Posts tagged with "Stimulus check"

Shake Shack to return $10 million government loan

April 21, 2020

Executives at the popular burger chain Shake Shack announced on April 20 that they planned to return the $10 million government stimulus loan the company had received through the Paycheck Protection Program, ABC News reported.

“The ‘PPP’ came with no user manual and it was extremely confusing,” Danny Meyer, the CEO of parent company Union Square Hospitality Group, and Randy Garutti, the CEO of Shake Shack, said in a joint statement, adding that, “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. “

That meant that The Shake Shack, which is not a truly small business, would qualify. The chain employs a total of about 8,000 workers at its 280 fast casual restaurants in the United States and 95 restaurants abroad, but only about 45 workers at each of its locations.

“We cheered that news,” the CEOs said, “as it signaled that Congress had gotten the message that as both as an employer, and for the indispensable role we play in communities, restaurants needed to survive. 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.”

Shake Shack and Union Square Hospitality Group (USHG) thought “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,” they explained.

After all, Shake Shack’s operating losses have totaled over $1.5 million per week since the lockdown began—and USHG has been forced to lay off more than 2,000 employees.

However, Meyer and Garutti said, “We now know that the first phase of the PPP was underfunded, and many who need it most, haven’t gotten any assistance.”

Therefore, Shake Shack management has made the decision to return the check so that the money can be made available to companies that need it even more.

What’s more, Meyer and Garutti did not stop with sending back the stimulus check. “We urge Congress,” they said in their release, “to ensure that all restaurants, no matter their size, have equal ability to get back on their feet and hire back their teams. 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.”

They also have outlined three steps that the government should take to help keep restaurants on their feet:

  • Fund it adequately. It’s inexcusable to leave restaurants out because no one told them to get in line by the time the funding dried up. That unfairly pits restaurants against restaurants. This industry rises and falls together. And if there is a concern that once again the government will have not allocated adequate funding, then send business to the front of the PPP line which has more limited access to outside funding.
  • Assign to each applying restaurant a local bank that will be responsible for executing the loan assuming the restaurant has satisfied eligibility requirements. Too many restaurants have been left out of the program simply because they lacked a pre-existing banking or loan relationship.
  • Eliminate the arbitrary June forgiveness date for PPP loans. This virus has moved in waves with a different timeline in different parts of our country. Instead, make all PPP loans forgivable if an adequate number of employees are rehired by a minimum six months following the date that a restaurant’s state (or city) has permitted a full reopening to the public.

In summary, the Shake Shack’s management said, “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.”

Research contact: @ABC