Ruth’s Chris Steak House and other chains pay off federal loans amid public and government criticism
Ruth’s Chris Steak House is return of $ 20 million in funds he got the stimulus paycheck protection program, the latest in a series of big chains that backed down on their acceptance of government loans amid a fierce backlash.
Listed companies like Ruth’s Chris, Shake Shack and Kura Sushi – all of which, with more than 100 Sweetgreen sites, recently announced repayment of their PPP loans – have been criticized for using funds to help small businesses in difficulty during the pandemic. Companies like these have been able to apply for PPP loans thanks to a deliberate feature of the program which grants eligibility to hotels and restaurants with 500 or fewer employees per location (not per overall workforce). The problem, like Caleb Pershan wrote for Eateris that funds are limited – the first round of funding ended on April 16, less than two weeks after the program was announced – and for every $ 10 million loan that a large restaurant chain receives, several small restaurants have been refused this financial assistance. assistance.
Amid these criticisms, the Treasury Department warned large publicly traded companies reconsider the application for small business loans, adding a new section to his FAQ which says that companies must “assess their economic need for a PPP loan” and “certify in good faith that their application for a PPP loan is necessary”. Given these requirements, continues the FAQ, “it is unlikely that a state-owned enterprise with substantial market value and access to capital markets will be able to make the required certification in good faith, and such an enterprise should be ready to demonstrate to the SBA, upon request, the basis of its certification.
Businesses could be investigated and face penalties if they accept small business loans against these stipulations. But, as the New York Times Remarks, this still does not force companies to return the money, and it is not clear how investigations into improperly granted loans would work. Any borrower who has applied for a PPP loan before April 23 and repays the loan by May 7 will be deemed to have “made the required certification in good faith”, according to the new published guidelines.
And in other news …
- In light of President Trump’s suggestion to possibly bring UV light indoors or inject himself with disinfectant (???) to try and kill COVID-19, the FDA commissioner (with Lysol and Dettol) says please don’t try to ingest disinfectant. [CNN]
- How big profitable restaurant chains like McDonald’s and Yum Brands (parent company of Taco Bell and KFC) found themselves in a position where they didn’t have enough cash reserves to weather the pandemic without needing to borrow money or extend lines of credit? Too many buybacks of their own shares in previous years, a practice used to drive up stock prices and benefit shareholders, New York Times find. [NYT]
- New York City is now considering capping shipping charges for third-party apps like Grubhub and DoorDash, following similar proposals and orders in San Francisco, Chicago, and THE. [Eater NY]
- Instacart now has 500,000 buyers, and plans to hire another 250,000 to meet record demand for people ordering home groceries for at-risk workers deliver. [The Spoon]
- The coronavirus could have dire consequences for the craft distillation industry, which relies on crowded bars, tasting rooms, face-to-face sales and high prices. [NYT]
- Gabrielle Hamilton on closing her restaurant Prune, and wonders if there is still a place for him in a culinary landscape that has changed dramatically in 20 years. [NYT]
• All Intel AM coverage [E]