Shake Shack Returning $10 Million Government Loan Meant for Small Businesses
Shake Shack was among the businesses that received funds as part of the CARES Act passed by Congress
Shake Shack is returning a $10 million loan it received from the U.S. government as part of an emergency plan to help small businesses survive amid the coronavirus pandemic.
The New York-based fast-food restaurant received the loan as part of the Paycheck Protection Program (PPP), which had set aside $349 billion in the stimulus law called the CARES Act to help small businesses keep their workers on payroll. The program ran out of money last week.
The Shake Shack decision comes after backlash, with some criticizing large restaurant chains for receiving money from the package, which was intended to be for businesses with fewer than 500 employees.
On Monday, Shake Shack CEO Randy Garutti and chairman Danny Meyer explained in an open letter on LinkedIn about why they’d returned the $10 million loan.
“Shack 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,” the pair said. “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 company has around 189 restaurants in the United States and nearly 8,000 employees total, Garutti and Meyer said.
The pair said they had frustrations with the PPP, writing that the program “came with no user manual and it was extremely confusing.”
Garutti and Meyer also suggested that businesses with limited access to outside funding be sent “to the front of the PPP line.”
“It’s inexcusable to leave restaurants out because no one told them to get in line by the time the funding dried up,” they said. “That unfairly pits restaurants against restaurants. This industry rises and falls together.”
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With the PPP out of funds, Garutti and Meyer called on Congress to contribute financial assistance toward the program.
“With adequate funding and some necessary tweaks, the PPP program can provide the economic spark the entire industry needs to get back in business,” they wrote.
Restaurants are among the businesses hit hardest amid the coronavirus pandemic due to strict stay at home orders, which officials have recommended to help combat the spread of COVID-19.
According to Forbes, it’s been reported that other major, nationwide chains like Potbelly had received funds from the PPP, but smaller restaurant owners were denied. Among those, was D.C. bakery DC Sweet Potato Cake, CNN reported.
“It’s a reminder to small businesses that our voices are dampened,” co-owner April Richardson told CNN. “What are we doing this for? Why are we in business just to be told we’re not good enough because we’re not big enough?”
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