Danny Meyer, Founder of Shake Shack — How to Win, The 4 Quadrants of Performance, and More | Transcription

Transcription for the video titled "Danny Meyer, Founder of Shake Shack — How to Win, The 4 Quadrants of Performance, and More".


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Intro (00:00)

Hello boys and girls, ladies and germs. This is Tim Ferriss. Welcome to another episode of the Tim Ferriss. So I'm going to keep my intro spiel as short as possible, because my guest today is someone I want to ask many, many questions. Danny Meyer, you can find him on Twitter @dhmyre, M-E-Y-E-R, is the founder and chairman of Union Square Hospitality Group, USHG, which comprises some of New York's most beloved and acclaimed restaurants, including Grammarcy Tavern, the modern, Myelino and more. I've been to most of them. As a strong island native, I have made the trek several times. Danny and USHG also founded Shake Shack, which you may have heard of, the modern day roadside burger restaurant, which became a public company in 2015. Danny is the author of the New York Times Best Seller Setting the Table, which articulates a set of signature business and life principles that translate to a wide range of industries. We'll be digging into that. He is the recipient of the 2017 Julia Child Award, and was named by Time Magazine as one of 2015's 100 Most Influential People. Danny and USHG's restaurants and individuals together have won an unprecedented 28 James Beard Awards. Think of those as the Oscars of Food, including Outstanding Restaurant Tour in 2005. Danny, so nice to finally connect live.

Personal Growth And Professional Experiences

The transformation from Dan to Danny (and Little Pig) (01:28)

I know, it's about time. It's great to see you and to be with you, Tim. I have so many pages in front of me and so many questions. It's really just been a challenge, an embarrassment of riches in terms of where to start, but I thought I would start with Myelino. So, a little pig, a little piglet. What is the backstory on the name? I think I was about 20 years old. I got to work for my dad who was in the travel business, and he was selling these group tours to airline employees and their families. It was this crazy idea he had that he had this niche market, and he was going to aggregate all of the benefits and discounts that you would get as an airline employee and package them all together to create these tours. And so, by the time my brother, sister, and I each turned 20, we were each invited by my dad to go work as a tour guide in the city of our choice. And my sister had picked Denmark, or Copenhagen. I picked Rome. My brother would later pick Paris. So, I'm in Rome, and this was one of the most pivotal parts of my entire life experience that would probably direct where I ended up in my career. And so, I was the guy that would wake up every single morning early, go pick up these cranky tourists. There were pilots, flight attendants, baggage handlers, because keep in mind, they were all airline employees, and pick them up at the Rome airport, collect all their luggage, get them on the tour bus, I'd get on the microphone as a 20-year-old, tell them all about what the next three days were going to be like. Here's how you got to hold your purse so you don't get it stolen by someone on a motorcycle. Here's what you should or should blah, blah, blah. So, anyway, I was supposed to be taking these tours to all the typical places, like the cameo factories and the Vatican Museum, all the stuff that was on there itinerary. But instead, I was looking at this as an opportunity to get an education in food. So, I kept going to these Trotterias. I found three different Trotterias that would actually pay me a thousand lira per head of every guest I brought in. So, I'd go get free food at these really good restaurants, and I'd end up with 25,000 lira in my pocket afterwards. Well, so one of the restaurants, which was called La Taverna da Giovanni, started calling me my Reno, Little Meyer, because they knew it was my dad's company. And I thought that was kind of cute. And somehow, over the course of that summer, without my inexperienced ear really picking it up, my Reno, Little Meyer, had somehow changed to myelino, which means little pig. And the reason they did that, and the joke was on me, but every single time I went to this restaurant, my favorite thing to order was the myelino, the roast suckling pig. And so, fast forward many, many years later, on my 50th birthday, my wife Audrey, she knows I hate surprises, so the party was not a surprise. But what was a surprise to me is that she had co-created a logo for my birthday, which was myelino, and she had my picture as a little kid with a pig underneath it, and made these stickers for bottles of wine that everybody was drinking that night. And it was such a damn good logo that when it was time to open a new restaurant, I couldn't come up with a better name or logo. So we ended up naming a restaurant myelino after this whole experience. So you can call me Little Pig or Little Meyer. I'll answer it to either one.

Why did Danny hate surprises? (05:20)

Now, in the course of doing homework for this conversation, I spotted, and this is true for, I suppose, everyone on some level, but sliding door moments, you've had so many different sliding door moments where your life could have cut one way or was headed one direction, and then seemed to pull a right or a left turn at 90 degrees. But before I get to asking about one of those, specifically your uncle and prepping for the LSATs, you mentioned you hate surprises. Why do you hate surprises? Or how do you think about surprises? I think, you know, underneath it, I'm a little bit of a control freak, and I realize that, you know, there's this great expression my grandfather taught me many times, which is man plans and god laughs. So as much as you think that you're planning for success or planning for, you know, the stuff that's going to work out, the world usually has another idea for you. So on the other hand, look, if we're driving, I like to be behind the wheel. It's just, it's my wiring. So I never mind not knowing where the story is going to end, but I like to have some, at least, it may be a false sense, but I like to have some sense that at least I had some say in the matter. So I mean, I'll be flying on an airplane and it's not that I need to get in the cockpit with a pilot, but for example, I'm the absolute world's worst sleeper on airplanes. I've got the window open. It's almost as if I'm afraid I'm going to miss one of the clouds outside the window if I don't keep paying attention. I think I share some similar programming and it brings to mind for me this metaphor that a novelist once shared with me, which was writing a novel is like driving a car cross country with the headlights on. You can't see where you're going, but you see enough in front of you that at least you know you're headed in the right direction. So coming back to what I alluded to a little bit earlier, and I know that we're establishing setting the table, as it were, for people listening who may not have a whole lot of background. You studied political science, if I'm getting my facts straight, then at one point you were preparing for the LSAT. So you're thinking of pursuing law education, perhaps becoming a lawyer, and you had a conversation with you or uncle. Could you describe that conversation and then I have a few follow-ups? Sure. I mean, with a poly-side degree, and the reason that I did study political sciences, as a child of the pretty much the 1970s, middle child of three in the middlemost state in the country, Missouri, Republican dad, Democratic mom, every night at the dinner table, there was a quote-unquote discussion about politics. It could have been Watergate, it could have been Vietnam, and the dinner table was where our family, we could agree on what we wanted to eat, and that was kind of about it. And the food was the comfort. And as a middle child, I was the one who wanted to make everybody feel good and bring everybody together and keep the family together.

What Jon loved about his parents (08:42)

And on the other hand, as much as my dad and I were best pals, played a lot of sports together, just we loved, we cooked together all the time. It was the time I spent with my mom hanging out watching the news every night that I found most interesting. And so I knew I loved what we used to call current events. It just was taken by it. And so after I graduated with my poly-side degree, I was either going to be interested in going into politics, because what else do you do with that kind of degree? Or maybe I was going to go into journalism. I just liked either writing about or impacting the events of the day. So after I spent a few years being a salesman just to make some money selling electronic tags, stop shoplifers of all things, I said, you know what, that's not what you want to do the rest of your life. It's been good. You made a bunch of commissions and I actually invested all those commissions in that company stock, which was a good thing. But I said, you got to do something right now. So I did take the LSATs. I decided law degree instead of journalism degree. And first of all, I think anyone who knows me knows I would have made the world's worst lawyer, because I just don't like, I don't wake up every morning saying, I'm looking for a fight, I'm looking to prosecute. It's kind of the opposite. I think hospitality is the opposite, which is how do we bring people together? But it was on the eve of taking my LSATs. I had taken the Kaplan course preparing for them and everything hated every minute of it. And the night before going to take this test was a Friday night when I was out to dinner with my aunt and uncle and my grandmother in New York City at an Italian restaurant I still go to, called Elios. And I was in a foul, just awful mood, because first of all, I didn't want to take the test, didn't want to be a lawyer. And my table mates were all having a great time eating good pasta, drinking lots of wine, and I couldn't do it. So at a certain point, my uncle, my uncle Richard, turns to me and he says, "What the hell is bothering you anyway?" And I said, "Well, I've got to take my LSAT tomorrow morning." And he said, "Well, of course you do, you want to be a lawyer, don't you?" And I said, "Actually, no." And he basically, he wanted to throw his pasta spoon at me at that moment. And he asked me what was, to this day, the most impactful question of my whole life, which was one I was not expecting. He said, "Do you have any idea how long you're going to be dead anyway?" And I said, "No, I hadn't really thought about that. Why?" And he said, "I don't know either, but I'll tell you one thing, you're going to be dead a hell of a lot longer than you're going to be alive. Why in the world would you do something that you have no passion around?" And I stopped and I said, "Because I guess I don't know what else I could do." And within a second, he said, "You got to be kidding me. All I've heard you talk about your entire life is food and restaurants." And I said, "So what am I supposed to eat in restaurants to rest in my life?" It was so obvious and I could not see this. And he said, "No, you fool, you should go open a restaurant." It had never dawned on me that that was a valid thing to do because that's not what you ever heard about in college back then. You didn't hear about going to open a restaurant. Now, I'm really, really glad that all these years later, being in the food business has become a validated entrepreneurial career choice for people with an education. But it wasn't back then and it still, well, I'll cut to the chase. I did take the LSAT the next morning. I'd already paid for it for God's sakes. Never applied to one school. But what I did do is the following Monday morning, I connected with one of my best buddies from Trinity College, who I used to go out to eat with all the time. He was a fraternity brother. And I said, "I got this idea. I'm going to open a restaurant. You be the money guy. I'll be the food guy. What do you think?" And he was in a bank training program at that point and he said, "Okay, I'll do it." So we enrolled in the New York Restaurant School, which was, all you had to do was pay your $150 and you got in. And we took a restaurant management class and he promptly dropped out after two sessions because he made the mistake of telling his parents that he was thinking about leaving banking to go into the restaurant business.

Jons best job interview (13:32)

And bottom line is he felt so bad about leaving me all alone that he said, "Look, our bank has one restaurant client, which was a big deal because mostly banks would run the other way if they heard the word restaurant back then." And he said, "I'll be glad to see if I can get you an interview with that. Would you like that?" So I got the interview, the interview pretty much consisted of the owner sitting midway down his bar. I'm at the front door. He waves me down the bar, tells me to stop and stand right in front of him. He looks me up and down from my wallabies up to my Brooks Brothers shirt and he goes, "You'll do." That was my first job interview. I got the job. And I was assistant lunch manager, which meant nothing, which meant I was getting $250 a week to answer reservation lines and set up the reservation book for lunch and be on the front door. Here's the good news. Out of that deal, I've figured out in seven months that I love this business. I met the woman who would become my wife. She was a waitress, an actress. She actually left on day two to go get an acting job. I couldn't stop thinking about having just seen her for one second. I met the neighborhood in which Union Square Cafe and Grammarcy Tavern and so many of our restaurants have been. And I met my career. And that was a major, major pivot point. But it just shows you so many things in life are those moments. I mean, the fact that none of this ever would have happened if I had not gone to Trinity College, for example, because that's where I met my friend. And I was 0 for 3 applying. I was such a screw up in high school. I applied to only three colleges. I was rejected from 2 and waitlisted at Trinity. And I had to get down on my hands and knees and write the best letter of my life to get off the waitlist at Trinity. So first of all, that had to happen. And the only reason that Trinity happened is that when my dad's business was in Rome, his travel business, he met Trinity College's lawyer at dinner one night. And the lawyer said, "Hey, your son should consider Trinity College," which none of us had ever heard of. So all that stuff. And then by the way, this friend of mine who introduced me to his restaurant, client, the only reason we ever met is on the first night that I was at Trinity College. There's a pick up softball game. And there weren't enough baseball gloves to go around. And so I lent my glove. And I went up to this guy and accused him of stealing my baseball glove. And somehow we became friends after that. So you just, all these moments that didn't have to happen, and that happens in life every day. And you just got to pay attention and just be grateful, if you're fortunate enough to have a good choice based on stuff that never should have happened in the first place.

Growing up as the professional new kid (17:01)

Yeah, it's so wild. And I have a number of follow up questions, which we'll dig a bit more into a few of these bits and pieces. So the first is, and this will lead to a question about not applying to law school, when you were working in Rome, and you would say have a group of four or five people, you pick the crankiest and they become your, not Mark, but your objective in the sense that you're going to turn them into a happy, raving fan by the end, what were the keys or techniques? What did you learn over time as most reliable for doing that for that person? I was probably in five different schools growing up in St. Louis. So there was a nursery school, then there was a public school, then we moved. So there was another public school. Then I went to an all boys school because I wanted to play football on their team. And then 10th grade came and I wanted to go to school with girls. So I went to the Co-Ed school after that. So that was five schools. And then by the time I was 18, now I'm going to college. So now I'm in six schools by the time I'm 18, you got to learn a lot of social cues along the way. And I just found that I was really good at kind of understanding what made people tick and a really good observer of body language, moods, etc. And it's not that I didn't have a sense of myself where I wasn't like zelig or a chameleon changing who I was, but I knew what people needed. And kind of a blessing to have found a career where that is a really useful thing to be able to do. And as I said, even before going into the restaurant business for three years, I was the top salesman in this company as a young 20 year old selling against hardened salesman from around the country. I just loved it. I loved it. I loved getting into my little blue rabbit and traveling to the worst neighborhoods in New York where there was the worst amount of shoplifting and meeting these people, these shopkeepers who own drug stores, bookstores, clothing stores, first stores, supermarkets, and learning to speak their language and making the sale. I just loved it. So I just think that I'm cut out to do this and the fact that I happen to love food and wine as much as I do has certainly helped a lot. So I would agree for sure that you are well, well cut to excel in these various areas.

What Danny learned at Checkpoint Systems (19:50)

And there have been various points where you've had to, for lack of a better term, maybe operationalize or externalize yourself so that you could say, expand in the restaurant business. So I'm curious. I mean, you mentioned making ends, I mean, I was going to say that was checkpoint. Am I getting that right? Yeah, checkpoint systems. Checkpoint systems. If you had to try to break down what you did, let's just say in sales at checkpoint systems that made you so successful so that you could teach somebody else. Does anything come to mind that you think somebody else could emulate or principles, perhaps they could attempt to implement if they were in that same job? Well, the first thing is, keep in mind, this was before we had the internet, but I would still do a lot of research and I would still learn as much as I could possibly learn not only about the business that I was trying to sell, but the person who I'd be meeting with. And what I came to learn very, very quickly in the New York retail world, and keep in mind, I was primarily selling to retailers because that's who had the shoplifting issues, is that many, many, many of them, you were either related to each other. There was a huge Syrian Jew population. That was not the only population, but I started to develop a sense for the family trees of either real families or relationships, and I got to know who knew who, and I would take that as far as I could possibly take it. So I learned early on something that has been something that I teach our teams, even in the restaurant business. We call it ABCD, so you can ABCD, always be collecting dots, so you can always be connecting dots. And I learned early on that people will take exactly as much interest in you as they believe you're taking in them, no more and no less. Look, I don't want to give away all my trade secrets here, Tim, but I've listened to your show for a long time, but I listened to a couple more segments, much more recently, because I really want to understand more about what makes you tick. I don't look at it as gaming the system. I think it's genuinely being curious and being interested. And so if you're looking for one tip, it's curiosity. And I throw in one other thing. The real trick was, since I was often called calling people, I would actually make my own schedule for where I was going to go that day based on a restaurant that I wanted to try in that particular borough or neighborhood of New York. And I would organize my day around my lunch. Or sometimes I'd organize it. I even organized it around some guy who would bring in lobsters in Brooklyn at exactly two in the afternoon, and I'd go get his lobsters and bring him home to cook. But it's in a weird way. I was developing two careers at the same time without even thinking about it. You were collecting dots in a few different areas at the same time in Klay. And also giving yourself, it seems like small rewards, which would probably give you more endurance in doing what you were doing in terms of gathering or organizing your schedule around those lunch spots. How did you navigate the conversation? And how did your parents respond to the conversation related to not applying to law school? Well, it was easy at first, because I didn't tell them. I kind of side tracked and sidestepped. And I finally, at one day, got the courage to say that I wanted to be a chef. They knew I loved to cook. Now, you may say, well, how would you get the courage to say you want to be a chef, but not to be a restaurateur? Well, in fact, I thought I did want to be a chef. And I had seen at that point, there were a number of really well educated people who had gone into the culinary profession. And chefs were starting to become kind of well known. And we keep in mind, this was way before the Food Network. But you had people like Alice Waters, who had known to Berkeley, you had Jeremiah Tower, who had gone to Harvard, Joyce Goldstein on the West Coast, Mark Miller, on and on and on, there's probably like 15 of them. Wolfgang Puck had become a household name. Paul Prudom in New Orleans had become a household name. So I finally got gathered the courage to say, I think I want to be a chef. And by the way, in these days, I spent almost all of my time walking around the city looking at menus on restaurants. I memorized every menu. I ate at many of the restaurants. If I would go back to Italy many, many times, not just when I was a tour guide working for my dad, but until I was 21 years old, I could travel anywhere pan-amploo for $44 around trip, thanks to my dad's travel business. And so I was constantly going to restaurants and learning and learning and learning. Anyway, so I finally said I'm going to be a chef. And so my dad was kind of open to it. My mom maybe a little bit less so, but I went for it. My dad actually connected me with two of the Relay and Chateau colleagues of his in Bordeaux. He said, look, I know you want to go to Italy, but in Italy, they basically cook food with three ingredients, and that's the genius of Italian cooking. But if you really, really want to learn to cook, you got to go to France. So I said, well, let me do both. So I spent time in Rome, Bologna, Sardinia, Milan. And then my dad did connect me with a restaurateur in Bordeaux named Roland Fleurrand. And he had two restaurants in Bordeaux. One was called La Reiserve. The other restaurant was called Du Beren, D-U-B-E-R-N. The day before I got to La Reiserve, they had lost their second Michelin star. Now, chefs have actually gone off the deep end for less because Michelin stars were everything for the French. And so I get there and everybody in the kitchen is completely dejected. And I'm this guy who doesn't know anything about cooking and who is he and how did he get in our kitchen, and why are they letting him live with the chef? And the good news was that after a couple days, a bunch of people in that kitchen left because they did not want their resume to say one star. To be tarnished. So they figured if they left with two stars on the resume, they'd be fine. And so all of a sudden I started to get some opportunities, some really big opportunities, like chopping shallots and opening oysters and pulling feathers out of pigeons, you know, to prepare them. And here was the big one. I got to cook family meal, which was, that's a big deal to get to cook for all the other cooks.

Danny's free work at Checkpoint (27:24)

And I was doing some of my family's favorite recipes. I'll never forget when I made barbecue ribs. They didn't even know how to eat these things. Coet de la de porque, you know, it was just a great, great experience. They took me to oyster beds. They took me to chateaus and bordeaux. They took me to places where they made sausage. They took me on a, like one of my favorite days of my life, a day that the restaurant was closed to go hunting for wild pigeons called Palom. Just a great life experience. It might be helpful to people listening. And I'd certainly love to hear your thoughts on, for lack of a better way to put it, free work.

Authenticity trumps perfection. (28:00)

So in the, in the food world, you have people who will stage and maybe you could describe what that means. But my understanding based on Bill Gurley's, our mutual friend Bill Gurley's speech at UT, I think it's called Running Down a Dream. Might have a slightly different title to it, but I recommend everybody see it. There's a 10 minute segment on, on your arc and presents it really well. And he talks about how you went from star salesman at checkpoint systems. And then over time got to zero and then kind of went upside down because I think some of these restaurants asked you to pay them for the privilege of working there. Could you just speak to the logic we're thinking behind that? Maybe it's as simple as, hey, I didn't have a choice and I really wanted to do this. But it seems to me that a lot of younger generations now have the impulse to say, I want to be paid what I'm worth. And I see a lot of wisdom and value in the secret weapon that a lot of young people have when they don't have a lot of money, but they have a lot of time, which is working for free and learning a lot. Would you be able to share any thoughts that you have on that? In our industry, there's a sense that if you really want to dig your roots and, and build a career, you should learn from the best and, and how do you get your foot in the door with the best? So you were willing to, to work for nothing. The only time I ever had to pay anybody was this cooking teacher in Milan who told me that she was the Julia child of Italy, which she certainly was not the Julia child of Italy. I paid her my money and moved on, but I did many, many stages where I was not paid anything. And as I told you, the one that I did in New York City, I was paid 250 bucks a week, which kind of laughable. That's, that's what a waiter makes in half of a night in New York City these days. So look, I just think that if I've learned one thing, it took me 10 years to open a second restaurant. And, you know, today will probably open two shake shacks somewhere in the world. If I've learned any one thing is that there's a benefit to being a little bit patient and try to grow where you're planted. And I think that as life is accelerated for so many reasons, technology being primary amongst those, I think that people feel like there has to be a beginning, middle and an end that all gets resolved within, you know, a 30 minute sitcom. And that's just not how life works. And I think that if you can do time paid or not, but, but really learn what it is you're trying to do and not scratch the surface and move on too quickly, it really pays big dividends. Now, there were reasons that took me 10 years to open a second restaurant. Primary one was I didn't want to go bankrupt.

The benefits of being patient. (31:16)

And since I had seen my dad go through two different bankruptcies, one in my teens and one when I was about 20, 20 something, I forget how old I was. And I always associated his bankruptcies with expansion. And I assumed that that was the business thing you wanted to avoid was expansion. And I didn't want to end up like my dad. I just said, there's no way I'm ever going to open a second restaurant because I just, I don't want that to happen. And the silver lining in that, even though I eventually after my dad died, I got some therapy and I first thing I learned was, hey, guess what? You're not your dad. And number two, there's a whole lot of businesses that have expanded. And that wasn't the reason they went bankrupt. In fact, they didn't go bankrupt. But the silver lining was I really learned my business. I really learned it. You know, that's probably the reason it took us five years to open a second Shake Shack.

graduating from experience to developing expertise. (32:11)

I didn't want to expand too quickly. And I did not want anything bad to happen. But guess what? We've learned our business. This might seem like a naive question, but what does learning the business look like? Right? Because there's there's experience and then there's developing expertise like some people can repeat the same mistakes for every year for 20 years straight. And then there's learning a lot. Well, every business is made up of five stakeholders. And so when I say learning the business, it's learning as much as you possibly can about how to motivate all five of your stakeholders to root for your success. That's what you want. And so the best way to motivate all five of the stakeholders to root for your success is to make sure that they believe you're on their side first. So it was learning. It was our staff. That was our first stakeholder. Who are they? Who are the best staff we could possibly have? Who are our guests? And I mean, really learning about them. And to this day to this very day, I end every single night reading all the reservation reports for all of our restaurants. So I know who's dining in our restaurants tomorrow. And then either if I stay up really late, I read all the the after service reports or I'll do that first thing in the morning to find out and how did all those experiences go. And I weigh in. And to this day, I'm connecting dots because I care about who our guests are. This one knows that one. Seat them near each other. This one has just published a book. Make sure to go buy that book and have it on the matriety stand so they can sign it. I care about that stuff as much as I've ever cared about it. But it also means, you know, getting to know the community in which you do business because why should your community root for your success if you're not investing in your community? Same thing goes true of our suppliers. Get to know your suppliers. You want the best product. You can't have the best business if your raw products are no good. I learned that lesson, by the way, from my grandmother. Very, very important. I love the cooking in her home. And I'll never forget when I asked for her tomato sauce recipe. And she said, I'll give you the recipe, but I'll tell you one thing right now. It's never going to be any better than the worst ingredients you put into it. And number two, those ingredients themselves won't be any better than how well you treat them after you buy them. So you better get the best tomatoes, which in New York is like a two month season, right? It's like August and September. And even if you get the best tomatoes, you better not throw them in the back corner of the walk-in refrigerator and bruise them so that they lose their sugar. Treat them the right way. Well, guess what? Same thing goes for people. You can have the best recipe in the world for how you hire people, but you better pick the best tomatoes. You better treat them the right way if you want the best sauce. So I've just learned so many lessons.

The wonderful world of carbon monoxide gardens (35:21)

It's amazing how many life lessons actually apply to learning your business. Another great one that my grandmother taught me when I was a little kid growing up in St. Louis, my favorite moment was March, March and April, because spring came kind of early to St. Louis. And that's when my grandmother would plant her flower garden. She had an amazing green thumb. Well, keep in mind she lived in an urban apartment building. It was a skyscraper in St. Louis at six stories tall. And her apartment building gave her a plot of land in the parking lot that was probably 20 feet long by about four feet wide. And she called it carbon monoxide gardens. And so every spring she would invite me to come help her plant her garden for the summer. And this would always be probably late March, something like that. And this probably started when I was six years old or something like that. And she gave me my gardening gloves. And she taught me early on to figure out which were the weeds. And it kind of like that scene from Tom Sawyer and Huckleberry Finn, she was basically having me do all of her free labor weeding the garden. So I learned to pick all the weeds. So now by the time I'm about nine, I go down there for my annual spring visit. And now it's probably April or May, because I would do this, you know, as the garden would keep growing. And she said, Now I'm going to teach you the real secret to how you have a great garden. And so I go for the weeds dutifully. And she said, Nope, she takes my hand gently pulls it off the weeds. And she hands me a watering bucket with some something in it. I have no idea what was in it. And she said, I'm going to teach you how to water the flowers. Because if you really want to get rid of the weeds, the best thing you need to do is water the flowers, because the flowers will provide a canopy that will actually prevent the weeds from getting the sunlight that they actually need. So voila, best business lesson ever, because I spend the first 10 years of my career almost exclusively focused on trying to motivate problem employees to be better, like the weeds, right? And what I learned was that our employees are like sunflowers, they will turn wherever the sun is. And if I'm spending all of my attention on the weeds, I'm actually pulling the gravitational force that way. And my grandmother's lesson was right. If I water the flowers and spend more time with the people who maybe I've taken for granted because they're doing such a great job, they actually crowd out the weeds and the weeds take care of themselves. I'm definitely going to ask you more questions about hiring with some some hypothetical situations.

The stakeholders of business (38:24)

But before I move on, the five stakeholders, did you list them? And I think it was employees, guests, community suppliers, investors in roughly the order that you would or did weigh them in your restaurants? Exactly, exactly that order. It took a long time to figure that out. Every business has those same stakeholders. You get to pick in which order you're going to prioritize them. And, you know, when I went to college, I took exactly one econ course, econ 101. And of course, you learn about Adam Smith. And we studied Milton Friedman, the guy from the University of Chicago. And he was like, take care of the investor and everything else takes care of itself. So I had that voice on my shoulder. But I also, you know, one of the first jobs I had after college, I was the Cook County field coordinator for John Anderson's independent run at the presidency in 1980. And believe it to me to work for the independent guy, not the Republican, not the Democrat. But 100% of the people who reported to me, that job, by the way, I got 214 bucks a week. But 100% of the people who reported to me were volunteers. And most of them were older than I was because I was only 22. And I didn't have any way to motivate them with money. I couldn't give them a raise, couldn't dock them their pay. So I learned such a crucial lesson, which is that if someone's volunteering, the only way to motivate them is to have a higher purpose. We're all doing this because we agree with this bigger idea. And so I basically took that idea to work with me when I first became a restaurateur. And again, half the people who worked, everybody was getting paid, but at least half the people were older than I was. And I was learning what it was like to be a leader, to be the boss. And I basically, to this day, treat all of our employees as if they are volunteers, which is not in the real sense, you're going to get paid. But if you're working for me, it means you're probably good enough to have gotten another 25 job offers, at least. And so, as far as I'm concerned, you're volunteering to share your gifts with us. I better give you a higher purpose and reason for wanting to be here. And that's when it became clear to me that our first stakeholder had to be our own employees. And by the way, I look at this, Tim, like it's a virtuous cycle. It's not a totem pole where the employees on the top and the investors on the very bottom. It's a virtuous cycle where one input leads to something even better. So, if you want to have really happy customers, they shouldn't be the input. You should have really happy employees, which I think then leads to a greater chance you're going to have really happy customers. You want to have really happy investors. You wouldn't want that to be the input, Mr. Milton Friedman. You'd want that to be the outcome. And by the way, what's ultimately the best way to have happy employees have really happy investors, because that's the only way people are going to get promotions and raises. And I've run a business where nobody was getting promotions and raises, and it was not happy. And we had to go out of business when that happened.

Building A Strong Work Ethic

How Danny has honed his writing skills occupied vs. interested (41:55)

I'd like to ask you a question about writing. And I'm going to begin with a blast from the past, which I've kept for a very, very long time, because I think it's so masterfully crafted. And it's something that you crafted. And this is a polite decline. I'm not going to say rejection, a polite decline when I via a mutual acquaintance, close friend of mine, Jeffrey Zorowski, reached out to see if you would participate in my book, "Triba Mentors." And the beauty was, your response ended up being incredibly valuable as a polite decline. So I'm going to be paraphrasing a bit, but this is what I received. And it was via Jeffrey, who was acting as the Yenta/ intermediary. Jeffrey, greetings and thanks for writing. I'm grateful for the invitation to participate in Tim's next book project, but I'm struggling at this moment to make time ends meet for all we're doing at USHG, including my ongoing procrastination with my own writing projects. I thought carefully about this, and it's clearly a wonderful opportunity, but I'm going to decline with gratitude. Know the book will be a big success exclamation point. Thanks again, Danny. So this is so noteworthy for me because there are many ways you can decline something that are likely to upset someone or don't do anything to offset the potential for someone being upset. I came away from receiving this just laughing and wanting to get better at writing polite declines because I felt better about you. I respected you more after receiving that. How did you learn to write? How did you improve or develop your written communication? I can't believe you pulled that letter out. That's wild. And you know what, I do that almost every day, but I wouldn't do it if it wasn't, if it weren't genuine. I wouldn't have gone to the trouble of saying all that stuff if it weren't genuine. I've always loved writing. My dad was an amazing editor. He was actually the managing editor of the newspaper at Princeton, the Daily Princetonian. And he took great pride in marking up anything I ever wrote. You know, I care. I love writing. I love expressing myself. But I also, I think, more to your point, it's not the quality of the writing as much as it is the sentiment behind it, which is that if somebody gets back to what we were saying earlier, if somebody cared enough to reach out their hand and say, "I want to shake hands with you," that's what that was. Or they reach out to give you a hug. What are you going to do? Just become a tree and not hug them back? And I think that I've learned a very, very important lesson. In fact, I'd be curious, and you'll probably know, I care so much about letting someone know, if I do appreciate an invitation, but I just genuinely can't do it, I care that they know that their invitation mattered to me so much so that I sometimes procrastinate writing that note. And I've learned a hard way that sometimes my mind and my heart are at war with each other. My mind knows I shouldn't do it. My heart really wants to do it. And if that translates to making you or Jeffrey wait too long to get that response, it doesn't really matter what I wrote. So I'm really curious to know when Jeff's invitation came and how many days went by before I responded. My bet is more days than there should have been. I don't have the dates, but I'll take a look. Has your approach to that type of plight declined changed over time? Do you have other language that you like to use? And again, this is not to imply to your point earlier that this is disingenuous. Like the assumption is made and I believe that it's that it's genuine. It's really hard. Have you found? It's just really hard. It takes time because, you know, what most people do, sadly, is they just delete the invitation or they just ignore it. So I think it kind of falls into a couple of camps here. So number one is, is this something I really want to do? Number two, if I really want to do it, can I do it? So that's easy. Look at your calendar. And number three, is this something that I feel like I should do? And then of the shoulds, there's another couple buckets, which is, is it a should because I have to or is it because a should because it's good, right? I've gotten into most trouble on the shoulds. If I really, really want to do something, like I really wanted to have this conversation with you today. I'm the guy that reached out to you. And I love when I get a spark of something that I really want to do. But many, many times the invitations come in, I get a lot from politicians. We support this or that. I get a lot from, you know, speaking opportunities, etc. And I'm not complaining. I'm very, very fortunate. But if it's a should, I learned this lesson from the restaurateur, Jeremy King, who's in London, great guy. And he said, he said, the shoulds are what have gotten me in the most trouble. And I asked myself a simple question. If this thing were tonight, because it's generally something, you know, four, five, six months or now, but if this thing were tonight, is this something I would be excited to do or what I roll my eyes and go, Oh man, look what I have to do tonight. And so by making it in the very present, that's really helped me a lot with the shoulds. And then I just feel like it's not my obligation to say yes to everybody. But I do care. I genuinely care if somebody had the courtesy to invite me to do something, they deserve the courtesy of a gracious response. All their guilty of is saying, I'm interested in you. How bad is that? That's, that's a compliment. It can be really challenging. And I just want to give you kudos again for an incredibly beautifully crafted polite decline that I was, might sound bizarre, but thrilled to receive. I really admired it so much that I've kept it on hand.

A Picture of Perfection (48:45)

And I asked about writing because I find that you pay seem to pay a lot of attention to language and communication and clarity. And my attention was drawn in doing homework for this conversation to questions. Now you can't believe everything that you read on the internet. So I do want to fact check this, but I found a list of six qualities Danny Meyer looks for when hiring, that is. And the first is, I'm just going to read through these and then you can correct as, as needed or expand as needed. But I'm going to get to a few at the end, there are only six that have questions associated. So number one, kind eyes, eyes don't lie, kind eyes, say, hell, I'll have a start, curiosity does this person see themselves as a finished product? Or are they looking to continually learn three work ethic? You can teach someone how to decant a bottle of wine, but you can't teach them to see opportunities to do more. Now we're going to get into some questions. So for empathy, is this the kind of person the entire team is going to want to be around, ask on a scale of one to 10, tell me how lucky you are. I'm curious about that self awareness. Can this person read their own weather report ask, what does the single biggest misconception people have about you? And then integrity trust, ask, name something that happened to you before the age of 12 that has changed your life forever. If you were hiring for your first restaurant today, would you ask some of these questions, look for these six things, or would you modify this? I would absolutely look for those things. In fact, I've checked them with myself year after year, and there's not one of them I would take off the list. I want to work with people who are kind people who genuinely are optimistic people. I'm not really excited working with skeptics who just see what could go wrong all the time. Look, I'm a cock-eyed optimist. I'm so damn optimist that I basically see the wine glasses half full even before I pull the cork on the bottle. But it's important for me to surround myself with people who at least ask me some tough questions. So I want kind optimists. I definitely want curious people who look at each. I don't want no-it-alls. I want learn-it-alls. I don't want someone who's already a finished product. It's not fun, especially if you're trying to make your business better every day. I definitely want people who have an excellent work ethic. I don't mean to the point of being sick because we can all push it too far. But it's not fun to be on a team where everybody's really bringing their best. And there's a couple of people just putting in a sea level effort that doesn't work. And I definitely want empathetic people, people who understand the wake they leave in their path, who care about how they make other people feel just as much as they care how other people feel. So yeah, and definitely I want self-aware people and I want people with integrity. So 100% of those, the one thing I would add that has really, really come to light for me is I want people who just love to win. And because that's not really captured in any of the six that I mentioned earlier. Wanting to be a champion, you look at the best athletes in sports, sure they have God given physical ability, but they also had to train like crazy. You don't get to be the Kentucky Derby winner without you got your bloodlines, but you also had to train like crazy. You don't get to be Serena Williams without the bloodlines, but you don't also get to be Serena Williams without working incredibly hard. Or Michael Jordan, whoever it is you want to talk about. So I look for that. I'm really interested to know the motivation behind what makes someone competitive. And I basically have four buckets. First of all, there's a competitive people, people who are great people. They just don't wake up every day saying, you know, I got to win. I'm dying to win. Tim Ferris did not get to be Tim Ferris without desiring to be the best. I know that. And that doesn't necessarily come across, but you're not a competitive. I can tell you that. Then the other three buckets I look for, and this helps me with someone's self awareness as well, is to understand, assuming that you are motivated to be a champion at what you do, what's the, what is your primary motivation for wanting to compete to win? And I find there's basically three buckets. Sometimes people have a little bit of each, but there's the, you know, that picture of Muhammad Ali standing triumphantly over Sonny Liston, whose back is on the map with his fist up in the air? So I can pretty much tell you that Muhammad Ali was primarily motivated by a love for beating someone else. That felt really good to him. And that's not, it's not a bad thing or a good thing. Just is what it is. Then you got imagine this photograph of John McEnroe with his headband on and his long, curly hair yelling at the umpire, you've got to be kidding me. That man hated to lose. It wasn't so much I'm motivated by who I'm going to be. It's like, like, I will not be seen losing. And then the third image I would have would be a great Olympian. Let's say Usain Bolt and his leg is outstretched with the veins popping, right? Trying to get that extra inch or that extra half second off of his time or whatever. And that guy is, he's out there, his primary motivation, he wants to exceed his own personal best. He's competing with himself. So by knowing these questions, this is something that I would absolutely want to add today. Because I know that I want to be the best. And I can't do it by myself. So I got to be, I got to stock my team with people who look at every day as an opportunity, not for perfection.

A Work Ethic Spectrum (55:04)

Because I think perfection is stupid. It's impossible. It's a recipe for unhappiness. But I do look for people who look at every day as an opportunity to honor whatever they did yesterday and figure out how to do it a little bit better today. That's the journey of excellence. How do you assess, this might sound silly, work ethic? Is it by trialing someone? Because everyone's going to be on best behavior and saying, Oh, my biggest flaws, I just work too hard. You know, that type of college application nonsense and a job interview. Do you have particular ways that you would approach assessing that proactive work ethic, right? Not just doing what you give them, but sort of thinking about what else they could do. How do you think about assessing that? Well, I basically define it as, you've now learned how to do the job, but only you can determine if it matters to you to do it as well as it can be done. And you can see it in people. There's so many ways we can all take shortcuts. The obvious things are, did you show up?

There's No Day But Today (56:01)

Did you show up on time? Did you show up? Shaven, if that's what your job is in the dining room, let's say, did you press your shirt or just take it easy and, you know, get that extra third, third use out of your shirt, where you don't really care what it looks like. And, you know, it's, you see this in sports all the time. And I think sports has so much to teach us. Number one is I think in my hospitality is a team sport. We rely on each other. It doesn't matter whether you had a bad night or not, you're not expected to go strike out if you're a baseball player. It doesn't matter whether you woke up on the wrong side of the bed or not. You're not expected to let a ball roll through your legs at shortstop. Well, it's the same thing in my business. Your job is to make the rest of your team better. And your job is to make the rest of your team better, whether you're on the field or in the dugout. And I got a quick story that I learned so much from other people. You probably heard of Theo Epstein. In fact, maybe you've even interviewed him at some point. I have not actually, I'm going to plead ignorance. I will broadcast it. Theo Epstein was the youngest general manager in, I think, the history of Major League Baseball. And he was hired at a very, very young age to take over being the general manager of the Boston Red Sox who had not won anything for decades and decades and decades. And, you know, they talked about the Yankee curse or whatever the hell it was. But for whatever reason, they couldn't win. He comes, he's the general manager, revamps the team. And of course, they win their first title. I want to say it was in 2004. Actually, I don't want to say that because if that's the case, it was against my St. Louis Cardinals. But he then went on to go win a couple others for them. And then he leaves to go to the Chicago Cubs and Chicago Cubs. Guess what? They have not won a world series forever. He revamps their team. Chicago Cubs win a world series for the first time in all these years.

Shutouts:  What and why are they? (58:15)

So now this, this wonderkin Theo Epstein is asked by a lot of people. And he basically, you know, what's the secret here? And you got to understand baseball is a game of statistics. They measure everything. There's statistics. I don't even begin to understand. But 100% of those statistics are what's happening on the field. Right? So running, caught stealing, you're fielding percentage, you're batting percentage, you're batting percentage with runners on base, you're batting percentage against left-handers, right-handers on and on and on. Half the game of baseball is played while you're sitting on the bench, right? Your team is in the field, you're on the field. When your team is at bat, you're on the bench. And so the real question is, how do you measure what your impact is on the rest of the team when you're in the dugout? Did you help the rest of your teammates get better? So I've been watching this guy Theo Epstein trying to learn from him. And finally, I have the chance to meet him once. And he had given a talk at a conference I attended. And it was the year that there was a big hurricane in Houston. I want to say it was Hurricane Maria, but I'm probably wrong about that. And this was like a week after the World Series. Houston won the World Series that year beating the Los Angeles Dodgers. And so, and he was still with the Cubs. The Cubs had lost to the Dodgers in the championship series that year. So the team that the Cubs lost to went on into the World Series and lost to Houston. So I go up to Theo Epstein. I finally get a chance to talk to this guy who I've been learning from from afar. And I ask him the stupidest question in the world. And I go, who are you rooting for? I got to know who are you rooting for in the World Series? Were you rooting for Houston because you felt bad for the city because they just had this hurricane? And you wanted to see something nice happen for Houston? Or were you rooting for the Dodgers because it would make the Cubs look better if the team they lost to went on to become the champion? And he looks at me. I come from Mars and he goes, he goes, actually very politely, he goes, actually neither one of those things. I was absolutely rooting for the Dodgers to win, but not because it would make the Cubs look better. It's because if the Dodgers win the World Series, I know that the Cubs have to face them eight times next year during the season. And if they win the World Series, they're going to be like every other team that wins the championship. And they're not going to do the things they need in the off season to improve their team. And that's going to make them easier for us to compete with next year. I want shit. That is such a great lesson because it's like when you when you think you're doing well or you think you're on top of whatever profession, that's the time you got to break the glass and you got to start over. And that's when when I think most of us, and it's not just laziness and it's not just sitting on your laurels, it's you think it's great, but the world keeps moving. And if you don't keep moving with it, you will definitely not keep up. That isn't a great story. And I'd be curious to know, I mean, did you dig into or have a chance to study how he assessed things that were not captured in the usual stats? People showing up early to practice, maybe staying later, practicing A, B, or C? Were there any other particular approaches that you've gleaned from studying him or speaking with him? You know, it was all intuitive to him. And it's the stuff I was looking at on our team.

Calibrating the side of a team too often forgotten (01:02:00)

The character, like in my business, this is going to sound really trite, but our staff, the cooks and the servers sit down and have what's called family meal before every lunch service and before every dinner service. And it's an opportunity for people to come together, stop, we call it family meal, we are a business not a family, but you can watch during that time. You can just watch who's brain motivating thoughts to the table, who's actually brain outside ideas to the table, who's asking questions. You can tell who's bringing the conversation down. There's always someone on every team who's the "ain't it bad" person, right? That's not someone we really want in the dugout. I want people who are like, just imagine if we, I want that person, just imagine if we could do this kind of person. But I didn't study that in Theo, except I watched how you know, before Theo Epstein, the most famous general manager was a guy named Billy Bean, who famously rebuilt the Oakland A's. Protagonist of moneyball for people who might recognize that. And I think what Theo did was he added the emotional aspect to the technical aspect. So let's say you have someone on your team, you don't want in the dugout. And let's say there's a reality TV show where you put on a Groucho Marx makeup kit and you go and you're starting a new restaurant.

Managing Leadership And Team Dynamics

Different setups for The Outsiders and Pancake House (01:03:31)

You can use all the knowledge you have, but you can't use the contacts, you can't use the bankers and the financiers or whatever you might have had access to before. And you have to let somebody go. How do you make that decision? Is it made quickly? If you have you set rules for yourself as to how to go about doing that? And then what is the language or approach that you might use? Well, I've gotten much, much better at it as the years have gone by. I mean, I'll never forget the first people I had to fire when I was 27, 28. I'd lose sleep for days, literally days. I even went on my honeymoon knowing that I was going to have to fire someone when I came back from my honeymoon. And I really regret that. I really regret that I hadn't done it ahead of time because that's not something that I should have been thinking about on the honeymoon. And the early days, I really looked at our businesses if it were a family. And again, the way I grew up, it's like my job is to keep the family together. And I would be great at it. Somebody wasn't working out at one position. I'd find a different position and move them to anything to keep them because it felt like I had somehow failed if someone was leaving our company. And I was really, really good on the other hand at rewarding great performance. But I was pretty damn bad and/or slow at exiting people who shouldn't have been on the team. So a big thing happened over time and not too far on the rearview mirror either. And that was this thing that I've already alluded to, which is that number one, it's a business, not a family. One of the great things about the restaurant business is that it does feel family-ish to people because you spend so many damn hours working with each other. But it's not a family. And so it's a good thing, but it's a double-edged sword because when you fire somebody from the family, also known as your restaurant, you have to ask yourself, what will this do to the fabric of that group, that troop that's working together? So I was able to come up with the help of some restaurateurs in California. They gave me this model that I just absolutely love. And we've turned it into something that we do. And they basically created a four-quadrant thing. You've seen these axes many times with a y-axis and an x-axis. And in one of the quadrants, there's the word can.

Scaling leadership and culture at Union Square Hospitality Group. (01:06:18)

Let's say the upper left hand, it says can. And then in the upper right, it says can't. And then in the bottom left, it says will. And in the bottom right, it says won't. So you basically have someone's technical abilities, the can and can't. And then you have somebody's emotional willingness or aptitude, and that's will and won't. And so what we've been able to do, we've actually created mirrors, which we put in the locker rooms of our restaurants. Because we're not trying to keep this a secret. And the mirror has all four quadrants. And so when you go put on your uniform every day, you get to look at yourself in the mirror if you so choose and see this quadrant. And so basically, if you have someone who will but can't, that's a very different thing than someone who won't and can. Or if you have someone who, I could go through all of them. But what we've basically done, Tim, is that we have an action point and a timeframe for each one of those. So if you've got somebody who can and will, right, I want to celebrate that person. I want to replicate that. But I really want to pay those are my flowers. I really want to water them. Too often we ignore those people because oh, that's easy. We don't have to worry about Johnny because he always gets it right, right? We really want to water those flowers and celebrate them. If you have someone who can't but will, I'm going to coach them. And I don't mind saying this, but the wick on my candle is pretty long for someone who will, right? Because if you can teach them how to do the thing and they're willing to do it and they've got the right approach, the right hospitality attitude, once they learn how to do it, you're going to have a loyal employee for life because you stuck with them. Now, on the other hand, so let's say that's a six month wick on my candle. But let's say you've got someone who can't and won't. Right. I'm going to put the candle underneath their rear end and they're going to have to learn that this isn't working. And that's going to be a very, very short. That's got to be a short window because the longer that person stays on the team, everyone else on the team says, why should I try if they keep batting that person in the lineup instead of benching them or sending them to the minor leagues? Why should I try? The hardest one I find is the can but won't. That's the person where you just go, you know, you're way better than this. But for some reason, you're just choosing not to bring it here. And so that's going to have a pretty short life as well. But by actually naming all four of those things, it really, really helps us to have these conversations. And we tell people upfront. So you're not having, they see that mirror. So it's not the first time you're having this conversation. It gives you a language to say, here's where you are right now and it's not working. And I'll say probably the greatest lesson I've learned about anything has been really trying to understand how do you scale culture? And I've kind of come up with this equation in my own mind that took me a long time to get to.

Why it's important to create a language to discuss toxicity on your team. (01:10:05)

I used to think that by rewarding the behaviors I wanted, that was the best way to fuel the culture I wanted. And now I look at it a little bit differently because that's turning a blind eye sometimes to the behaviors I don't want. Right? So I've now learned that the culture you have in your organization is the sum of all the wanted behaviors that you celebrate minus all the unwanted behaviors that you tolerate. And I've learned that the hard way because people think I'm full of crap. They can read anything I write about our culture, et cetera. But if I'm tolerating behaviors that don't promote either the excellence or well-being of the team, then everything I've done on the positive side should be called into question. How might you these days having had much more practice since your honeymoon?

What makes letting someone go a conversation better open than closed. (01:11:06)

If you had to let somebody go or you wanted to maybe suggest language as someone might use, but you could make it personal, how might you phrase that conversation? Well, the first thing is it shouldn't be the first time you've had the conversation. Yeah, there's nothing worse than when somebody feels like I got whacked in the back of the head and they're just shocked because you had never had the conversation. You hadn't had the tough conversation that said either your performance or your behavior. It's one of the two are not measuring up. And that's another reason that we have to be really clear about what excellent performance looks like and what the wanted behaviors are, which we're very, very clear about. And by being upfront with people and not having this be the first time you're having the conversation, it takes a lot of the emotion out of it. It doesn't mean someone's going to be happy, but it basically sounds like actually something that I've said on a few occasions, not in the time I'm actually exiting somebody, but in the time leading up to it, is I use what I call the jigsaw puzzle analogy. We've all done jigsaw puzzles and like the more challenging they are, you get to this point where it's starting to take some shape, but you still have a lot more pieces that you haven't put together than what you have in your little shape there. And invariably you're going to come up with a piece that looks like it's right. And you put it down and it's almost right. It's so almost right that you keep kind of jigging it around to make it right, even though you know it's not right. And the piece knows it's not right. And what starts to happen is the paper on top of the jigsaw piece starts to fray a little bit. And in fact, the jigsaw puzzle, if you're not, if you keep trying, starts to fray. Well, that's what we do too often with employees that are almost right, but they're not really the right fit. And it ends up not being good for the puzzle or for the puzzle piece. So I try to explain that to people, if you get that conversation with me, chances are probably 80% that the next conversation is you're a beautiful jigsaw piece, but you should probably be part of a different puzzle. It doesn't make you wrong. It doesn't make you bad. Now, if it's someone who actually did something bad, that's a very different conversation. It's like, you cannot work here. You betrayed integrity. You've betrayed someone on our team. You've betrayed one of our guests. You've betrayed our investors, whatever, whatever. If you cross any one of our stakeholders, that's a very different conversation lack of integrity. But if it's, if it's just not the right fit, it shouldn't be the number one, it shouldn't be the first time they've heard about it. And they may not love the conversation who in the world wants to be exited. Yeah. But I'll tell you one thing I feel really good about is that we have a pretty small industry and invariably, if you're someone who left our business on your terms or on our terms, you're probably going to be serving me in a restaurant sometime in New York. And I feel really good that I never mind seeing these people. It just feels like as long as it's clean and we were honest with each other, it tends to work out in the end. Reading your bio, looking at the highlights, you've had so many successes, but imagine beyond your wildest dreams or expectations that you could have had in your, say, late twenties.

Setting Tabla the right way vs. leaving shamefully (01:14:54)

What are some of your favorite failures or any favorite failures that come to mind? And by favorite failures, I mean, a failure that you learned a lot from, that set you up unexpectedly for later success. Anything that sticks out comes to mind as a seminal moment, a teaching moment. Many, many, many. Every day we have micro failures. There's a really good movie called the Best Exotic Marigold Hotel. I don't know if you've ever seen it. I haven't watched it. It's a terrible title because I can almost never remember it. I want to say Carnation, Chris Santhamum, but it's the Best Exotic Marigold Hotel, takes place in India. And there's two great lessons from that, one of which I think answers, there's probably more than two, but one of my favorite lessons is that the only real failure is the failure to try and that the measure of success is how we cope with the disappointment. I like that latter. And so I'd say that probably the first most pivotal experience for me was closing the first restaurant I ever closed, which was Tabla, an Indian restaurant. Interestingly, interesting that I'm using an Indian film to talk about this, but Tabla was about 13 years old. And if I regret one thing that I wrote in setting the table, it was actually in the very first paragraph of the book. And I proudly stated at this point, we had been in business for about 20 years. And I proudly stayed at how many restaurants we had opened. And then I super proudly stated, and in all that time, we've never closed one as if closing a restaurant is failure. And it was the stupidest thing I could have possibly written because closing a restaurant is not failing. And it's also nothing to be ashamed of and nothing to be proud of to keep a restaurant open forever. It either, it is or it isn't. So, Tabla, I guarantee you, I was so falsely proud with what I had written that I kept Tabla, and I was so afraid of my dad's, you know, I didn't want to go down the path of being my dad. You telling me that something, I couldn't make something work here? Tabla was a great Indian expression with, you know, in a very groundbreaking way in New York City, using fresh green market ingredients. We had a fantastic chef who sadly died during COVID, Floyd Cardo's groundbreaking restaurant, lived for 13 years, probably should have closed it at year 11. We had just hit the Great Recession, and we started to lose money. It was our biggest restaurant. In terms of numbers of seats, we had 283 seats on three different dining rooms, two different levels. I was so afraid of closing it, so afraid of talking to the team and saying we couldn't make the restaurant work that I kept it open for two years longer than I should have. And that was the restaurant where for two years we had people working out of loyalty. No one was making a raise, no one was getting a promotion. And I finally gathered to courage to do what I should have done two years sooner. And I'll never forget the day. I said, look, what if we could distinguish ourselves as much based on how well we closed a restaurant as we had with how well we had opened the restaurant? And so we started writing a list of, all right, what are all the ways that we could look back on this and say we did it the right way? And first thing was, we told our whole staff, right? Now that sounds, well, why is that such a beauty? Well, sadly, in our business, sometimes the first time a staff learns a restaurant's going out of business is the day they go to work and see a padlock on the door, because the restaurant is dead afraid that no one will work there. No one wants to stay on a sinking ship. So we told our staff quarter of a year ahead of time, told our landlord told the community, we invited all of the alumni of the restaurant into come cook with us. So we celebrated the restaurant. We hosted job fairs for all of our team members, not just not just with us teaching them how to interview and working potentially in our other restaurants, but again inviting famous chefs who had once cooked with us, or general managers who had once worked with us to come in and hire our staff. We hosted three fundraisers. We brought in Indian chefs from around the country to do a fundraiser for earthquake victims in India. We did a fundraiser for Madison Square Park. So by the time this was done, we paid our landlord everything. We actually even paid our investors, like I think they got a 0.1% return on their original invite. They got all their money back plus a couple pennies. So if you're going to close a place, at least that was the way to do it. And the biggest learning I had was there's no shame in closing. Since closing tobla, I would say we've probably opened 15 restaurants and we've probably closed another six. And we had to close about three of them during COVID. And I think that learning to fail fast and to realize that if you hadn't tried the thing in the first place, there would neither have been success or failure. So the real failure would have been not in trying. But not everything has to go on forever. The late restaurateur Joe Baum had this great expression that I love and I don't love. But he used to say that the definition of a classic restaurant is one that can outlive its original lease. And that's, you know, that was a goal of mine for a long, long time. And we've frankly, we've done that with almost all of our restaurants. I now have a different goal of my own, which is, I want our restaurants. And I think your podcast is this as well. And we all have songs in our lives that are like this or pieces of art or movies or books that I want our restaurants to become essential in people's lives. I want people to say, my life got better because that restaurant existed. Doesn't matter how long. And God forbid the restaurant goes out of business. I want people to say, I just lost a little something when that restaurant closed. There's so many restaurants, dry cleaners, whatever, the come and go. And it's like, who cares? There's so many songs. I never heard it again. I'd be fine. But there's those handful of songs that when I listen to them, I'm grateful for the person who wrote it. I'm grateful for their life. My life got better because that song existed. And I can't even imagine my life of that song and never been written. That's my more than longevity. It's a sensuality that I think matters.

How Danny became focused on service and hospitality, not food (01:22:36)

You know, I haven't thought about this in a really long time, but I still remember every restaurant and coffee shop in which I wrote my books because these locations and I took great pains to find the right spot became my surrogate family for a period of time. While I worked on these things, that of course became a huge part of my life, continue to be a huge part of my life. And even though some of them have gone out of business, or I shouldn't say gone out of business, maybe they were just closed, maybe the decision was made to close, they still have left this indelible mark in my mind. And I just brought all of these memories rushing back like the Pixar movie Ratatouille. The similar effect just now as you're talking about that.

In-Depth Lessons On Service And Tips

Mojito lessons (01:23:25)

And I admire you for being in my mind an experimentalist, running experiments, being willing to try in terms of testing things. And I remember this was some time ago you could probably place the timestamp effectively, but when you experimented with no tipping. And I would love for you to speak to that and just discuss lessons learned through that. And this ties into something we were talking about a little bit before I recorded, which was time in Japan, where tipping is not a thing, as an example. It's just not really part of the culture. But could you describe what you did and what you learned? Yeah, we had faced a major, major shortage in really good cooks. This was probably starting in about 2012, 2013, 2014. And I'll never forget I went to one of the restaurants we closed, which was a really good restaurant, but I think we got a subpar location for it was called North End Grill. And I'll never forget going into the restaurant one night. And I said to our general manager, Kevin, I said, "God, I'm service has gotten really good here.

Hospitality Included. (01:24:41)

I'm so proud." I just spoke to four different servers and they all told me that they had graduated from the Culinary Institute of America. And I said, "How are we getting so many people who want to be professional servers? This is great." And he goes, "Boss, I wish I could tell you that was the truth." He said, "These are all people who wanted to be cooks, but they can't afford to be cooks." And there's three of them living in a studio apartment commuting all the way from Queens. And we can't pay them any more money because we don't have any more money to pay them. We're trying to give them free metro cards, but that's not going to keep them. So the only way they can make a living is to be waiters. And something I'd been thinking about for many, many years was how much I did not like the tipping system. Initially, in the early part of my career, I didn't like the tipping system because there would always be a situation in these early days of Union Square Cafe or Gramercy Tavern when a tourist from Japan or from France or Great Britain, where there's not a big tipping culture, would either leave no tip or they'd leave a pretty shitty tip. And it would be so demoralizing for the waiter. There was one occasion where one of our waiters actually chased somebody out onto the sidewalk, and I was mortified. It's like, "You cannot do that." And yet here I was because of the tipping system where they were getting the adjusted tip minimum wage back then, which was $2.21. And if they didn't get a tip, they weren't going to be able to pay their rent. So I understood it, but it was just, I hated it. But then later, now bringing it up to the mid-2015 time, I said, "You know what? I'm so tired of this system where we are legally prohibited from allowing tips to be shared between waiters and cooks. Cooks work at least as hard as waiters." The guy who made the risotto didn't work stirring the risotto like crazy. He didn't work any less hard than the guy that brought it to the table. And by the way, if somebody's going to have truffle shaved on that risotto and therefore, the price is going to go way up, the waiter's going to make a whole lot more money and the cook's going to make zero more money. And what I had noticed was that every year, the waiters were making increasingly more money. Why? Well, because menu prices only go up and what's a tip if not a multiplier of the menu price. And cooks hourly wages had remained stagnant. And so you may say, "Well, why don't you just raise the cooks wage?" Great. Every time I raise the cooks wage, I have to increase the menu prices, which only increases the disparity because now the tipped employee makes more. So I was really tired of trying to argue that New York State or many, many other states should change their laws so that tips can be shared. And so I said, "Screw it. I'm just going to take this into my own hands." And I came to a meeting one day with my senior leaders and I played one of the worst John Lennon songs I've ever heard called "Cold Turkey." And I said, "I am now declaring tips to be a drug and we've got to get off this drug." And if we can't change the rules, we're just going to stop taking tips. And we came up with this idea called "Hospitality Included." And my goal was that we would narrow the gap between what a cook could not make and what a server could make. I didn't want to punish our servers, but I wanted our cooks to get to make more money so we could attract more cooks. Otherwise, New York City as the preeminent dining capital in America was definitely going to be threatened. So we established this idea, did some really, really hard math and I'm telling you it's incredibly hard because you've got three legs on the stool. You've got the consumer who's looking at menu prices that now include everything. So if you go to a typical restaurant in America, the menu price has to include the cost of whatever it is that menu item is, right? The chicken and everything that came with it. It's got to include the cost of the linen, the flowers, the rent, the insurance, right? It includes everything except paying the person who brought it to your table. You're going to pay that two and a half hours after you start your meal. You're going to get your bill and then you're going to go into your other pocket and add 20% to that. But you're going to do it. So with hospitality included, I said everything's included. And I purposely called it hospitality, not service because the way I look at it is I want you to feel like you're paying for how we made you feel. I want the food to be free, the drink to be free. And when you look at that big number at the bottom of your thing, you got to feel like, man, I just got a $350 hug, right? And so that's what I wanted to call it hospitality included. And I wanted our staff to understand that. And so the math was really hard because by the time I included everything on the menu price, right?

Difficult math and declaring tips to be a drug. (01:30:13)

I don't want to bring our waiters down. I just want to bring our cooks up by 20%. Oh, by the way, I also wanted to bring our starting manager salary up because one of the worst things about the tipping system is that you cannot afford, in most cases, to promote yourself from being a great server to being a manager without taking a 25% pay cut. And that's really screwed up that there's nowhere to grow. That's a dead end for waiters. Unless they're willing to decide we're going to raise our managers wage. Oh, by the way, we're also going to put in a retirement plan for our team. We're going to put in a family leave policy so that when people are pregnant or people have a baby, both the birth mother and the birth father can get up to eight weeks of paid time off. I wanted to put all that in the price. And we didn't want to scare people away from dying at our restaurants. And we wanted to leave some money for our investors. So we tried it at one restaurant, the modern, really hard, but it worked pretty damn well. Amazingly, the guests did not bulk. They loved not having to buy their coat back from the coat check at the end of the meal because everything was included. And then like every every four or five months, we'd roll it out at another restaurant. And we started to see our our profits started to erode a little bit. But damn it, I was gung-ho on making this thing work because the good news was we were getting better cooks. And I knew we were doing the right thing. There's another thing that I should add is that in making this choice, we actually had to forego a million dollars in federal tax credits, like real money that they pay us. The federal government pays you to accept tips. I know does that seem crazy or what? And once we eliminated tipping, we had to forego those that and the reason they did that is that probably 15 years ago, when the government realized they were not collecting a lot of taxes based on tips because people were hiding what they were making, they actually brought the restaurant industry under under their cloak. And they said, if you guys for every tip dollar tip, you report to us that your servers are making, we will pay you back a certain percentage. And so that's why they pay restaurateurs to take tips because they want the tips reported. But so we gave up a million bucks in making this choice. I just wanted to do the right thing. So now all of a sudden COVID happens, we're basically brought to our knees with no revenues at all for four months, could have gone out of business and had to lay off a huge number of our team members.

Resuming tipping during the pandemic restart. (01:33:11)

So finally, in the summer of 2020, New York made it legal to open your restaurant with a certain number of outdoor tables. You weren't going to make any money, but it was going to helpfully get the city back up on its feet. And I was a big proponent for the city for our whole industry. And I saw this really amazing dynamic happen to him. The New Yorkers who had been locked up in their apartments for all these months, unable to go to restaurants, they could only get curbside pickup and delivering that kind of thing. We're so incredibly grateful for our servers who are willing to come out and serve them on the sidewalk that they were literally throwing $20 bills at our servers, $50, $100 bills to say thank you. And now I'm telling our servers, not only can you not accept that, but you have to tell our guests, you may not say thank you to me. After about two weeks of this, I said, and by the way, we had no vaccine at this point. So any server working there serving someone who's not wearing a mask while they're eating, this was a dangerous time in New York. And I finally said, this is inhumane. This is not being on our employee side. And so I said, guess what? We're going to resume tipping. But in so doing, we as a company will start to pay a percentage of our revenue every night to our cooks who are tip ineligible. I don't think that should be our responsibility, but I did not want to erode the gains we had made. And so now that's where we are. So our servers are making tips. And if we have a really busy night, our cooks are really happy. They're benefiting. They're not just like in so many restaurants where on a busy night, you're watching the waiters counting their tips and the cooks just perspired more. That's not right. Yeah, I grew up earning my keep on Long Island as a kid. I probably started really young. God, I was about 14 or 15 working as a busboy.

Adapting benchmarks and pay grades post-tips for longevity and performance. (01:35:37)

And I occasionally, if the moment presented itself a server at restaurants on Eastern Long Island. So I grew up as a townie in the Hamptons, which has a whole set of stories for another time. But I'm wondering as we think about the four quadrants that you described earlier, right, the Ken and Will, the Cant and Wont and the other permutations, did you run into or how did you handle a dynamic where people who in the previous paradigm, so now I'm talking about in the in the hospitality included transition, you're already there. But people who in the in the tipping environment had been top performers, contending with that, right? So the sunflowers that you want to water, how did you how did you contend with if you did the dynamic of maybe prior top performers feeling like they were not going to or in their fair share? It was really tough. And you know, if you want to take a communications lesson, just try rolling out hospitality included at your restaurants because tipping is such a deeply held American way of life, both for the people providing the service and for the people on the receiving end. This was a really tough thing to break and not many restaurants joined us in this a couple tried and a lot of them folded their hand well before we did on the whole thing. But what we did do, and I feel really good about this was to do the same thing we do with our cooks. So you get a raise based on merit if you're a cook. If you're a server, you're getting the same adjusted minimum wage, no matter what you do. And so we created learning opportunities with our teams, and we had several tiers of learning opportunities. And if you got to a different tier, you got a higher base wage. Obviously, we were not doing tipping. So you could actually get a raise through the whole thing. So if you look at our staff, we factored in longevity, but sometimes the longest serving servers are the ones that most need to go because they're just over right, and they've lost their smoke. But we definitely factored in longevity because here's the thing, the way you make the most tips in a restaurant is generally through longevity because you get the classically, the Thursday, Friday, Saturday shifts and classically, you don't get the Monday, Tuesday lunch, right kind of thing. What was great, and this was a win for everybody, was that while longevity would factor into your base rate, it did not factor into your schedule. And so a lot of people who in order to make their money had to work weekends, sometimes away from their family, they could actually have a schedule that was a much better balance of life. So there were some wins in this. But at the end of the day, we just couldn't make the math work. And it just didn't seem right to tell our staff, stop. You know, you must tell our guests, no, thank you. That was a pretty awkward thing. And going back to Japan for a minute, they have a wonderful culture, very different from ours, and they call it "omotenashi," which is their word, which is so much more than hospitality. It's the providing of hospitality and service without expectation of any further reward in anticipation of someone else's needs. And it's a beautiful concept, and that's how that culture has been brought up. And I've learned a lot from it, but it's... I do believe that the kind of people we hire, we call 51%ers, people who have a high hospitality quotient, genuinely are happier themselves when they do something that makes you feel good. But that's no reason that they should be penalized relative to this marketplace in terms of how much money they can make. What does 51% refer to? Well, we want 100% employee, just like all of our employees would like us.

Why 51%? (01:39:59)

I want to get 100% on my test. I think I'd happen probably three times when I was a kid, but it doesn't mean I didn't want it. And so it's our way of basically saying, "Great, you want 100% on your test? Here's how you get it." Cool thing is, there's only two ingredients in this recipe. There's your technical performance, how well you do the job you're paid to do. The most points you can get for doing it perfectly is 49. Then there's your hospitality performance. And how did you make everyone else feel while you were doing it? That's worth 51 points. I think we both know 51 is a little more than 49. I don't want to get a 51 on my test. That's a failing grade. If I don't do the technical stuff right, the food sucks or it took too long. Doesn't matter how nice I am. I want 100. But I will tell you right now that the only way I've learned to become essential and to burrow our way into people's hearts is the food better be damn good. But more than anything else, you got to feel like we're on your side. And that's where the 51% comes in. I love that. Danny, I'd love to ask you just a few more questions.

Personal Reflections And Insights

The book Danny has gifted the most (01:41:20)

And one that comes to mind, you seem to be, I have to imagine a reader. And besides your own books, what books have you gifted the most to other people? If any come to mind or gifted frequently? Well, outside of our cookbooks and setting the table, which is the most most gift I give, because someone's got to give it. I love marketing. I just love marketing because marketing is understanding the other person. Marketing is a dialogue. It's a lot like hospitality. And I love Seth Godin's books. And I would say that I've given many of his books, but probably the one that I've given the most is this is marketing. And it comes down to one simple expression. He's just so brilliant at getting to the essence of what something really is. And he thinks marketing is when you can convey that people like us do things like this. And that sounds so simple. And yet it's so deep, actually. I believe that the biggest longing people have is to be long. And so great marketing actually doesn't just sell you something. It makes you feel like you belong to a tribe. So anyway, long answer to your question, but yeah, that would be the one. Seth also walks the walk. I really am a huge fan of Seth. And I've gotten to know him over the years. Very sweet guy. Always will tell you exactly what is on his mind. You don't have to guess which I love. Makes me pying after the East Coast every once in a while when I have to deal with the opposite somewhere in the US. I hope Seth won't mind this story, but he once told me exactly what was on his mind. He had a pretty bad service experience at one of our restaurants, my Alino. And he told me. And I've known Seth for a while, loves love him. And I felt so badly. And I said, I got to write a great next chapter on this. I got to figure out something. So I invited Seth to have breakfast with me at my Alino. And he didn't want to talk about the service mishap. He said, I gave you what I gave you the gift. You go deal with that's your problem. Go figure that out. I just want to have a good conversation with you. So we had a great breakfast. And I'm going, all right, finally got set back in my good graces here as he's leaving the restaurant after breakfast. I don't know what happened, but he banged into our clear door. The door was so clean that day, he banged into it and broke his nose. And I'm going, now what am I going to do here? Of course, Seth. Anyway, he's a genius. And he is, he's the definition of a minch. Yeah, he really is. And he's, he's one of the best people I've ever met at walking the walk with what he describes or his values, whether publicly presented or not. He's very good at defining his values. And I don't think he would think of it this maybe explicitly, but sort of rank ordering them and then organizing his life, making decisions about family, business, etc. travel that are aligned with all of those. It's very impressive. I aspire to be better at it, certainly.

What Danny might put on a billboard (01:44:50)

Leading off of the, the very pithy and very, I think, accurate also expression regarding marketing from Seth, if you could put anything on a billboard, this is metaphorically speaking, just to get a message out, could be an image could be a quote, it could be a word, could be anything at all, just to convey something to a very, very large number of people. Is there anything that you might put on that billboard? Can't we please have a charitable assumption about one another? I think I'd put that on there. I feel like when we go into a conversation with somebody or read about somebody, and we assume the worst as the starting point, it doesn't usually end up very well. On the other hand, when you assume the best intentions, you just never know. It's very possible that you hadn't communicated, understood what someone really meant. And I feel like going into any relationship or experience with a charitable assumption is such a helpful thing. Is that something that you've had out of the box you mentioned, the glass half fully even before you uncorked the bottle, but within this particular context, going into, say, conversations, having charitable assumptions as opposed to assuming the worst? Is that something you've cultivated? Is that something that just seems to come with your hard wiring? I just think that's who I am. I don't think it's something I've ever thought consciously about, but I do know that it's not just about being optimistic, but it's about being hopeful. There is a difference between hope and optimism. I think that hope is an active act. Look, I think it's so much this gets back to growing up. My parents got divorced after 25 years, and I'm watching all these conversations, and there's two truths to every single conversation. And I think one of the gifts I got as a kid was getting to cherry pick the good stuff from each of my parents and leave the bad. Didn't make them bad people. It's just like you pick and choose, but you start from a standpoint, this person actually means well. Their intention is to do the right thing. And we're all flawed. We're all make mistakes constantly, but that's not a reason to vilify us. And the other thing I'll just say is that you've clearly gotten the sense I live my life within the 40 yard lines. I don't live my life on the five yard lines where you can't hear people yelling at each other from the five yard lines of a football field. And I know that we've gotten so tribal in this country, so tribal with everything that if you're not all the way on one side or the other, you're wrong. And that's just not how I look at life. Just gives me great joy to to find how can we make progress together? And it starts with assuming the best in people. Danny, we've covered a lot of ground and we're honing in on nearly two hours now or roughly two hours.

What do you want to be known for 100 years from now? (01:48:35)

And as we want to close, is there anything else that you would like to say or request could be a request of my audience? It could be anything at all that maybe we didn't discuss you'd like to bring up and closing comments, complaints you'd like to lodge publicly, anything at all? Go support your local restaurants because and your local butchers and your local fruit growers, etc. You cannot know how important for the economy and also for the just the emotional fabric of a community restaurants are restaurants provide a place for the community to come together and do their social life to do their business life to do their personal life. We saw what life looked like when we didn't have restaurants during COVID and it gets to the human desire to connect with people. People are so eager to be with people and so the more you can do to support people who work in the food industry, that's my hope. I think that's a perfect place to and Danny, thank you so much for making the time. It's really nice to have a long form conversation with you and I appreciate you carving time out of your schedule to do this. So first and foremost, thank you very much. I have tons of notes, many things to follow up on, many things to think about, which is always the sign.

Parting thoughts (01:50:20)

Well, I'm really grateful to you and thank you for sharing me with your amazing audience and I hope I'll get to see you in New York. Absolutely. I do love New York City. I mean, there's no place like New York City. Or at a Shake Shack near you, by the way, at the Shake Shack in Austin. We have a burger there that we only do in Austin. No kidding. All right, I can find that on Lamar on the South Carolina location. You can find it there and it's called the Lockheart Link. So we got an amazing sausage from Lockhart, Texas and put it right on top of a Shack burger. I wish we had those in New York, but only in Austin. All right, that's on my to-do list. And for those of you who don't know, Lockhart, very famous. This is one of the mecha's of delicious meat here in central Texas. So I will have to try the Lockhart link. And for people listening, they can find you, Danny, on Twitter @dhmire. Instagram also @dhmire. We'll link to many, many other things that we've discussed. I recommend people check out setting the table, your book.

Connect With Danny Online

Danny on Twitter and Instagram (01:51:39)

They can find ushg@ushg.com as well as your team member description and so on. And I will add links to everything we discussed in the show notes for folks after the fact. And you'll be able to find that as always at tim.blog/podcast. And until next time, be just a bit kinder than you think is necessary to others and to yourself. Assume good intentions. Make charitable assumptions about the next person you're going to have a conversation with. And as always, thanks for tuning in.

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