The Shake Shack restaurant chain will return its government loan meant to help small businesses through the Chinese coronavirus pandemic, the company said Monday.
“The New York-based burger company is among more than a dozen companies with annual revenues in the hundreds of millions that are reported to have received money from the Paycheck Protection Program, or PPP,” according to NBC News.
Sunday, Danny Meyer, Shake Shack’s founder and CEO of its parent company, Union Square Hospitality Group (USHG), and the chain’s CEO, Randy Garutti, said they pursued the loan because it was open to any restaurant location with no more than 500 employees.
The stipulation described the chain’s 189 individual U.S. restaurants, the report noted.
Shake Shack’s statement continued:
For Union Square Hospitality Group, the decision as to whether or not to apply for PPP loans was more complicated. All USHG restaurants closed as of March 13th, and with no revenue, the company was forced to lay off over 2000 employees.
Since the PPP loans would be forgivable only if employees were hired back by June, and since most USHG restaurants are based in New York City where that timeline is unlikely achievable for full service restaurants, that application decision relied upon our conviction that one day we would be able to pay back the loan.
After careful consideration, USHG opted to apply for PPP loans, taking on the risk in order to hire back laid off employees as soon as possible. Some USHG loans have been funded, and we await the day we’re able to re-open.
March 27, President Trump signed the approximately $2 trillion CARES Act, which set aside $349 billion to help small businesses keep their employees on the payroll.
However, the PPP ran out of money on Thursday, according to Breitbart News.
“If this act were written for small businesses, how is it possible that so many independent restaurants whose employees needed just as much help were unable to receive funding?” the statement noted.
“We now know that the first phase of the PPP was underfunded, and many who need it most, haven’t gotten any assistance,” it added.
Last week, Senate Majority Leader Mitch McConnell (R-KY) tried to replenish the program with $251 billion in additional funding by unanimous consent.
That effort was effectively blocked by Democrats who wanted additional funding for local governments and hospitals, Breitbart News reported.
Despite the failure to replenish the program, Shake Shack accessed the capital it needed on Friday “to ensure our long term stability through an equity transaction in the public markets.”
“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,” the statement concluded.
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