Shake Shack is repaying a $ 10 million federal loan after the Paycheck Protection Program that was meant to help small businesses run out of money in less than two weeks of operation. The hamburger chain and other large companies were able to get the money because the program covers any company with fewer than 500 workers in one location.
“Few, if any, restaurants in America employ more than 500 people per location,” said Shake Shack CEO Randy Garutti. wrote in a statement early Monday morning. “That meant the Shake Shack, with approximately 45 employees per restaurant, could and should run to protect as many jobs as possible for our employees.”
But now, the New York-based company “will immediately return the entire $ 10 million PPP loan we received last week to the SBA so that the restaurants that need it most can get it now,” Garutti said.
Shake Shack employs nearly 8,000 people at its 189 US restaurants, but only about 45 at each location. Its revenue for the first quarter of 2020 was $ 143 million, reflecting a sharp drop in same-store sales compared to March 2019. The company, which has $ 104 million in cash and liquid assets, says he has taken out other loans to cover the money that would have come from the SBA.
When Garutti announced the repayment of the loan, he also criticized the APP system, calling it “extremely confusing.”
Listing ways to improve the system, Garutti said the government should start by adding more money.
“It’s unforgivable to keep restaurants out because no one told them to line up for when the funds ran out,” he said.
The APP system should also link each restaurant to a local bank, he said, adding that “too many restaurants have been left out of the program simply because they lacked a pre-existing banking or credit relationship.”
The PPP loan program is scheduled to run through June 30, a time frame that Garutti says is too arbitrary.
Noting the different COVID-19 peak times and infection rates being seen in different parts of the U.S., Garutti said a better plan would be to require companies to rehire a percentage of their employees within of the six months after the reopening of their local economies. .
Several publicly traded companies are benefiting from the federal loan program, which essentially offers free money to businesses during the coronavirus crisis: Loans are forgiven if borrowers spend most of the funds on payroll and withholding. employees. Other high-profile loan recipients range from Ruth’s Chris Steak House at Potbelly Sandwich Shop. But many independently owned companies said they were left out after the aid program hit its $ 349 billion cap late last week.
The majority of PPP loans (74%) were for less than $ 150,000, according to the Small Business Administration. But that represents only 17% of the total money disbursed through the program. Almost 28% of the money was awarded to companies seeking loans of $ 2 million or more.
The food and lodging services industry accounted for approximately 9% of all approved APP funds – $ 30.5 billion. The leading sector was construction (13%), which accounted for about $ 45 billion.
Copyright 2021 NPR. To see more, visit https://www.npr.org.