Christ Yoder
Related Articles
Shake Shack is returning $10 million it received from a federal loan program meant to help small businesses amid the ongoing coronavirus pandemic, the popular burger chain said in a statement Sunday.
“Our people would benefit from an investment of $10 million [Paycheck Protection Program] but we are fortunate to now have access to capital that others do not,” company executives Danny Meyer and Randy Garutti wrote in a letter shared on LinkedIn. that every restaurant that needs it has had the same opportunity to receive assistance, we return ours.
The decision comes shortly after Shake Shack was identified in recent media reports as one of several large companies with revenues of more than $100 million that have secured loans from the Check Protection Program of payroll, which peaked last week and is no longer accepting claims. The $350 billion loan scheme, a central part of the massive $2.2 trillion stimulus package passed last month, aims to incentivize small businesses to keep people employed through loans that are forgivable whether workers are kept on the payroll, according to the Small Business Administration.
But as CNN reported over the weekend, dozens of small businesses had their loan applications turned down while larger companies, including restaurant chains, hoteliers and other publicly traded companies, received millions of dollars.
In Sunday’s letter, Meyer, the founder of Shake Shack, and Garutti, the CEO, explained that the chain originally requested federal assistance because it was eligible under a stipulation that loans could be disbursed at n any restaurant with no more than 500 employees. Although Shake Shack has 189 locations, each individual restaurant only employs about 45 people, the letter says.
“The ‘PPP’ came without a user manual and it was extremely confusing,” wrote Meyer and Garutti. “The best chance of keeping our teams working, out of the unemployment line and rehiring our furloughed and laid-off employees, would be to apply now and hope things get cleared up in time.”
The burger chain wasn’t the only major restaurant company to benefit from the program, CNN reported. Potbelly Sandwich Shop, Ruth’s Chris steak house and Kura Sushi USA Inc., one of the nation’s largest sushi chains, among others, have all received large loans, according to CNN.
Meyer and Garutti said Sunday they were unaware the federal program would be overwhelmed so quickly and acknowledged the outcry over independent businesses that were unable to secure loans. The decision to repay the $10 million loan was made immediately after Shake Shack secured separate funding last Friday “necessary to ensure our long-term stability,” the letter said.
The two leaders went on to urge Congress to ensure the program is adequately funded, writing, “It’s inexcusable to leave restaurants out because no one told them to line up before the funding rolls in. dry up.”
“If this health crisis and the associated economic shock have taught us anything, it’s that we’re all in this together,” Meyer and Garutti wrote. “Restaurants and their employees are hungry for when we can safely resume operations and bring our customers back to the table. With the right funding and a few adjustments needed, the PPP program can provide the economic spark that the entire restaurant industry needs to get back into business.”
