- The owner of the Ruth’s Chris Steak House has said it will repay $20 million in federal loans after facing backlash for its access to the money, which was meant to aid small businesses.
- It’s possible that Ruth’s needed the funding, as restaurants face declining revenues with dining rooms closed across the US.
- But the company has also enjoyed several years of profits. Last year, Ruth’s earned a profit of $42 million on revenue of $468 million. In turn, the company last year spent about $42 million on share repurchases and paying out dividends.
- Visit Business Insider’s homepage for more stories.
Ruth’s Hospitality Group Inc, the owner of the Ruth’s Chris Steak House chain of restaurants, said last week it would quickly repay $20 million in federal loans after backlash against the company’s access to the money, which was meant to aid struggling small businesses.
The company, which operates or franchises 159 restaurants, announced the repayment after an online petition circulated with more than 260,000 signatures demanding that Ruth’s return the loan.
Ruth’s and other chains that received federal funding started facing a backlash as funds dried up in the Paycheck Protection Program, a federal program that provided an initial $349 billion in funding for businesses amid the pandemic.
By the time the funds were depleted, just 5% of small businesses received assistance, though 60% had applied for funding, according to a survey by LendingTree. (Congress has since approved a second round of funding).
The backlash centered around the fact that several major chains, some of which could potentially draw from other funding sources, had access to federal funding meant to aid small businesses.
It’s possible that Ruth’s, which employs about 5,740 people could be facing a sharp decline in revenue. Like thousands of other restaurants across the country that have had to close their dining rooms, the restaurant has moved to a delivery and take-out
In response, Ruth’s has taken a number of cost-cutting measures, such as suspending all new restaurant construction and non-essential capital expenditures, suspending its quarterly dividend, and closing 23 restaurants where take-out and delivery isn’t viable. The rest of its restaurants remain open for take-out or delivery only.
Ruth’s has also furloughed workers and reduced salaries, the company said.
The company had about $87 million in cash on hand as of April 10 and $170 million in outstanding debt after drawing down on most of its credit lines, according to its most recent SEC filing.
Ruth’s has enjoyed several years of profits. Last year, the company earned a profit of $42 million on revenue of $468 million. In turn, the company last year spent about $42 million — more than twice the amount of federal loans it received in early April — on share repurchases and paying out dividends.