Brands to Boycott: The Corrupt Companies of COVID

After the SBA ran out of funds this week, it was revealed that the average SBA PPP loan was $206,000. For a loan intended to cover 2.5 times the monthly payroll expenses of a small business, this is extraordinarily large. The numbers indicated a core problem with the program: It went to large businesses instead of small ones.

The Paycheck Protection Program had a loophole. It was open to any company of 500 or less employees in a single location. This opened the entire program up to restaurants and hotels of any size. And 500 employees itself is not very small.

Let’s take a look at some of the companies that we know took advantage of this small business program.

Potbelly ($10 Million)

Potbelly, a publicly traded company with $409 million in revenue every year, decided to avail itself of $10 million in funds. Since accepting these funds, it’s gone on the defensive, deleting any criticism hurled its way on social media. Founded in 1977, the sandwich shop has previously had a mostly ignored reputation. Potbelly recently hired a new Chief Financial Officer and seems to have an optimistic outlook about restructuring and moving forward.

Alternatives: Literally any other hot sandwich shop.

Ruth’s Chris ($20 Million)

With over 100 high end steakhouses throughout the country, Ruth’s Chris doesn’t seem to be struggling. An Outback Steakhouse with darker lighting, Ruth’s Chris has opened quite a few new locations in the last few years: Las Vegas, Denver, Albuquerque, Odenton, and Reno. In 2011, Ruth’s Chris was sued for discrimination against female employees, including a “sexually charged atmosphere.” In 2017, it was accused against discrimination against African-American customers.

PPP funds were limited at $10 million, but Ruth’s Chris intentionally skirted around this barrier by applying with two subsidiaries.

Alternatives: If you ask Google for ‘Alternatives to Ruth’s Chris,’ the top list says Denny’s. This is neither correct nor incorrect. Perhaps get a cast iron pan.

Shake Shack ($10 Million)

It started out as a hot dog cart, but today Shake Shack is worth more than $450 million in revenue a year and growing. Shake Shack is aggressively growing, in fact, and expects to have 320 or more locations in by the end of this year. Despite this, it still acquired a $10 million fund from the Small Business Administration.

Alternatives: Five Guys, In-n-Out. It’s burgers.

Taco Cabana ($10 Million)

Taco Cabana has been serving fast casual semi-Mexican food since 1978, and for a time was a subsidiary of the same company that owned Burger King. It was split into Fiesta Restaurant Group later, a publicly traded company. Taco Cabana has 162 locations throughout the south.

Alternatives: Taco Casa, Taco Mayo, Taco Bell. It’s bold of companies that are so imminently replaceable to anger so many people.

But That’s Not All… There’s the Construction Industry, Too

We know that the loans given out were exceptionally large. But we don’t have a full list as to who received PPP loans. In fact, the restaurant and hospitality industry was not even one of the industries granted the largest percentage of funds.

The largest industry was construction.

It’s difficult to say which individual construction companies took advantage of the loan. But what is known is that most construction firms were not out of business during COVID. Construction companies were marked as essential in nearly every state.

This brings us to something critical: The PPP loans were naturally tilted towards those who were not suffering from the pandemic. Companies that were healthy were able to keep their employees on and qualify for the PPP program. Companies that were suffering were forced to lay their employees off, and therefore didn’t qualify.

Haven’t These Companies Been Impacted, Though?

A Ruth’s spokesperson told BuzzFeed News the company took the loans to provide additional liquidity. “As a franchised organization, it is our responsibility to our nearly 30 small business owners, team members, customers and shareholders, to do everything we can to ensure Ruth’s Hospitality Group is well positioned to emerge from this situation a strong and viable entity.”

Such is the rallying cry for the big business: The money was there, so we took it.

It’s inarguable that companies such as Potbelly and Ruth’s Chris were impacted by COVID. But all companies were, including businesses that don’t have as many options open to them. Companies such as Ruth’s Chris have liquidity available. They have loans available — they have established relationships with bankers, and they have open lines of credit.

They didn’t need to take advantage of a program meant for small business in order to survive. They did so because they could and because it was easy.

What Can People Do?

Very little, except write to their representatives, and make sure that it doesn’t happen again. Presently, the SBA is about to get more funds for the EIDL and PPP programs. But without any changes, these funds are only going to go to the biggest businesses yet again.

America has a problem. Whether you love capitalism or hate it, the issue is such: Larger businesses are taking direct action to squeeze smaller businesses out of the market. They are leveraging government programs and loopholes to do so. Amazon is thriving, but local retail shops on main street are closing their doors forever. Ruth’s Chris is getting a loan, but your small town pizzeria is not.

For the companies that are known — such as Ruth’s Chris and Potbelly — boycotts are an excellent way for consumers to send a message. But because not all companies have revealed that they received a PPP loan, it isn’t a complete solution. A complete solution requires that small businesses get the funds they need, and that they be protected from the machinations of larger businesses.