Shake Shack returning all $10M of PPP loan

• After an outcry, Shake Shack (NYSE:SHAK) is returning all $10M of its loan from the Paycheck Protection Program, the COVID-19 rescue fund meant to help small businesses.
• The burger chain is one of more than a dozen companies who drew criticism for tapping the small-business loan program despite having revenues in the hundreds of millions. The PPP ran out of money less than two weeks after launch.
• Shake Shack took part because the law allowed any restaurant business with no more than 500 employees at a location, which applies to Shake Shack's 150-plus locations. (It also explains why others such as Potbelly tapped the fund.)
• But founder Danny Meyer and CEO Randy Garutti said they've secured separate funding and decided to return the entire $10M so others that "need it most can get it now."

Comments

[heatnup]

I believe that almost everyone is missing the point here! Made no sense for SHAK to keep this PPP loan since they know it would not be enough to keep them afloat. They had to go elsewhere and find ways to get far more cash just to try and survive what will be a very rough next year. See prior news release from 04/18!

"Shake Shack (NYSE:SHAK) has announced transactions that have brought in a gross $150M in new equity capital to shore up its balance sheet.
That includes about $140M from the sale of class A common shares in an underwritten offering, and some $10M from selling class A common shares in an at-the-market program."

[kiwicarrotcake]

Shame on Congress. Think of the billions that went to companies that don't need it. Total disgrace.

[Djreef1966]

Some $16 billion hedge fund just snapped it up.

[GR Value]

Shakedown Shack.

[richin10]

Oh come on - the whole $2.2 trillion dollar fund is filled with pork give aways. Hell, 34 Democrat senators signed a letter complaining senior citizens shouldn't have to fill out a tax form to get their stimulus checks. They said these seniors don't work and have many haven't filed a tax return in years -OK great - but then again -WHY THE HELL did they need a check in the first place if they didn't work?!!!! www.wrcbtv.com/...

This whole thing was full of pork. ONLY PEOPLE AND BUSINESSES DIRECTLY impacted by government mandates should have been included. Instead, in an effort to curry favor with potential voters, every swinging dick in the country got a handout at the cost of our children's future! The whole damn country is made up of greedy, selfish, gimme now let the future be damned idiots!!!!

[DGIDMD]

The whole PPP Loan is cronyism at its worst. The loan was clearly meant for small businesses. Companies like Shake Shack, Ruths Chris, and other's, lobbied our government to open it to big businesses and completely screwed the little guy out of any funding.

All of the big banks- BoA, Chase, Wells, etc, favored their big clients over the mom and pop shops. I don't know a single person that got PPP funding from any of the major banks.

A complete and utter joke of legislation this turned out to be. Just more handouts to big corporations.

[wetdoginvest]

@DGIDMD Someone, or the program itself, needs to make a list of all the companies over a certain size, all the publicly traded companies, and every person that is 1 degree of separation away from a politician that received money in the PPP program.

If times get rough, we can eat these people. I'm not kidding.

If times don't get so rough, we can destroy these businesses by boycotting them. People need to learn & change their ways.

[JZahra]

this is capitalism, survival of the fittest, if they were able to take the loan than why not? its the government that had to close the loop holes in PPP.

[Alek Eleutherios]

There's nothing capitalistic in bailing out everything.

[scr00ge22]

You say survival of the fittest. Yet very next statement is if they can get the loan. You either run your business right and take advantage during times like these!! Yes there will be businesses that go under, they did not have a rainy day fund or enough funds to get through tough times.

[reynor]

Darwinism should be reserved for biology. It doesn't apply to people as individuals and it surely doesn't apply to business organizations.

[DrewMcVay]

Lots of things to like with the PPP, lots of things to dislike.

Publicly traded companies never should have gotten the money, not because they are a publicly traded company, but in order to be a publicly traded company you have to be of a certain size for which this program wasn't designed for.

Also no clue as to why independent contractors are in the PPP. Eliminate the self employed, that's not whom this is intended for at all.

Having to choose between what's worse, publicly traded companies getting the money and self employed, I'd say self employed is worse. It was designed so employees could get paid by employers, not so a guy who drives an uber can get paid to do nothing.

[wetdoginvest]

@DrewMcVay Publicly traded companies can sell stock to raise cash. There is NO WAY they should get taxpayer bailouts. EVER.

[DrewMcVay]

@wetdoginvest your logic is pretty flawed then if you believe others should get taxpayer bailouts. If anything, it's actually more toxic if you only exclude publicly traded companies. Imagine a world where your 401k wasn't able to invest in the best companies. Imagine a world where the government, funneled money to others within the government with impunity -- imagine all of the bribery that would take place in/around DC with the government contractors, of course more than what already happens.

[wetdoginvest]

@DrewMcVay Who said anything about 401Ks and bribery? You make as much sense as Trump.

I said "public companies can sell equity to raise cash"... therefore they should not receive public funds. Never ever.

[User 2825711]

With reports only 5% of nations 30M small businesses receiving any of that $350B designed to prevent mass layoffs not the most thought out plan Ive seen. twitter.com/...

[Founts5]

I’m a little confused about the 500 EMPLOYEES limit. Were they able to get the $10M loan because in TOTAL with 150 + locations they still had LESS than 501 employees? That seems unlikely unless they use numerous “independent contractors” too.

[scrobble]

It's 500 employees PER LOCATION

it's a total fraud that it's only for "small businesses"

[Conservative_aggressive_alpha]

exactly, by that definition, McDonald probably would qualify too!

[DGIDMD]

Lobbyists got to these clown politicians and changed it to 500 employees PER LOCATION.

[wetdoginvest]

Everybody not in the "it's capitalism, so it's OK what they did" camp:

It's important to get the message out about Shake Shack's actions. Not all corporations are like this. Something is rotten within if they are taking money from a small business loan program in the middle of a crisis.

Please tell others via social media and your family & friends. Don't eat there.

[MathewH1986]

I wonder if they did it so they can fire some employees when they reopen?

[jsr]

SHAK did what any smart business would do, it got a loan. No tricks, no lies, no nothing. The way the plan is set up, SHAK was entitled to the loan.
You guys would be shocked at how many big companies put in and got loans.

For sure the return of the loan is for PR purposes, but let’s just get one thing straight SHAK just did what it was legally entitled to do.

[wetdoginvest]

it's not for big biz

[Pdots]

You are legally allowed to do/not do many things. Doesn't make it morally it right for a large business to take money from a program intended for small businesses.

[becuziwasinverted]

Of course it does. This is the same reason why tax law allows billionaires to pay cents on the dollars compared to your average Joe blow ...

[becuziwasinverted]

I don’t understand why companies listen to cry babies...this is capitalism, if you can get a loan, you take a loan, you don’t know how long this lasts, people aren’t gonna care that you took a $10M loan in 5 years ...

[wetdoginvest]

not for big biz. is't the small biz program. capitalism does not mean "what you can get away with"....

I'm pretty sure the virus will be teaching people like you a lot of lessons in the next year.

[wetdoginvest]

you forget the power of social media. this could actually damage their reputatiion and sales.

this is a GROWTH stock any failings on growth, and down it goes.

so... down it goes.

[racecar1]

Glad they came to their senses........

[Michael Dolen]

In other words, they wanted it until they got caught.

[eternitus141]

If the loan is not necessary to sustain operations, and you certify that it is in order to get the loan, then that’s fraud.

[DrewMcVay]

I think if anyone put themselves in their shoes, they'd have taken the money because their competition was and everyone else was trying to. Hardly malicious, and like most people they probably thought the $4T bill that was passed was going to be mostly PPP, when in reality it wasn't even 1/10th of it.

The blame and scrutiny should really be on congress, as they should easily spell out to the public where the money went if so little of it actually went to the intended purpose. I highly doubt $3.65T went to individuals as a part of the $1200/one time thing.

[Joe Brandon]

You don’t have to certify necessity to sustain operations to get the loan