Shake Shack is now in damage control mode. The popular, overpriced, and tasty burger chain received $10 million in federal loans originally meant for small businesses hurt by the coronavirus. The New York-born Shake Shack? A small business? In what world? After receiving some well-deserved flack, Shake Shack is giving the $10 million to actual small businesses, either to do the right thing or probably to save face.
$10 Million Buckaroos
When people heard the large burger chain was getting $10 million that could’ve helped small, say family-owned businesses instead, there was an outcry.
The $349 billion from the new stimulus law, CARES Act, is meant to help small businesses to keep paying their employees and bills. In two weeks time, the money was all gone, but somehow Shake Shack got their greasy ‘lil hands on a good chunk of it. Now, they’re playing dumb, too.
Shake Shack’s Response
Danny Meyer, Shake Shack’s founder and CEO of its parent company, posted a response to the PR disaster on his Linkedin that mostly raises eyebrows and questions. It’s not always believable. For example, here’s an excerpt:
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. 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. There was no fine print, anywhere, that suggested: “Apply now, or we will run out of money by the time you finally get in line.”
The Insincerity Continues
Was it really as confusing as Meyer implies? The CEO of a major burger chain thought it was a small business because of the number of employees? He’s surely smarter than that. There are many excuses in his explanation of the situation. Meyer continued:
Few, if any restaurants in America employ more than 500 people per location. That meant that Shake Shack – with roughly 45 employees per restaurant – could and should apply to protect as many of our employees’ jobs as possible. The immediate drop in business due to the virus had caused the company to face operating losses of over $1.5 million each week, simply by keeping our doors open with the goal of paying our people and feeding our communities.
Doing the Right Thing?
The right thing would’ve been to never apply for the money in the first place. Shake Shack, now conveniently after getting hammered in the public, is giving the $10 million to actual small businesses.
Meyer continued:
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. We’re thankful for that and we’ve decided to immediately return the entire $10 million PPP loan we received last week to the SBA so that those restaurants who need it most can get it now.
We urge Congress to ensure that all restaurants no matter their size have equal ability to get back on their feet and hire back their teams. We are an industry of 660,000 restaurants with nearly 16 million employees.
Based on the comments in Meyer’s post, nobody is really buying what he’s selling. Right now, the pandemic is revealing the good and bad in some people and businesses. Who would’ve thought we’d see the bad in Shake Shack of all places? Damn good burgers, fries, and shakes, of course, but their brand now means something different. Once Shake Shack reopens their doors to the public, the PR stink will have worn off, but it’s doubtful people will forget how Shake Shack responded and acted during the coronavirus.
