Several large restaurants were given multi-million dollar loans as a result of the $349 billion Paycheck Protection Program to help small, struggling businesses amid the coronavirus pandemic. Shake Shack was one of them, but now they are returning the money.
In a Linkedin post, CEO Randy Garutti and chairman Danny Meyer explain their reasoning for doing this. They said:
“Late last week, when it was announced that funding for the PPP had been exhausted, businesses across the country were understandably up in arms. If this act were written for small businesses, how is it possible that so many independent restaurants whose employees needed just as much help were unable to receive funding? We now know that the first phase of the PPP was underfunded, and many who need it most, haven’t gotten any assistance.”
They add, “Shake Shack was fortunate last Friday to be able to access the additional capital we needed to ensure our long term stability through an equity transaction in the public markets. We’re thankful for that and we’ve decided to immediately return the entire $10 million PPP loan we received last week to the SBA so that those restaurants who need it most can get it now.”
Garutti and Meyer also stressed the importance of Congress distributing the money from the fund properly. “We urge Congress to ensure that all restaurants no matter their size have equal ability to get back on their feet and hire back their teams. We are an industry of 660,000 restaurants with nearly 16 million employees. While it is heartening to see that an additional $310 billion in PPP funding is about to be approved, in order to work for restaurants, this time we need to do it better.”
According to the New York Post, many large restaurant chains have taken money that was meant for small business, which is alarming because the small-businesses aid package ran out of money on Thursday. Restaurants that have received funds include Ruth’s Chris Steak House and Potbelly Sandwich Shop.