Powered by Topple

Largest Burger King franchise owner with massive line of credit plans to file for business relief loan

Powered by Topple

It never fails: Whenever Congress passes out free money, there is waste, fraud, and particularly abuse.

And we’re finding that it’s no different in the case of the massive $2.2 trillion CARES Act — the coronavirus relief measure that is stuffed with so much pork there was no possible way to keep away the opportunists and the grifters.

The owner of the largest Burger King franchise appears to be exploring plans to apply for a small business loan as part of the coronavirus relief effort despite having a $145 million credit line, according to the UK’s Daily Mail.

Carrols Restaurant Group, with 1,036 stores, filed paperwork with the Securities and Exchange Commission late last week indicating the company’s intention to grab some of that coronavirus relief money.

“If necessary, repay indebtedness incurred pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act,” the company wrote.

And by the way, Carrols Restaurant Group hauled in $1.4 billion in revenue last year alone.

This outrage comes as officials with the Shake Shack franchise said they would give back the $10 million Small Business Administration loan they had received after being lambasted for taking it in the first place.

The Daily Mail notes:

The Small Business Administration (SBA) loan is a key part of the government’s $2.2 trillion aid package and is aimed at helping small companies keep paying their employees and their basic bills during the shutdowns so that they are able to reopen quickly when public health allows.

It limits loan recipients to businesses with fewer than 500 employees and revenue of less than $2.5 billion. 

That said, the CARES Act contains an exception for foodservice businesses that employ fewer than 500 people per location — meaning restaurant chains are free to apply for loans under the program as well, the same as a locally owned restaurant or bar.

The Carrols group has restaurants in 23 states; the company also owns 65 Popeyes franchises as well. Buzzfeed noted that CEO Daniel T. Accordino made $3.7 million in 2018.

The problem with massive government ‘relief’ outlays, however, is that regardless of intentions, such schemes rarely work as intended. In 2009, for instance, the Obama administration’s American Recovery and Restoration Act, passed in response to the “Great Recession,” was an abject failure by any measure.

When it passed a Democrat-controlled Congress, President Obama promised that the $1 trillion boondoggle wold “jump-start our economy,” “create new jobs,” and laid the groundwork for “many years of economic growth.”

He also claimed the program would “cut the deficit in half by the end of [his] first term” and “put our nation on sound fiscal footing,” according to US News.

But real economic growth remained stagnant; job growth was tepid, at best; and Obama ended up doubling the national debt by the time he left office.

What’s more, other programs contained in the bill directly intended to help homeowners keep their homes, for example, also fell far short of stated objectives. The Intercept reported in December 2015:

When President Obama announced the Home Affordable Modification Program, or HAMP, on February 18, 2009, in Mesa, Arizona, he promised it would assist 3 to 4 million homeowners to modify their loans to avoid foreclosure. Almost seven years later, less than 1 million have received ongoing assistance; nearly one in three re-defaulted after receiving inadequate modifications; and 6 million families lost their homes over the same time period.

Now we have another trillion-dollar program that is falling short of expectations. The Daily Mail notes that more than one-quarter of the $350 billion allowed for small businesses under the CARES Act has gone to fewer than 2 percent of companies that got relief, “including a number of publicly traded companies with thousands of employees and hundreds of millions of dollars in annual sales.”

That has created a massive “backlash from smaller establishments and mom-and-pop restaurants, one of the hardest-hit sectors as diners stay home due to lockdowns.”

But Shake Shack CEO Randy Garutti and founder Danny Meyer noted in a blog post that, while they are immediately returning the $10 million SBA loan their company received, “how is it possible that so many independent restaurants whose employees needed just as much help were unable to receive funding?”

Great question. Maybe part of the answer is in the fact that this massive spending bill was written and passed in near-record time.

Jon Dougherty

Comments

Latest Articles