Shake Shack, the popular burger chain with almost 250 locations globally, announced early Monday morning that it would be returning a $10 million small business loan it had accepted from the government earlier this month.
The company, along with several other large organizations, faced backlash after accepting money from the Paycheck Protection Program, or PPP, that was originally created to help small businesses keep workers on the payroll during the coronavirus pandemic.
Just after midnight, Shake Shack's official Twitter account announced the company would be giving back the loan.
"We will be returning our Paycheck Protection Program loan," Shake Shack tweeted, adding a link to a statement from its founder, Danny Meyer, and Shake Shack CEO Randy Garutti.
"Shake Shack was fortunate last Friday to be able to access the additional capital we needed to ensure our long term stability through an equity transaction in the public markets," Meyer and Garutti explained in a joint statement posted on LinkedIn. "We’re thankful for that and we’ve decided to immediately return the entire $10 million PPP loan we received last week to the SBA so that those restaurants who need it most can get it now."
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Shake Shack originally accepted money from the plan which started on April 3. The loan was available to restaurants with fewer than 500 employees, which made the New York-based burger chain's 189 individual U.S. locations eligible. A week after receiving the loan, however, Shake Shack laid off or furloughed 1,000 employees at its restaurants and corporate office.
Shake Shack, along with companies like Ruth's Chris Steak House and Potbelly Sandwich Shop that make hundreds of millions annually, were criticized for accepting such large government-backed loans when thousands of small businesses without the same access to outside funding received nothing.
In its defense, Shake Shack said the rules of the PPP were "extremely confusing" and that they had no idea that the $349 billion loan program would run out so quickly. The $10 million will be returned to the government program, however it will not be available to other small businesses until congress authorizes the release of more money.
Like many other restaurants affected by the coronavirus pandemic, Shake Shake has had to close many of its locations, and is only offering takeout or delivery from select stores. As the company downsizes its workforce, Shake Shack said it will still provide full pay for general managers and paid time off for furloughed managers, as well as home office employees.
"Our teams have been heroic, pivoting our business to a new curbside pickup and delivery model, while keeping our teams and guests at a safe distance," read the statement from Meyer and Garutti.
Fifty-seven of the chain's 120 locations remain open, according to the company's first quarter results, reported Friday. Shake Shack has also looked to increase revenues during the health crisis by adding more delivery partners and selling DIY burger kits through Goldbelly (Danny Meyer is an investor in the retail site that specializes in shipping gourmet and regional foods).
Before the pandemic, Shake Shack was one of the nation's fastest growing restaurant chains. The company still plans to open 33 new locations as soon as the business environment allows. In the meantime, the company has made a generous donation to help feed healthcare workers during the coronavirus pandemic through GratiFoodNYC.
Stacy Rotner, founder of the initiative, said that Shake Shack was responsible for donating a "significant" portion of the 800 meals that have already been donated to front-line workers.
A representative for Shake Shack was not immediately available for comment.