After becoming one of the massive restaurant chains to receive federal loans due to COVID-19 stimulus measures, Shake Shack has announced it will return the $10 million loan that was meant for small businesses.
The restaurant’s founder, Danny Meyer, and their CEO, Randy Garutti, explained the move in a LinkedIn post this weekend, admitting that the terms of the Paycheck Protection Program (PPP) were “confusing” and that the company was not aware that funds would be exhausted so quickly. After securing separate funding, Shake Shack was inspired to give its loan back so smaller businesses may have access to the funds instead.
“Late last week, when it was announced that funding for the PPP had been exhausted, businesses across the country were understandably up in arms,” Garutti and Meyer said in a post on Sunday. “If this act were written for small businesses, how is it possible that so many independent restaurants whose employees needed just as much help were unable to receive funding? We now know that the first phase of the PPP was underfunded, and many who need it most, haven’t gotten any assistance.”
They also shared some helpful tips on how to make PPP work better in the future, along with urging Congress to make certain that “all restaurants no matter their size” have equal footing amid the coronavirus pandemic. “Our people would benefit from a $10 million PPP loan but we’re fortunate to now have access to capital that others do not,” Garutti and Meyer said. “Until every restaurant that needs it has had the same opportunity to receive assistance, we’re returning ours.”
Turning down $10 million is obviously a commendable move, and while many have expressed just that, others have been quick to argue that Shake Shack only made that move after being criticized for accepting the money in the first place.
On top of those criticisms, others have argued that Shake Shack should have just redistributed the money to several small businesses on their own instead of returning it to the government, who clearly doesn’t want to give it to small businesses in the first place.