After taking some heat, Shake Shack decides to return federal loan money—which not all large chains are willing to do.
Many small businesses have not been able to access the Paycheck Protection Programme (PPP), which are crucial federal government loans intended to help maintain staff wage responsibilities during restaurant and store closures.
According to Bloomberg, Shake Shack was one of the larger chains that managed to successfully apply for financial assistance under the PPP before it was depleted. However, after raising capital from the private sector the company chose to return the $10 million loan. “until every restaurant that needs it has had the same opportunity to receive assistance, we’re returning ours,” CEO Randy Garutti posted in a statement.
We will be returning our Paycheck Protection Program loan. More information from our founder @dhmeyer + CEO @randygarutti here: https://t.co/gXNsO1RfKf pic.twitter.com/tMtVNlY6ou
— SHAKE SHACK (@shakeshack) April 20, 2020
Numerous independent business specialists have noted that PPP is not adequately funded and that it’s forcing restaurants to compete with each other for emergency aid.
Shake Shack initially came under fire for accessing the funds along with other larger businesses. Although, companies like Potbelly and Ruth’s Chris have been able to receive funding by applying through subsidiaries and not the main group ownership, meaning they fall under the employee limit and therefore qualify as a “small business” within the PPP criteria.
The combination of insufficient funding and difficult access to PPP has meant there are many independent restaurants and cafés struggling in Los Angeles. Those that are still running, rely on delivery orders and takeout customers.
Features image: Jason Jiewen Deng