It did have to lay off approximately 25% of its 8,000 employees of the Union Square Hospitality Group (of which Shake Shack is only a part), but because its high end, full-service restaurants (like Union Square Cafe and Grammercy Tavern, among others) are mostly located in NYC, they would be hard pressed to hire back everyone by the June 1 deadline. The Shake Shack operations are still going, so one assumes that most of their employees are still working the take-out and delivery business. Both for humanitarian as well as practical interest, they secured an "equity transaction in the public markets." Danny Meyers from their website (read the whole thing at link):
... 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. Our teams have been heroic, pivoting our business to a new curbside pickup and delivery model, while keeping our teams and guests at a safe distance.
For Union Square Hospitality Group, the decision as to whether or not to apply for PPP loans was more complicated. All USHG restaurants closed as of March 13th, and with no revenue, the company was forced to lay off over 2000 employees. Since the PPP loans would be forgivable only if employees were hired back by June, and since most USHG restaurants are based in New York City where that timeline is unlikely achievable for full service restaurants, that application decision relied upon our conviction that one day we would be able to pay back the loan. After careful consideration, USHG opted to apply for PPP loans, taking on the risk in order to hire back laid off employees as soon as possible. Some USHG loans have been funded, and we await the day we’re able to re-open.
Late last week, when it was announced that funding for the PPP had been exhausted, businesses across the country were understandably up in arms. If this act were written for small businesses, how is it possible that so many independent restaurants whose employees needed just as much help were unable to receive funding? We now know that the first phase of the PPP was underfunded, and many who need it most, haven’t gotten any assistance.
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. While it is heartening to see that an additional $310 billion in PPP funding is about to be approved, in order to work for restaurants, this time we need to do it better.
https://www.shakeshack.com/updates/
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