Shake Shack said it will return a $10 million loan it received under the coronavirus small business relief program but Ruth’s Chris Steakhouse, another company that got a big loan, appears to be keeping theirs.
Ruth’s Chris received $20 million while Shake Shack received $10 million, CNN reported. Other chains like Potbelly Sandwich Shop, Taco Cabana, and J. Alexander restaurants got big loans intended for small businesses as well.
Non-restaurant companies like the coal mining giant Hallador Energy and windmill manufacturer Broadwind Energy received nearly $10 million apiece too.
The companies received the loans, which can be forgiven if they keep their workforce, while thousands of small businesses were left in the cold after the $350 billion allocated by Congress ran out last week.
The SBA has approved more than 1.6 million loans. Of those, 4,412 were for more than $5 million.
Congress is expected to allocate another $400 million for the program this week.
Shake Shack returns money:
Shake Shack, which has $100 million in the bank, said they would return the money because they are "fortunate to now have access to capital that others do not."
Shake Shack CEO Randy Garutti and chairman Danny Meyer said in an open letter that the program "came with no user manual and it was extremely confusing."
Garutti told CNN that "by returning our $10 million, that $10 million can go back into the pot and go to the people that deserve it. We hope it can go inspire the next round.”
Money not going to franchisees:
President Trump defended the loans by claiming that restaurant franchisees are small businesses too.
But the Wall Street Journal reports that the $20 million is going directly to the Ruth’s Hospitality Group, which operates 83 of the chain’s restaurants while 25 franchisees operate the other 73.
“We will be following all guidelines set forth by the [Small Business Administration] in how the funds are being leveraged, including payroll assurance for our team members in individual locations running our takeout and delivery business,” the company said in a statement.
