID-19 changed everything almost overnight.

Once again, Contreras, who has worked in restaurants since he was 17, adjusted to disruption with grit and ingenuity. A drive-through window has proved hugely important during a time when stay-home orders ban dine-in service at restaurants. Contreras also recently signed with two companies for food delivery. That’s something he hadn’t thought to do before COVID-19.

Congressman Greg Stanton said Pedrito’s is doing what we’ve come to expect of small businesses.

“You often hear that 'small businesses are the backbone of our economy,' and we're seeing what that really means right now--the role that Main Street plays in shaping our neighborhoods and making our community great has never been more evident,” Stanton said.

“So many small and local businesses across Arizona are fighting right now — fighting to keep their employees paid and their doors open. Congress is doing a lot to get relief to business owners, but we're grateful that LISC and others are also stepping up to help keep small businesses like Pedrito's alive.”

At a Phoenix City Council policy session on April 28, Christine Mackay, Phoenix economic development director, spoke of the liquidity crisis that small businesses are experiencing and how that impacts the economic landscape.

Among the state’s ultra-small businesses (companies with fewer than 30 employees), Mackay said, two-thirds will not receive SBA PPP loan or Economic Injury Disaster Loan funds; these companies represent 1.1 million vulnerable jobs over the next three months — 36 percent of all jobs in Arizona.

“Unfortunately, … we estimate that 20 to 25 percent of Phoenix small businesses won’t exists when this pandemic is over,” Mackay said.

Phoenix City Councilwoman Laura Pastor expressed concern about the impact of losing small businesses several days before Mackay’s presentation.

“Small businesses are an integral part of what makes Phoenix special,” Pastor said. “They directly stimulate our economy, add character to our neighborhoods and help connect communities.”

The Refuge Café is in Pastor’s council district. The coffee shop and wine bar is heavily involved in the Melrose District and it’s a hotspot for central Phoenix networking. Like Pedrito’s, The Refuge is within the light-rail corridor.

“You see the people who come here, they are social-forward and thoughtful people, ”Strawn said. “They go (to The Refuge) for that reason. … It’s a beautiful thing. It’s a wonderful thing.”

The Refuge brand is not just a café. It also has a coffee wholesale component that supports the social enterprise mission.

As a social enterprise, losing money at the café takes on an entirely new meaning.  The Refuge is a for-profit business that supports nonprofit work in the community.

“When The Refuge loses money that means Catholic Charities loses money and that means we are not able to fulfill our mission in regards to outreach and helping people – veterans, refugees, foster kids, victims of domestic abuse,” Strawn said. “What we need to do is use this social enterprise to create sustainability for the social enterprise and then move forward from there.”

Steve Capobres, vice president of business development at Catholic Charities, said because The Refuge is a for-profit business, not a nonprofit, it’s usually not eligible for financial support from charitable giving. Grant sources that help support smaller businesses are very competitive and harder to come by, he said.

Capobres also appreciated that the Verizon LISC grant process didn’t add too much additional burden to already struggling businesses.

“I appreciate the fact that they made it extremely easy because that’s not normally the case,” Capobres said. “Even grants as small as $10,000 sometimes can be extremely complicated. Especially when you’re trying to run a business and do your work, that’s the last thing you want to do is spend an entire day writing narratives. … We’re just thrilled that we’re able to get this kind of support and keep what we’re trying to do going.”