With the Paycheck Protection Program already out of money, the hipster burger chain says other restaurateurs need its loan more than it does.
Shake Shack founder Danny Meyer and CEO Randy Garutti announced that the company has been able to access additional capital and will return the $10 million it was granted through the CARES Act.
Shake Shack, one of several large restaurant chains that got federal loans through the coronavirus stimulus law meant to help small businesses, said Sunday night that it is giving all $10 million back.
The New York-based hipster-favorite 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. The loan program set aside $349 billion in the stimulus law called the CARES Act to help small businesses keep their workers on the payroll. Less than two weeks after it started, the program has already run out of money.
In a statement Sunday night on LinkedIn, Danny Meyer, Shake Shack’s founder and CEO of its parent company, Union Square Hospitality Group, and Randy Garutti, Shake Shack’s CEO, said the company pursued the loan because the law stipulated that it was open to any restaurant location with no more than 500 employees — which describes Shake Shack’s 189 individual U.S. restaurants.
“The ‘PPP’ came with no user manual and it was extremely confusing,” they wrote.
The program offered to forgive the loans if recipients rehired furloughed and laid-off workers by June, and because Shake Shack and its parent company had already furloughed hundreds of employees, they said, they gambled that “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.”
But they said they had no idea the fund would dry up so quickly, so after they were able to secure separate funding last week, “we’ve decided to immediately return the entire $10 million” so restaurants that “need it most can get it now.”
“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, urging Congress to ensure that “all restaurants no matter their size have equal ability to get back on their feet and hire back their teams.”
“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 wrote. “Until every restaurant that needs it has had the same opportunity to receive assistance, we’re returning ours.”