Under Fire, Shake Shack Returns $10 Million in Small Business Funds

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Big news yesterday. Burger chains shake shack is returning. It's ten million dollars. Pp loan that people of course is short for the payment protection program. That's part of the Federal Government's cares act. It was touted as a bailout for small business. The low interest loans forgivable if at least three quarters of the money is used to keep workers on payroll but a number of large publicly traded companies including certain shake shack managed to get multimillion dollar loans before the program ran out of funds last Thursday that angered millions of owners of considerably smaller businesses. Who were locked out of the program? Here's what happened. The PPI was intended for businesses with fewer than five hundred employees. The Small Business Administration's definition of small business but it included a clause that allowed companies with multiple locations to apply as long as there were fewer than five hundred workers at each location shake. Shack is public company. Employing eight thousand people across close to two hundred stores in the US. It's valued at one point. Seven billion dollars according to Forbes but fewer than forty five people make burgers and fries at any single shake shack store that's far below the PP's single location cab. When the program was announced the company had already furloughed or laid off about one thousand workers so shake shack applied for the P and it turns out. They weren't the only multimillion dollar company to do so other applicants included. Ruth's Chris Steak House. Three hundred million dollar cruise line and four hundred million dollar data storage company and that's created a big problem for small businesses. According to Bloomberg two percent of the firms approved for loans got thirty percent of the total funds Solo preneurs and small businesses faced with the prospect of going out of business permanently. Were furious to learn that more than a dozen public companies with revenues greater than one hundred million dollars had received portions of the funds leaving little for them according to Bloomberg four inches. Ruth's Chris employs almost six thousand people. It's sales topped half a billion dollars. Last year. It received twenty million dollars in P. Money. Four hundred million dollar pot belly corporation chain of sandwich shops also employs six thousand people. It received million dollars in the low interest funds. Bloomberg's Ed but shake shack has since apologized for applying for the loan in an open letter. Sunday. Owner Danny Meyer and CEO Randy. Rudy said the. Pp's initial guidance was confusing. They wrote quoting here. The best chance of keeping our teams working off the unemployment line and hiring back are furloughed laid off employees would be to apply now in hoped things would be clarified in time close quote. They were losing more than a million dollars a week. At that time last week the company was able to sell equity on the public market and raise one hundred fifty million dollars as a result Meyer. Garate decided to return their peop- funds quoting again so that those restaurants who need it most can get it now. They said in a statement. They acknowledged their good fortune and having access to other funds and said until every restaurant that needs it has had the same opportunity to receive assistance. We're returning hours. Well responses ran the gamut from laudatory to highly critical some observers praised owner Danny Meyer is noble and pledged to be lifelong customers others were livid saying restaurant. Chains should never have applied in the first place. It'll take time to see whether public opinion will tilt toward shake shack or against it. However the company's actions received a hearty congratulations in one place by Monday. Evening it stock was up seven percent. In contrast. Ruth's Chris fell seven percent. Potbellies was also down by yesterday afternoon. No other major restaurant chains or public companies had stepped forward to follow shake shacks lead

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