The decision comes shortly after Shake Shack was identified in recent media reports as one of multiple large companies with revenue of more than $100 million that obtained loans from the Paycheck Protection Program, which maxed out last week and stopped accepting claims. The $350 billion lending program, a central part of the massive $2.2 trillion stimulus passed last month, is meant to incentivize small businesses to keep people employed through loans that are forgivable if the workers are kept on payroll, according to the Small Business Administration.
But as CNN reported over the weekend, scores of small businesses have had their loan applications rejected while larger companies including restaurant chains, hoteliers and other publicly traded corporations have received amounts in the millions.
In Sunday’s letter, Meyer, Shake Shack’s founder, and Garutti, the CEO, explained the chain initially applied for federal assistance because it qualified under a stipulation that loans could be paid out to any restaurant location with no more than 500 employees. Though Shake Shack has 189 locations, each individual restaurant only employs about roughly 45 people, the letter said.
“The ‘PPP’ came with no user manual and it was extremely confusing,” Meyer and Garutti wrote. “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.”
The burger chain wasn’t the only large restaurant business to benefit from the program, CNN reported. Potbelly Sandwich Shop, Ruth’s Chris steak houses, and Kura Sushi USA, one of the largest sushi chains in the country, among others, all received sizable loans, according to CNN.
Meyer and Garutti said Sunday they were not aware the federal program would be overwhelmed so quickly and acknowledged the outcry stemming from independent businesses that were not able to secure loans. The decision to return the $10 million loan was made immediately after Shake Shack secured separate funding last Friday “needed to ensure our long term stability,” the letter said.
The two executives went on to urge Congress to make sure that moving forward the program is adequately funded, writing, “It’s inexcusable to leave restaurants out because no one told them to get in line by the time the funding dried up.”
“If this health crisis and the associated economic shock has taught us anything, it is that we are all in this together,” Meyer and Garutti wrote. “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.”