Executives with burger chain Shake Shack announced Monday that they are returning a $10 million federal loan received through an initiative aimed at shoring up small businesses struggling during the coronavirus epidemic.
The business was awarded the loan through the Paycheck Protection Program, funded by the $2.2 million economic stimulus bill passed last month by Congress. Funding for the program quickly ran out, prompting criticism of how the money was distributed.
In a letter published Monday, Shake Shack CEO Randy Garutti and chairman Daniel Meyer said the company decided to return the $10 million loan after an “equity transaction” gave it access to additional capital. The chain plans to sell shares to raise as much as $75 million from investors, according to CNN.
Shake Shack, which has 189 locations and nearly 8,000 employees nationwide, was eligible to secure a Paycheck Protection Program loan because, despite its size, the business employs less than 500 people at each of its locations.
The company has had to furlough or lay off hundreds of employees as business slowed due to the coronavirus pandemic. Garutti and Meyer said the chain is facing operating losses of more than $1.5 million each week.
“We’re fortunate to now have access to capital that others do not," they said. “Until every restaurant that needs it has had the same opportunity to receive assistance, we’re returning ours.”
Congress members and officials with President Donald Trump’s administration are in negotiations to add additional funding to the Paycheck Protection Program. Officials expect to reach an agreement Monday to add up to $450 billion of additional funding to the program and to give more money to hospitals and for COVID-19 testing, The Associated Press reported.
“We urge Congress to ensure that all restaurants no matter their size have equal ability to get back on their feet and hire back their teams," Garutti and Meyer said Monday. “Fund it adequately. It’s inexcusable to leave restaurants out because no one told them to get in line by the time the funding dried up. That unfairly pits restaurants against restaurants."
The restaurant industry has been hard-hit by restrictions put in place to contain the spread of the coronavirus, including stay-at-home orders issued to protect public health in several states. The National Restaurant Industry said Friday that as of March 1, the industry has lost more than 3 million jobs and $25 billion in sales. The group noted that about 50% of restaurant operators were anticipating having to make further cuts in April.
As of Monday, more than 760,000 Americans have been diagnosed with COVID-19, leading to more than 40,000 deaths -- the most in any nation.