Today, September 29th, is the release date for Danny's first book in 20 years. The title is What Could Possibly Go Right. And I'm honored to be publishing this episode. Danny and I discuss 20 years of mistakes made and lessons learned, and how Danny thinks restaurants should think about AI in this new age. He is someone that absolutely embodies the not-done mentality. I was honored to have him on the show. And if you're new here, welcome. Be sure to hit the subscribe button. I publish an episode every other Tuesday. And with that, on with the show.
Well, welcome back to another episode of Not Done. I'm Sloan Dean. And today, my guest opened Union Square in 1985, Danny Meyer. And Danny went on to open Gramercy Tavern, The Modern, and that little hot dog stand that ended up being Shake Shack, that now is a public company with hundreds of locations around the world. And in 2006, he wrote Setting the Table, where we learned about enlightened hospitality and the radical idea that an employee comes first and customers come second. Something that I tried to idolize in my career in the hotel industry. And 20 years later, he's back out with his second book, What Could Possibly Go Right. Danny, welcome to Not Done. Thanks for being here.
Hey Sloan, thank you. Really nice to meet you and to be here.
Yeah. So I must say, in reading What Could Possibly Go Right, I find your vulnerability and candor as a hospitality executive myself to be refreshing. Where does that sense of optimism that you talk about in the book, that glass-half-full approach, come from? Because I too identify as an optimist, and I think in a world where you constantly have stressors in a business that is non-stop, 24/7, like hospitality, where does that optimism come from for you?
I think that optimism and entrepreneurship are cousins with each other. And I think that as an entrepreneur, I'm somebody who, I guess, I have an ability to see existing problems sooner than maybe some others, but then I also have a gift for being able to imagine solutions to make it better, to make whatever that thing is better. And so a big part of being an entrepreneur in What Could Possibly Go Right, I call it being upsided. So I'm wearing reading glasses to help me with reading. I don't actually use them when I'm in regular life. I know some people are nearsighted, some people are farsighted. I think I see up better than I see almost anything else. And I think that's what entrepreneurs do. They see something, they go, well, if I actually put this idea to work, what could possibly go right? And no entrepreneur starts that conversation by saying, 'If I do this, what could possibly go wrong?'
There's something in our society where we've somehow gotten programmed the wrong way to look at the downside, which is not a bad skill to have at some point. But I'll say, you know, the great things that we've been lucky enough to be a part of have always started with that question. And then I'll just add that it really hit me that I'm kind of tired of 'ain't it bad' as a kind of thing people are walking through life with these days. Pessimism and skepticism and cynicism. And I don't know, one day I've started my life with that. That was a good day. And I think I'm ready, and I hope maybe others are ready, for some positivity and optimism.
That's really critical. I talk about perspective-taking on this show a lot. That, you know, you rewind the tape 100, 150 years ago, people didn't even know what a daily hot shower looked like. You know, we get caught up in the moment, but if you reflect back and take an objective perspective over a long term, you know, we're blessed to be living in this time of, you know, abundance and optimism, and, you know, living in a country where entrepreneurship is commonplace. I mean, look at, you know, all the opportunities that were born out of your kind of hard work, grit, etc., that you've been able to do. And I think that perspective-taking is really, really critical. If we fast forward to the book, you talk in some of the opening chapters about how in your first book, Setting the Table, you wrote proudly that in 25 years you never closed a restaurant. You fast forward and had to close Tabla, hopefully I'm saying that correctly, your Indian concept restaurant. What did you learn from that? Step us through that a bit.
Yeah, Sloan, I learned so much through that experience. And I think chief amongst the things I learned was that you can actually fail up. In fact, that's the title of that chapter in the book, Failing Up. I was ashamed and afraid of closing a restaurant. I felt like, you know, maybe that meant that I was a bad entrepreneur, or maybe I'd been a bad employer because I'd obviously be laying people off. My heart was in the right place, I think, with some of those concerns. But in fact, one of the things I learned was that by staying open, I was doing a disservice to many of the people working there. Because as loyal as they were, fantastic human beings, cooks, waiters, you know, every role you know about in the restaurant industry, by keeping the restaurant open for as long as I did, nobody was getting a raise or a promotion, and I was trading on their loyalty, which really wasn't fair. I think I learned that. First of all, I also learned that there's no such thing as an immortal restaurant. That, you know, Tabla had been open for 13 years. It was a really groundbreaking restaurant that launched all kinds of incredible careers. And so failure is in the heart of the beholder. So that's another thing I learned. Was it failure that we didn't go for 15 years? Was it failure that we didn't go 20? Was it failure that we didn't go forever?
I know a lot of great Broadway shows that close after five years, and they're considered the biggest success on earth. So 13 years, I should not have seen as a failure. When I call that chapter in the book Failing Up, the biggest lesson was that if you can take great learnings from things that feel like they had not worked out so well, you can actually put those learnings to work and then end up in a better spot afterwards. And in closing Tabla, I think maybe the biggest lesson I learned was that you can distinguish yourself just as much as a restaurateur or as any business owner by how effectively and thoughtfully you shutter a business as you distinguish yourself by how well and thoughtfully you opened it. And we did that. And I think that the dividends have come back from a relationship standpoint, from so many amazing careers of people that left Tabla when we closed and then went on to do things even greater for their own careers.
That's an amazing perspective. You know, I often, you know, because the hotel business, I've been a hotel executive most of my career, is a tough business as well. Maybe not quite as tough as the restaurant, not quite as thin a margin, but still pretty tough. And listening to you speak, I reflect on a few hotel deals that didn't work out. And it did allow how you handle that in the moment, you know, really sets up for maybe the next deal. It really is true. You know, as one door closes, another door opens. And I think we often in the US think of a zero-sum game. You know, it's like a winner or a loser. And what you're talking about is, you know, perspective is really important. Even if it is maybe a loss in some capacity, there's something to be gained and learned. I think that's really, really powerful.
Yeah. And I think, you know, another lesson of many that came to me from closing Tabla was about 30 years after starting Union Square Cafe. And I didn't have that experience before. And I needed to have that experience because I realized after the fact was that I was probably not taking as many good risks as I should have taken for fear of failure. And once you kind of go through that experience of closing a place, you go, 'Okay, it's not the end of the world. Let me keep trying some new things. And if one of them doesn't work, it's really not the end of the world.' As long as you handle that with integrity and you try to learn something and teach something from it.
That's really powerful. That's a great point. If I pivot to the new book itself, you know, you wrote Setting the Table, which is a worldwide bestseller. I think I've read it three times myself personally.
You needed a new book, didn't you?
It is a little tattered between my wife Pam and I reading it. But yeah, I needed a new one from you. What was the catalyst for the book? Right. It's been 20 years. Shake Shack is now kind of a worldwide phenomenon. Like, what was the catalyst? What made you think, hey, now is the time for that second book?
Well, in 20 years, which is exactly how long it's been since Setting the Table came out, I had cataloged enough mistakes that I could finally write about the lessons I learned from those mistakes. You know, at the very top of our conversation, you talked about my willingness to express some vulnerability. There's a chapter that, since you've read it three times, you'll remember from Setting the Table, which is called 'The Road to Success Is Paved with Mistakes Well-Handled.' And I will tell you that What Could Possibly Go Right is a catalog of 20 years of new mistakes, but mistakes that were made in the process of learning how to scale our business. So Setting the Table, we had one Shake Shack at that point. Today there's 700. So what Setting the Table taught us very effectively, because we've been now using the book for the last 20 years and it works, as you said yourself, absolutely, taught me and our team about the power of hospitality to lead to really good outcomes, business, and it worked because we started growing. But Setting the Table didn't really have a blueprint to teach me or our team now what do you do. You've got all the... how do you make sure that the special sauce, which is our culture, actually tastes better as the thing gets bigger, as opposed to losing that specialness as we grew. And so when I talk about the 20 years of mistake-making, I don't feel ashamed by the mistakes. I feel proud that we made them and proud that we learned from them. But each one of those mistakes was made in the service of trying to advance our culture as we grew the business. And when I finally felt that I had enough lessons that I could share first with our team so that now that we are growing and have grown, we can be even better at hospitality, not worse. I never ever wanted to be the kind of business that too often you see, not just in our industry, the restaurant industry, but everywhere, where as they grew, they somehow lost their way and stopped focusing on the thing that had really made them special in the first place. So that's why I wrote it. I believe it's going to be helpful for our team, and I hope it'll be helpful for others as well.
So fast forward, you know, in 2006 you had a lot less employees. Shake Shack was one, and now you're 700 locations. How did you scale that and not lose that people-first mentality? Because I think you alluded to this. I think that's the fear that a lot of leaders who are very culture-focused, people-focused, worry about what happens in a scaled business.
Well, keep in mind that Shake Shack grew out of Union Square Hospitality Group, and it started off as a hot dog cart. The food came out of the kitchen of 11 Madison Park, and I was trying to prove that enlightened hospitality worked. And I was tired of hearing people say that hospitality is the domain exclusively of fancy restaurants. So I said, I'm going to prove that it actually works at a hot dog cart, and I wanted to put enlightened hospitality to work. So let's take care of our own team first. How do we do that? We took five out-of-season coat checkers during the summer, and instead of making them wait till the weather got cold in late October to have a job, we put them to work at the hot dog cart. And we told them, 'Your job is to serve hot dogs with exactly as much hospitality as you were just doing at 11 Madison Park last summer. You need to recognize our guests. You need to remember everybody's preferences for what they like on their hot dog, what they don't like.' And lo and behold, for three consecutive summers, we had lines winding around Madison Square Park. And bear in mind, this was before social media. So for New Yorkers to wait in line without, you know, text each other and tweet and that kind of...
Yeah. Before they could Insta, go live on Insta, right? This was...
Exactly, none of that stuff. So it worked. And then that led to Shake Shack because in year four, we said, 'Let's do something for the park year.' And we created what I call a community wealth venture where we donated the shack, the actual building, the kiosk. We donated that to Madison Square Park. So Madison Square Park would be the landlord. We would own the business. Had no idea that the business was going to work, never mind that there would be a second one ever. It took five more years to have a second Shake Shack. But the deal was that a percentage of every sale, when people bought hot dogs and milkshakes and crinkle-cut fries and ShackBurgers, a percentage of every sale would go right back into that park. And if this worked, the goal was to have a funding source to keep the park safe and beautiful, and, you know, hopefully to keep the park busy all day so it would remain safe. It worked, and we got a nice business out of it. And to this day, 25 years later, that one Shake Shack pays a million dollars in rent to Madison Square Park.
They got a good funding source. We got a nice business, and just, you know, hundreds and hundreds and hundreds of careers have been launched because of that. So I couldn't feel better about that. But what we had to learn, we already had, I call the category that Shake Shack occupies, fine casual, right? Because it was born out of a fine dining ethos. What kind of ingredients do we use? What kind of cooks do we hire? How do we train for hospitality? What's our relationship with our community? How do we design the place? What we had to learn coming out of the fine dining industry, we had good taste, but we didn't have good systems. And we had to learn how to scale by virtue of putting systems to work. And quite frankly, Sloan, every single day that Shake Shack was opened, we were operating a bigger business than anything any of us had ever done, and a different kind of business than any of us. So we were truly learning how to fly the airplane while it was in flight after all these years. Now, we have a very, very experienced team who have experience working with larger companies. You know, early on we were hiring immigrants from Chipotle and P.F. Chang's, and I'm forgetting another one that sent us a lot of people. And today there's people from basically every public company out there, but who are taken with our culture of enlightened hospitality, and they say, 'I want to take my gifts of scale to a business that feels like I feel, thinks how I think.' And so it's pretty magical.
It is. It is. And let me just say, I think you proving out enlightened hospitality at scale is something that I think all businesses, as they look to scale, can take from that. You don't have to sacrifice quality. You don't have to sacrifice your core essence just to grow. Frankly, I think that's part of why people are so enamored and so inspired by you, because you have these core principles that you don't stray from. And I think that's so critical in business that sometimes people feel like they need to give up something to grow. And you've proven that that's not the case. I found it really refreshing too that in the book you say this is speaking to, and I'm going to quote you, Shake Shack. You said, 'I was looking for any excuse to say no, and I had a long list of them on expanding Shake Shack.' That is, I'm curious, what were some of those excuses, and then what helped you get over that fear?
Probably my biggest underlying fear was that something that didn't go right for me early on in my life was watching my father experience two bankruptcies. Your whole family is experiencing it, and it's a horrible feeling, especially when you look up to your parent, your mom or your dad. And I always, with zero business experience as a kid, there is something in me that always associated his bankruptcies with expanding his business. And so I had promised myself, you know, the reason it took me 10 years to open a second restaurant, going from Union Square Cafe to Gramercy Tavern, was that I had a hard and fast rule that I was positive would protect me from ever going down that same path as my dad. And I said, I will only open a second restaurant. Don't mind you, I only had one for 10 years. I will only open a second restaurant when I believe that in the process of opening it, Union Square Cafe will actually improve, not get worse. And I knew that was impossible because I had seen so many fine dining restaurateurs lose their way as soon as they opened their second place. But then I came up with a second rule that would prevent me from failing. And I said, 'And I'm only going to open a second restaurant if I truly believe it can be better, even better within its niche than Union Square Cafe is within it.' And I knew that was kind of impossible because Union Square Cafe was doing really, really well. And then I finally came up with a third prerequisite, which is, oh, and by the way, I'll really only open another restaurant if I believe that in so doing, I will end up with a better balance in my life. And I knew that couldn't happen either. So after coming up with those three prerequisites, I kind of threw it all against the window when a young chef, Tom Colicchio, said, 'Can we open a restaurant together?' And at that point, I had known Tom's cooking. You probably know he's gone on to be Top Chef, Tom Colicchio. But back then, this was 1993 when we had this conversation, quite a while ago. His restaurant had just gone out of business in 1992, actually. And he said, 'I want to open a restaurant with you.' And I don't know who your favorite basketball player is or whatever, but that would be...
It's got to be Michael Jordan because, you know...
Okay. So Michael Jordan knocks on your door and says, 'I'm a free agent and I really want to play on your team.' What are you going to say, Sloan?
Yeah. So I, you know, I threw all three of my prerequisites to the wind and went for it with Gramercy Tavern, right? And it was a pretty rocky opening, and I was sure that I had completely screwed myself. And, you know, somehow all these years later, Gramercy Tavern is hanging in there. It's 32 years old, busier than ever. Union Square Cafe is 42 years old, busier than ever, or whatever it is, 41 years old rather. I hate to rush life too much, but yeah, so things are going well. And it does start from what you were talking about earlier, which is we truly, and everyone on our team, you look at every day as being another step on the journey of excellence, and you never get there. But for me, the journey of excellence is that you try to begin every single day honoring three things we did really well yesterday, because I promise you, you're going to find three things you did well. You'll probably find 30 things that you could do even better. And from those 30, the next thing you do after you found three things to honor from yesterday, and that's what's been the reason that we've had longevity. I mean, Shake Shack's bigger and busier than ever, and it's now 22 years old. Our restaurant, The Modern, is busier than ever, and it's 22 years old. So it's not that we only know how to open old restaurants, but what we do is we focus always on improving and never resting on our laurels. Complacency is, we're allergic to that word.
Yeah. I would always say success is never final, you know, and that's really the premise of my name of the podcast, Not Done, that, you know, you're constantly evolving. You're constantly improving, constantly learning. But, you know, you then fast forward and then COVID happens. I was running a hotel company. No one stress-tests a hotel to be empty. You had to shut, you know, you had to close restaurants. The hospitality business in 2020 was absolutely decimated. Unfortunately, several businesses went out of business. You had to lay off an overwhelming majority of your company, thousands of folks. And you talk about that in your new book. What was that experience like for you? Because I think for those of us that are hospitality professionals, it was the hardest thing I've been through professionally. Personally,
It was awful. It was grueling. It was the worst. And the really hard part was that with every time that we were tested with any kind of a macro event, it could have been a hurricane, it could have been the Great Recession, it could have been 9/11. Every single time that we had been tested in our restaurants and as the hospitality industry up till that point, we could actually put hospitality to work to be helpful. I would argue that the New York hospitality industry created places that, to a degree, supercharged some of the healing that the city was going through because we provided places for people to come to feel safe, to be loved, to belong. That was taken away from us during the pandemic. The very thing we do, we could not do. We were not permitted to open our doors. Then furthermore, I wrote about this at length in What Could Possibly Go Right, but how do you reconcile being a people-first business and then laying off 90% of your people? So yes, it was grueling. It was excruciating. And at last, we had to come to the conclusion, which was right, but it wasn't nice and it wasn't fun, that we will not be an employer at all if we go out of business. So the only way ultimately to return to being a good employer is to one day return to having a healthy business. And the only way we can do that is to unfortunately, if we couldn't become insolvent, and with no revenue to speak of other than, you know, selling a few meals with pickup and delivery. But we didn't know how to do that back then. We just didn't. That's not who we were. Also, we just didn't have any revenue.
Yeah. When I was running Remington Hospitality, which at the time we had about, we had right at 7,000 associates then, and we got down to 485 active by April 1st. And, you know, the two things I would always say is that people can handle bad news. They just don't like surprises. So I think the only thing, it wasn't transformative that we did, was we did weekly webinars with everyone, everyone that was furloughed, everyone, just to give them, hey, this is the latest information we have. And somehow it created a sense of community, a sense of empathy, even though it didn't change an outcome. And the second thing was, to your point, that you can be very, I mean, we were very passionate about our culture and people, but survivability at the end of the day does dictate some decisions. And so I think I hope we don't live through another pandemic in our careers.
No, but I'll share one thing. And I also did, I did write about this. You weren't supposed to talk about silver linings during the pandemic because so many people were suffering so much. But as someone who is wired to ask what could possibly go right, I'm always looking for a silver lining in anything. And the silver lining we got by having to close for all that time was that it's probably the one and only time in our careers that we got to lift our entire boat out of the water and inspect the underside of the hull and see where all the barnacles were, scrub them off, see where all the holes were, patch them, right? See where all the scratches were and polish them. And then by the time we put the boat back into the water when the thing was finally done, it was much more seaworthy. That required us to stop doing certain things we had been doing, start doing new things that we should have been doing, hire differently, train differently. You know, another great line, that expression I'm sure you've heard many times is it's a crime to waste a good crisis. Well, this was a bad crisis, so it's a capital crime to waste a bad crisis. And we didn't. We did not waste it.
