Shake Shack returned its $10 million coronavirus stimulus loan. Ruth’s Chris, Potbelly, and other chains are keeping more than $81 million meant for struggling small businesses.

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Shake Shack is returning $US10 million in loans meant for small businesses. Irene Jiang/Business Insider
  • Shake Shack is returning a $US10 million loan after critics slammed the burger chain for getting money from a program meant to benefit small businesses struggling to survive the coronavirus pandemic.
  • Six other chains – including Ruth’s Chris, Potbelly Sandwiches, and Taco Cabana – have not indicated that they planned to return the more than $US80 million they have received in Payroll Protection Program loans.
  • The $US350 billion allotted toward PPP loans ran out last week, before many struggling small businesses received any funding.
  • Visit Business Insider’s homepage for more stories.

Restaurant chains are facing backlash after receiving more than $US80 million in coronavirus stimulus loans intended for small businesses.

Last Sunday night, Shake Shack’s chairman, Danny Meyer, and CEO Randy Garutti announced that the burger chain would return its $US10 million Paycheck Protection Program loan.

Critics slammed Shake Shack for applying for the loan aimed at small businesses that would have a harder time finding funding to stay afloat as restaurant sales plummet. Shake Shack announced the loan the same day it revealed it had raised $US150 million in a private-equity offering.

“We are seeing tremendous backlash because hundreds of thousands of small businesses have not gotten PPP loans,” Chris Allieri, the founder of communications consulting firm Mulberry & Astor, told Business Insider. “Many have had to cease operations because they can’t wait until the next pot of money is approved.”

While the PPP loan program was intended to help small businesses keep workers employed during the coronavirus pandemic, the hotel and restaurant industries successfully lobbied for an exception that allows chains with fewer than 500 workers per location to apply for a loan.

Shake Shack is not the only chain that cashed in on the initial $US350 billion allotted toward loans, which ran out last week before many small businesses could receive loans. At least six other chains received about $US81 million in loans.

Business Insider reached out to these six chains on Monday morning to ask about their PPP loans. None of the chains said that they planned to return the loans.

Here’s how much money chains including Ruth’s Chris, Potbelly, and Taco Cabana received from the program intended to help small businesses stay afloat and keep workers employed.


Potbelly

Potbelly was granted a $US10 million loan from JPMorgan Chase on April 6. The sandwich chain did not respond to Business Insider’s request for comment.


Ruth’s Chris

Two subsidiaries of Ruth’s Hospitality Group – RCSH Operations, LLC and RCSH Operations, Inc. – were granted $US10 million each in loans from JPMorgan Chase on April 7. In all, the Ruth’s Chris parent company had $US86.6 million in cash on hand and $US169.8 million of outstanding indebtedness last week as of April 10.

The company did not respond to Business Insider’s request for comment.


Taco Cabana

Tex-Mex chain Texas Taco Cabana was granted a $US10 million loan from JPMorgan Chase on April 8. Parent company Fiesta Restaurant Group declined to comment further when contacted by Business Insider.


Fogo de Chao

Fogo de Chao received $US20 million in PPP loans for two of its individual restaurants, The Wall Street Journal reports. The company did not respond to Business Insider’s request for comment.


J. Alexander’s

Two J. Alexander’s Holdings subsidies received a collective $US15.1 in loans from Pinnacle Bank, as of April 15. As of last week, the company, which has nearly 50 casual-dining locations, had $US33.7 million of cash on hand and $US40.8 million in outstanding debt. The company did not respond to Business Insider’s request for comment.


Kura Sushi

Bank of the West granted Kura Sushi a loan of almost $US6 million on April 14. The day before, the sushi chain said that it had a “strong balance sheet with a cash and cash equivalents balance of approximately $US24 million and no debt” and that its controlling stakeholder, Kura Sushi Japan, had agreed to make a $US20 million revolving line of credit available to the chain.

The company did not respond to Business Insider’s request for comment.