Shake Shack returns money from coronavirus small business loan
Shake Shack is returning a $10 million Small Business Association loan it received during the coronavirus. FOX Business’ Maria Bartiromo with more.
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Sales at Shake Shack restaurants plunged in recent weeks as the fast-casual burger chain contended with store closures related to the coronavirus pandemic, the company said in its first-quarter earnings report on Tuesday.
Same-store sales fell 12.8 percent in the first quarter compared to the same period one year ago. The most precipitous decline occurred in March, when same-store sales fell 29 percent year-over-year as Shake Shack moved to a “to-go only” model in order to comply with social distancing protocols.
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Shake Shack’s revenue rose eight percent to $143.2 million for the quarter, falling short of the $1.45 million estimated by Wall Street analysts, according to Refinitiv data. The company reported a net loss of $1.1 million. Adjusted earnings were two cents per share, outpacing expectations.
“Given the actions we’ve taken to bolster our balance sheet, we are in a strong position to resume execution of our long-term strategic growth plan as we continue to come through the other side of COVID-19,” Shake Shack CEO Randy Garutti said in a statement. “You can bet that when the day comes where friends, families, coworkers, travelers and everyone in our community chooses to gather again, Shake Shack will remain a place they choose to do so."
Shake Shack was one of several larger chains to face criticism in April after it received financial relief as part of the Trump administration’s Paycheck Protection Program, an initiative meant to help small businesses weather the financial impact of the pandemic. The burger chain later returned a $10 million loan.
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Shake Shack shares see-sawed in after-hours trading on the mixed earnings results. As of April 29, 17 company-owned Shake Shack stores remained closed, and the “majority” of locations were open with reduced hours and limited operations.
Growth in Shake Shack's digital sales was highlighted as positive signs of recovery even though the pandemic has not subsided.
“However, there can be no assurance as to the time required to fully recover operations and sales to pre-pandemic levels,” Shake Shack added. “As the Company starts to plan for dining rooms to re-open domestically, albeit in a restricted and modified capacity, it will work closely with local authorities, Centers for Disease Control ("CDC") guidelines and its landlords during the process, and will clearly follow any and all social distancing and other safety restrictions and recommendations.”
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Shake Shack withdrew its guidance for fiscal 2020 due to uncertainty related to the pandemic.
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