Two months ago, New York City restaurateur Danny Meyer made headlines when, after an uproar, Shake Shack returned a $10 million loan from a program intended to help small businesses weather the shutdown.
But it turns out that he held onto even more money than that for other restaurants he controls.
According to data released this week from the Small Business Administration, between $11.4 million and $27 million was awarded to food service establishments in the Union Square Hospitality Group. Art Food LLC, an affiliate that runs the Cafes at MOMA, for example, received between $2 million and $5 million. Hudson Yards Catering received a loan in the same range. The Blue Smoke barbecue joints in the Flatiron and Battery Park City each received between $350,000 and $1 million. Other recipients included the Union Square Cafe, the Gramercy Tavern, Porchlight, and Daily Provisions. (The SBA did not reveal exact amounts of the loans, just ranges.)
Daily Provisions, one of Meyer's newer spots
PPP loans were designed for businesses with fewer than 500 employees, which was one reason why the loan to Shake Shack, a chain with 8,000 employees in 189 restaurants, was so controversial. But a provision in the law allowed hotels, restaurants, and bars to count the number of employees of each affiliate separately, rather than all together. (The National Restaurant Association had, it came out later, specifically lobbied for this provision.)
Similarly, the Union Square Hospitality Group — which had employed 2,300 people as of early March and laid off 2,000 by mid-March — applied for at least 11 loans, using a separate limited liability corporation for each application. But all of the loan applications listed the same business address, and the restaurant group markets each establishment as part of one organization, all burnished with the name of one of the most celebrated figures in New York City’s hospitality industry.
When contacted for comment by Gothamist on Thursday, a spokesperson for the restaurant group said that it had played by the rules.
“Because we operate in hospitality and food service, and each restaurant had fewer than 500 employees, our restaurants that needed the loan were eligible to apply,” said Jetty-Jane Connor, director of communications for the company. “Each restaurant is a separate legal entity, independent of all other businesses under the USHG umbrella, with its own EIN, payroll, and financial structure.”
The loans for Meyer’s sit-down establishments have largely flown under the radar, in part because the Union Square group is privately held, while Shake Shack is a publicly traded company, and therefore revealed it had received the loan through a security filing. In an interview in May with “Inside the Hive,” Meyer admitted applying for the loans, though he did not disclose their size.
“The calculus that I know we went through at the Union Square Hospitality Group was, ‘We don’t know when this is going to be over. There is no map,’” Meyer said. “‘Oh, my gosh. It looks like the government is doing Thing No. 1, which is providing a package for laid off employees. That’s a good thing. Oh my gosh, it looks like the government is also providing a loan to try to help businesses if they will rehire people. That also seems like a good thing. Let’s learn as much as we possibly can about it. Do we qualify or not?’”
At the end of April, the Small Business Administration limited the amount that restaurant groups could receive to $20 million. By that point, however, the Union Square Hospitality Group had already had its loans approved.
With research by Jake Dobkin and Megan Zerez
