Advice Line with Danny Meyer of Shake Shack

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0:47Hello and welcome to the Advice Line on How I Built This Lab. I'm Guy Raz. This is the place where we help try to solve your business challenges. Each week, I'm joined by a legendary founder, a former guest on the show who will help me try to help you. And if you're building something and you need advice, give us a call and you just might be the next guest on the show. Our number is 1-800-433-1298. Leave us a one-minute message that tells us about your business and the issues or questions that you'd like help with. All right, let's get to it. This week, I'm joined by legendary restaurateur Danny Meyer, founder of the Union Square Hospitality Group.

1:22Danny, it's great to have you back on the show. Thank you, Guy. If any of you listening have ever eaten out in New York City, there's a chance that you know Danny's story. He is the man behind Union Square Cafe, Gramercy Tavern, The Modern. And he's the guy who took a single temporary hot dog stand in Madison Square Park and turned it into Shake Shack, which is now a global publicly traded burger empire. Danny, you were last on the show in June of 2020. And for those of you who haven't heard the story, we will put a link to it in the show notes. So check it out. That was a crazy time. The world was sheltering in place and dining rooms were dark.

2:00And it certainly felt like a long time ago. I think in 2022, you stepped down to become executive chairman of the Union Square Group. So first of all, before we get into that, just kind of give us an update about what's kind of going on in your life right now. Yeah, well, I actually stepped up to become executive chairman. A lot of people thought I was retiring, which could not have been further from the truth. And by being executive chairman, which was actually a term I had never even heard of before, it gave me the chance to continue to come into work every day but to spend more of my time on fewer of the things but those things that uniquely lined up with my gifts.

2:40So really it has to do with the culture of the company, the culinary product of the company, and then all of the creative outlets we have for new businesses. And that's what I spend my time on. Whereas before I was the guy, you know, hopefully making the trains run on time. I'm just not doing that today. You have a new book out. Congrats. What could possibly go right? A big part of the book is about building an enduring culture and keeping teams aligned. Can you tell us a little bit about how you think about culture? I think culture at its most basic is a word to describe how we do things around here.

3:19And every company, whether it's intentional or not, every family, every fraternity, sorority, every sports team, there's a way they do things around here. I think the biggest way to build culture is to have a common set of behaviors that everybody in the organization understands that they are responsible for really emanating. So, for example, I actually traveled a long way. I used to think that what we really needed was family values. And we had those in place for about 15 years. And, you know, I wouldn't argue with any of them, but they weren't specific to our culture. Um, and the other problem with that guy was that it was disingenuous in retrospect to call them family values because a business is not a family.

4:08And I noticed that every time we held someone accountable to the point that there just wasn't going to be a place for them on our team going forward, people would go into deep grief because you don't fire a family member. And so the big transition I had was really evolving from family values to expected behaviors is the shorthand where everybody knows exactly what you're talking about. They know exactly what you're expected of them. And this is the equation that I figured out is our culture is ultimately all of the wanted behaviors that we celebrate actively minus all of the unwanted behaviors that we tolerate.

4:50Yeah, it's interesting. I mean, Reed Hastings has long had a similar view, right, that a business is not a family and famously has, you know, developed a whole sort of theory of management around this. He was on the show several months ago and we talked about it. So it is interesting, right? And I think that's been evolving in many businesses over the last 10 or 15 years. As you know, hospitality can be an overused term, right? I mean, everybody, but many restaurant groups talk about hospitality as a key value. And how can I, as a customer, tell in a few minutes whether a restaurant or business genuinely has a culture of hospitality or if it's just talking about having one?

5:39Yeah, just look at the staff members when you walk in. If the staff members are focused on doing the job as well as it can be done, and they're having fun with each other, if they check both of those boxes, that joie de vivre, that human energy, is going to become one of the ingredients in your meal as well. I've been to restaurants where everything was technically perfect, but there was no love there. And I don't need to go back to that restaurant. I really want to see both of those boxes checked. By the way, that works for me. I can get on an airplane and watch the two flight attendants pushing the cart up and down the aisle and tell if they're focused on their job.

6:19And if they're having fun with each other, they're probably having a playful experience with the passengers. And at the end of the day, the real job of that airplane is to get me where I'm supposed to go on time and alive, get me my luggage back. The stuff that's happening in the airplane is the determinant whether that's going to become my favorite airline or not. Yeah. How much is that about management? Probably about 120%. And when it's not happening, it's 150 % because of management. Management should take responsibility when it's not working and I think deserves a lot of the credit when it is working.

6:56We actually have a whole philosophy, which we call having a day one mentality. And it's so crucial. It's the reason that Union Square Cafe is 41 years old and Gramercy Tavern is 31 and Shake Shack's 22 and the Modern is 22. It's because every day we ask our teams to imagine that it's day one. Remember the pride you felt when there was not a scratch in the floor, not a smudge on the wine glasses, and every plate that came out of the kitchen was as perfect as you could get it Because you assumed that on any given night, there were three restaurant critics in the audience. And so by taking that day one mentality, even at 10 years or 20 years or 30 years or 40 years, it keeps the restaurants fresh and improving.

7:45And that's the fun I get out of this. Yeah. Well, Danny, we got some callers waiting to ask some pressing questions. Are you ready to take our first call? Yes. All right. Let's bring on our first caller. Welcome to the advice line. on with Danny Meyer, founder of Union Square Hospitality Group. Please tell us your name, where you're calling from, and just one line about your business, please. My name is Janelle Bass. I'm from Louisville, Kentucky. Hello. I am the co-founder of Pony Boy Slings. We're a bourbon-based canned cocktail that drinks more like a nostalgic soda. Well, thanks for calling in, Janelle.

8:21So Pony Boy Slings, it's a canned alcoholic beverage made with bourbon, but it's more like soda. So what do you mean? It's sweeter, It's easier to drink. Yes, all of the above. So Mike, my husband, and I created this. And we come from the beverage and bartending industry, hospitality background. And we realize in Kentucky, in bourbon country, everyone's drinking bourbon the same, whether it's in old-fashioned, in Manhattan, or it's on the rocks and neat, which is great. We love that. But as bartenders, we were having a lot more fun playing with the flavors of bourbon and blending them into these light cocktails.

9:01And so we have a strawberry, a cream soda, and a tart black cherry. And when you say lighter, are they lower in alcohol? So lower than a typical bourbon cocktail, we're 7%. So we're not like at that 30 or 40 % that an old fashioned would be at. But more like a beer. Exactly. We say we're the bourbon option for a beer occasion. So when did you when did you guys launch? We launched into market at the very end of 2023. So first full year was in 24. And where are you selling? I mean, alcohol is highly regulated, right? So are you selling mainly in Kentucky right now? Yes. So we are in Kentucky. We opened Tennessee last year.

9:43We have a distributor here. So we're off premise, you know, retail. And then we're also in a good amount of on premise with some bars and restaurants. Awesome. And tell us what your question is for us. So I guess like at the end of the day, Danny, I just I love that you're here because there's a lot of synergies, you know, because Mike and I come from the bartending scene. We really cared about what we put into that can. We don't use preservatives. We use real juice. We use local bourbon from Kentucky and bitters. Our conversion rate in store when we do tastings is crazy. It's like between 60 and 70 percent.

10:22People taste it. They buy it. And so it's great. Where we have a little bit of a hiccup, you know, when we're not in the store to be able to do the tastings. And there's the sea of RTDs that you're looking at. You know, how do we get, you know, the person to feel excited about trying us with a packaged product like ours? How do we build that sense of hospitality into the company itself when we're not actually there? Okay, so you're in the ready-to-drink aisle, and how do you build that sense of hospitality into the brand? Okay, Dani, I want to bring you in here. Meet Janelle, Ponyboy Slings. A great idea, but she's trying to figure out how to build that sense of hospitality into the brand.

11:04First of all, congratulations. It's exciting starting a new company. My question for you is, who personifies your brand? So when somebody goes up and down the aisle, they've got a can, and I'm sure that the can has a really nice label or a nice design to it. Is there any connection with any person? Some incipient brands bring on a celebrity, but you could do it yourselves. I mean, people love a good homemade story. I think that that's an interesting question because Mike and I definitely stepped into creating these, making something that we want to drink. And so we haven't we don't specifically have a certain like celebrity or persona, except for, you know, when we think about our demographic, we do tend to reach the older millennials and Gen X.

11:58And it skews slightly more female when when we do tastings. But it's so hard because we're still so new. And then Tennessee really brought us a bunch of info, too. Janelle, have you guys had like Ponyboy parties or pop-ups or backyard event tastings? You've done those. Yes. So that is one thing that we love. I mean, that's the thing I miss about bartending is curating a space and where you get to sit at my bar and I get to drive the ship of how you feel for the evening. So with Ponyboy, we do tons of pop-ups and events around Louisville. Mike DJs. We have a 1977 Chevy van we park and do tastings out of.

12:41So we definitely try to curate a moment and a feeling and a vibe. I mean, our website, our Instagram, it's very retro 70s. When we launched, we decided to go opposite of traditional bourbon in a bottle. And we kind of based it on that Studio 54 feeling of like, once you're in the club, everybody's welcome. It's this big party. And so that's kind of the vibe that we took on. And when you do the events, which I thought Guy's question was right on the money, You're bringing your vibe to that. And you also create a sense amongst the drinkers that they are part of a community. You're not selling a product.

13:21You're selling the opportunity to belong to a community where people like us do things like this. The question is, how do you curate a group of people who say, I am now part of a community that does this thing? Exactly. And, you know, we do tons of stuff here in Louisville and we've got some repeat buys. I mean, our sales are pretty decent for what we've put in. It's just been bootstrapped by us pretty much the whole time. But yeah, just trying to, as it scales, to keep going with that feeling when, you know, we're not in the store or we're not there to do the pop-up and for people to, I don't know, just still feel like they're being taken care of.

14:00I mean, that's the question here, right? When somebody encounters the product and neither you or your partner are there, what do you want that person to feel? And the answer to that question is what your brand strategy is. So one thing I was thinking of looking at your cans are cool. I like the 70s retro feel. But, you know, I would think about the can is your bartender. Like that's the, you know, in lieu of a bartender say, oh, you got to try this amazing thing. It's the can initially can sort of be that. I think of liquid death. This is murder your thirst on the can. I mean, could you put something cool or unexpected like under the tab when you pop it or even on the can that says like, come on, join the party or come on in or.

14:43Pop on the pony. It's something like that. You know, you should you could try to be playful with because the can. Yeah, it looks nice, but it's very conventional. It tells the name of the drink and what's in it. And you've got the cool logo. But maybe you can be playful. Danny used that word playful when you know hospitality is working. Maybe you try that on the can. There's a terrific example in the wine world. Have you heard of Ramona, the canned wine? I have actually. Yes. So it's a terrific product. It was launched by a sommelier, someone who used to work for us, named Jordan Salcedo. And she was very specific.

15:23She wanted to give women a product that they could drink while guys were chugging the beer. And she did just a great launch where when you buy a can of Ramona, you feel like you are with Jordan. So I think that would be a really good case study to have a look at that one. Yeah, I'm looking at that site now. It looks really cool. The packaging's great. Also, Olipop, you know, a new kind of soda. I mean, but you are going for a certain vibe, and I think you can use the can as the introduction, as your ambassador. So I would think about that. Yeah, I love that. I think that's fantastic. That's a great idea.

16:03Janelle Bass, the brand is called Ponyboy Slinges. Good luck. Thanks for calling in. Thank you so much for having me. Bye, guys. Thank you. we're going to take a quick break but when we come back another caller another question and another round of advice i'm guy ross stick around you're listening to the advice line on how i built this lab

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18:46Welcome back to The Advice Line on How I Built This Lab. I'm Guy Raz, and my guest today is Danny Meyer, founder of Union Square Hospitality Group. And Danny, let's take another call. You ready? Let's go. Hi there. Thank you for having me. My name is Jade Taylor, and I am the co-founder of Angel Oak Smokehouse. We are a premium salmon smokehouse based in Charleston, South Carolina, and we hope to make it a household name in a category that we believe doesn't really have one right now. Thanks for calling in, Jade. So Angel Oak Smokehouse, this is a, you smoke salmon and sell it from a storefront, online?

19:24Where is it sold? So right now, we launched 15 months ago, and we are primarily in retail. Our first major retailer was Whole Foods. We launched there in March in the Southeast region. And how many products do you sell? Right now we have two. We have our cold smoked salmon, which you know traditionally would go on a bagel. And then we have our hot smoked salmon, which is smokier, more like a piece of salmon you would cook at home. Really flakes beautifully and much more versatile in what you can do with it. Well, are you a chef? What's your background? How did you get into smoking salmon? I am not, no.

20:06So the story really starts over 40 years ago with my dad. He was salmon fishing in the north of England. He caught too many, took them home, and he put them in the family bathtub. And when my grandfather found them, he said, you've got to get rid of them. So my dad smoked them and sold them in the village. He left school at 16 and then ended up building his career around smoking fish. I went to Duke University and studied mechanical engineering. So started my career as an aerospace engineer at Boeing on the 787 Dreamliner. First as a repair engineer and then as a design engineer. You could have called it Flying Fish at that point.

20:43You could have transitioned in a smoking salmon. I love that. Smooth transition. And now you said you are in whole – how many Whole Foods are you in? We're in the southeast region right now. We just launched a couple months ago. It's 42 stores. Great. We just got a PO this week from Harris Teeter. Nice. 20 of their stores, and then next month we'll be launching in all of Fresh Market's 170 stores. And you say we, it's you and? It's me and my husband. Okay. Before we dive in further, what's your question? So, Danny, like you, we care deeply about having a consistent, high-quality experience every time for our customers.

21:22Should we continue to expand in retail and in food service, or should we take that leap and go into the direct-to-consumer shipping from our website, knowing that one bad delivery could mean spoiled fish on someone's doorstep instead of giving them that premium experience that we've worked so hard to build? All right. Danny, Jade, they're doing premium smoked salmon. They've got some great traction with Whole Foods and retail. Should they go DDC? Should they start to explore that knowing that there's risks involved? Well, first of all, I'm excited to try your product because I grew up hating salmon, mostly because every time I had it, it was overcooked, smelly.

22:04Although the first time I got to try smoked salmon, I loved it. And then the first time I got to try hot smoked salmon, I love that too. So you obviously have a product that is appealing to people. So you have what we call a high-class problem. And now the question is, you know you've got a good thing. You've got a great story. It's fantastic that you're carrying on with your family tradition. That actually makes the salmon taste even better, if you ask me. And you're clearly not concerned or you don't seem to be concerned about Whole Foods getting a bad shipment. So what's the trouble with selling it in other ways?

22:44Like you are confident that they're going to handle the product the right way, the way you're packaging it. So what is your concern? Is it shipping? Correct. It's letting go of that control that once it leaves our facility, we're dependent on UPS or FedEx. getting it to that customer and then reliant on them getting it from their doorstep into the refrigerator. Now, have you heard of Goldbelly? I have heard of Goldbelly, yep. Because that's a company that we like so much, we invested in it. And they ship daily all kinds of products that I think are even more perishable than yours. They ship my daughter's ice cream.

23:24And it was packed frozen. It arrives frozen. They ship Joe's Stone Crab. They have so many companies that have otherwise perishable products, and all they do is provide the logistics for you so that when it leaves you, it leaves exactly as you want it. You get to bundle on to their incredibly low shipping rates, which means that your customers are not paying some exorbitant higher fee for all the shipping. As you know, so often that's the biggest cost when you get DTC stuff shipped, especially perishable. Yeah, I'm going to take a slightly contrarian view on this one, Danny, because Gold Belly is amazing.

24:07They do great stuff. And it may be a great option, you know, whether you decide to do it on your own or with them. But I would say down the road, right? Because right now you're in 42 Whole Foods. You're in 12 to 15 Harris Teeters. you're barely a year plus some change old that's pretty great traction right and so I guess I would say do you want to also get into DTC right now before you have solidified those retail outlets the other thing is if you want to do it I would I would start very limited a limited like geographic experiment and then really track everything like are there repeat orders You know, that's the most important because if a customer isn't repeating the order, then you don't have a direct-to-consumer business.

24:56You're just sending – you have an expensive way of sending people salmon that they could go buy at Whole Foods. So I would really wait, and if you want to do it, start small in a small geographic region. That's my feeling. But, Danny, you may think differently. Well, I think similarly and differently. So I'll try both sides of that coin. The similar thing is that I do agree that it's a good thing to really solidify what's working right now. It's also a really good idea to ask yourself, why do we want to do it? How much growth do you want? What are you hoping for? How much growth can you have? I have no idea about how solid your supply of salmon is.

25:40I have no idea what would happen if you'd triple that or quadruple that. I have no idea how big your capacity is for smoking. So, you know, the book that I just wrote is called What Could Possibly Go Right? And what happens if it does go really right? Are you going to be prepared for that? Is that something you really want? So that's the part of Guy's point of view that I agree with, which is it's not really about DTC versus in-store versus on-premise. It's really about what are your goals. But then the contrary point of view, I think it's worth dabbling a little bit with a platform like GoldBelly because you can do it just one day a week.

26:24My daughter's ice cream place called Cafe Pana, she doesn't have capacity or interest in selling more than one or two days a week on GoldBelly. But here's what she's learned. she knows that if you if you don't have it available in your local Whole Foods because you live in St. Louis or Cleveland or Idaho wherever you still have an opportunity she's been able without adding bricks and mortar and without adding any capacity to have a national audience and she can actually tell you exactly where the most demand is while she has no interest in opening bricks and mortar in other cities. If ever she were to, she has built-in data on where there is actually demand beyond anything she could learn if she were just selling at her own place.

27:19So I like dipping your toe if in fact you're interested in growing. What about the dipping the toes being in more of a B2B model? So there are a lot of these gourmet shops and markets across the country that have been emailing us and would love our product. But again, we don't have large nationwide distribution yet. So they can't get it besides us shipping it to them. So maybe that's how we dip our toes. I think that's even smarter. Find one or two places that you would be proud to own yourself and create a scarcity where everybody else wants it. Yes. But only those one or two can get it. And now all of a sudden your brand has even more luster to go with it.