Shake Shack announced on Sunday that it is returning its $10m federal loan. This burger chain that got the loans thanks to the Coronavirus stimulus laws, but the loans were mainly aimed at small businesses.
One of the dozen odd companies with annual revenues in the hundreds of millions to receive loans as part of the PPP, the chain received $10m as part of the CARES Act, which aimed to give small businesses money to keep their workers on the payroll. Within two weeks of being started, the PPP’s $349m budget has been depleted.
Founder of Shake Shack and CEO of its parent company Union Square Hospitality Group, Danny Meyer and Shake Shack CEO Randy Garutti released a LinkedIn statement stating that the only reason they had pursued the loan was that it stipulated eligibility to be a business with more than 500 employees, which was met because of Shake Shack’s 189 restaurants in the US.
“The ‘PPP’ came with no user manual and it was extremely confusing,” they wrote.
Shake Shack had furloughed hundreds of its employees and availed the loan because it said that the loan would be forgiven if companies rehired furloughed employees by June.
Apparently, it was a gamble, “the best chance of keeping our teams working, off the unemployment line and hiring back our furlough-ed and laid off employees, would be to apply now and hope things would be clarified in time.”
But now, as the fund dried up so quickly, they have decided to return it so that places that need it more can get it.
Stating that every restaurant irrespective of size deserved the help to get back on its feet, the duo stated that till that is not happening, they are returning their share.
“We now know that the first phase of the PPP was underfunded, and many who need it most, haven’t gotten any assistance,” Meyer and Garutti wrote.