Kura Sushi, a company with more than 400 locations globally – including more than 20 in the U.S – has decided to give back Payroll Protection Program (PPP) funding after it and other companies were criticized for taking funds meant for small businesses.
Kura Sushi is among the top 20 companies by market cap that took PPP loans – which are intended to go toward small businesses in order to protect employee payroll during the COVID-19 pandemic. According to a report by CNBC, the company has a market cap of USD 78 million (EUR 72 million) and took a loan of just under USD 6 million (EUR 5.5 million) from the program.
The criticism was first sparked by the revelation that large companies like Shake Shack – worth USD 1.7 billion (EUR 1.57 billion) in market cap – had taken some of the PPP loan funding intended for small businesses. In the wake of the criticism, Kura Sushi CEO Jimmy Uba announced the company will give back the PPP funds.
“We made the decision to return our PPP loan,” Uba wrote. “This was a difficult decision because our employees are extremely important to us, but it’s impossible to ignore the fact that our finances allow us to weather financial hardship for a longer period than independent restaurant owners.”
According to Uba’s letter, the company applied for the PPP loans soon after they were announced.
“When the CARES Act and PPP loans were announced, we were very excited. Receiving a loan not only meant that we could continue to keep paying the remaining staff on payroll, it meant that we could also rehire all of the employees that had been furloughed,” Uba wrote. “We never considered how intense the competition for the loans would be and applied for one immediately, so that we could continue paying our employees even though all of our stores were closed.”
In addition, Uba wrote, the CARES Act had, early on, an exemption for all businesses with North American Industry Classification System code 72 – which signifies an accommodation or foodservice business. That led the company to “interpret this as a deliberate effort by lawmakers to further support the restaurant industry.”
“With the Paycheck Protection Program, we assumed all restaurant employees would be able to continue being paid, regardless of where they worked, and that the funds would be enough for everyone,” Uba wrote. “This was a wrong assumption.”
While Kura Sushi has decided to return the loan, other companies have refused or have hesitated on promising to give the money back until further financial analysis. Among those who have not returned the money is, as of 27 April, Fiesta Restaurant Group, which represents the Pollo Tropical and Taco Cabana restaurant brands. The group has a market cap of USD 189 million (EUR 174 million) and took a loan of USD 10 million (EUR 9.2 million), among the largest granted.
