Selflessness In A Crisis

Yesterday Fox Business posted an article noting that Shake Shack Inc will return the small business loan it received from the U.S. government.

The article reports:

The company will immediately return the entire $10 million SBA loan as it was able to raise additional capital, CEO Randy Garutti and founder Danny Meyer said in a blog post on Monday. Last week, it raised about $150 million in an equity offering.

…Shake Shack said the money it received could be reallocated to the independent restaurants “who need it most, (and) haven’t gotten any assistance.”

The company runs around 189 restaurants in the United States, with about 45 employees in each outlet, and reported nearly $600 million in revenue for 2019.

It has closed about half of its 120 locations worldwide, and furloughed or laid off more than 1,000 employees after sales fell 28.5% in March, the company said in a filing on April 17.

This is an interesting decision. First of all, it frees the company from any restrictions or limitations that were put on the government handout. The government loans to businesses would only become grants if the companies retained 75 percent of their employees. By returning the money, Shake Shack is free to make decisions of what is best for both the business and the employees. I don’t know if that was part of their decision making process, but it is part of the federal loans to small businesses program. All of us need to remember that when there is federal money involved there are strings attached–those strings can be about the size of the cables that hold up suspension bridges.