How Danny Meyer Set the Table for Shake Shack

In today's episode, we're exploring the life and legacy of Danny Meyer — the man behind the legendary Shake Shack chain and many iconic NYC restaurants.

Danny created unique restaurants by never settling for the status quo, constantly bringing his fresh, new perspective to every dining experience, and building vibrant communities around each table he set. 

If you’ve ever wondered how extraordinary people got their start — and how you can too — this podcast is your front-row seat to be inspired by a life and a legacy that were built to last.

Transcript

Born For Business, Drawn To Hospitality

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I was born to go into business for myself, and I was destined to find a business that would allow me to share with others my enthusiasm for things I find pleasurable. My craving for the adventures of travel, food, and wine is what first compelled me to do what I do. In fact, like so many other entrepreneurs I've met, I'm not even sure I had much of a choice. A career in the restaurant business was going to tap me on the shoulder, even if I hadn't found it first. But what really challenges me to get up and go to work every day and has also motivated me to write this book is my deep conviction about the intense human drive to provide and receive hospitality. Within moments of being born, most babies find themselves receiving the first four gifts of life: eye contact, a smile, a hug, and some food. It's not much of a surprise that we'll crave those gifts for the rest of our lives. My appreciation of the power of hospitality and my desire to harness it have been the greatest contributors to whatever success my restaurants and businesses have had. I've learned how crucially important it is to put hospitality to work. First, for the people who work for me, and subsequently for all the other people and stakeholders who are in any way affected by our business. In descending order, our guests, community, suppliers, and investors. I call this way of setting priorities enlightened hospitality. It stands some more traditional business approaches on their head, but it's the foundation of every business decision and every success we've had. That was an excerpt from the book Setting the Table by Danny Meyer, the man behind Shake Shack and so many other legendary restaurants in New York City. Hello, everyone, and welcome to the Built to Last podcast. Built to Last is a show where I dig into the lives of history's most remarkable leaders, thinkers, trailblazers, and builders to learn not just what they achieved, but how they did it and to uncover the values, convictions, character, and foundations that were built to last and made them unforgettable. Today I'm reading to you from the autobiography of Danny Meyer, the legendary restaurateur who's behind Shake Shack and some of New York City's quintessential restaurants like the Modern, Grammar Sea Tavern, and 11 Madison Park, to name a few. If you live in New York City, you know how competitive the restaurant scene is and how important the restaurants are really to the soul of the city. It's where the city comes alive and it's where people meet, celebrate, and experience the, you know, the unmistakable New York charm. And it's in this city and in this culinary market that Danny Meyer got his start and has really left his mark on what hospitality means. He writes in his book, you may think, as I once did, that I'm primarily in the business of serving food. Actually, though, food is secondary to something that matters even more. In the end, what's most meaningful is creating positive, uplifting outcomes for human experiences and human relationships. Business, like life, is all about how you make people feel. It's that simple and it's that hard. I mean, of course, Danny was passionate about food, but he was more focused on how his guests felt when they dined at one of his restaurants, or what he calls enlightened hospitality, which is a central theme of the book and his business management philosophy that we'll get into. But first, just kind of retracing his roots. So he was born in St. Louis, Missouri, and he came from a family of entrepreneurs and two people in particular, his father and his grandfather on his mom's side, had a huge influence on him and the way he ran his businesses. Here's him talking about his grandfather on his mom's side. Irving B. Harris was a singular man whose combining of social consciousness with business acumen was an enormous influence on me as a human being. And ultimately, as a restaurateur, he graduated from Yale and he made his first fortune before he was 40 years old, having co-founded the Tony Home Permanent Company with his brother. They sold it to the Gillette Safety Razor Company in 1948 for what was then an enormous sum,$20 million. Grandpa Irving's piercing analytical business mind was radically different from my father's intuitive entrepreneurialism. Irving invested in or acquired other people's businesses, especially when the ideas that defined these companies were compelling to him. Evaluating human potential was every bit as important to him as any business idea. I adored Grandpa Irving and I was awed by his otherworldly business success. Through him, I became aware of my own competitive zeal and began to believe in my own potential for winning. My father was unquestionably my childhood hero. I never fully understood how or why, but sometime in the late 1960s, when I was still a young boy, Open Road Tours, which is his father's company, went bankrupt. I remember abundant tears and shame, but few details. I heard comments like we expanded too quickly, and I had thoughts like my hero failed. In 1970, when I was twelve, my father leaped into the hotel business in Italy. Despite the pleas of my mother, he committed himself to long leases on one hotel in Rome and another in Milan. He was certain that becoming a hotelier would be his ticket to fortune. My mom correctly maintained that it promised nothing more than protracted absences from home. Business flagged and lagged, and although he was spending half a month at a time away from his family to address problems, it inevitably proved impossible for him to operate a hotel business across two continents. At an enormous financial cost and an even greater emotional cost, my father finally found a buyer for his two leases. He then went on to his next idea. And then in 1972, still irrepressibly optimistic, my father created another new business called Caesar Associates. This new company would sell packaged group tours at a deep discount for a very narrow niche of travelers known as interliners or airplane employees and their families. Dad's business model was simple but original. Caesar Associates actually thrived for many years, but this success wasn't enough for my father. Having failed to learn some critical lessons from his earlier business failures in the nineteen sixties and the nineteen seventies, he gambled the fortunes of his entire business on another new one, involving risky and questionable real estate and hotel deals back in St. Louis. By the time he was getting ready to redevelop those properties, the bottom fell out of the economy. His funders dropped, but not before suing him. And he was bankrupt again. Although Dad may have been an inventive entrepreneur, he did not have the necessary emotional skills or discipline, and he failed to surround himself with enough competent, loyal, trustworthy colleagues whose skills and strengths would have compensated for his own weaknesses. So his father's failures are going to have a major impact on how he runs his business. As you can tell from this description, it's it's very impactful to him. And, you know, it's one thing to observe failures, it's another to learn from them. And that's a big reason for Danny Meyer's success, is really his ability to learn from his father's failures and not to make the same mistakes in his own business. So turning back to his own early life, after graduating from college, he goes to work for a company called Checkpoint, selling electronic tags to stop shoplifters. You know, he works his way up, earning handsomely in commissions, and the job was very entrepreneurial, and Danny was in charge of his day and schedule, and the job made him realize that he never wanted to work for anyone. And a few years in, while he's still in his mid-20s, the company asks him to lead the launch of an office in London, and he writes about this working abroad was a tempting opportunity. But my dream as I was growing up had never been to catch shoplifters on any continent. My years at Checkpoint had been a period of great personal growth. I had gained a world of independence and a new self-confidence. But it was time to move on to something different. It was time to grow up and pursue my life's career. So this is when he starts preparing for the LSATs, and at a dinner the night before the exam with his aunt and uncle, he says, I can't believe I'm doing this LSAT thing tomorrow. I don't even want to be a lawyer. So why are you? His uncle Richard Polski asked him, Why don't you just do what you've been thinking about doing your whole life? And what's that? I asked him. What do you mean, what's that? Since you were a child, all you've ever talked or thought about is food in restaurants. Why don't you just open a restaurant? The idea felt at the same time both foreign and like an absolute bullseye. The next morning, completely relaxed, I took the LSAT, and then I never bothered to apply to a single law school. From that moment on, I was off to the races. So he took a job as a daytime assistant manager after this, and once a week cook at a restaurant called Pesca in Manhattan. And at the same time, he was also starting to take a course at a wine academy in New York. And so he spends some eight months at Pesca, which is where he also meets his future wife, and then he arranges to go start study cooking in Italy and France for the next three and a half months as a chef's apprentice, all while analyzing and taking in everything he could about restaurant design and menus. He writes, In 1984, embarking on a career as a restaurateur was still frowned upon, at least by families like mine. This was not the career for which suburban parents sent their kids to college. Back in the city, I was a 27-year-old guy from St. Louis who'd worked in the restaurant business for a mere eight months. What I did have was an intense desire, a burning sense of urgency, and having sold my checkpoint stock enough cash to get things going. One role I decided not to play myself was chef. Though I had fantasized early on about leading the kitchen, and in fact had seen being a chef as my only legitimate avenue into the business, it increasingly dawned on me that as much as I love to cook, I was much more suited to becoming a restaurant generalist. And I wanted to mention this because of the self-awareness it takes to recognize that, especially when you're starting your own venture, I feel like it can be tempting to take on a lot of roles yourself. And it turns out that the self-awareness to identify your strengths and weaknesses was key, you know, um, in succeeding. When I read this, it also reminds me of Sam Walton and his immense confidence and desire to get into the retailing business, despite only having worked in retailing for two years. And contrary to popular belief, then it's, you know, it looks like it's not your experience as much as it's your determination, your desire, your passion to get things going and really charge full steam on your projects. And, you know, you start seeing sort of how he learns from his father's failures and really tries to incorporate that in the way he executes his business. So learning from that, you know, from his father's hotel business is where he failed, he wanted to have the right to assign his lease to someone else. Um and he takes over the lease from a vegetarian restaurant called Brownies, just off Union Square in Manhattan, and he writes, I continue to reject the prevailing maxim: location, location, location. This is the idea that you somehow need an upscale address to be considered a great restaurant. I was determined to go against the grain. I was no expert in New York real estate, but I understood on a gut level that if I handicapped the location correctly and could successfully play a role in transforming the neighborhood, my restaurant, with its long-term lease locked in at a low rent, could offer excellence and value. So what I love here is that he has bold visions and he's not deterred by going against the grain. And what you'll see this, you know, time and again in the story is that he's constantly challenging the status quo and ultimately benefiting from that contrarian mindset and he's making it work for himself. Even with 11 Madison, when he opened that restaurant, the area was not what it is today. It was an unsavory part of town, but the rents were 50% lower than other nicer parts of the city, and that gave him a chance to take part in reviving that community and that area, all while maintaining value. I also like that while he's new to his business, you know, he still has strong opinions about how things should be done. It's the confidence in his fresh new ideas and the diligence in sticking with them and implementing them that, you know, that's going to be a game changer. So while he may be lacking in what people say experience or, you know, the technical know-how, the desire to succeed and to stick to his gut, to his style is just so very clear in this description of his, you know, his opening of his first restaurant, Union Square Cafe. So, you know, the first few weeks and months when he opens this restaurant, they're really tough. Um, you know, there's a lot of angry parties leaving, um, there's long waits, but you know, that doesn't deter him from getting better and working on surmounting those challenges. And I think that's so um inspirational to read, right? Just like there's gonna be setbacks, there's going to be hurdles, but that doesn't mean that you can't succeed. So he writes on this I was developing what I would call an athletic approach to hospitality. Sometimes playing offense, sometimes playing defense, but always wanting to find a way to win. On offense, we'd figure out creative ways to enhance an already good experience with desserts or dessert wine. Playing defense, we got better and better at overcoming our frequent mistakes or at diffusing whatever situations the guests might be angry about. So, you know, that's Union Square Cafe. And, you know, he goes into a lot of detail if you read the book on, you know, getting that restaurant started and the challenges and surmounting them. Um, but just moving on to his next restaurant, which was Gramercy Tavern, wouldn't actually open for another 10 years after Union Square Cafe. And that was the cautionary pace that he wanted to take after he learned from his dad the mistakes of expanding too quickly. And so now I want to pivot a little bit to his business philosophy, and which is what, you know, he's really known for. And it starts with, you know, his time at Grammar C and Union Square Cafe, and there was a phase at both where they were both getting poor reviews from their regulars, and you know, they were just going through a tough patch. And of this tough phase, he says, I began to look around me for ways to regain direction and control of both restaurants. It was time to win at any cost. At this moment, enlightened hospitality was born. I began to outline what I considered non-negotiable about how we did business. Nothing would ever matter more to me than how we expressed hospitality to one another. And then, in descending order, our next core values would be to extend gracious hospitality to our guests, our community, our suppliers, and finally our investors. Every decision we made from that day forward would be evaluated according to enlightened hospitality. And so this philosophy is really what became his business's key driving force, you know, that he constantly refers back to in the book, prioritizing his people above all, and then guests, community, suppliers, and then investors. And he's convinced that this is what will help them lasting, achieve lasting success. And I think it makes sense, you know, if you work in a team, if you ever worked in a team, it's so important that the team feels collegiate, that you guys work together as a team, and that's what sets you up to perform really well in your job. And if you perform well, then you perform for whoever you're delivering for. Another thing he talks about here on his leadership style is what he calls constant gentle pressure, or you know, as maybe some people call it just having that right tension, or like sort of if you heard about the rubble band principle, it's kind of similar to that. So he writes three hallmarks of effective leadership are to provide a clear vision for your business so that your employees know where you're taking them, to hold people accountable for consistent standards of excellence, and to communicate a well-defined set of cultural priorities and non-negotiable values. So to illustrate the first two, he talks about a salt shaker story, which one of his mentors teaches him. And the essence is basically saying that if somebody moves to salt shakers off the center of your table, it's your job as a manager to move them right back to center. And I'm gonna read this bit from his mentor who says, Listen, lava, your staff and your guests are always moving your salt shaker off center. That's their job, it's the job of life. Until you understand that, you're going to get upset every time someone moves the salt shaker off center. You just need to understand that's what they do. Your job is just to move the shaker back each time and let them know how exactly what you stand for. And if you're ever willing to let them decide where the center is, then I want you to give them the keys to the store. Wherever your center lies, know it. Name it, stick to it, and believe in it. Everyone who works with you will know what matters to you and will respect and appreciate your unwavering values. Understanding the salt shaker theory has helped me develop and teach a managerial style I call constant gentle pressure. I anticipate that outside forces, including you, will always conspire to change the table setting. Every time that happens, I'm going to move everything right back to the way it should be. That's the constant aspect. I'll never recenter the salt shaker in a way that denies you your dignity. That's the gentle aspect. But standards are standards, and I'm constantly watching every table and pushing back on every salt shaker that's moved because excellence is paramount, and that's the pressure. Ultimately, the most successful business is not that one that eliminates the most problems. It's the one that becomes most expert at finding imaginative solutions to address those problems. And lasting solutions rely on giving appropriate team members a voice as well as responsibility for making decisions. Communicating has as much to do with context as it does content. That's called setting the table. And I would just, you know, I just call this a great definition of intensity, you know, that just you can't take your foot off the gas pedal that you gotta keep the pressure on. And, you know, on his management philosophy, he also actually talks a bit about managing people who are key to his enlightened hospitality philosophy. And here's what he says people who aren't alerted in advance about a decision that will affect them may become angry and hurt. They're confused, out of the loop, they feel as though they've been knocked off their lily pads. And this is what he calls the lily pad theory. So he continues poor communication is generally not a matter of miscommunication. More often it involves taking away people's feeling of control. Change works only when people believe it's happening for them, not to them. Ideas at their best happen for people, at their worst, they They happen to people. And I think this is, I mean, this is great advice for managers and anyone running a business. But I think it's also great advice for life in general. Like working in finance, for example, one of the first lessons I learned, and I'm so grateful I did, and sometimes the hard way, is that it's better to over-communicate than to undercommunicate. And you want to avoid poor communication where you can because perception is reality. You know, if that's the perception you're giving out, that's what people believe that you are trying to do. And so it's important that you over-communicate. So you get the message that you want to get across. And I want to stay a little bit longer on this topic of how he uh manages and his management philosophy because that's what he's really well known for. And I think it's so applicable to, you know, whether you manage a team or you run a business or even in your personal life. So he's talked specifically about problems now and how to deal with them and you know, uh avoiding them. And he spends a lot of time on how to handle that well. In the restaurant business, as in any other business, you know, problems will occur, mistakes will happen, but how those are handled is ultimately what's going to determine the long-term success of your life and business. So he writes here the road to success is paved with mistakes well handled. My grandfather Irving Harris had always told me the definition of business is problems. His philosophy came down to a simple fact of business life. Success lies not in the elimination of problems, but in the art of creative, profitable problem solving. Waves are like mistakes. You can count on the fact that there will always be another wave. So your choices to get back on the surfboard and anticipate it, the degree to which you ride it with better form than the next guy is how you improve and distinguish yourself. We call that writing a great last chapter. Whatever mistakes happened happened. And the person on the receiving end will naturally want to tell anyone who's interested all about it. That's to be expected. While we can't erase what happened, we do have the power to write one last episode so that at least the story ends the way we want. If we write a great one, we will earn a comeback victory with the guest. To be effective, the last chapter must be written imaginatively, graciously, generously, and sincerely. And if you read the book, you'll see several examples of how he inculcates this culture within his staff to become creative and to come up with innovative ways to write a great last chapter, even if they mess up, to really build that loyalty and relationship with their customers. And I feel like that's kind of the philosophy that also underpins a lot of successful e-commerce and technology companies that you see these days that make customer experience really the focal point and make it a given that if you have a bad experience, they will fix it. And that in turn instills great customer loyalty and brand satisfaction. So now I want to pivot a little bit away from his management process to talk about his creative process and how he really tries to express something new and creative with his restaurants. And I think this is instructive for anyone who's an entrepreneur or in any business of any kind, is just really to be able to think how do you bring a fresh new perspective and make your product unique. So he writes, My passion is always to explore the object of my interest in depth and then to combine the best of what I found with something unexpected to create a fresh context. I then look at the results and ask myself and my colleagues what it would take to do this even better. And here is an example of Shake Shack and really him expressing that creative process in the creation of Shake Shack. So in 2001, in an effort to revitalize Madison Square Park, Danny Meyer brought together artists to do a series of art installations in the summer. And one of the installations included a hot dog cart. And that's where Danny Meyer's company offered to serve hot dogs. And what seemed like a small, even throwaway project really quickly became something a lot more meaningful. And so he writes on Shake Shack here: small as the project was or seemed, I took this cart quite seriously. I was eager to use the project as a test of enlightened hospitality. I was asking myself, whoever wrote the rule that you can't push the envelopes of excellence and hospitality for something as ordinary as a hot dog cart. Could a hot dog cart ever be anything more than just a hot dog cart? By early September 2001, we had actually lost nearly$5,000 operating the cart. While demand had been high and lines were always long, we'd addressed my requirement for excellence and hospitality by hiring too many people working in a very inefficient system. But there was a clamor from the neighborhood for us to return with the cart in 2002. Though they were spending two and a half dollars for a hot dog, the satisfaction and loyalty of these guests was no less important to us than that of our regulars at Gramercy Tavern or Tabla. Around that time, the city's Department of Parks and Recreation had solicited proposals to create and operate a permanent kiosk in Madison Square Park. We were game and we decided to expand on the hot dog cart and make our dream of a drive-in come alive for good and for the good of the park. So in creating Shake Shack, Danny Meyer followed, you know, the same formula he used at his other restaurants, which was to travel extensively, to study the cuisines and concepts he was interested in and inspired by, and you know, asked that familiar question that we talked about: what fresh perspective can I add? For Shake Shack, that inspiration came from his childhood in St. Louis from places like Steak and Shake and Ted Drew's and some other iconic brands like Culver's and In N Out. And this idea is personally very fascinating to me because for a long time I assumed that revolutionary ideas or unique ideas, whether that's in business or philosophy or in any any other field, had to be completely original and something entirely new. But after reading, you know, Danny Meyer and Sam Walton and other people, I've come to realize, you know, that that's not necessarily the case, that truly successful people aren't afraid to borrow great ideas, and that the edge really comes from how they make them their own, you know, how they add their own flair, their own unique touch. And you can see this with Shake Shack. Danny Meyer isn't pretending, you know, he invented the hamburger. You know, there's clearly a hundred other burger joints in the country, but he looked at what already existed and said, okay, how can we do this differently? How can we add our own unique touch? And so Shake Shack was an instant success, you know, but of course, just like anything, not without challenges. And on his success, on the success of Shake Shack, he writes, as we imagined our new kiosk, we thought about a lot more than food. We understood that people don't go out just to eat, they also select restaurants in order to be part of a community experience. Starbucks took the notion of drinking good coffee and figured out how to make the experience of drinking coffee with a community of other like-minded people become the real star of the show. And it was brilliant entrepreneurship to grasp that selling excellent coffee is secondary to creating a sense of community. Coffee sells and is habit forming, but performing a daily ritual with a self-selected group of like-minded individuals also sells. A business that doesn't understand its raison d'être as fostering community will inevitably underperform. And that philosophy that Danny just talked about is what Shake Shack was formed with from the beginning. You know, he never really expected people to say, This is the best hamburger I've ever had. Instead, he hoped that years later people might, you know, sit in that same burger joint with their kids and say, That's the best hamburger I ever had growing up. And that to me, you know, is sort of the real lesson behind Shake Shack's amazing success, which is sort of mastering this art of community. And more than it being a restaurant, it's become a place where people make memories. And that's what turned a simple hot dog cart into an enduring national brand. The last thing I want to cover in this episode before we wrap up is on the art of saying no, which I think was so, you know, so insightful that he talked about this. So for Danny Meyer, a very important influence on his business decisions was the failures of his father, you know, especially those marked by rapid expansions. So he was acutely aware of expanding too fast and being very selective with the projects he took on. So he writes, I often try to measure the money we haven't lost and all the quality and soul we haven't squandered. There is much to learn by understanding what goes into a no decision, and there's an art to analyzing the deals you don't make. If our existing businesses are not constantly improving, then expansion loses all of its merit. Think of a balloon. It isn't really a balloon until it's inflated, but as soon as you blow too much air into it, it's going to pop. Having seen firsthand the consequences when my father expanded his business too rapidly, I'm wary of blowing too much air into our balloon. Often, when businesses fail in our industry, it's because of too much expansion. Quality suffered, and the organization couldn't handle it. Timing is everything. There's an important art not only to determining whether one should or should not go into a deal, but to knowing whether one might want to go into such a deal somewhere down the road. Especially in cases where timing was the decisive factor in not making a deal, there is value in remaining in close contact with the potential future partner. While it's true that today's business, potential business deal may later evaporate, it also may one day evolve into something bigger, better, and more richly textured. Patience has its rewards. And with this, what he's alluding to is the opening of the modern restaurant in the Museum of Modern Art in New York, which is an iconic restaurant in the city. Also in 2004, the MOMA was preparing for a major renovation and expansion, and the leadership had agreed to open a restaurant on the ground floor of the museum when it opened. And during the museum's temporary relocation to Queens during this time, the leadership team wanted to open a temporary concession stand. And Danny writes, From our conversation with senior executives at the MOMA, it seemed implicit that whoever ran the temporary concession would earn their favor and enjoy a competitive edge in landing the big deal when MOMA eventually reopened on West 53rd Street. Regrettably, the timing for the concession in Queens could hardly have been worse. We were still in the throes of pre-opening construction at Blue Smoke, which was another one of his restaurants, and it didn't take long to determine that we did not have the wherewithal to do both projects well. At about this time, my assistant shared a priceless expression. Want to chess can't dance at two weddings. It's nice to be invited to a lot of parties, but as much as you want to attend them all, it's important to acknowledge that you can be only in one place at a time and do one thing well. It was extremely difficult to turn MOMA down, but that was the right decision. Still, we assured the museum that we would be very interested in discussing the larger project down the road and to keep our relationship with MoMA alive. We conducted several more meetings with executives, curators, and trustees over the next years. And sure enough, despite all this and other hurdles, when it came time to bid for and go through the selection process for the permanent restaurant, you know, Danny Meyer's team came through with the winning proposal to open the modern that today graces the grounds of the MOBA. And so with that story, it is a wrap for today's episode. I hope that this look into Danny Meyer's autobiography and covering, you know, sort of a completely different individual from a different walk of life, um, reading the book setting the table was both interesting and insightful. I think my biggest takeaway is that what truly set him apart was his relentless willingness to change and challenge the status quo and constantly looking to reimagine familiar ideas, introducing fresh angles, and really treating failure as a teacher rather than sort of a setback. Um, and I think equally also what was important, I thought, was his belief that restaurants are about far more than food. And, you know, by intentionally fostering that community, that hospitality, and that human connection, he was really able to create businesses that stood out in crowded markets really and grew into something far greater than you know, I'm sure even he could have really imagined. So, with that, thank you for listening. And I'd love to hear feedback if you have any. And if you liked today's show, please share it with someone you think you would like it as well. Um, and thank you, and I'll see you in the next episode.