Shake Shack To Return $10M Paycheck Protection Program Loan

HARTSDALE, NY — Days after receiving a $10 million loan from the government's Paycheck Protection Program, Shake Shack announced Sunday it would return it so the cash can help more needy businesses. In a statement issued by Shake Shack CEO Randy Garutti and Danny Meyer, the CEO of the Union Square Hospitality Group which owns the restaurant, the chain announced it has been able to access additional capital and no longer needed the government's money.

In the Hudson Valley, Shake Shack has restaurants in Hartsdale and Yonkers.

CNN reported the company announced last week that it expected to be able to raise up to $75 million from investors selling off stock shares. The chain had earlier applied for the federal assistance as it dealt with financial loss and layoffs of thousands of team members across its 189 restaurants.

"While the program was touted as relief for small businesses, we also learned it stipulated that any restaurant business — including restaurant chains — with no more than 500 employees per location would be eligible,” the statement read.

“We cheered that news, as it signaled that Congress had gotten the message that as both an employer, and for the indispensable role we play in communities, restaurants needed to survive."

With their restaurants forced to close, Shake Shack was staring at weekly losses of more than $1.5 million each week, executives said. Like other restaurants, Shake Shack shifted to a curbside and delivery operation in order to remain open.

Meanwhile, company officials said in the statement that USHG faced a more complicated decision in whether to apply for PPP funding. With no revenue, the group was forced to lay off more than 2,000 employees, but PPP loans are only forgivable if employees were hired back by the end of June.

Company executives were forced to weigh that reality against uncertain timelines of re-opening. They also realized that many other restaurants were unable to receive PPP loans, the statement said.

"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," the statement read.

"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. 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.”

In the statement, Meyer and Garutti called on Congress to better assist a restaurant industry that includes 660,000 restaurants that employ more than 16 million workers and that generates $800 billion in consumer spending each year.

Written by Jeff Arnold, Patch Staff