Shake Shack plans to return a $10 million loan it received under an emergency small business rescue program, amid a growing backlash against big businesses that got the money before $350 billion in funding lapsed last week.
The burger chain was just one of several large restaurant operators and publicly traded companies that secured tens of millions of dollars in “Paycheck Protection Program” loans before the Trump administration announced Thursday that the funding was exhausted because of the high demand.
Other chains that reported receiving the loans include Potbelly, Ruth’s Hospitality Group, Taco Cabana and J. Alexander’s. The disclosures infuriated small business owners who were unable to get loans in time. The program, which is intended to avert massive layoffs during the coronavirus pandemic, is focused on businesses with fewer than 500 employees but allowed large restaurant operators to also apply.
In a post on LinkedIn, Shake Shack CEO Randy Garutti and Chairman Danny Meyer said the company was fortunate on Friday to raise more capital in the markets — $150 million — and that it planned to return its entire Paycheck Protection Program loan “so that those restaurants who need it most can get it now.” They called on Congress to adequately fund the program, as lawmakers near an agreement on an additional $300 billion.
“Our people would benefit from a $10 million PPP loan, but we’re fortunate to now have access to capital that others do not,” they said. “Until every restaurant that needs it has had the same opportunity to receive assistance, we’re returning ours.”
The ability of major companies to receive funding before smaller businesses has emerged as the latest flashpoint in a program that has left many involved dissatisfied since its hurried launch on April 3.
Garutti and Meyer said the program “came with no user manual and it was extremely confusing.”
If there is concern that the program will not have enough funding again, they suggested sending businesses that have more limited access to outside funding “to the front of the PPP line.”
“It’s inexcusable to leave restaurants out because no one told them to get in line by the time the funding dried up,” they said. “That unfairly pits restaurants against restaurants. This industry rises and falls together.”
Restaurants have been among the businesses hardest hit by the coronavirus pandemic because of stay-at-home orders across the country. On Monday, the National Restaurant Association planned to send a letter to top lawmakers calling for Congress to create a dedicated recovery fund for the industry.