Shake Shack Received a $10 Million Small Business Loan. They're Giving It Back.

The company says it will return the money after it was announced that the Paycheck Protection Program ran out of funding.


Shake Shack, the fast-casual burger chain with hundreds of locations across the country, announced Monday it will be returning a $10 million small-business loan granted through the Paycheck Protection Program. 

"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," Danny Meyer, the CEO of Union Square Hospitality Group (USHG), and Randy Garutti, the CEO of Shake Shack, wrote in a statement. "We cheered that news, as it signaled that Congress had gotten the message that as both as an employer, and for the indispensable role we play in communities, restaurants needed to survive."

But that $349 billion fund, intended to inject life into small businesses struggling amid COVID-19 shutdowns, ran dry last Wednesday, prompting Meyer and Garutti to reassess the money they'd received. 

"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?" they wrote.

Shake Shack, which has laid off 2,000 employees and is facing operating losses of over $1.5 million each week, received the capital it needed through a public-market equity transaction. Though the company says that the additional $10 million loan would be helpful, they acknowledge that other businesses need it more and said that they will return it "immediately."

The Paycheck Protection Program's allocated funding evaporated in less than two weeks, setting off another debate on Capitol Hill. As of Monday afternoon, it appeared that Democrats and Republicans were nearing an agreement that would funnel $310 billion toward small small-business loans, with another $75 billion for hospitals and $25 billion for increased virus testing. 

That large hotel and restaurant chains were ever eligible for government assistance prompted a backlash that only intensified as smaller dining establishments learned they would not receive funding. Not only do those larger companies have a much higher likelihood of locking down funding from private lending markets, they also have strong corporate relationships that allow them to expedite the application process.

"This industry rises and falls together," they wrote. "And if there is a concern that once again the government will have not allocated adequate funding, then send business to the front of the PPP line which has more limited access to outside funding."

The two men also drew attention to some of the more problematic parts of the program, noting that the loan forgiveness terms are highly unrealistic and that many small businesses are unable to secure help from major lenders in the face of exclusive loan terms.

In order to qualify for loan forgiveness, 75 percent of expenses must be spent on payroll—already a tough ask for companies that have no customers, but still bills to pay. Yet the legislation also stipulates that companies restore pre-coronavirus "full-time employment and salary levels" by June 30, 2020. Meyer and Garutti suggest that the government "make all PPP loans forgivable if an adequate number of employees are rehired by a minimum 6 months following the date that a restaurant's state (or city) has permitted a full reopening to the public." It's a decent idea, but as with aspects of the PPP as written and implemented, the 6-month window would be easier for some companies to comply with than others. 

"Shake Shack, like all restaurant businesses in America, is doing the best we can to navigate these challenging times. We don't know what the future holds," wrote Meyer and Garutti. "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."

NEXT: Federal Regulations Are Making the Grocery Store Supply Crunch Worse

Coronavirus Business and Industry Small Business Food Restaurants

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

Please to post comments

33 responses to “Shake Shack Received a $10 Million Small Business Loan. They're Giving It Back.

  1. This is nice gesture, but isn’t this the point of the fucking fund? it’s legit for keeping people off unemployment as long as possible. Last I checked giving Shake Shack money probably accomplishes this. Are the optics bad? probably. But noone ever accused the gov of being able to spend the money wisely. I don’t know I have mixed feelings on this. There’s not enough money in the world on one hand on the other hand I know a ton of business owners who could have used the money and got boned because the gov fucked this rollout so completely. Who the fuck takes money without knowing what strings are attached? That’s basically what the Gov was trying to do.

    1. Shake Shack said they were able to secure funding elsewhere, so they don’t need the money to keep people employed.

      1. Facebook is paying $530 Per day. Be a part of Facebook and start getting Extra Dollars every week from your home. JVc..I just got paid $8590 in my previous month……….,Visit Site

        1. No that’s okay. My computer doesn’t like viruses.

  2. From what I have seen many fast food establishments are doing a good business. The line of cars at the drive through are very long. I am sure they are suffering losses, but probably not as bad as some other businesses. Shake Shack did the right thing and their gesture should be acknowledged. This is smart capitalism. They also make a great burger.

    1. I agree I also don’t think it was wrong to take the money either though. I think anyone that has eat in space is doing worse than they were before and I don’t believe Shake Shack has an actual drive thru at the majority of it’s locations that I’m familiar with.

    2. I live in Canada. It’s a socialist hellhole so we don’t have that many options. Other than ‘Five Guys’ but they closed a bunch of locations.

      1. Grapes gets canned for saying “you people” but Justin gets a pass for multiple instances of blackface. Canada is weird place.

        Are they still angling to get Dr. Peterson fired for not acknowledging imaginary gender pronouns? He used to be a regular in Joe Rogan. Haven’t heard from him in awhile.

        1. I’m in Canada.

          I can’t figure this country out anymore under Justin Moist. You think America is divided? We have a minority Libera government with the West going Conservative and Quebec (where I am) Bloc Quebecois (a nationalist party). Ontario – Toronto specifically – delivered this idiot a second mandate. In this way, Toronto is acting like NYC or LA.

          It’s a divided country but the Liberals are governing as if they have majority deluding themselves. What a mess and all of their own doing. Now they played identity politics with the pandemic and may have made things worse.

          I applied for the Fed small business loan so I have to go into debt for a panic largely self-induced.


        2. Ask his daughter.

        3. Peterson got the treatment you’d expect from the media – Wendy Mesley of the CBC did her best to be another Cathy Newman.

          Reason was also all too happy to play into it covering him with one lame ENB article. He had a health issue and is recovering from it. He started up Thinkspot with Dave Rubin.

    3. Shake Shack does not have drive-thru. I wonder how take-out/Uber Eats locations do compared to restaurants with a drive-thru? Even more reason to give these guys props if they’re operating at a disadvantage. Smoke Shack is a damn good burger.

  3. So much empathy LMFAO.

    1. So much scumbag idiocy.

      1. So sad, I remember when they were writing empathy is bad for Sotomayer. You listen to what people tell you, so sad.

        Sorry I hurt your feelings. But whatever you tell yourself to feel better, lol. Useful idiot

        1. So much scumbag idiocy.

        2. Incoherent ramblings from Hihn? Why yes it is!

          1. Simple answers from simple violent people. Useful idiots don’t look at life long term.

            1. Oh, and look there! Proving it.
              Thanks, fucking lefty ignoramus! We need imbeciles like you to prove the point!

            2. Yeah but your post doesn’t make any fucking sense.

              1. It’s because you have no critical thinking skills. Useful idiots tend to lack that.

                1. No, it’s because you’re spouting nonsense.

                2. So much scumbag idiocy.

          2. Pretty sure it’s not the lefty fucking ignoramus Hihn, but another lefty fucking ignoramus.

            1. Pretty sure you feel better about yourself after saying that.

              1. So much scumbag idiocy.

  4. Or they are planning layoffs that would trigger repayment of the loan, anyway. This gets them ahead of that…

  5. Finally a non-small business acts responsibly and doesn’t try to take money meant for small businesses by trying to disguise themselves as a small business.

    The guy I work for (well very barely now) is just trying to get the $10,000 that was supposed to be for small businesses.

    He can’t get it because the big guys are again greedily gobbling up what was supposed to help the small guys.

    Applause for this company… may they prosper.

    1. Yeh I read this as a positive move. And the Democrats once again are playing politics with aid.

      A degenerate party of punks during this pandemic.

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

    I have no problem with Shake Shack, they are a great place for a clean bathroom and their burger is thoroughly average. However, a fast casual hamburger restaurant is the very definition of dispensable.

  7. Thank for your writting. You have made it very clear that the problem is happening. I really like your way of thinking. seo tool

  8. Left-wing outlets are reporting that Shake Shack only did this after being “shamed” into it.

Comments are closed.