Following growing criticism on social media over the weekend, burger chain Shake Shack has decided to return the $10 million small business loan it received from the government as part of the COVID-19 stimulus bill. Restaurateur Danny Meyer, who founded the chain, made the announcement in a letter posted on LinkedIn writing that Shake Shack was returning the loan “so that those restaurants who need it most can get it now.”
Meyer, who co-wrote the letter with Shake Shack CEO Randy Garutti, outlines the company’s reasonings for applying for the loan, including the fact that it seemed like the best way to keep thousands of people working and potentially hiring back furloughed staff members. They also cited the lack of guidelines calling the application process “extremely confusing,” and writing that it was open to restaurants that didn’t have more than 500 workers in one location.
Shake Shack was losing $1.5. million each week after the virus hit the U.S., and applying for the loan was intended to help keep the business open to pay staffers, the letter says.
News came out last week that Shake Shack had received the $10 million loan, and the chain swiftly received criticism — as many small business owners say they’re still waiting for loan applications to be processed and were ultimately unable to access funds. The $350 billion fund ran dry in less than two weeks, with reports of multiple large chains collecting tens of millions of dollars in loans.
The burger chain, which has 280 U.S. locations and 95 international outposts, reported more than $570 million in sales last year, which was up 29 percent from 2018.
Meyer and Garutti said that they didn’t think that the Paycheck Protection Program (PPP) funds would run out as fast as they did. Now, they claim that the chain has received “the additional capital we needed to ensure our long term stability” and no longer need the federal loan.
Meyer’s Union Square Hospitality Group — a separate company that operates top NYC restaurants like Gramercy Tavern, Union Square Cafe, and Marta — did receive loans at some locations. The company, which fired 2,000 employees in mid-March following the coronavirus shutdown measures, will be hiring back laid-off staffers “as soon as possible,” the letter says.
With the federal loan program out of money, small restaurant owners will need to wait for additional stimulus measures. Congress is nearing a deal to add $300 billion to the PPP, though it’s not yet clear if large chains will once again be the beneficiaries of the loans.