12 votes

Shake Shack, Ruth's Chris and other chain restaurants got big PPP loans when small businesses couldn't

8 comments

  1. [6]
    EscReality
    Link
    I don't know why I expected the money to end up where it was supposed to. I shouldn't be surprised, but I am so disappointed by all of this. I know many restaurant owners that will most likely not...

    I don't know why I expected the money to end up where it was supposed to. I shouldn't be surprised, but I am so disappointed by all of this. I know many restaurant owners that will most likely not survive the shutdown and to see multimillion dollar chains raking in the cash that they don't even remotely have a need for is so hard to swallow.

    I know people that have worked themselves ragged for decades to build up their businesses, literally not taking more than a day or two off for years at a time and they are going to lose everything because of the pandemic. My owner took a vacation this past October for a week, it was the first time he had taken more than two days off in a row in over three years. There are people out there deserving of this money and its not getting to them.

    Just as a follow up I thought I would post this reaction video by Lisa Smith, a local caterer in the Knoxville area that I saw posted on /r/KitchenConfidential

    7 votes
    1. [5]
      vord
      Link Parent
      It's quite strange really...I'm pretty sure most restaurants would do fine with a mild grant and unemployment for their staff. if only they had to stop paying rent. This is broadly true across the...

      It's quite strange really...I'm pretty sure most restaurants would do fine with a mild grant and unemployment for their staff. if only they had to stop paying rent.

      This is broadly true across the nation. Large quantities of everybody's income goes to paying rent and/or banks.

      The banks can afford to forgive the debt that would otherwise be owed. The landlords can afford to dip into their savings as they are expecting their tenants to do. If they lack it, they can file for unemployment like everyone else.

      Rent/mortgage strike is likely the only answer. But it suffers from a prisoners dilemma problem, where if not enough people do it, the results would be catastrophic for them.

      There's efforts underway to try to make that happen on May 1st, but I don't have my hopes up.

      9 votes
      1. [3]
        JXM
        Link Parent
        I inherited a piece of property that is occupied by a small business. I'm also lucky enough to still have a job and can (barely) get by without the rent money but have no savings to dip into. Most...

        The banks can afford to forgive the debt that would otherwise be owed. The landlords can afford to dip into their savings as they are expecting their tenants to do.

        I inherited a piece of property that is occupied by a small business. I'm also lucky enough to still have a job and can (barely) get by without the rent money but have no savings to dip into. Most of the rent goes into taxes or repairs on the building. I'd imagine there are a lot of small landlords in similar situations, managing one or two properties to get by as their full time job.

        But the business that rents the building been closed for nearly six weeks now and they paid minimal rent for the past two months (only because the business owner wanted to give me something as a show of good faith). I've cut back on my expenses to keep things manageable, but it's not something that my tenant or myself can sustain long term.

        Rent/mortgage strike is likely the only answer.

        I think we need the government to step in and take even more drastic action, like freezing debt or credit payments for everybody, to avoid a ripple effect from just a rent strike.

        8 votes
        1. [2]
          vord
          Link Parent
          You have property (defined as 'land I own that I use to extract profit and do not live in'). That immediately thrusts you into the top 10%...less than 90% of the country owns their own home, let...

          inherited a piece of property that is occupied by a small business. I'm also lucky enough to still have a job and can (barely) get by without the rent money but have no savings to dip into. Most of the rent goes into taxes or repairs on the building

          You have property (defined as 'land I own that I use to extract profit and do not live in'). That immediately thrusts you into the top 10%...less than 90% of the country owns their own home, let alone a rental property.

          Your rental is profitable, with 0 risk. The fact that it doesn't cover your lifestyle is not the point. If it isn't profitable, you could sell it and use the money obtained from the property value for other things. If your tenants go broke, they likely have nothing and have to start from scratch.

          Even if that property is only netting you $500 a month, that's $6,000 a year that you make on passive income. Without having to work.

          That's almost half the annual wages of a full-time minimum wage worker. It's more than the value of my car.

          If a landlord can't sustain, they can sell their properties and sustain on that.

          If a tenant can't sustain, they're likely to be homeless or worse.

          6 votes
          1. JXM
            Link Parent
            I’ll be the first to admit that I’m extremely lucky (as I mentioned above). The person who runs business owns about 10 small businesses that he has built up from scratch. It’s not passive though....

            I’ll be the first to admit that I’m extremely lucky (as I mentioned above).

            If your tenants go broke, they likely have nothing and have to start from scratch.

            The person who runs business owns about 10 small businesses that he has built up from scratch.

            Even if that property is only netting you $500 a month, that's $6,000 a year that you make on passive income. Without having to work.

            It’s not passive though. It requires maintenance, upkeep and management.

            If a landlord can't sustain, they can sell their properties and sustain on that.

            While true in theory, it takes a long time to sell property and probably wouldn’t help you in the short run.

            Also, I still think this is a much, much bigger issue than just a few months of rent relief for people.

            Again, that all said, I’m well aware of how lucky I am.

            5 votes
      2. EscReality
        Link Parent
        There is a little more to it than that, but mostly you are correct. Most kitchens that did not fully close laid off their hourly employees and the salaried staff (management, Chef, maybe the Sous,...

        It's quite strange really...I'm pretty sure most restaurants would do fine with a mild grant and unemployment for their staff. if only they had to stop paying rent.

        There is a little more to it than that, but mostly you are correct.

        Most kitchens that did not fully close laid off their hourly employees and the salaried staff (management, Chef, maybe the Sous, etc etc) are the only people working. Even if you are doing curbside in the areas that are allowing that, you are not making enough money to cover those salaries, never mind your operating costs (unless you are in a major area where you are going to stay stupid busy no matter what just based on population). Even if you are closed entirely, you still have operating costs; you still are paying insurance, utilities and any subscription stuff that the business uses (POS Systems and Music, etc).

        I live in a community that is primarily tourism based so the shut down also means total shut down for the majority of our restaurants (including my own). Because we are a tourism based community the cost of living is extremely high. My owner told me when we shut down that without major help he would only be able to pay rent for 2-3 months before it wipes out both his personal savings and the savings he has set aside for the restaurant. I obviously do not know exact figures on our rent, but I do know when I managed an Automotive shop in this same area years ago our rent was around $10k a month (the restaurant is in a better location, so I would guess it's more).

        We do a very good business normally but I know that my owner doesn't set a lot aside for the business because he chooses to pay his staff higher than anywhere else in the area (we are an upscale bistro). I know a lot of places in the area are in the exact same boat, without rental/mortgage relief by the end of the month we will be seeing a lot of places closing their doors in my area.

        The margins for restaurants are very small, in areas not as well off as us I expect many places are already gone for good.

        4 votes
  2. [2]
    Kuromantis
    Link
    short reaction Welp, Trump said there was gonna be no oversight, and no oversight is what we're getting with small businesses getting such terrible treatment.
    short reaction

    Welp, Trump said there was gonna be no oversight, and no oversight is what we're getting with small businesses getting such terrible treatment.

    2 votes
    1. EscReality
      (edited )
      Link Parent
      The conspiracy theorist in me feels like this is entirely on purpose so his buddies in the industry can get some fast cash.

      The conspiracy theorist in me feels like this is entirely on purpose so his buddies in the industry can get some fast cash.

      1 vote