Burger giant Shake Shack plans to return $10 million it received from a government loan program meant to protect small businesses during the coronavirus crisis.
The New York-based fast food chain was one of several large restaurant companies that got a multi-million-dollar loan through the Trump administration’s $349 billion Paycheck Protection Program aimed at helping struggling small firms pay workers amid the pandemic. Many merchants were left waiting for a lifeline when the program ran out of money last week.
Shake Shack decided to return its loan because it found a way to raise money through a public stock transaction instead, CEO Randy Garutti and chairman Danny Meyer said Sunday. They urged Congress to put more money into the program and prioritize businesses with limited access to outside funds.
“It’s inexcusable to leave restaurants out because no one told them to get in line by the time the funding dried up. That unfairly pits restaurants against restaurants,” Garutti and Meyer said in a LinkedIn post. “This industry rises and falls together.”
More than a dozen big publicly traded firms like Shake Shack — which has 189 US restaurants and nearly 8,000 employees — got PPP loans, even though the program was targeted at businesses with up to 500 workers, according to Bloomberg News.
Others included coal-mining company Hallador Energy, cruise operator Lindblad Expeditions and the firms behind Potbelly Sandwich Shop and Ruth’s Chris Steak House, the news agency reported Sunday.
Shake Shack decided to apply for a PPP loan because chains were eligible for funding if each location had fewer than 500 workers, Meyer and Garutti said.
Union Square Hospitality Group, Meyer’s restaurant conglomerate that helped start Shake Shack, also sought money after closing its eateries and laying off more than 2,000 people, they said.
“The ‘PPP’ came with no user manual and it was extremely confusing,” Garutti and Meyer wrote. “The best chance of keeping our teams working, off the unemployment line and hiring back our furloughed and laid off employees, would be to apply now and hope things would be clarified in time.”
House Speaker Nancy Pelosi said Sunday that Congress was “very close” to reaching a deal for more small-business loan money. Republican lawmakers have been pushing for an additional $251 billion for the program.