Exceptional Leaders: Shake Shack: Hospitality at Scale

I always felt, incorrectly, I felt that growing was going to be selling out. And I had to convince myself that you can also sell up. You don't have to sell out. And if you can actually use your growth to advance your culture and get better and create more jobs and do better things for more neighborhoods, that's not a bad thing.

I'm honored to be here.

Growing up in Saint Louis in the 60s and 70s, I loved going to restaurants. But it wasn't so much because the food was great back then. It was much more because of how we were treated. I always loved cooking. I always loved eating. My dad was in the travel business, primarily in Europe, and meanwhile I moved to New York. The food was really good here, but the hospitality wasn't. Meanwhile, I started thinking about some of the experiences I had had when I was cooking in Rome and some of the time I had spent in France, also going to bistros. And then about the same time, I had traveled a few times to California, where you started to see this cafe and bar and grill movement happening. And what all those places had in common, trattorias, bistros, and the bar and grill of, you know, the Bay Area in California, was that the food was really good. It was very simple. But what they also had in common was the people who worked there were genuinely happy to see you. And so it just hit me, 'Wait a minute. Why can't I take what I grew up with in Saint Louis, match it with the experiences that, at that point, I had had with really good food in France, Italy, California, and do something fresh.' Which, by the way, today there are thousands of restaurants that occupy this kind of space. But it may be hard to believe, but there just weren't that many in 1985.

Yeah, yeah. Well, not quite. Our prices were pretty low back then. But the environment was different. It was friendly. It was neighborhood. I meet people to this day who talk about the Tuesday night group that gathered at Union Square Cafe, but the magic really was in the staff, the welcoming.

It was a very tough move to go from one to two. And it was a tough move because I had promised myself that I didn't want to end up bankrupt, as I had seen my dad go a couple of times. And I always associated his bankruptcy with growing his business, for right or for wrong.

Thank you. Always beautiful. This restaurant is now 32 years old. It's incredible. And there's something kind of magical where the older it gets, the better it looks. And I wish that were true of me, but it's not.

We created something called the campaign for the new Madison Square Park. We brought in the Public Art Fund of New York City, wonderful public-private partnership, and asked them to curate a piece of art. The Target Corporation decided to get behind this community project. So Target actually sponsored bringing in this artist from Thailand, had this idea of having four taxicabs on stilts, and he wanted to have a working hot dog cart that he designed right underneath the taxicabs. They came to me and they said, we need someone to operate this guy's hot dog cart. And I said, well, sure, we'll do it. Let's make Chicago-style hot dogs with eight toppings so we can see if hospitality actually works at a hot dog cart. It was the same thing we were doing in our full service restaurants, and the lines for this hot dog cart were like 100 people long every single day. And we did that for three consecutive years. Even when they took down the piece of art, the community said, please bring back the hot dog cart. So we did it again in 2002, 2003. And that's when I said, wait a minute, let's turn this into a permanent kiosk.

I had gone to these burger shacks and frozen custard places growing up in Saint Louis, and so really all I wanted to do was to kind of honor what I'd loved growing up. How do you get independence from the telephone at home? You get in your car and go meet friends in the parking lot of a burger place. This is simply taking that idea and saying, 'All right, New Yorkers don't necessarily have an automobile culture.' We have parks. But we have parks. And why not use the park as the gathering place? Yep.

I read this book by a friend named Billy Shore called 'The Cathedral Within' about creating community wealth. And so I wanted what I would call Shake Shack to be a community wealth project. And here's what it meant, it lives somewhere between capitalism and philanthropy. The model was that we would gift this building to the park so the park would become our landlord. And so a percentage of every sale would go right back into the park to make the park more beautiful and safer. And lo and behold, all these years later, we got a big company out of it. That was never the goal to do that. In fact, we didn't open a second Shake Shack for five years.

We don't have tablecloths, we don't have flowers, we don't have waiters or waitresses, we don't have art on the walls. But here's what they all have in common, what they all have in common is a real devotion to sourcing the best possible ingredients. When we first started working with Pat LaFrieda, the butcher, who had a lot to do with the success of why people fell in love with The Shack Burger, it's only because we had been using his beef, both at Union Square Cafe and at Tabla. But you're also getting a dedication and commitment to hospitality. You're getting a commitment that the way someone makes you feel while they're handing who your tray of food is at least as important as how great that food tastes. And it's something that I learned a long time ago in the fine-dining business, which is that having great food is table stakes, that what really, really matters even more is how did we make you feel while we were creating that experience. And the big challenge and the big opportunity for a business like Shake Shack is, how do you scale that feeling over many, many places in many, many different cities? One of the ways we've learned to do that is to make each Shake Shack feel like it's your Shake Shack. We have something called the 80/20 rule. 80% of the design, 80% of the menu is going to be the same everywhere, but 20% of the design and 20% of the menu should be customized to where we are. So, for example, I'll never forget when we opened in New Haven, we found reclaimed wood from the bleachers at the original Yale Bowl. They became the walls of the restaurant. And then we had a special hot dog. It's called the Handsome Dan, which is the nickname of the Yale mascot. And guess what? Sometimes that kind of innovation leads to something that you can use throughout the whole company.

Once we decided to grow, which was a really hard thing for me to do, because again, I just, I always felt that, incorrectly, I felt that growing was going to be selling out, and I had to really convince myself that you can also sell up, you don't have to sell out. And that if you can actually use your growth to advance your culture, and get better, and create more jobs and do better things for more neighborhoods, that's not a bad thing.

We had the good fortune of hiring you to do that.

First of all, I have this tremendous, had, still have a push me, pull you relationship with growth, because I want to stay pure to who we are. And I don't ever want the growth to either dilute our excellence or our hospitality, and certainly not our culture. And it took me a long time to figure out that you can do it all.

The hardest choice for me was really a foolish ego choice, which is what happens when you lose the three letters CEO by your name? And it's the greatest thing I ever did, but it was not an easy rubicon to cross. Right. Now, I don't focus on the operations nearly as much as I used to. I focus much, much more on three things. They all start with C, one is culinary, one is creative, and the third is the big C, which is culture.