Danny, thank you so much for joining me. I always traditionally start with the same question, which is asking you to introduce who you are and what you do.
Well, my name is Danny Meyer and I am a longtime restaurateur. I founded Union Square Cafe in 1985 when I was 27. So, you can do the math on that. And since then, there's been many, many full service restaurants all in New York City, and Shake Shack, which I'm happy to say is even in the UK.
Now, you've become famous not only for feeding that many happy people in New York and through Shake Shack, but through the first book that you wrote. And the first book, Setting the Table, has become for anyone like myself or anyone who listens to this, anyone who's obsessive about human nature and human culture, it's become this Bible for one of a better word. And so when I saw that you had this new book, What Could Possibly Go Right, coming out, it was the thrill of seeing your favorite show being recommissioned for a new episode. I just wanted to sort of really go into the themes of culture today. And firstly, I just wanted to ask why do you think you were so interested in culture? You describe yourself as a people pleaser, but what is it that makes you so interested in the themes of human interaction like that?
I think some of it has to do with having grown up in the Midwest part of the United States in St. Louis, Missouri. And as I look back, all the people who I grew up with and the restaurants that I went to, they were just, I felt like they were on your side. The food wasn't nearly as good back home as it would be when I moved to New York. But then when I moved to New York and the food was really good, this was in the 1980s, the places didn't seem to be very nice to you. And I just asked myself, whoever wrote the rule that the food would taste worse if you went to a place where people were on your side. And I just started tugging at this meaning of hospitality. And it finally dawned on me back in the old days, meaning pre-internet, we had something called the Zagat survey. It was a paper and pencil opportunity for New Yorkers to weigh in on what they thought of all the meals they had had that previous year. And you could rate a restaurant based on its food, decor, and service. And you could also say which were your five favorite restaurants that you had been to. So what I started noticing year after year was that as my one and only restaurant for the first 10 years of my career was Union Square Cafe, that was before Gramercy Tavern. But Union Square Cafe kept marching up the list of New York's favorite restaurants. And yet, even the year that it first hit number three as the third favorite restaurant in New York, the food was the 12th best and the service was the 10th best and the decor was 65th best. And I said, 'We must be doing something that Zagat's not asking about.' And the same thing happened year after year. And I finally it hit me like a lightning bolt and I said, 'Service is very different than hospitality. And we must be at the top of hospitality which is the way you make people feel whereas service was the way you technically delivered the product.' So that's what I started thinking about deeply. I started thinking about the word hospitality what it meant what it didn't mean and I started preaching that to my team. And then when we opened Gramercy Tavern, I'll just fast forward a few years, Union Square Cafe and Gramercy Tavern would vie for number one and two with each other as New York's favorite one and two restaurants and then Eleven Madison Park after several years. My next restaurant was in the top five. We had three of the top five favorites. We never had three of the top five food scores. They were good, but I started really getting the religion that hospitality, the way you made people feel, the sense that you were on someone else's side was the key. And then finally, it also hit me that we all have the same five stakeholders in life. If you're in business, you've got people who work there and you've got customers and you've got a community in which you do business. You got suppliers and you got investors. That I would actually unleash the hospitality in that order for our stakeholders to create a virtuous cycle believing that the better our staff members felt when they came to work, the greater were the odds that our guests were going to feel remarkably good. And the better our guests felt, the more revenue we'd have and therefore we could do more things for our community. And the more our community embraced us, we'd have even more revenue and we could get better suppliers, not just people who had the best product, but who would deliver most quickly and give us the best prices. And then that would leave more for our investors if we were half good at running the business. And it turned out that really happy investors were the best way to have happy employees because that's when people get raises and promotions when you're making money. So this was the virtuous cycle of enlightened hospitality. And when I wrote Setting the Table, it forced me to make intentional things that had always been intuitive to me. I didn't write it because I knew it. I wrote it to learn it. And then once I learned it, I was able to teach it. And that's why it's taken about 20 years to write What Could Possibly Go Right because I've spent the last 20 years working on everything I learned from Setting the Table.
I'm really fascinated. I'll skip ahead to a question that I was going to ask later then because I love the idea that writing is this meditative process which actually helps us organize our thoughts. And so what you're saying effectively there is that even though you've got these 20 years of learning since Setting the Table, actually it's the moment now, probably it took you a couple of years or whatever to write this book, it's the moment of setting it down into paper it's helping you define it and crystallize it. So has there been anything about that process then that has helped you refine your take?
A thousand percent. I think I'm not the kind of writer that has a million ideas and says, 'What I've really got to do is share these ideas with the world.' I think of myself more like a chef. So, the first thing a chef does is they, you know, they look at what's in the larder or at the green market and they come up with an idea and they put it together and they cook it and it's either good or it's not good. They work on it. They try to make it better. Then they try to teach it to their own cooks. And once their cooks can do it really, really well, then they start to serve it to their guests in the restaurant. And if their guests really, really like it a lot, there may come some point where the chef says, 'You know what? I now have this many recipes. I think I'm going to write a book, a cookbook, number one, so that the next cooks can cook this stuff, you know, really faithfully, but then furthermore, why not share it with other people at the same time?' But the process didn't start by for me. So for me, I have a bunch of business theories and business ideas. I didn't wake up one morning thinking these things consciously or intentionally. They were all intuitive. But after working on them year after year after year and then teaching them to our team and seeing that they worked, this is after Setting the Table. We've been using Setting the Table as our, you call it a Bible, I call it our playbook. We've been using it as our playbook now for probably the last 20 years or so.
I was interested. It took you four years to do that. And was it only because you saw other people doing that that gave you the confidence to do it yourself?
Yes. You know, there's a little bit of, I think I'm a reasonably humble person. You can take any gift you may have too far. And my humility got in the way. And I just said to myself, don't make your own team read this book. You wrote it. It's like I don't want to be the kind of person that spends 20 minutes making you see all my baby pictures or the, you know, pictures of my family. I just kind of felt like I wrote the book. I wrote it for me because I wanted to get this stuff out of my heart and out of my head and on paper. And yes, it took me four years to make it required reading and training for our team. And what did that kind of frustratingly wherever I would go, literally as far as South Africa or all over this country, I would have people in restaurants, not only restaurants, hardware stores, beauty salons say, you know, we use your book as a way to understand hospitality. And I said to myself, this is our bloody playbook. Why are we not... It would be as if I had written a cookbook or my chef had written a cookbook and I would go to other restaurants and they were cooking our dishes better than we did and that was very, very frustrating. So that's when we got really, really dogged about, we created book clubs within our company and really brought it to life and I said if these are our recipes we better be cooking them better than everybody else.
Really interested, this quite often when we get obsessed with culture. One of the areas that we often immediately see culture is in sports teams and what people will push back and say well look you can't necessarily use the metaphor of sport because it's so imprecise but everything you say about hospitality I'm immediately struck firstly the thing that you've mentioned there that the idea there is a through line between dealing with our employees well and our customers being happy is a really interesting thing the only thing I was worried about is people might say well hospitality is different. Now, in the same way sport maybe is different, is hospitality different or is it actually a perfect metaphor for keeping customers happy and anything that applies in a restaurant would apply in any business? What's your take on that?
Well, first of all, let me answer the question you first posed, which is is sports an apt metaphor? And I think it absolutely is an apt metaphor. I believe that hospitality is a team sport just like any sports team. Now, you may say a singles match in tennis is not a team sport, but even that singles player has a team up in the crowd. That's, you know, part of the training and part of the coaching, etc. Anyway, when I think about a great sports team, let me, I know this may not land incredibly well with your audience, but if I'm watching a baseball game or what we call football or basketball game, I can tell almost everything I need to tell based on, I'll take baseball for a moment. Looking at the dugout where all the players are waiting between innings when their team is at bat. Now, baseball has more statistics than almost any sport there is. All the statistics in baseball are connected to what happens on the playing field, right? Fielding percentage, batting percentage with runners on base, batting percentage when you're batting from the left side, the right side, on and on and on. Half the game is spent on the bench. And there are no statistics for what happens on the bench. And I think this is the case with any sport. Right? As long as the team is in or out, and what's happening while the teams are on the bench is culture. What's happening when teams are on the bench is how they care for each other when the chips are up and when the chips are down. What's happening on the bench is how they're motivating each other to bring out the best in each other. In any great team, it's not just about individual performance. It's about who are you for your team. And that's the exact same thing in a restaurant. It's the exact same thing in a technology lab. It's the same thing in a hospital. We're all paid to do the thing we do. But we are really paid for who we are while we're doing it. And that is what is really the root of the culture that you end up having in whatever organization you are.
So I guess the first question really that would go into the mechanics of that culture is the onboarding. It's the hiring. It's the selection. Now I know in your first book you mentioned that initially when you've been setting up in New York you didn't want to hire New Yorkers cuz you had this idea in your head and you know we sort of have these evolving thoughts. I wonder you quite often talk about whether people have got hospitality quotient or whether they are optimistic, positive, curious people. To what extent is that indelible in your mind or is it about how someone presents to you? There might be a different person in a year's time. To what extent I'd love to get inside this hiring process as the first stage of culture and how you think about it and how you'd advise someone to present or what they could change if they could change it.
Yeah. Well, one of my favorite chapters in my new book, What Could Possibly Go Right, is a chapter called Think Like a Wine Maker. And I made a metaphor that wasn't a sports team, but it was really thinking about how any wine maker wants to make a great wine year after year after year, just like any business person wants to field a winning team year after year or sports team wants to field a winning team. And it dawned on me that where it all starts for a wine maker is the quality of the soil, right? They can get the best grapes in the world, but the best grapes are never going to taste any better than the health of the soil in which they're growing. In fact, they're going to take their flavor from that soil. Well, the soil is the culture and the grapes are the people we hire. We've got to hire the right people for our culture. But first and foremost, we've got to keep our culture healthy and make it very, very clear to everybody who we bring in. You are the right person for this culture if this culture is the right culture for who you are as well. And so we're very resolute that yes, we want to hire people who have what we call a high HQ, a high hospitality quotient. Those are people who are happier themselves when they are making other people feel better. It is just an emotional wiring. And you're right. I believe that that is pretty much indelibly printed. Your HQ, just like your IQ, I don't know how I got my IQ. I promise you mine is lower than yours. But what an IQ does is it's a predictor of one's ability to learn things. I could read the whole dictionary tonight and my IQ won't change. It just won't. It's not about how much I know. It's about my proclivity to being able to learn. An HQ is a predictor of the degree to which it's going to make you happier when you make someone else feel better. So, we identified six emotional skills that are always present in someone who's got a high HQ. And our first job is make the soil really healthy. Make it very, very clear how we do business, what our culture stands for. Then go bring in the right grapes that will thrive there. There's a reason that Cabernet Sauvignon does not grow well in the UK. There's a reason that we can't make apple cider the way you do. There's a reason we can't make butter the way you do. And it all starts with the soil. It totally does. So we try to figure out what's the right grape for our soil. That's our people. And then to answer your question, I believe there are some people who have an off-the-charts high IQ in the world. And there are some people who on the other end of the spectrum really they just don't know how to learn at all. I also believe that the vast majority of us live somewhere in the middle. And that's great. That's fine. I don't want to live a life with, you know, nothing but geniuses all over the place. And I also think it would be strange if every human being had an eye-popping hospitality quotient. In other words, they were, I don't know, they were kinder and more optimistic and more curious and had a better work ethic and they were more empathetic and more self-aware and had more integrity than anyone else on Earth. That would be a little weird. So what can we do? Well, what we can do is to do the best job we can to identify and hire as many people with a high HQ. Not the highest but high. And then what we can do is celebrate the behaviors that we want to see here. And by celebrating them whereas most companies are only celebrating things they can measure like, you know, profit and earnings and, you know, lower food costs in our business etc. We want to celebrate the behaviors, not just the outputs. And by celebrating the behaviors, you actually you're not necessarily going to raise someone's HQ, but you're going to bring out the best in that person where they say to themselves, my actual native gifts are valued here, and I am going to unleash more of them for the benefit of this team. And by so doing, we have been able not only to strengthen our culture and the employee experience, and then that of course is directly linked, as you just said, to our guest experience, to our customer experience. And it really becomes a self-fulfilling prophecy that self-sustains itself because people with a high HQ want to work with other people with a high HQ, making other people feel better. And when you do in fact make other people feel better, starting with the people on your own team, it becomes a better place to work. And it's just when you get that thing spinning, it's a really, really powerful and wonderful thing.
The wonderful thing about this book is that if you taught us in the first book by really sort of revealing the inner turmoil that goes on behind every experience, in this book, you confess to dozens of mistakes. You know, you don't spare your own ego in terms of saying things that you've done wrong, things that have gone wrong and gifting us the opportunity to learn from them. And one of the things actually as a result, and maybe this is one of the things you benefit from the process of writing down, you give us this formula for culture, which is actually immensely instructive. I always use a definition of culture, which is culture is behavior in organizations whether rewarded, encouraged or tolerated. But I think actually you enhance upon that. I wonder if you could give us your formula that you came to for culture and just explain how you came to it really.
Well, what first dawned on me, Bruce, is that we all use the word culture all the time. And yet, if you lined up any, you know, 20 people in a room and asked them, please write down two sentences to describe what you mean by culture, I promise you, you would have 20 different answers. And that doesn't make anyone bad. It's just a good thing to acknowledge because if I'm going to use the word culture and if I'm going to say we want to actually advance our culture, then my team better have a common understanding of what I mean when I use the word culture. And so I've been, in the same way that I think writing Setting the Table forced me to tease out what I meant when I kept talking about hospitality, I think What Could Possibly Go Right really helped me to tease out what I really meant when I used the word culture because what I found was that hospitality was something we did but culture was the operating system that allowed it to happen. And so what I started off with a very rudimentary definition from one of my board members who said, 'Oh, it's simple. Culture is how we do things around here.' And at that point, I had a bunch of coffee mugs made for everybody in our company that said HWD, how we do business. And that's good. It got to a certain point how we do things around here, but I really wasn't being completely clear how we do business around here. And then I came up with another stupid mug and it had all of our family values on it. Look how many there are here. If you expect anyone in the world to be able to memorize all the, you know, intuitive, engaged, no. So then I took it a step further and I narrowed those, you know, I think there were like 60 different family values that we crowdsourced from our team. Narrow that down to four, which were excellence, hospitality, entrepreneurial spirit, and integrity. And that was kind of working, but then it really wasn't working. And the reason it wasn't working so well was that number one, we're not a family. We're a business. And it turned out that every now and then you have to fire somebody in a business. And you don't fire family members. And the team would go into, you know, weeks of grieving after one of their own got fired. The other thing that was a problem with it, it's really hard to hold someone accountable for a value. And so then my next step, and this was all while I was writing What Could Possibly Go Right. So I'm learning as I'm writing this thing. We met a friend who came to speak to our team and he said, 'Guys, you know, I love going to your restaurants and they're really, really good, but I'm going to tell you something right now. As you know, it's a competitive landscape out there. And the best restaurants are not going to be the ones that outcook the rest of the restaurants out there or outperform them in any way. It's going to be the ones that outbehave them.' And I kind of scratched my head and I go like, what do you mean by that? And he said, 'You need to be very clear with your team what behaviors you expect from them. And then you need to hold your team accountable for really putting those behaviors into play. And furthermore, you need to make those behaviors,' he said, 'your values are irrefutable. Who wouldn't want to be more excellent or more hospitable or have more entrepreneurial spirit or have more integrity?' That's great, but those could be anybody's. And he said, 'You need to instead of values and instead of family values, you need to have expected behaviors for your business. And you need to make those behaviors connect to stories that are part of your company's heritage, part of your culture's heritage, so that they feel uniquely yours.' And that's what we did. And 100% of the expected behaviors we have all came from Setting the Table. For example, one of the expected behaviors is center the salt shaker. That's all we have to say to somebody in our company. That relates to a story that's in Setting the Table. It's our story. And it's a very, very wonderful shorthand way for us to say do it the right way. Do it with excellence and with an unwavering commitment to quality. That's all we have to say.
