The COVID-19 pandemic has had a significant impact on the restaurant industry, with many restaurants experiencing reduced revenues and forced to close their doors. To help these businesses weather the storm, the Employee Retention Credit (ERC) was created as part of the CARES Act. This refundable payroll tax credit encourages employers to keep employees on the payroll, even if they aren’t working during the covered period due to the pandemic.

Eligibility for the ERC

To be eligible for the ERC, a restaurant must have experienced either a full or partial suspension of operations due to a governmental order related to COVID-19, or a significant decline in gross receipts. The ERC is available for wages paid to employees during the period of the suspension or decline in gross receipts.

In addition, the ERC is available for businesses with 500 or fewer employees. This means that even smaller restaurants and franchises may be eligible for the credit.

Calculating the ERC

The ERC is equal to 50% of qualified wages paid to employees during the covered period. Qualified wages are those that are paid to an employee for time that the employee is not providing services due to the pandemic.

Claiming the ERC

To claim the ERC, restaurants will need to file a tax return and complete Form 5884-C, Employee Retention Credit for Employers Affected by COVID-19. They will also need to provide supporting documentation, such as payroll records and copies of any governmental orders that led to the suspension of operations or decline in gross receipts.

It’s important to note that the ERC is a refundable credit, which means that if the credit exceeds the amount of tax you owe, you may receive a refund for the excess amount. The ERC is available for tax years 2020 and 2021.


The ERC is a valuable resource for restaurants that have been affected by the COVID-19 pandemic. Do you have questions regarding how the ERC Tax Credit program works? Contact us for a complimentary consultation.