Ruth’s Hospitality Group, the owner of Ruth’s Chris Steak House, announced on Thursday it will return the $20 million it received from the federal government’s Paycheck Protection Program, which was intended for small businesses to pay their employees amid the coronavirus pandemic.
What We Know:
- The $349 billion program ran out of money quickly, and nearly $600 million was given out to roughly 150 public companies. The Treasury Department has asked those companies to return their money.
- According to CNBC, the company’s President and CEO Cheryl J. Henry said in a statement, “We intended to repay this loan in adherence with government guidelines, but as we learned more about the funding limitations of the program and the unintended impact, we have decided to accelerate that repayment.
- Hundreds of thousands had also signed a Change.org petition earlier this week, urging Ruth’s to repay the loans, or the group be “shamed forever”. “We’re seeing that these larger corporations as you see someone like Ruth’s Chris Steakhouse, just got $20 million,” Nancy Calamusa, the owner of a small medical treatment facility in New Jersey, told Fox News last week. “You know and here we are trying to survive and provide medically necessary intervention to a population that is at risk and vulnerable. And yet, you know, kayak rental businesses are getting $10 million. The process should have been a better hierarchy on who received what funds first.”
- Many small business owners were unable to receive any financial assistance, because although the program had a $10 million loan limit, if large hotel and restaurant businesses had less than 500 employees at each location, they were able to apply through multiple subsidiaries. As a result, the initial funding ran out before many small business owners were able to receive any financial assistance. “This sparked backlash against big companies like Shake Shack and Potbelly, who received maximum funding.”
- Earlier this week, the fast-casual burger chain Shake Shack announced it would return its $10 million loan, after becoming aware “the first phase of the PPP was underfunded and who need it most haven’t gotten any assistance”. Shake Shack CEO Randy Garutti and founder Danny Meyer, wrote in an open letter posted to LinkedIn, “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’.”
On Tuesday, the Senate voted to pass another stimulus package which would provide more than $300 billion to further fund the PPP. The same day, the Treasury Secretary Steven Mnuchin told reporters at a press conference that the loans were not intended for companies that have “access to liquidity and other sources”. He added that there would be “potentially other consequences” for companies who fit that description but fail to repay the loans.