Shake Shack Returns $10M They Got As Govt. Loan So Restaurants That Need It Most Get It

Shake Shack Returns $10M They Got As Govt. Loan So Restaurants That Need It Most Get It

"Until every restaurant that needs it has had the same opportunity to receive assistance, we’re returning ours," Shake Shack wrote.

Image Source: Wikimedia Commons/ By Paul Sableman - Shake Shack, CC BY 2.0

Shake Shack announced Sunday night that it’s returning the $10 million loan it received from the Paycheck Protection Program as part of the $349 billion coronavirus relief package. Shake Shack is one of the several large restaurant chains that got federal loans through the coronavirus stimulus law meant to help small businesses, reports NBC News. The decision to return funds comes after the Paycheck Protection Program,  or PPP, which is overseen by the Small Business Administration, ran out of funds last week. The burger company based out of New York is one of several companies with annual revenues in the hundreds of millions to have received funds from PPP.


It is understood that the loan program had initially set aside $349 billion in the stimulus law called the CARES Act to help small businesses pay their workers. However, in less than two weeks from the start, the program ran out of money. In an open letter via LinkedIn,  Danny Meyer- founder & CEO of Shake Shack, and Randy Garutti- CEO, explained why they were returning the loan. "Our people would benefit from a $10 million PPP loan but we’re fortunate to now have access to capital that others do not. Until every restaurant that needs it has had the same opportunity to receive assistance, we’re returning ours," they wrote.


They also criticized the funds they received. "The 'PPP' came with no user manual and it was extremely confusing," they wrote. They also added that the decision to return the loan came after they learned that the funds were exhausted and that several independent restaurants hadn't received their share yet. "We now know that the first phase of the PPP was underfunded, and many who need it most, haven’t gotten any assistance. 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."


They also shared, "If this health crisis and the associated economic shock has taught us anything, it is that we are all in this together. Restaurants and their employees are craving the moment when we can safely be back in business and bring our guests back to the table. With adequate funding and some necessary tweaks, the PPP program can provide the economic spark the entire industry needs to get back in business. Shake Shack, like all restaurant businesses in America, is doing the best we can to navigate these challenging times. We don’t know what the future holds."


Meanwhile, billionaire entrepreneur Mark Cuban said on Monday that publicly traded companies like Shake Shack are just damaging their reputation by trying to access money meant for small businesses. “Shake Shack didn’t give the money back because they didn’t want the money,” Cuban said on CNBC’s “Fast Money.” “They saw what the public outcry was.” He added, ”you’re going to kill your brand" for taking money out of the program. “There’s so many different ways to approach it. They don’t need to take money that should be available to really small businesses,” he said. 


Several small business owners are expressing their anger over the issue, reports WIVB. Ruhel Islam, owner of a restaurant in Minneapolis says he applied for a six-figure loan but got nothing. “I believe bigger restaurants had better systems for dealing with this, while we were just working hard to keep our doors open. They have people to navigate this for them, while we had to do it ourselves, and I think that’s why they were ahead of us in terms of applying for loans,” Islam said.  Colin McIntosh, founder of a Denver, Colorado, bedding company Sheets & Giggles, is also angry that he applied for the loan program promptly but came up empty. 


“I am frustrated at the amount of time and work I did making sure we were ready to go. I even paid my [chief financial officer] to help us with this,” he said. “To spend valuable time and money on the application and to then get nothing is really a punch in the gut.” Other small business owners are furious, too. Adriana Carrig, owner of a Caldwell, New Jersey jewelry company Little Words Project, applied for a $140,000 but she didn't get it, either. “I applied the second the program opened and uploaded my documents when I was asked to,” Carrig said.  “It was enraging to see that places like Ruth’s Chris and Potbelly received millions of dollars that should have gone to true small business owners,” she added. 


Disclaimer : This is based on sources and we have been unable to verify this information independently.

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