In an open letter penned by CEO Randy Garutti and Founder/Chairman Danny Meyer, Shake Shack just announced they are returning the $10 million PPP loan they received April 10. In a process that has pitted small businesses against large companies, it seems as though Shake Shack is trying to do the right thing. Here’s what we know so far in this developing story.
Note: We will be updating this story as we get more details.
Related: Big Companies Got Loans Meant For Real Small Businesses And It’s A Slap In The Face
Here’s Why Shake Shack Is Returning Their $10 Million PPP Loan
The Paycheck Protection Program (PPP) was touted as a relief for small businesses, however there has been outrage as the public learned many large companies had received funding while actual small businesses had not.
The open letter, which was posted on LinkedIn by Randy Garutti and Danny Meyer reads, “Restaurants function as the lifeblood of the U.S. economy and the nation’s spirit. The bulk of the over $800 billion that restaurant-goers spend on dining out flows right back into the economy with much of that impact going to the very small businesses this PPP loan was intended to reach. The CARES Act was touted as the largest economic stimulus package in U.S. history and on its initial face, for restaurants, there seemed to be a lot to like in the bill.”
Randy Garutti serves as Shake Shack CEO and Danny Meyer, CEO Union Square Hospitality Group, Founder and Chairman of Shake Shack.
Restaurants And Hotels Currently Get Special Provisions In PPP Loan
While the government-backed PPP loans is only open to small businesses with less than 500 employees, it gives special consideration to restaurants and hotels by allowing them to apply and be approved as long as each location does not employ more than 500 people.
Special consideration to hotels and restaurants has caused massive exploitation of the loan application process and allowed some hotels and restaurants, such as Ruth’s Chris Steak House, to accept multiple multi-million dollar PPP loans by having subsidiaries apply for the loans. Ruth’s Chris Steak House accepted two $10 million PPP loans.
A Maryland hotel company that did more than $1.5 billion in revenue last year has applied for more than 50 loans — and been approved for about 10 so far according to the Orlando Sentinel.
Unfortunately, large companies taking advantage of special considerations in their respective industry meant that America’s real small businesses ended up being the casualties at the end of the day.
Restaurants In America Don’t Employ 500 People Per Location
Shake Shack CEO Randy Garutti continues in the open letter, “Few, if any restaurants in America employ more than 500 people per location. That meant that Shake Shack – with roughly 45 employees per restaurant – could and should apply to protect as many of our employees’ jobs as possible.”
Garutti goes on to explain Shake Shack’s decision to apply for the SBA PPP loans in the letter published on LinkedIn, “The immediate drop in business due to the virus had caused the company to face operating losses of over $1.5 million each week, simply by keeping our doors open with the goal of paying our people and feeding our communities. Our teams have been heroic, pivoting our business to a new curbside pickup and delivery model, while keeping our teams and guests at a safe distance.”
Last Thursday, the Small Business Administration announced that the PPP program exhausted all its funds.
Once it became news that small businesses, sole-proprieters, and self-employed individuals had been rejected for these loans while large companies were accepted for millions, “businesses were understandably up in arms,” Garutti said.
Garutti Says CARES Act Was Not Written For Real Small Businesses
He continues, “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? We now know that the first phase of the PPP was underfunded, and many who need it most, haven’t gotten any assistance.”
“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,” Garutti said.
Due to the additional capital, Shake Shack has made the decision “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.”
Shake Shack is also calling for Congress to make changes to the next round of PPP funding, including funding it adequately, moving small businesses to the front of the line, having small businesses apply at a local bank, and eliminating the arbitrary June forgiveness date.
Congress is expected to approve an additional $310 billion in PPP funding very soon.
We’re All In This Together
The open letter concludes with the following thoughts from Shake Shack CEO Randy Garutti and Danny Meyer, CEO Union Square Hospitality Group, Founder and Chairman of Shake Shack:
“If this health crisis and the associated economic shock has taught us anything, it is that we are all in this together. Restaurants and their employees are craving the moment when we can safely be back in business and bring our guests back to the table. With adequate funding and some necessary tweaks, the PPP program can provide the economic spark the entire industry needs to get back in business. “
“Shake Shack, like all restaurant businesses in America, is doing the best we can to navigate these challenging times. We don’t know what the future holds. Our people would benefit from a $10 million PPP loan but we’re fortunate to now have access to capital that others do not. Until every restaurant that needs it has had the same opportunity to receive assistance, we’re returning ours.“
READ THE OPEN LETTER IN ITS ENTIRETY HERE.
Here’s Why Shake Shack Is Returning Their $10 Million PPP Loan
Shake Shack is returning their $10 million PPP loan to the SBA immediately according to an open letter penned by CEO Randy Garutti and Founder Danny Meyer.
Here’s More on Metroplex Social:
- Mark Cuban, Jerry Jones Drafted By White House To Be On Reopen America’s Dream Team
- Waze Now Lets You Find 30,000 Emergency Food Pantries Near You
- 135 Emergency Foods You Can Get From The Grocery Store
- Dallas County Is Now Requiring Everyone To Cover Their Face In Public
- Texas Is Reopening Their Economy: Here’s What We Know So Far
What do you think? Tell us in the comments.
IRS Sent $1,200 Stimulus Payments To Dead People And I’m Literally Not Surprised Anymore
