3 Takeaways - The Transforming Power of Hospitality in Business: Setting the Table with Union Square Hospitality Group Founder & Chairman Danny Meyer - repost (#160)

Episode Date: August 29, 2023

“Business, like life, is all about how you make people feel. It’s that simple, and it’s that hard. In the end, what’s most meaningful is creating positive, uplifting outcomes.” Danny Meyer, founder and Chairman of Union Square Hospitality Group, whose restaurants have won an unprecedented 28 James Beard Awards, several three Michelin stars, and a Julia Child Award, says he once thought he was primarily in the business of serving good food but learned that food is secondary to something that matters even more. He shares on delivering uplifting outcomes and outstanding hospitality. 

Welcome to the Three Takeaways podcast, which features short, memorable conversations with the world's best thinkers, business leaders, writers, politicians, scientists, and other newsmakers. Each episode ends with the three key takeaways that person has learned over their lives and their careers. And now your host and board member of schools at Harvard, Princeton, and Columbia, Lynn Thoman. Hi, everyone. It's Lynn Thoman. Welcome to another episode. Today, I'm excited to be with restaurateur Danny Meyer, CEO of Union Square Hospitality Group. Danny has created many beloved restaurants, including Union Square Cafe, Gramercy Tavern, The Modern, and of course, Shake Shack. His restaurants have won several three-star Michelin ratings, 28 James Beard Awards, 16 years in the number one spot on the

Zagat Most Popular Restaurant list, and 17 stars from the New York Times. Congratulations, Danny, and welcome. And thank you so much for all of your wonderful restaurants and for our conversation today. It's really nice to be with you, Lynn. Thank you. Thank you, Danny. Danny, what does food represent for you? Food is love. Food is the provision of happiness and sustenance and a big hug. There's people who often say that the world divides into people who live to eat and people who eat to live. I think we all live to be loved. And I think that even if you don't live your life to eat the way people like I do, I do think that the expression of giving nourishment and nurturing are inextricably linked. And I know that some of the most wonderful experiences in my life are with family and

friends at restaurants, enjoying wonderful food, conversation, and the setting and the hospitality. Absolutely. It's something that I've always appreciated and enjoyed deeply as a person, first in my own family and then growing up in St. Louis and going out to eat in restaurants that were not necessarily famous for being gourmet in any respect back in those days. to see you and who's creating a social environment in which you can enjoy the pleasures of the table with people you want to be in a larger environment. And yeah, not have to do the dishes. It's a pretty good equation. Danny, how do you think about hospitality? I think hospitality is so firmly printed on our hierarchy of needs, both to give and to receive. And I've always defined hospitality as the sense that someone's on your side.

I think hospitality exists when the person on the receiving end of whatever you're doing feels like you did something for them. It certainly doesn't exist if someone feels like you did something to them. But we spend so much time thinking about good service when we go out to a hardware store or a grocery store or an airline or a hotel or a restaurant or a dry cleaner or whatever. The service is the technical delivery of the product. You better get it right. It's what people expect. If I say my car dealer has good service when my car breaks, it means they fixed it within the time they said they were going to fix it.

If I say they have good hospitality, it goes way over and beyond that which I expected. And it gets into the category of things that are remarkable because somebody applied thoughtfulness, which is a great word because thoughtfulness implies that you're both thinking and feeling. So you're using your brain and your heart. And somebody applied thoughtfulness to their service, meaning they did something tailored specifically for me. It could be at the car dealer, something as simple as, I remember last time you came in here, we worked on that same thing. Let's see if I can do it even better for you this time. Hospitality is what you did specifically fit for me.

And that's a feeling that we don't get enough in life. And when people do it, when people customize the experience for you, it is something people remember a lot. How do you deliver outstanding hospitality in all of your restaurants? Well, we hire people who have the emotional wiring to say that this actually matters to them. I don't know how to teach somebody to care who otherwise doesn't care about providing hospitality. We've identified six emotional skills that are always present at a very high level in someone who's got what we call a high HQ, high hospitality quotient. But we just don't know how to teach anyone to have any of those emotional skills. People who do have those skills at a high level, who have a high HQ,

are people who are actually wired to be happier themselves when they're providing pleasure for other people. And I don't know if I want my kids to know this, but when they were all young, there came an age when I would do this kind of fun experiment. And all you got to do is you give your kid, let's say they were maybe six years old or something. I forget exactly. You give them that yellow bag of Nestle's chocolate chips and you make sure to have all the ingredients in the house. And you say, I want you to follow the recipe and I'll help you if you need it, but let's see what happens here. So think about it. Anybody can make Toll House

cookies. Almost every kid likes them. And so in that one bag, you've got reading, you've got a little bit of math, you've got learning to follow instructions. You've got safety training because you're dealing with something hot as well. You've got a little bit of impulse control because you could eat the batter while it's not cooked. You could take the cookies out a little bit too soon. But then the coolest thing is when the cookies are baked. So you've gone through all those great learning thing is when the cookies are baked. So you've gone through all those great learning opportunities. When the cookies are baked, now I get to see whether my kid's got a high HQ or not, because now I get a chance to see, does the kid put all the cookies on a plate

and take them to their bedroom and post them away for good times? Or is part of the pleasure taking that beautiful platter of cookies and presenting it to mom and dad and their siblings or whatever and say, look what I made for you, for you. And if part of the pleasure is that I'm getting is what I did for you, that's a pretty good idea that this kid's got a high HQ. Now, I do have to say some of my very best friends, some of my very favorite family members don't happen to have high HQs. I don't hold that against anybody. You're not better because you've got one HQ or another any more than you're better if you've got one IQ or another. But as a hiring principle to deliver hospitality to our customers and guests on a consistent way, the more people on our team

who over and beyond what a great cook they are, or what a great sommelier they are, or what a great co-checker they are, if they also have a high HQ, the chances that you're going to leave the restaurant feeling like we were on your side is immeasurably heightened. So it sounds like you value HQ or hospitality more than technical skills. Well, barely. We call it the 51-49 rule. I want to get 100 on our test. So if all you had was hospitality skills and you didn't have technical skills, we'd get a failing 51 on our test. I would never have been proud to show a 51 to my parents after taking a test. Probably had a couple of those, but they didn't get to see it the next day. So the reason it's slightly more important is that in the great scheme of things,

I think that great hospitality can overcome a technical mistake in a way that technical proficiency cannot overcome a poor attitude. It's just not going to. So I make that slightly more important, but I'm really, really clear that I want all a hundred points. I think doing what we're supposed to do well is table stakes, but I want to be your favorite. And in order to be your favorite, I got to ace as much of the 49%. That food better be good, better be cooked the way you asked it to be cooked. The temperature of the room better not either melt you or freeze you. The sound in the room better not be piercing the bubble of your ability to have a conversation

with your table. All that stuff is technical. We got to get it right. But again, I want this to be your favorite restaurant. And to do that, I've got to be really good at what we do as a starter, but then I got to do thoughtful things that make you want to come back and come back. What do you think distinguishes your restaurants? Well, I think we work hard on both ends of what we were just talking about. We're pretty clear on what the technical components are of the experience. And I think like any business, maybe at least as much, restaurants are hard.

It's hard to get all that stuff right. It's hard to get the look, feeling, sound, taste, smells. And it's also a very personal thing because let's just take the restaurant decor for an example. Same person who thinks restaurant A is beautiful. Someone else may say it's gaudy. Everything we do is a matter of taste. And so we're trying to consistently offer a version of a point of view. We have to take a point of view, otherwise who needs our restaurant? As much as we would love everyone to love the restaurants, that's just not realistic. And in

fact, if everyone loves you, you're probably not saying much of anything. So what we really try to do is get the technical stuff right, but then hire people who, as I said earlier, really live for the opportunity to make other people feel better and then set them free. Let them make choices. I can't write a manual for what to do when someone says, I want a half portion of soup on the side. I just have to let people know, of course, you're going to do that with pleasure. I don't have a what if for every experience, but if I have people on the team who not only are happier themselves when they do something thoughtful for you, but understand that we want them to take the initiative, that it's their job. We want them

to take risks. We want people to be generous. We want people to try to put themselves in your shoes and say, what's the thing I could do right now in this situation that's going to make you leave here humming the tune? If we were a Broadway show, that's what I want you to do. Danny, what business are you in? Well, I think we've been talking about it. I'm in the hospitality business. Food and drink happen to be the stage props, but we're in the business of making people feel better.

And we look for every opportunity to extend what we call enlightened hospitality, not only inside of our restaurants. We actually invest in other people's businesses because we're, I think, hyper aware that not only are we not smart enough to have all the right ideas and best ideas, but there's not enough hours in the day to have them anyway. So when we see people and businesses and leaders who have come up with an idea we wish we had come up with, who are people we wish we had hired, we'll even invest in their businesses outside of ours. Danny, you said that flawless service is not really the goal. Can you give some examples of the types of service that you would consider exceptional, what you aspire to, and what your restaurants actually deliver? Well, I do aspire to flawless service. It just

never happens. So I would say perfection is not the goal because perfection is a recipe to be unhappy. But I am somebody who cares deeply about getting it right. If you go on an airplane, there's basically three things they have to get right. You've got to land alive. It would be really nice if it were on time and it would be really nice if you got your luggage back. Now, outside of those three things, I think airlines can peck around the edges to make you feel more or less important by recognizing your loyalty, by serving you increasingly better food over time. In our business, it's very similar. We are responsible for serving you safely. You are trusting that our business is to create something that you're actually going to put inside your body. But outside of that, there is room for

flaws. I promise you it's not the end of the world if I accidentally serve you risotto that's too al dente for you. We can fix that. We can overcome that through hospitality. So do I want the risotto to be too al dente? Of course not. I want to have a really, really excellent technical expression of our product. But more than anything else, what I want is that when you leave, you just feel happier than however you felt when you came in. And that takes real hospitality skills because it takes reading where people are and having the emotional skills and desire to make it even better. How do you think about opening new restaurants?

I think it's really important, again, to have a point of view and to say, why does this restaurant need to exist? I've always approached new restaurants one of three ways, which is that I've got a burning desire to do an idea to express like what could we add to the dialogue on could be barbecue, it could be Indian, it could be Italian, it could be jazz. I start with an idea that I have to express. And by the way, once I have that idea, I better go find the right location and I better go find the right chef to express it. Or it could start with, there's this chef I'm just dying to work with. Now let's go find the right idea and the right location. Or it could be, oh my gosh, what an amazing location and business opportunity this is. Now let's figure out what's the right idea and the right chef.

So it starts with one of those three things, idea, chef, location. I would say increasingly, as my career has gone on, it has more often than not been that the location and business opportunity goes first. And it's because someone might be approaching us and say, we want to commission you guys to do something special for this place. And I like that. That's like someone handing you a frame and saying, now go paint the picture that belongs in this frame. How do you think about your different constituencies? First and foremost about the people who work here, I think the people who work in our company are our first customer. We put them even before our paying customers, because if you really care about your paying customer, you'd probably do a

better job of succeeding with them if you have happier people serving them and cooking for them. So I'm a big believer in the power of both a vicious cycle and in the power of a virtuous cycle. In a virtuous cycle, one good thing keeps leading to something even better. It makes complete sense to me that the first thing we have to get right is how does it feel to work here? So that's our first stakeholder. Our second stakeholder are the people who do pay for our product, also known as our guests, our customers. Our third constituent are the communities in which we do business our fourth are our suppliers and our fifth are our investors we don't put our investors fifth because we don't want to

make money in fact to the contrary we think we can do better for them if each of those other stakeholders is rooting for our success so if our staff members come to work saying this is the best job i've ever had in this industry. I'm going to do my best. I can't wait to take great care of our guests and offer exceptional hospitality. Chances are better than our guests are going to leave raving and humming the tune. And if they do that, theoretically, we're going to have enough revenue so we can do great things for our community. And then the community is rooting for us to win.

And then we can probably get the best suppliers, the best prices, the best products, the best service from our own suppliers. And with all those things, we have to be pretty bad business people not to take great care of our investors. And by the way, the reason I call it a virtuous cycle, it's not a totem pole where the investors are on the bottom. It's truly a virtuous cycle. The best way to have happy employees, it turns out, which is job number one, is to have really happy investors because what do employees want? They want professional and financial opportunities to grow and you better make money if you want those two things to happen. Danny, how have you changed as a leader? What have been some of the most important lessons that you've learned?

I hope I'm considered to be a better listener than ever. I've always been a decent listener, sometimes to a fault, sometimes wanting to build consensus so much that I don't put my foot down and make the decision soon enough. Because I think people know that I start a conversation with a point of view. I think they know that I want to hear from everybody. But I think that being a better listener is not just, are you listening? It's also, are you reading body language? And sometimes people just want the decision. That may sound counterintuitive because I think a lot of bad listeners don't even welcome the conversation. I think in my case, I sometimes

welcome too much conversation. And I think people really appreciate clarity of accountability and clarity of decision-making. And I think I've learned how to do that better where you still get heard, but people truly have an opportunity to participate, but they know when it's time to move on. There's a great expression, I think Jeff Bezos from Amazon may have said it years and years ago, but it goes something like disagree and commit, because there comes a point when not everyone is going to agree, but everyone had their say and everyone needs to leave that meeting moving ahead. What is success to you?

I have no idea. It's something that I'm very uncomfortable with the term because it seems to imply that you've reached a destination. I don't view success as a destination. I view success as pursuing a path that is consistent to your values. I don't think one ever arrives. If you're shooting for the moon and you're walking there, I don't think you're ever going to get there. So for me, success in many ways is not believing in your own success, but rather being committed to hopefully a noble journey where you're saying, these are the things that matter. I've communicated that to everyone in the company, the people who want to come along, can't wait to unleash you and your talents.

And let's put one foot out in front of the other and keep heading in the right direction. Before I ask for the three takeaways you'd like to leave the audience with today, is there anything else you would like to mention that you haven't already talked about? What should I have asked you that I didn't? What continues to get me excited about coming to work each day and creating new places? And truly, it's this question that I scratch my head about all the time, which is how can you use your growth to advance your culture? I was always told that growth was the surefire way to diminish the culture of your business. And I don't believe that. I believe you need growth to advance your culture,

because if you indeed are promoting and giving raises to not only the people who are the best at what they do, but the best for your company culturally, the culture carriers, if you're doing that, I think that each time you grow, you're actually advancing the culture of the business. And the thing that I'm most excited about is it's something that I know we're working hard at every single day. And it's one of these things we may never attain it, but that's the thing I'm most excited about as a challenge, which is can you scale culture? And I love that. That is wonderful. What are the three takeaways you'd like to leave the audience with? Well, the first one is this too shall pass.

I think that no matter what challenge we have faced, it could be an internal challenge with a business that wasn't working out or a senior employee that wasn't working out, or it could have been an exogenous event like 9-11 or Hurricane Sandy. And you got to double down on your behaviors and values when that happens and realize that it will be over and you will be remembered for how you behaved while it was happening. And you may as well just focus on those things that you can impact, which are who were we while it was happening and who do we want to be when it's over? Number two, something that I think about every day of my life, the road to success is paved

with mistakes well handled. As human beings, we are probably better wired than any animal on earth to be mistake makers. In the same way that the ocean is constantly producing another wave, we're constantly producing another mistake. And as long as it's an honest mistake, I think that you can actually end up in a better spot because of how you handled the mistake, how you overcame the mistake. The third one is the minute you are ready to give up your values for any reason, just hand in the keys. Just don't do it anymore. Whatever it is you do, just life's too short. So I think a values-based approach to decision-making

is really, really helpful. It's understanding what are those core values that you have, and they should probably be different core values for every human being on earth, but know what your core values are. And the minute you're willing to compromise on them, just give back the keys to the store because no one needs you. Danny, thank you so much. Thank you for your wonderful restaurants and thank you for our conversation today. Come see us soon. That I will do with

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