The heart of hospitality, this week on "Firing Line."
What I did understand was how I wanted to be treated when I went to a restaurant. What I knew was that good food might taste even better if you were just nice to people.
That simple philosophy has carried Danny Meyer to dizzying heights since he opened his first restaurant, Union Square Cafe in Manhattan when he was just 27. Now, head of a restaurant empire, he is a legend in the industry.
My guide is the hospitality Jesus himself.
You want to try that, don't you?
It looks delicious.
Meyer's innovations have transformed both fine dining and fast food.
Never seen a line this big. It's a good old-fashioned good burger.
But not every idea was a success. In 2015, you made headlines when you eliminated tipping in your restaurants.
I learned that Americans like their tips.
He has distilled a lifetime of learning into a new book, "What Could Possibly Go Right?" What does Danny Meyer say now?
"Firing Line" with Margaret Hoover is made possible in part by Robert Granieri, Vanessa and Henry Cornell, the Margaret and Daniel Loeb Foundation, The Beth and Ravenel Curry Foundation, Cliff and Laurel Asness, and by the following.
Danny Meyer, welcome to "Firing Line."
You were raised in St. Louis. You grew up eating in restaurants around the world, thanks to your father's travel business. You received your degree in political science and your first job was working on a presidential campaign. But at the age of 27, without any formal culinary education, you opened Union Square Cafe in New York City. Since then, your career has reshaped American hospitality from fine dining to Shake Shack. What did the 27-year-old version of Danny Meyer understand about restaurants that the chefs didn't?
I don't know that the chefs didn't understand it, but what I did understand was how I wanted to be treated when I went to a restaurant. You mentioned that I grew up in St. Louis, and they treated you great in St. Louis. The food wasn't as good then as it is now, and it certainly wasn't as good then as it was in France or Italy or in New York City, but they had something going for them, which is they made you feel welcome. And when I came to New York as a 22-year-old, I just kept saying, "Why are these people not treating you well?" And it was almost like the Studio 54 mentality of the 80s had crept its way into restaurants, which is you're not good enough to get in, you're not good enough to get any table other than the one by the bathroom. And so what I knew was that good food might taste even better if you were just nice to people.
What made you think that a good dose of Midwestern nice could work in America's toughest restaurant city?
I actually wasn't sure that it would work. I just knew that that's who I am and that's how I wanted to do it, and fortunately it worked.
Rave reviews from "The New York Times."
We got a really, really good two-star review and we went from zero to 60 overnight after that first review came out.
You went on to open 27 restaurants. You write very vulnerably about how you've closed 10, but I think most Americans know you as the founder of Shake Shack, which began as a hot dog cart in Madison Square Park and has now grown into more than 700 locations around the world. But you didn't set out to start a global chain. This was nowhere on your bingo card. You followed what seemed like a good idea at the time. What did Shake Shack teach you about following an idea before you know where it will lead?
Shake Shack taught me that if you follow your passion, and my passion was hospitality, my passion was caring for the community. The only reason I had opened two restaurants on Madison Square Park in the first place, which were 11 Madison Park and Tabla, which opened four weeks apart from each other, was to actually do something for that park. The park was for Lauren.
You partnered with The New York City Parks Foundation, raised millions of dollars to restore it, installed public art, which is very important to you, and eventually when Shake Shack grew, you shared a portion of the profits with New York City for the park's maintenance. If you come to New York City today, Madison Square Park is one of the city's most vibrant neighborhoods. Why did you approach that project with a sense of responsibility for the community you would be serving?
The two things my parents really had in common, the thing that sustained their marriage for 25 years before it ended, were art and community. And so it's really not a surprise as I think back that it was bringing art to Madison Square Park while trying to restore and revive that park that actually led to Shake Shack. And what a good outcome that is.
Danny Meyer's name is not written without the tagline hospitality, but you write about enlightened hospitality. Describe enlightened hospitality.
Enlightened hospitality basically says, "All right, if hospitality is the thing we're selling, you think when you come to one of our restaurants, we're selling food, that's almost beside the point. We're selling how did we make you feel. And you will either come back or not based on how we made you feel." Enlightened hospitality is what I called a virtuous cycle where the first person that gets the hospitality on our team is our team. We put our team members actually before our customers, which is not what I learned growing up in St. Louis. I learned that customer's always first, customer's always right. I think we do a better job for our customers if first the people who work in the restaurant love working with one another. Our third stakeholder after our guest is the community we work in, and then our suppliers and then our investors.
I mean, what you've just referred to is sort of a flip on the traditional sense of how capitalism works, right? If you're creating a product, you're creating it for the customer, but you believe very strongly in taking care of your employees first. And you write in the book that while you're a very proud capitalist when you were in your younger days in the 1970s, capitalism had a bad rap. You wrote, "I had internalized the feeling that being an unabashed capitalist was something to be ashamed of, that somehow making money was incompatible with caring deeply for our people, our product, and the planet." Now, William F. Buckley Jr., who hosted this program originally, had several debates about the moral virtue of capitalism. And in 1976, an economic theorist named Jeremy Rifkin argued that corporations put profits ahead of people. Here's what he said.
The opinion survey suggests that the American people believe that what's good for GM is not necessarily good for the American people. A majority of Americans believe that the corporations are involved in excessive profit at the expense of the consumer and worker. A majority of Americans feel that the giant corporations have come out of control and tend to dominate much of American life. Are we all misinformed? Are we all misguided?
I may have even seen that particular episode at some point. (Margaret laughs) There was a lot of that feeling.
That's when I graduated from high school and that's when I was taking all those kind of classes. I took my first economics class in 1977. And you know what? One of the things that we learned in 1977 was the University of Chicago professor Milton Friedman basically saying, "If you put your investor first, everything else will follow from that." And I just firmly reject that. I just think that I believe in the power of both a virtuous cycle and the power of a vicious cycle. And if I really want to take care of my investor and I believe in a virtuous cycle, why would I put them first? I want the input to be our people. And by the way, it's not just what can I do for our employees? It's what do I hold them responsible for doing for each other? Their first customer is each other. It's not Big Daddy up here. It's their job because the degree to which our employees love coming to work to be with each other, to learn from each other, to, you know, find new ways of doing things with each other, that totally translates to having really happy customers.
Well, it sounds like you're trying to create a family or the idea is to create a kind of family.
That's something that I learned through the process of writing "What Could Possibly Go Right" is that we're not a family, and so I am full of contradictions.
The difference is that we are a business and that you cannot fire a family member. And sometimes we have to fire people.
It's never fun when you do it, but it's really disingenuous to tell people who work for you that it's a family. On the other hand, you want to create a feeling of the functional parts of being a family, which is a group of people that have something in common.
You write in the book about how one of the things you've learned is not to belabor decisions that you know you need to make. You write painfully about keeping Tabla open for two years longer than you needed to. You write with a real rawness and earnestness about that experience. 20 years forward, what have you learned?
I've learned so much from the experience of closing Tabla. I had never laid off anyone in my life and going into this restaurant that had 130 employees and speaking to the managers and the chef and saying, "We are going to be closing this restaurant in four months," I just felt like a complete failure for everything I had always worked at and believed in.
You made headlines during COVID by requiring diners to show proof of vaccination. Are those moments when you're in the headlines, when your moves as a businessman are leading the news, how do you navigate them? Does it give you heart palpitations?
Yes, yes. The first thing that I always try to do is ask, "Is this the right thing for our business?" But it starts with us. Is this consistent with our values? The first time I did this was in 1990, soon after my dad died from lung cancer, and I was so mad at, he wasn't even a smoker, but I was mad that every night I'd come home smelling like an ashtray and I eliminated smoking at Union Square Cafe. There were people who said, "Oh, we're never coming back to your restaurant again." But we got busier and we got more popular. So the vaccines, I was so tired of not being able to open our restaurants. And so every bit of science I read told me that vaccinations were actually lowering the risk of COVID. And so I required both our staff and our guests to show proof of a negative COVID test in order to work and to dine there. By the way, this was happening in France. You had to get a passe sanitaire to walk anywhere. Everybody had to do it. I don't know what the big deal was in this country, but the good news was-
A lot of people who didn't like being told they had to get a vaccination.
I know that, we are all about our freedoms in this country, but it's hard to be free when you're dying.
In 2015, you made headlines again and the Time Magazine 100 list of most influential people by eliminating tipping in your restaurants. You called it hospitality included. And you wrote that, "Tips have become a drug for all of us." And yet five years later, when the COVID pandemic hit, you were forced to abandon the effort. What did you learn when you eliminated tips about what it fixed and what it got wrong?
Here's what it got right. It got right on understanding that the tipping system is inequitable because tips are not permitted to be shared between waiters and cooks. And if you've ever worked in a restaurant, you know that cooks are working just as hard as the people bringing the food out to the table.
And that's because of an idiosyncrasy in New York state law.
Many, many states have that same law. And furthermore, it's exacerbated by the federal government, which pays a commission to restaurants for every tip reported. And so that's the drug that's-
There's a tax credit. There's a tax credit given to restaurants for the money that they don't pay their employees because of the tax.
Yes, because the government realized a long time ago that a lot of tips were not being reported. So they said, "We will enlist the restaurateur to report all the tips. In fact, we'll pay the restaurateur." So a lot of restaurateurs don't want to eliminate tipping because then they eliminate this tax credit that they get, which is meaningful.
But you elected to forgo that tax credit.
