Shake Shack to return $10M small business loan
The burger chain Shake Shack says it has obtained new funding and will return a small-business loan it got to help weather the coronavirus crisis.
Shake Shack has laid off or furloughed hundreds of its employees and needed the assistance, its CEO Randy Garutti and its founder Danny Meyer said in a statement seen Monday.
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But the company was able to get extra funding late last week through an “equity transaction” and decided to “immediately return" the $10 million paycheck protection loan it obtained through the CARES Act.
It said, “we’re fortunate to now have access to capital that others do not. Until every restaurant that needs it has had the same opportunity to receive assistance, we’re returning ours."
The letter said shutdowns due to the coronavirus pandemic threaten $800 billion in U.S. restaurant spending and are a severe challenge to both Shake Shack and to Meyer's Union Square Hospitality Group.
Pedestrians walk past an American fast casual restaurant chain, Shake Shack store in New York City. (Photo Illustration by Alex Tai/SOPA Images/LightRocket via Getty Images)
Shake Shack has 189 restaurants in the U.S. that employ nearly 8,000 people. It said it is still operating many outlets while closing its dine-in facilities. Union Square Hospitality Group, with more than 2,000 employees, suspended its business in March. Like many big companies, both qualified for the government loans, the statement said, because their outlets employ fewer than 500 workers each.
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Funding for the small-business loans has fallen far short of what is needed. The Trump administration and Congress expect an agreement Monday on an additional aid package of up to $450 billion to boost the small-business loan program that has run out of money and add funds for hospitals and COVID-19 testing.
“We urge Congress to ensure that all restaurants no matter their size have equal ability to get back on their feet and hire back their teams," Garutti and Meyer said. “Fund it adequately. It’s inexcusable to leave restaurants out because no one told them to get in line by the time the funding dried up. That unfairly pits restaurants against restaurants."