Shake Shack Returns $ 10 Million Coronavirus Relief Loan For Small Businesses

Following increasing reviews on social networks on weekends, chain of burgers Shake Shack decided to repay the $ 10 million small business loan it received from the government under the COVID-19 stimulus bill. Restorer Danny meyer, who founded the chain, announced in a letter posted on LinkedIn that Shake Shack was repaying the loan “so restaurants that need it most can get it now.”

Meyer, who co-wrote the letter with the CEO of Shake Shack Randy Garutti, describes the company’s motivations for applying for the loan, including how it seemed like the best way to keep thousands of people working and potentially rehire staff on leave. They also cited the lack of guidelines calling the application process “extremely confusing” and writing that it was open to restaurants that had no more than 500 employees in one location.

Shake Shack was losing $ 1.5. million every week after the virus hit the United States, and the loan request was to help keep the business open to paid employees, the letter said.

Last week it became known that Shake Shack had received the $ 10 million loan, and the chain quickly received criticism – as many small business owners say they are still waiting for loan applications to be processed and were ultimately unable to access funds. The $ 350 billion fund ran out in less than two weeks, with reports of several major chains raising tens of millions of dollars in loans.

The burger chain, which has 280 locations in the United States and 95 international outposts, reported more than $ 570 million in sales last year, a 29% increase from 2018.

Meyer and Garutti said they didn’t think Paycheck Protection Program (P3) funds would run out as quickly as they did. Now, they say the channel has received “the extra capital we needed to ensure our long-term stability” and no longer needs the federal loan.

Meyer’s Union Square Hospitality Group – a separate company that operates New York’s top restaurants like Gramercy Tavern, Union Square Cafe, and Marta – has received loans in some locations. The company, which laid off 2,000 employees in mid-March following the coronavirus shutdown measures, will hire laid-off staff “as soon as possible,” the letter said.

With the federal loan program strapped for cash, small restaurateurs will have to wait for additional stimulus. Congress is on the verge of closing a deal to add $ 300 billion to the PPP, although it is not yet clear whether the big chains will again be the beneficiaries of the loans.

Comments are closed.