Shake Shack Gives $10 Million Small Business Loan Back: Here’s Why

After securing a $10 million coronavirus relief loan from the federal government, Shake Shack (SHAK) is reportedly giving it all back. The publicly-traded burger chain faced backlash after accepting the loan as funding ran out for other needy small businesses.

Shake Shack has nearly 8,000 workers, reporting $594.5 million in revenue in 2019. The company warned that it was at risk of defaulting on its debt last week, Bloomberg reported. Since that time, the company has reportedly sold $150 million in equity.

“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,” CEO Randy Garutti and Danny Meyer, the founder and chairman of Shake Shack and CEO of Union Square Hospitality Group, said (via Bloomberg).

“We’re thankful for that and we’ve decided to immediately return the entire $10 million PPP loan we received last week so that those restaurants who need it most can get it now,” the two said.

Shake Shack was one of several companies that came under fire for securing federal monies through the U.S. Small Business Administration program. As much as $349 billion was set aside for the program to give relief to small businesses impacted by the coronavirus.

Shake Shack reported its 2020 Q1 earnings on Friday with Garutti saying, “Given the ongoing impact of COVID-19 on our business, our Shack teams have demonstrated their entrepreneurial spirit and continued to adapt our operating models and business strategy. As a result, we’ve seen strong sequential sales increases on a weekly basis since the last week in March.

“We’ve taken this time to double down on our digital toolbox, and have increased engagement and messaging in our own channels over recent weeks, while also successfully expanding new and existing integrated delivery partnerships with DoorDash, UberEats, Caviar and Postmates. We’re encouraged that these and other crucial business pivots have driven an improvement in recent sales trends, and continued to leverage the strength of our brand.”

The restaurant reported total revenue of $143 million for the quarter with a same-store-sales decrease of 12.8% over Q1 2019, which was based on the “acute impact from COVID-19,” with March sales dropping 28.5% compared to last year. Total operating loss for the company was $0.8 million.

Shares of Shake Shack stock were up 5.52% as of 10:55 a.m. EDT on Monday.