Shake Shack announced it will be returning the $10 million federal loan it received that was intended for small businesses.
The fast-casual burger chain received the money from the Paycheck Protection Program, which set aside $349 billion to help small businesses pay their workers during the coronavirus pandemic.
The program stipulates that if businesses bring back their furloughed and laid-off workers by June, the loans will be forgiven.
The PPP started less than two weeks ago, and has already run out of money.
Shake Shack announced it had furloughed or laid off more than 1,000 employees. The chain also said it has $112 million cash on hand and is spending between $1.3 million and $1.5 million per week. Shake Shack has 189 locations in the United States, and in a statement, Danny Meyer, Shake Shack founder and CEO of Union Square Hospitality Group, and Shake Shack CEO Randy Garutti said they applied for a loan because they were open to any individual restaurant with no more than 500 employees.
The PPP came with no user manual and it was extremely confusing, Meyer and Garutti said. Because Shake Shack and Union Square Hospitality Group had already furloughed and laid off workers, they 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.
Meyer and Garutti said they will immediately return the entire $10 million, now that they are aware the first phase of the PPP was under funded and many who need it most haven’t gotten any assistance.
They called on Congress to do something to make sure all restaurants, no matter their size, have equal ability to get back on their feet and hire back their teams.