Shake Shack has decided not to accept a $10 million loan from the government through an emergency program designed to help businesses pay workers and stay open during the coronavirus pandemic.
Shake Shack, a New York-based burger chain, is one of many companies bringing in hundreds of millions of dollars annually that received financial assistance from the $349 billion Paycheck Protection Program, which has already run out of money.
The restaurant’s CEO, Randy Garutti, and Chairman Danny Meyer announced their decision to give back the funding in an open letter on Sunday.
“Shake Shack was fortunate last Friday to be able to access the additional capital we needed 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,” their statement said.
“We urge Congress to ensure that all restaurants no matter their size have equal ability to get back on their feet and hire back their teams,” they added. “We are an industry of 660,000 restaurants with nearly 16 million employees. While it is heartening to see that an additional $310 billion in PPP funding is about to be approved, in order to work for restaurants, this time we need to do it better.”
The program includes the opportunity for loan forgiveness if the recipients rehire furloughed and laid-off workers by June.
Shake Shack and its parent company Union Square Hospitality Group initially applied for the loan knowing 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,” Garutti and Meyer wrote.
USHG is based mostly in New York, where it appears unlikely that the restaurant business would return to normal by June.
Both the White House and Democratic congressional leaders have expressed optimism in that they will be able to come to a deal on funding for the PPP for small businesses.
