Shake Shack, an American fast-casual restaurant chain, has reportedly announced that the company will return the USD 10 million business loan it received from the American government. Shake Shack is one of the numerous large restaurant chains that received federal loans through the coronavirus stimulus law intended to aid small businesses in the nation.
The company was awarded with a USD 10 million loan as part of the PPP (Paycheck Protection Program). With this move, the burger chain has become the first major firm to return money provided to help businesses during this pandemic.
The USD 349 billion stimulus package which was specifically rolled out to aid small businesses in the nation is already running out of funding. The burger chain is among several companies with annual revenues in hundreds of millions and reported to have obtained money through this program.
In the joint statement, Danny Meyer, CEO of its parent company, Union Square Hospitality Group, and Randy Garutti, CEO of Shake Shack said that the company opted for the loan as the law was open to any restaurant location with an employee count of less than 500 — which describes the company’s 189 individual American restaurants. However, after securing separate funding last week, the company had decided to instantly return the entire USD 10 million so restaurants that require it more can get it.
US SBA (Small Business Administration) is a vital part of the government’s USD 2.2 trillion packages aimed at aiding small companies to keep paying their workers and basic bills during the lockdown.
As per the reports, over 25% of the total USD 350 billion funds granted to less than 2% of the companies that got relief comprising several publicly traded companies with millions of dollars in annual sales and thousands of employees. This has led to a backlash from smaller businesses and mom-and-pop restaurants, one of the most affected sectors as diners stay at house due to lockdowns.