Chicago-based restaurant chain Potbelly Sandwich Shops announced it will return $10 million in federal coronavirus aid it received under the Paycheck Protection Program.
"In order to financially support our in-shop employees, and based on SBA guidelines, we applied and qualified for assistance under the Payroll Protection Program (PPP)," the company said in a Saturday statement. "We were surprised and disappointed when the fund was quickly exhausted, leaving many without help."
"We are returning the PPP loan after further clarification from the Treasury Department," the statement continued. "We will continue to seek alternatives to help support our employees and enable them to return to work so they can serve our loyal customers."
The coronavirus shutdown has hurt Potbelly's sales, forcing the company to furlough employees, close shops and cut salaries at all levels of the organization.
Potbelly CEO Alan Johnson said in a statement on March 20 that same-store sales were up 2.5 percent in the first 10 weeks of 2020, but everything changed as the coronavirus spread across the United States.
"We were on pace to record our fourth straight quarter of sequential same-store sales improvement and our first positive quarterly comp since the fourth quarter of 2016," he said. "However, market conditions have changed substantially in the last week as we face the realities of COVID-19."
As a result, the company withdrew its guidance for fiscal 2020 and plans to provide an update during their first quarter earnings call on May 5.
Potbelly, who received the maximum SBA loan amount, has a market cap of $71.2 million.
The restaurant chain is the latest company to return federal aid meant for small businesses that were authorized under the CARES Act, following decisions by Ruth's Chris Steakhouse and Shake Shack last week. According to the Associated Press, at least 147 publicly traded companies disclosed getting about $555 million from the initial $349 billion pot of federal loan funds.
The Treasury Department is giving public companies who received the funds until May 7 to pay back the loans.
Potbelly stock closed at $3.01 per share on Friday, down more than 5 percent.
The Associated Press contributed to this report