What Could Possibly Go Right? A Conversation with Danny Meyer

I definitely love the customer as one of our five stakeholders, and I think the thing I learned myself when I wrote Setting the Table was that what was really working well for us was the virtuous cycle. And what I figured for us that was working incredibly well with all of our places was that we have the exact same five stakeholders as every single person in this room, and we were going to have the input to the virtuous cycle be our own team members. So, if I really want to love my customers, I don't want that to be the input. I want that to be the outcome of first having a team of people who feel loved, who work in the company, and who love each other.

The input was our own team. The next stakeholder was our customer. The next stakeholder was our community. The next was our suppliers, and then the fifth, not the bottom of a totem pole, but the outcome of all of this one good thing leading to the next, is our investor. But it's a cycle. It keeps going, and it turned out that the best way to have really, really happy employees was to have really happy investors.

Why? Because these guys get really happy when they get raises and promotions. They don't get raises and promotions without happy investors. So, that's what I learned. Yes, I love our customer, but I don't necessarily love them any more than I love all of our other stakeholders.

Think about it for a second. North Beam is as successful as you are first and foremost because you're a great place to work. At the end of the day, we have an idea. Many of us are entrepreneurs. So, I start off and I see here's a problem. Here's what I think is a good solution to the problem. But guess what? A lot of people can do that. The real question now is, can I hire like-hearted people who actually say, 'You know what? I want to be part of the mission to solve that same problem. I trust that that leader can help get us there in a safe way.' And so, at the end of the day, what we're all really competing for are the best team. That's who wins.

The best idea is a good starting point, but the best team is how you win. And try to create an environment where, as soon as you get a great team, everybody else wants them. They want to pick them off. And every day that I go to work, I'm either giving our team a really good reason to listen to their offer, or I'm giving them a reason to say, 'I'm good, thanks. I'm going to stay right here.'

I'm getting emotional before I can even answer the question. I stand by everything I wrote in Setting the Table, except one thing. In the opening paragraph of Setting the Table, I foolishly said, 'In 25 years, I've opened 13 restaurants and never had the experience of closing one.' As if restaurants are meant to be immortal, as if whoop-de-do, Danny. And I really was afraid of closing a restaurant. My own father had gone bankrupt twice before he died. I saw that. I saw how it tore our family apart. And I assumed that closing a restaurant would mean I was going to go down that same path, and I just never wanted to do that. And it's almost like every time we did grow, it took me 10 years to open a second restaurant, Gramercy Tavern. And I was fine with Union Square Cafe. And the reason is I did not want to go bankrupt, and then I finally, it's like I kept tempting fate. And then this book, What Could Possibly Go Right, opens with closing the first time I ever closed a restaurant, which was Tabla, our Indian restaurant, which at that time was almost 13 years old. As a matter of fact, it took me two years too long to close it. We were losing money. The writing was on the wall. I was making every excuse in the book as to why not to close it. The first thing was, 'Well, I can't lay off people. I've never done that before. How horrible would that be?' I even said to myself, 'You can't go rewrite that opening paragraph in Setting the Table. You have to keep it open.' And really what I learned was that the worst thing I could do was keep it open. No one at the restaurant was getting a raise or promotion for four years. What a horrible thing to do to people, to prey on their loyalty. So yes, so what is failure? I open this book with a failure. And then chapter two is called Failing Up. Failing does not have to be falling down. And what is failure for any of us? Is it failure in our own eyes? Is it failure in the imaginary person on our shoulder? Is it failure in the eyes of what we perceive our parents would have said? Our teachers would have said? And if it does feel like failure today, will it still feel like failure in five years? What lessons... We all know that we learn way more from when things don't work out so well than our triumphs. Our triumphs, as a matter of fact, can be our greatest Achilles' heel because we can rest on our laurels, we can get complacent. I really do believe if I'm not failing at something, I probably wasn't taking on enough new projects, enough innovation, enough risk. And then the key thing is learning from it, teaching from it, and doing it all as quickly as you possibly can. Unlike waiting two years. There's another... I, in retrospect, failure in this book. Has anyone been to Gramercy Tavern? Thank you all for that. So, our chef, Mike Anthony, I was just with Mike before I came here. Mike has been the chef at Gramercy Tavern for 20 years as of this Friday. There's only been one in 32 years, there was only one chef before Mike, and that was Tom Colicchio, who went on to become Top Chef. Tom wanted to grow a lot more quickly than I wanted to grow. He was ready. So, Setting the Table came out in 2006. In 2001, because we had Eleven Madison Park and Tabla facing the park, I had spent a lot of my own time and energy trying to bring back Madison Square Park. It was our front yard. I named a restaurant after the damn park. It had been one of the premier parks in the city going back to the 1890s. Well, we opened in 1998, but I signed my lease in 1996. It was a disaster. It was dangerous, ugly, barren. And we raised $11 million to restore the park. And I knew that we needed to give people a reason to use the park once we had made it beautiful, otherwise it was just going to go right back down the tubes again. And so, I came up with this idea of turning it into an outdoor sculpture park with art that would give people a reason to use it all the time, and someday, hopefully, having food there. And we did a partnership with the Public Art Fund, New York City. And there they curated this incredible piece of art. They got underwriting from Target, which was not yet in New York, but wanted to invest in the community before they got here, which was amazing. And so, this program was called Target Art in the Park. The artist that the Public Art Fund brought in was an artist from Thailand, and his artistic vision, he had a piece called I Love Taxi. He had four taxi cabs that he made with his artistic bent up on huge stilts up in the sky. And underneath the taxi cabs, he had designed a hot dog cart, and he wanted it to be a working hot dog cart. And I said, 'We'll do it.' And my whole team looked at me like crazy, and I didn't exactly say what could possibly go right, but I should have, because it went very right. And this was in the summer of 2001, before 9/11.

And before I wrote Setting the Table, but I was already starting to think a lot about hospitality. And I was kind of sick of people thinking that the way you make people feel is only for restaurants, and certainly only for fancy restaurants. I wanted to see if you could actually have a really good hot dog cart if you took care of your people first. So, we hired five out-of-season coat checkers, so they wouldn't have to wait till October to get their income. Said, 'You guys run this hot dog cart.' This was in June through October. And I wanted to see if we took care of our people. I want to see if you five people can remember what everyone's favorite topping is and what they don't like. And lo and behold, this hot dog cart that we were just doing to support his art, you know, we were making great dogs in the kitchen of Eleven Madison Park. Beef-stained potato chips and the best rice crispy treats you've ever had. Lemon verbena iced tea. We had lines of 150 people waiting for a hot dog. This was before Twitter. They just loved it, all because of hospitality. That's what I wanted to prove. We did that for three years, and then in 2004, I persuaded the city to allow us to come up with this idea, and I had read this book about creating community wealth. Philanthropy dries up at a certain point. Political grants dry up at a certain point. But capitalism is here to stay. And what if we could use capitalism to create community wealth? And so, I donated this structure to Madison Square Park. It cost $700,000. We plunked this building there, called it Shake Shack. The park would become our landlord, and they would get paid as a percentage of every sale we made. They'd get, I think at the beginning it was eight cents on the dollar. Today it's probably closer to 15 cents, 20 cents on the dollar. And if it worked, it would draw people to the park to keep it safe. It would create a funding source for the park to keep it beautiful. And that's all I wanted to do. That's truly all I wanted to do. I had no idea we were going to get a business out of it, a public company. I had no idea that the park, in addition to remaining beautiful and safe, to this day earns just shy of a million dollars in revenue from that original shack. And so, it was not an entrepreneurial pursuit. It was truly, can I prove that hospitality works? And then, this is where you enter a fork in the road, where you met this guy, because we talked earlier today about like, how do you hire the right person who makes a difference in your business, right? It's so hard to find those game-changing team members at your company where like, if I bring this person on, my business is going to go to a completely new level. And everyone, someone asked the question earlier today like, how do you find that person, you know? And maybe a lot of it's destiny or luck or whatever you want to call it. But you met this fellow Randy, and he was the one that really pushed you to say, we got to open a second Shake Shack. That was in my mind, like everyone has these like pivotal moments. And to me, at least from what I can tell, that was a big moment for you.

Oh, absolutely. So, I hired Randy when he was 23, right out of Cornell. He had had a job in Seattle. He drove out to... He became the first general manager at Tabla, and then he became a general manager at Union Square Cafe by the time he was like 26. And I don't give the keys to Union Square Cafe to anybody. That's the mother yeast of our company. And he kept acing everything. And he was the one that said, 'Yeah, I don't know about this hot dog thing you got going on, but you should let me run that.' And he completely aced it. He wanted to grow. I was reticent. I had a hand on the brake. Took five years to open a second Shake Shack. And that's only because it took Randy three years to actually kick the crap out of me. And he said, 'What's the biggest complaint we get at Shake Shack?' And I said, 'That's either the line is too damn long.' He said, 'Great. Let's cannibalize the line.' And I said, 'Yeah, but the rent's too high.' And he said, 'Trust...' You know, he was great with numbers and running restaurants. So, we did it obviously, 77th and Columbus. And we opened the second Shake Shack after five years.