The Real Reason Shake Shack Returned Its Bailout

We love Shake Shack for many reasons — their burgers (they've even made allowances for vegetarians with their 'Shroom Burger), their Crinkle Cut Fries (cheese, anyone?), and their Frozen Custards and Shakes (in case you have around 1,000 calories to spare). And just when you thought you couldn't love them more, they offer up a selection of dog treats (via Shake Shack).

We may have found a new reason to love Shake Shack, and it has to do with the way their top managers think. The company says it will return a $10 million dollar check it received from as part of the Paycheck Protection Program (PPP) which was administered by the Small Business Administration (SBA). In an open letter published on LinkedIn, Shake Shack Founder Danny Meyer and CEO Randy Garutti say that because they have been able to access additional capital needed to keep going, "... 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."

The $350 billion-fund administered by the SBA was meant to give America's small businesses some relief from the damage caused by the pandemic. Meyer and Garutti said that the fund, (which, according to Politico, was launched on April 3) – stipulated that any restaurant business with no more than 500 employees would be eligible; but the fund "came with no user manual and it was extremely confusing." So Shake Shack (and its parent company, Union Square Hospitality Group), decided to apply for the bailout, in the expectation that the situation would clear up in time.

Instead, barely two weeks after the fund was launched, the Trump Administration announced that the funds had been exhausted; the lion's share of the funding had gone to large restaurant operators and publicly traded companies, at the expense of small business operators who were unable to apply for — and get funding — on time. Other than Shake Shack, other companies who received checks from the Small Business Administration include Potbelly, Ruth's Hospitality Group, Taco Cabana, and J Alexander's. Ruth's Hospitality, which operates Ruth's Chris reportedly received $20 million, and Potbelly's said it received $10 million — which it says will go to employees (via ABC). 

Since funding ran out so quickly, there has been a huge backlash over how the money was distributed.

Shake Shack's Meyer and Garutti are now calling on Congress to ensure all restaurants have equal access to an additional $310 billion which is being made available in PPP funding. They also pushed for more structure within the funding scheme that would allow restaurants to speak to a local bank so they could get access to funds, and to get rid of what they called an arbitrary June deadline for restaurants to repay the PPP loan. They also called for all loans to be forgivable if employees are rehired by a restaurant within six months after the area it is located in has allowed restaurants to reopen to the public. 

"We don't know what the future holds. Our people would benefit from a $10 million PPP loan but 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," Meyer and Garutti say.