Connect with us

Business

Shake Shack Returns $10M Loan for Small Businesses

Published

on

  • Shake Shack will return the $10 million it received from the Payroll Protection Program so that other small businesses have a chance at gaining financial assistance.
  • The PPP ran out of funding after two weeks, leaving many small businesses empty-handed, many of which have less access to other company-saving means than chains like Shake Shack.
  • Shake Shack is also just one of the many chain restaurants that got millions of dollars the PPP, which has led to frustrations about how PPP funding was distributed.
  • Congress is working on getting more funding for the PPP, with a plan that could add another $310 billion, as well as $75 billion to help hospitals and $25 billion to expand testing nationwide. 

Shake Shack Returns Loan

Shake Shack is returning the $10 million it received from the Payroll Protection Program so that businesses in higher need for financial assistance can get it. 

The New York-based burger joint, which is publicly traded and has 275 locations worldwide, released a statement on Monday morning announcing their decision. 

“We’re thankful for [the loan] 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,” CEO Randy Garutti wrote. 

Chain restaurants and hotels with under 500 employees per location were eligible for the PPP loan. According to Garutti, very few, if any, chain restaurants employ more than that per location. He said that the PPP “came with no user manual and it was extremely confusing” but that his company ultimately decided to apply “to protect as many of our employees’ jobs as possible.”

Garutti released this statement along with Danny Meyer, the CEO of Union Square Hospitality Group, which founded Shake Shack. While Shake Shack has taken a financial hit as a result of the coronavirus, USHG is facing harder times. USHG is an independent restaurant group in New York, and it closed all of its restaurants in March. The group also laid off 2,000 employees. 

Independent Businesses Get Left Out

USHG was able to get some loans approved, but not enough. Like many other small businesses in the country, the PPP ran out of funding before it could give them their much-needed boost. Still, on top of Shake Shack, other chains like Ruth’s Chris Steakhouse, Potbelly Sandwich Shop, Kura Sushi and more got a pretty penny from the loan. 

“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?” the statement by Garutti and Meyer continued. “We now know that the first phase of the PPP was underfunded, and many who need it most, haven’t gotten any assistance.”

While both Shake Shack and USHG are based in the Big Apple, small businesses around the country are feeling the impacts of this. April Richardson, the owner of local D.C bakery DC Sweet Potato Cake told CNN she applied for the PPP and got nothing. Richardson was hoping for far less than the millions places like Shake Shack received, with the report noting that a potential $23,000 would have gone a long way for her bakery.

Since she did not get it, she had to ask three of her employees to file for unemployment.

“It’s a reminder to small businesses that our voices are dampened,” she told CNN. “What are we doing this for? Why are we in business just to be told we’re not good enough because we’re not big enough?”

The Future of the PPP

Because the funding ran out so quickly and was spread to chains who seemingly do not need it as much as hyperlocal businesses, Garutti and Meyer laid out suggestions for how Congress should amend the PPP going forward.  They advised legislators to spread funding more efficiently and assign restaurants to banks so that locations without pre-existing bank relationships are not left out. They also urged them to remove the clause that states that businesses rehire employees by June. 

“That timeline is unlikely achievable for full service restaurants,” they wrote, specifically referencing spots based in New York, which has become the epicenter of the U.S. outbreak.

There are plans in motion to add more funding to the PPP.  Treasury Secretary Steven Mnuchin is hopeful that Congress can get something agreed on as soon as Monday, with a vote by Wednesday. This deal would send another $310 billion to the PPP. Another $75 billion would help hospitals and another $25 billion would expand testing nationwide. 

It is unclear how negotiations will go, as Democrats have been pushing for more hospital funding, while Republicans want that funding to be allocated in an entirely separate piece of legislation. 

See what others are saying: (CNN) (Wall Street Journal) (NPR)

Business

Child Safety Advocates Urge Facebook To Scrap Plans for Instagram Kids

Published

on

  • Nearly 100 child safety experts and international organizations sent a letter to Facebook Thursday criticizing its plans to develop an Instagram app for children under 13.
  • Facebook claims the app will offer parental controls and is meant to create a safer space for kids, who are often lying about their age to access the normal version of Instagram.
  • Still, critics point out that children already on Instagram are unlikely to switch to a kids version. Many also cited concerns about screen time, mental health, and privacy, arguing that younger children are not ready for such a platform.
  • U.S. Lawmakers expressed similar concerns earlier this month, saying, “Facebook has an obligation to ensure that any new platforms or projects targeting children put those users’ welfare first, and we are skeptical that Facebook is prepared to fulfill this obligation.”

Instagram for Kids

An international group of 35 organizations and 64 experts, coordinated by the Campaign for a Commercial-Free Childhood, released a letter Thursday urging Facebook to abandon its plans to release an Instagram app for kids under 13-years old.

Plans for Instagram Kids have been public for about a month after Buzzfeed News obtained emails about the app in mid-March. Since then, there have been widespread concerns about how such an app could affect children.

Thursday’s letter argues that a version of Instagram targeting under-13-year-olds raises concerns about privacy, screen time, mental health, self-esteem, and commercial pressure. Stephanie Otway, a spokesperson for Facebook, said the company understands the concerns presented by the Campaign for a Commercial-Free Childhood.

“We agree that any experience we develop must prioritize their safety and privacy, and we will consult with experts in child development, child safety and mental health, and privacy advocates to inform it,” she said.

“The reality is that kids are online. They want to connect with their family and friends, have fun and learn, and we want to help them do that in a way that is safe and age-appropriate. We also want to find practical solutions to the ongoing industry problem of kids lying about their age to access apps,” Otway added, noting the reality of how many children interact with age-gated apps.

Unlikely To Stop Children From Joining Regular Instagram

The idea that children would just switch to Instagram Kids received pushback from the Campaign for a Commercial-Free Childhood. In fact, the group’s executive director, Josh Golin, pointed out that most kids who are currently on Instagram are between 10 and 12-years-old, and they likely wouldn’t migrate over to Instagram Kids because it will be perceived as “babyish and not cool enough.”

The children this will appeal to will be much younger kids,” Golin explained. “So they are not swapping out an unsafe version of Instagram for a safer version. They are creating new demand from a new audience that’s not ready for any type of Instagram product.”

It’s unknown exactly how the app would work, but it would feature content similar to what is allowed in other age-appropriate apps, such as YouTube Kids. One of the few details given out so far is that Instagram Kids will be ad-free and feature parental control options.

Concerns over Instagram Kids has also come from lawmakers. On April 5th Senators Edward Markey (D-Mass.) and Richard Blumenthal (D-Conn.), alongside Representatives Kathy Castor (D-Fla.) and Lori Trahan (D-Mass.), sent a letter to Facebook CEO Mark Zuckerberg expressing concerns that “children are a uniquely vulnerable population online, and images of kids are highly sensitive data.”

“Facebook has an obligation to ensure that any new platforms or projects targeting children put those users’ welfare first, and we are skeptical that Facebook is prepared to fulfill this obligation.”

See what others are saying: (TechCrunch) (BBC) (NBC News)

Continue Reading

Business

Retail Sales Jump Amid Stimulus Spending, Unemployment Claims Plunge To Pandemic Low

Published

on

  • The Commerce Department released a report Thursday recording a 9.8% spike in retail sales for the month of March.
  • That surge was largely driven by stimulus check spending, with restaurant, sporting goods, clothing and accessory, and auto sales all being among the top-performing sectors in retail for the month. 
  • Coupled with that news, the Labor Department reported that 576,000 unemployment claims were filed last month — a pandemic low. 
  • That figure is still significantly higher than the roughly 200,000 weekly unemployment claims filed before the pandemic. 

Retail Sales Spike

U.S. retail sales for the month of March jumped 9.8% from February, according to a Thursday morning report from the Commerce Department.

That spike is largely thanks to the most recent round of stimulus checks from Congress.

March was the best month of retail spending since May of last year, which at the time saw an 18.3% gain following the first wave of stimulus checks.  

Sales in the bar and restaurant industry rose 13.4%, making them among the retail sectors that saw the biggest spikes last month. That’s largely a result of relaxed lockdowns stemming from the country’s current pace of around three million vaccinations a day. Meanwhile, sporting goods spending rose 23.5%, clothing and accessory sales rose 18.3%, and motor vehicle parts and dealer sales rose 15.1%.

“Spending will almost certainly drop back in April as some of the stimulus boost wears off,” wrote Michael Pearce, senior U.S. economist at Capital Economics, “but with the vaccination rollout proceeding at a rapid pace and households finances in strong shape, we expect overall consumption growth to continue rebounding rapidly in the second quarter too.” 

Unemployment Hits Pandemic Low

The retail sales data came around the same time that the Labor Department released this past week’s unemployment figures, which dropped to a new pandemic low of 576,000 claims. 

That’s a massive difference from almost exactly a year ago when 6 million people filed for unemployment in a single week. It’s also a significant decline from the 769,000 people that filed jobless claims last week, especially since some analysts had predicted there would be around 700,000 jobs lost with this week’s report.

That said, unemployment claims are still much higher than the around 200,000 a week that were being filed prior to pandemic closures.

“You’re still not popping champagne corks,”  Diane Swonk, chief economist at the accounting firm Grant Thornton, said according to The New York Times. “I will breathe again — and breathe easy again — once we get these number[s] back down in the 200,000 range.”

See what others are saying: (The New York Times) (CNBC) (Fox Business)

Continue Reading

Business

Hundreds of Businesses and Celebrities Join Growing Fight Against Restrictive Voting Efforts

Published

on

  • In a letter published Wednesday, hundreds of major companies, law firms, corporate leaders, and celebrities banded together “to oppose any discriminatory legislation or measures that restrict or prevent any eligible voter from having an equal and fair opportunity to cast a ballot.”
  • The list of signatories includes companies like Facebook, Twitter, and Amazon; celebrities such as Demi Lovato, Katy Perry, and Samuel L. Jackson; and billionaire investor Warren Buffet, among others.
  • Though the letter does not address any specific voting legislation, it was organized by Kenneth Chenault and Kenneth Fraizer, who also organized a letter late last month in which more than 70 Black executives urged companies to take a stand against GOP-led restrictive voting proposals being floated in dozens of states. 

Hundreds of Companies Oppose Restrictive Voting 

The number of companies speaking out against a series of GOP-led voting proposals is growing, despite calls from notable Republicans for boycotts against companies doing so.

In a letter published Wednesday morning, hundreds of major companies, law firms, corporate leaders, and celebrities united behind what journalist David Gelles described as “the biggest show of solidarity to date.”

The letter itself doesn’t specifically call out Republican voting efforts. Instead, the statement reads, “We stand for democracy,” with the signatories also vowing “to oppose any discriminatory legislation or measures that restrict or prevent any eligible voter from having an equal and fair opportunity to cast a ballot.”

Still, the letter comes in the middle of an ongoing battle between corporate America and the GOP, which is backing dozens of state proposals that many have condemned as restrictive and discriminatory against poorer individuals and people of color.

The slew of companies that signed Wednesday’s letter includes Target, Netflix, Bank of America, Facebook, Twitter, Microsoft, Starbucks, Amazon, Mastercard, American Airlines, United Airlines, and others. 

The letter also boasts star-power from celebrities like Demi Lovato, Katy Perry, Gwyneth Paltrow, George Clooney, and Samuel L. Jackson, among others. Notably, billionaire investor Warren Buffet also added his name to this list.

Companies Debate Taking Action Against States That Pass Restrictive Voting Measures

Wednesday’s letter was organized by Kenneth Chenault and Kenneth Frazier, who late last month also organized a similar letter from a group of more than 70 Black executives. That message, which urged companies to speak out against the GOP-led proposals, has largely been credited with helping to catalyze the fight between the GOP and corporate America. 

This past weekend, the two also partially led a Zoom call that featured over 120 CEOs and business leaders. 

During that call, participating executives considered a number of possible steps, including pulling donations to politicians who support restrictive voting measures, refusing to move business or jobs to states that pass such laws, and even relocating events; however, no hard plans were actually set into motion.

Still, some groups have already gone forward with various forms of protests against such laws. Last week, Major League Baseball announced it was moving its All-Star game out of Georgia, which recently passed a series of restrictive voting measures. On Monday, actor Will Smith and director Antoine Fuqua also announced that they no longer plan to film their runaway slave thriller “Emancipation” in the state.

Some Companies Didn’t Speak Out in Wednesday’s Letter

Both federal and state Republicans have been very vocal as businesses have continued to lob criticism at their proposed laws. 

Last week, Senate Minority Leader Mitch McConnell warned businesses to “stay out of politics,” though he later walked back that statement.

Two weeks ago, the Georgia state House voted to strip Delta Airlines of its tax breaks after the company spoke out against the state’s new voting laws. In fact, that reprimand might explain why it and other Georgia-based companies like Coca-Cola were absent from Wednesday’s letter. 

According to The New York Times, people involved in the process of organizing this letter said those companies feared more blowback and also did not feel the need to speak up again.

Connected to that, The Times reported that some companies originally tried to have the line of “oppos[ing] any discriminatory legislation” removed, but they later signed anyway after Chenault and Frazier insisted the line was crucial.

See what others are saying: (The New York Times) (The Washington Post) (The Hollywood Reporter)

Continue Reading