Shake Shack is returning a $10 million small-business loan it received as part of the federal coronavirus stimulus package, one of several companies that received the funds despite annual revenue of hundreds of millions of dollars.
Shake Shack founder Danny Meyer, who also serves as CEO of parent company Union Square Hospitality Group, and CEO Randy Garutti said in a statement that the company sought the loan because it was said to be open to any restaurant with 500 or fewer employees, which applies to the chain’s individual locations.
“The ‘PPP’ [Paycheck Protection Program] came with no user manual and it was extremely confusing. Both Shake Shack (a company with 189 restaurants in the U.S., employing nearly 8,000 team members) and Union Square Hospitality Group (with over 2,000 employees) arrived at a similar conclusion,” the two wrote on LinkedIn. “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.”
The two added that they did not know the federal funds for small businesses would be exhausted so quickly and have since secured separate funding. As a result, they wrote, they will make the $10 million loan available to restaurants that need it more.
“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, calling on Congress to “ensure that all restaurants no matter their size have equal ability to get back on their feet and hire back their teams.”
The two made numerous suggestions for improving the loan program, including adequate funding, assigning a local bank to each restaurant applying for the loan and doing away the June deadline for businesses to have their loans forgiven if they have brought back furloughed workers.
“This virus has moved in waves with a different timeline in different parts of our country,” they wrote. “Instead, make all PPP loans forgivable if an adequate number of employees are rehired by a minimum 6 months following the date that a restaurant’s state (or city) has permitted a full reopening to the public.”