The Real Reason Ruth's Chris Steak House Is Getting So Much Backlash During The Pandemic

Because information about the movement of government money must be free and open to the public, the recipients of the United States' $350 billion Paycheck Protection Program (PPP) which was intended to help small businesses during the coronavirus crisis is readily available online. Some of the recipients are rather surprising, though, as some large chains including Potbelly Sandwiches and Shake Shack were able to receive sizable loans (via The New York Times). 

Funding for the program soon ran out and thousands of business owners were furious that though they were not able to procure low-interest federal loans, a company like Shake Shack with locations all over the United States and as far afield as the United Arab Emirates and South Korea was able to obtain $10 million in funding. Because the bill was intended to help mom and pop businesses and independent restaurateurs, public outrage ensued, and to deal with the media blowback, Shake Shack decided to return the funding that it had received. 

How the law worked in Ruth's Chris Steak House's favor

One massive international chain, on the other hand, has held on to its funding. Only one company received double the amount that Shake Shack received: Ruth's Hospitality Group, more commonly known as Ruth's Chris Steak House. Ruth's Chris, which boasted a profit of $42 million last year, received two $10 million PPP loans for a total of $20 million in government funding (via Business Insider). 

Large companies, such as Ruth's Chris Steak House and Shake Shack, were able to apply because of legislation that read that any company with fewer than 500 employees per location was able to apply. This meant that Ruth's Chris Steak House, even with 147 locations worldwide, was eligible. As of today, more than 217,000 people had signed an online petition demanding that the steakhouse, which has a market cap of $225 million, return its government loan money.

Ruth's Chris has decided to quickly repay the small business loan

Echoing the sentiments of many truly small businesses, Sabir Mujtaba, president of Veloc Inc., a small staffing company that did not receive assistance due to depleted funds, told The Wall Street Journal, "Multimillion-dollar companies are getting millions of dollars, it just doesn't make sense."

But after the enormous amount of backlash and public outcry the company received, CNBC reported Thursday that Ruth's Hospitality Group has announced the decision to quickly repay the $20 million in small business loans it had received two weeks ago. 

As the company made the announcement to quell the outcry, president and CEO of Ruth's Hospitality Cheryl J. Henry said, "We intended to repay this loan in adherence with government guidelines, but as we learned more about the funding limitations of the program and the unintended impact, we have decided to accelerate that repayment," the President and CEO Cheryl J. Henry said in a statement.

A source told CNBC that the money had not yet been used and that Ruth's would "carefully weigh all options available to them" looking to the future for more funding options.