Burger chain Shake Shake did the right thing by reversing course and returning $10 million to the Paycheck Protection Program, but the parent company of Ruth’s Chris Steak House is doing the exact opposite. In returning the money, which is supposedly intended for small businesses but is available to large restaurant chains through a loophole making them eligible as long as they don’t have 500 employees at any one restaurant, Shake Shack’s CEO and chair wrote, “Until every restaurant that needs it has had the same opportunity to receive assistance, we’re returning ours.”
Every restaurant that needs it most definitely has not had that opportunity, with some closing permanently or going deeply into debt to have a chance at survival. But Ruth's Hospitality Group managed to get $20 million in loans—twice the $10 million limit, because it got loans for two different corporate subsidiaries—and has still laid off many of its workers, Judd Legum reports at Popular Information.
Ruth’s has closed 23 restaurants and furloughed many staff, despite the Paycheck Protection Program’s requirement that 75% of funds be used to keep workers on payroll. At restaurants that are still open, most hourly workers have been furloughed and “the only people remaining on payroll are managers,” according to one furloughed worker with knowledge of restaurants in Alabama, Tennessee, and Georgia, or are managers and a small number of chefs, according to another furloughed worker in Indianapolis.
”The $20 million forgivable loan, financed by taxpayers, would be enough to pay all 5,195 hourly restaurant workers $3,850 each,” Legum notes. But Ruth’s is allowed to count salary up to $100,000 per employee toward that requirement that 75% of funds go to payroll—so it can take the money, furlough the workers most likely to be living paycheck to paycheck, and use PPP money to pay managers’ salaries.
The top executives at Ruth’s, who earn between $300,000 and $650,000—plus ample bonuses and stocks taking them up to as much as $6.1 million—have said they would take an unspecified pay cut. But, after $441 million in revenue and $5.2 million in stock buybacks last year, they’re still taking money that was supposed to help small businesses keep paying their workers, and instead taking double the money and furloughing most of their workers. No wonder Democrats are pushing back on more of the same.