Shake Shack founder Danny Meyer and chief executive officer (CEO) Randy Garutti said on Monday (April 20) that they are returning the $10 million Paycheck Protection Program (PPP) loan from the federal government that was part of the coronavirus stimulus package.
“We now know that the first phase of the PPP was underfunded, and many who need it most haven’t gotten any assistance,” they said in a letter on LinkedIn. “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.”
Parent company Union Square Hospitality Group (USHG) said it has access to other capital that will help it stay afloat and pay more employees during the pandemic. It also said it is burning through money and facing operating losses of over $1.5 million each week amid the pandemic. Shake Shack has 189 restaurants in the U.S. and employs nearly 8,000 people. USHG has a workforce that tops 2,000 employees.
Shake Shack was one of several restaurant groups and chains with millions in revenue and multiple locations that got money from the PPP. The $349 billion forgivable loan program was part of the CARES Act to help small businesses with under 500 people. The program ran out of money last week, less than two weeks after it started on April 3.
“The PPP came with no user manual and it was extremely confusing. While the program was touted as relief for small businesses, we also learned it stipulated that any restaurant business – including restaurant chains – with no more than 500 employees per location would be eligible,” the letter said.
“There was no fine print, anywhere, that suggested: ‘Apply now, or we will run out of money by the time you finally get in line.’ 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.”
The burger chain’s parent company, Union Square Hospitality Group (USHG), runs several businesses and has about a dozen restaurant brands under its umbrella: Hospitality Quotient, offering operational consulting; Union Square Events for catering and special events; and Enlightened Hospitality Investments (EHI), a growth fund. It has operations in New York, Las Vegas and Washington, D.C.
Other big businesses tapping PPP loans include Ruth’s Chris Steak House, Potbelly and the coal mine operator Hallador Energy.