Another Restaurant Chain Returns Its SBA Loan After Realizing There Wasn’t Enough Funding For All

Another restaurant chain has decided to return the funding it received from the government under the Small Business Administration stimulus program. The company, Kura Sushi (KRUS), announced the decision on its website, saying it misunderstood the scope of the funding.

Kura Sushi, a public company with restaurants located in California, Texas, Washington, Florida, Michigan, Washington, D.C., Georgia, Illinois, Nevada, and New Jersey, returned about $6 million, after entering into a $20 million lending agreement last week, Bloomberg reported. The company reportedly has about 1,400 employees.

The SBA loan, which was designed to provide financial support to small businesses with under 500 employees, has drawn scrutiny as media reports cited several larger companies that received loans under the program.

Kura Sushi claimed that it understood the SBA loan as support for the entire restaurant industry, regardless of the number of locations a company had, with CEO Jimmy Uba saying on the company’s website, “With the Paycheck Protection Program, we assumed all restaurant employees would be able to continue being paid, regardless of where they worked, and that the funds would be enough for everyone. This was a wrong assumption.”

Uba continued, “Today, we made the decision to return our PPP loan. This was a difficult decision because our employees are extremely important to us, but it’s impossible to ignore the fact that our finances allow us to weather financial hardship for a longer period than independent restaurant owners. We hope that these funds will be shared equitably among deserving candidates.

Kura Sushi is not the only business that has returned the Paycheck Protection Program loan back to the federal government as Shack Shake returned about $10 million, and Sweetgreen also returned $10 million back to the program.

Kura Sushi had annual sales of $64.2 million in 2019 and closed all of its restaurants on March 18 because of the coronavirus pandemic. The company said it is continued to pay its employees during this time, only furloughing a portion of them on April 4. The company has retained about 65% of its workforce at full pay.

Shares of Kura Sushi stock were up 0.14% as of 2:06 p.m. EDT on Thursday.