Kura revolving sushi bar, the chain of 25 restaurants based in Irvine, decided to repay the $ 6 million Paycheck Protection Program (PPP) loan he had received under the federal CARES law. The move echoes Shake Shack, which received $ 10 million in federal loans before a public outcry forced the New York-based burger chain to return funds.
Kura Revolving Sushi Bar is a publicly traded company with more than two dozen locations across the country, including 11 in Southern California. Its current market value is $ 87 million; it revealed earlier this month that it has $ 24 million in cash reserves, as well as a $ 20 million loan from its Japanese parent company, Kura Sushi, Inc.
Kura Chairman and CEO Jimmy Uba today wrote a letter on the restaurant website explaining that the company’s intention was to use the $ 6 million federal loan to keep its un-laid off workers for as long as possible. Kura closed most of its restaurants on March 18, following nationwide dining room closures in response to the ongoing coronavirus pandemic.
When the PPP announcement went public, Uba said the company was initially excited to keep the remaining staff on the payroll and even rehire employees on leave, who made up around 35% of the workforce. the company’s workforce. However, the competition for the $ 350 billion set aside for PPP loans was fierce, and seems to have favored well-connected entities – leading to several lawsuits against the banks issuing the loans – including many large, large-capitalization restaurant chains, as Ruth’s Chris Steakhouse. As a result, countless independent restaurants in Los Angeles and across the country have been excluded from the program.
Uba hopes the funds returned will go to businesses and potentially other restaurateurs who are not as well capitalized as Kura:
With the Paycheck Protection Program, we assumed that all restaurant workers could continue to be paid, regardless of where they worked, and that the funds would be sufficient for everyone. It was a false assumption.
Today we made the decision to repay our PPP loan. It was a difficult decision as our employees are extremely important to us, but it is impossible to ignore the fact that our finances allow us to overcome financial difficulties longer than independent restaurateurs. We hope that these funds will be shared fairly among deserving applicants.
The PPP was originally intended to help small businesses with fewer than 500 employees pay their employees during the coronavirus pandemic, keeping workers on the payroll and off unemployment. However, the bill allowed companies with fewer than 500 workers by location qualify, which meant that big chains like Shake Shack, which potentially have thousands of employees, could get PPP funds. As long as 75% of the loan is used for salary expenses, government guaranteed loans will be canceled.
Ruth’s Chris Steakhouse, Potbelly and other major restaurant chains have not returned the funds. Ruth’s Chris Steakhouse, in particular, which was able to secure double the maximum of $ 10 million through the use of two branches, is a petition to repay the federal loan funds so that the money can go to “real small businesses”.
Congress passed another aid bill this afternoon with $ 310 billion to replenish the paycheck protection program; $ 30 billion has been set aside specifically for community lenders, with an additional $ 30 billion for midsize banks and credit unions, which is expected to increase the number of small businesses eligible for federal loans.