708: Danny Meyer - How You Make People Feel: The Founder of Shake Shack & Union Square Hospitality Group on Culture as Soil, the 49/51 Hiring Formula, and Leading With Generosity

24:34And those technical skills are completely different from every single job. You know, if I'm hiring an accountant or the CFO of the company, I don't really care how good of a pasta cook they are. And if we're hiring a chef, do I care that they can handle the balance sheet? It's a good skill for them to have, but that's not the primary technical skill. So that the 49 % of the technical skills, the 51 % that I'm looking for in any interview is who are you? And specifically, I'm looking for the degree to which you have what we call a high hospitality quotient, which we call HQ. And an HQ is the outcome of all the emotional skills you just read off.

25:19When someone has each one of those things, beginning with optimistic kindness or warmth, right up to and including integrity, but all the ones you just listed, when someone has those at a very high level, they have what we call a high hospitality quotient. And that's someone who is actually happier themselves when they make someone else feel better. Now, I think you know as well as I do, that has absolutely nothing to do with whether you can cook a great piece of fish. And yet, cooking a great piece of fish only gets you to the 49-yard line with our company. We got to get the touchdown. We got to get all 100 yards.

25:58And the way we're going to do that is we're not going to hire someone who's great at fish if they don't also have a high HQ. And it's not just servers in the dining room who have to have a high HQ. It's everybody.

26:10Ryan Hawk:Yeah. Is that just like a gut feel through having a regular conversation? Are there specific questions? Is there a style? Because gut feel could work for you, but maybe again, how does it scale? So how do you teach that to somebody else? No, you're absolutely right. and I'm pretty sure my IQ is way lower than yours, but my HQ is pretty high. And that can be a liability, by the way, when you're hiring. And the reason having a high HQ can be a liability when you're hiring is that when I'm interviewing, it shouldn't be my job to make you feel better. It should be my job to assess how I think you're going to make our staff members feel, how you're going to make our guests and our customers feel.

26:52So I really have to kind of sometimes park my own HQ at the door when I'm interviewing. But just because I have a high HQ, I can actually, I can almost smell someone else with a high HQ around the corner. I just sense it. I feel it. But that, as you just said, is not scalable. So we've come up with a number of questions that actually start to get to some of the emotional skills that we're looking for. And I would never ask somebody, by the way, are you self-aware? Because they'll say, yes, of course I am. But I might ask someone, what's the greatest misperception other people have about you? You cannot answer that question if you're not self-aware because you first have to know, you have to say, well, I'm really this, but I'm putting out there that I'm actually that.

27:44That question is a great stepping off point to get to know somebody. I also think it's an important part when you're interviewing somebody and you get a sense pretty quickly whether this person is a possibility. Pretty quickly. And so you're already beginning the process of leading that person, even in the conversation. So you have an opportunity to let them know. So here's an example. When I'm hiring a chef and I already know that they're a really good cook, what I really care about more than anything is this. in an interview, what's the feedback loop going to feel like when I give this chef feedback on their cooking?

28:22Are they going to be defensive about it? Are they going to be grateful for the feedback? Are we going to have a really thoughtful conversation? And by the way, I may not be right with my question and my feedback, but I want to know early on, what is the experience going to be like of leading this person or working with this person? And so right in the initial interview, once I already know that someone's good at the thing they do, I really, really want to know what's it going to feel like on a day-to-day basis to solve problems with this person? Because ultimately, that's what business is. It's just solving problems all day long.

28:59And it's kind of like, I'm sure when you played football or whatever sport you play now, it's hard work. You come off the field tired and perspiring, but it was fun, right? And that's what business should be like. It's solving problems. It's hard work. And sometimes you come back exhausted, but you look back and you go, there's no team I would have rather done that with. And that's what I'm trying to gauge in an interview. Is this someone, I hate to say going to battle, that doesn't sound like I'm in the hospitality business, but that's a battle to win the hearts and stomachs and minds of your guests.

29:33Ryan Hawk:Yeah. You write about heart share versus mind share. You need both, but how heart share is so important about how you make somebody feel when they walk through that door. And one of the examples, I'd love you to share this full story, is this letter you got from a member of your team named Caitlin and how Caitlin literally saved somebody's life. She thought she was just answering the phone to take a reservation like any other day. What happened with Caitlin? Oh, my Lord. So she heard the person call to make a reservation at, I think it was Gramercy Tavern. And Caitlin was in the process of getting the person's phone number, which we always do when we're taking a reservation.

30:15And the person started, she got the phone number out, but she started really halting with her voice. And Caitlin sensed that something was very, very different. and she asked the woman to stay calm and said, I'm going to call 911 because it sounds like you could use some help. Is that okay with you? And the woman said yes. And Caitlin had the wherewithal to get her address. 911 came, turned out she was having a hemorrhagic stroke. And if they had not gotten there, she most likely would have died, as you just said. It turned out that she was barely able to speak after that. She got all kinds of training, it turned out.

31:00And so this woman stayed in touch with Caitlin to thank her. Caitlin was inspired by this woman's miraculous ability to learn how to speak. She had aphasia. And that inspired Caitlin to go to school to learn how to provide therapy for people who had aphasia. When this woman died, which was pretty recently, right before Caitlin wrote me, she left money for Caitlin to pay for that school. And Caitlin, I hadn't known the second part of the story. Caitlin had left our company during the pandemic. So this all happened during the pandemic. But it was only recently that Caitlin wrote me to tell me how the story ended up.

31:47I will tell you that the letter that Caitlin wrote me is in the book, What Could Possibly Go Right. When I read it on audio, I started crying. Just it was that moving. And that's the real stuff that can happen. That was athleticism in action. This is somebody whose job it was to faithfully take reservations, right? Ryan wants four people at eight o 'clock at Union Square Cafe on Friday night. A really good guest relations person is going to faithfully make that happen. A great hospitality athlete in most circumstances is going to learn enough about Ryan so that those notes go to our maitre d' and our maitre d' has those dots to connect.

32:34So when Ryan comes, he has a great time. But that takes having a high hospitality quotient. What she did was putting that HQ into action to actually save someone's life. That fortunately, we don't have that example all that often, but it all starts with what her heart told her to do. And you just talked about heart share and mind share. Mind share is the outcome of great marketing. And for whatever business you have, you need people to know it exists. Better still, you want it to be on the tip of people's tongues when they're considering which podcast should I listen to? You want Ryan's podcast to be right in the top of their mindshare.

33:15But now we want to take it even further than that. Now that we've got your mindshare, we want to put our hospitality to work to earn your heartshare. And when we earn your heartshare, which is the people's, they don't just know about your podcast. They don't just know about my restaurants. They don't just know about my book. They go, I love that podcast. I love that. And they start telling everyone else they know that they have to go do that, that our work actually makes someone's life better. That's why we do it.

33:49Ryan Hawk:How cool is that story? And there's tons of them, but how does it make you feel when you hear something like that? Because my first question was like, how does she know to do that? And it feels like it's because it's embedded in the culture. This is how we do things here. We don't just say, oh, I can't really hear the person. I'm going to hang up because they can't talk. They think, wait, can I help this person? And they're not even in the doors yet, right? You think all the hospitality is about once they're in the restaurant, let's wow them a little bit. It's a competitive market. We got to do what we got to do.

34:22Ryan Hawk:It's way beyond that, that Caitlin story and others. It's all about how we make people feel. It's all about taking care of people. And so it's just got to be such a rewarding feeling that it is. And it's, it gets back to another thing that you brought up earlier, which is as we hire people. And one of the things we're interviewing for is caring empathy, the unique ability to put yourself in the other person's shoes and ask, how would I want to be treated in this situation? And that allowed me to come up with an idea, which I put in the book, What Could Possibly Go Right, which is the difference between the golden rule that I was brought up with, which is good, which is do unto others as you would have others do unto you.

35:02That's pretty good, right? But the golden rule of hospitality is do unto others as you believe they would want done unto them. Implicit in that subtle but powerful difference is that it treats each of us as individuals. It's one size fits one. Service is one size fits all. It's how we do things for everybody all the time. Hospitality is how we do things custom just for you.

35:32Ryan Hawk:Yeah. I feel like this type of culture is built through a series of moments and inflection points. And I think one of those moments I was reading about that maybe you could share is this Gramercy Tavern all staff meeting, I believe it was 1994, 1995, where was it a loyal guest? They described like a terrible night. Like this is all bad. And you, so you gathered everybody around to have a conversation about that as well as this isn't how we do work here. What happened that night and what happened afterwards that, that helped you get it back on track? Do I have to tell this story? It just makes me so upset every time I think about it.

36:10I think it was a happy ending.

36:11Ryan Hawk:So it did have a happy ending and then it actually led to some really important thinking that was a breakthrough for our whole company, but it was painful. And I guess that's when a lot of the good stuff comes from painful experiences. So this was very soon after I had opened Gramercy Tavern. At that point, I had had 10 years of experience operating one restaurant, my one and only Union Square Cafe. And this was the first time I had to actually lead by using my words as opposed to just embodying the behaviors I wanted to see. I never did that for the first 10 years. I was a very immature leader.

36:48You know, if you saw Danny doing it, that's how you should do it. Once there were two restaurants, this was the first experience I had scaling. And therefore, the first experience I had scaling how we do things around here, how we do business. Wherever I was, I was not at the other place. And when I went to Gramercy Tavern, the brand new restaurant, and a woman pulled me aside after her meal. And she was a Union Square Cafe regular. And she said, you know, what just happened here was inexcusable. It never would have happened at Union Square Cafe. So immediately I was crushed. I said, what did we do?

37:23And she said, well, it started when you cooked my salmon. Well done. Everyone at Union Square Cafe knows I like my salmon rare. I ordered it rare here. And the first thing I said to myself was, well, I don't feel that bad that a cook made an honest mistake. But she kept talking, fortunately, and she said, the problem wasn't the cook's mistake. At Union Square Cafe, the server who knows I like my salmon rare, who took my order rare, would have seen that it had come well done, would have discreetly come over to me without the rest of my guests seeing, and would have discreetly taken it away, brought a cup of soup in its place so that I could have something to eat and my guests wouldn't wonder why I was eating nothing and therefore they could keep eating.

38:13They would have cooked the salmon the right way without saying anything. And then at Union Square Cafe, they probably would have even taken the salmon off the bill. You know what your guys did here? Not only did they not come over while I picked at my salmon, but at a certain point, your manager came over, took it away and gave me a coat check in exchange, telling me that the rest of my salmon would be waiting for me at the door. And then they left it on the check. And she said, I'm just appalled. This never would have happened. So I got sick just hearing the story because I had not used my words.

38:52I hadn't taught my staff that we always lead with generosity. I had always been doing that. But now I had a second restaurant. And this gets to the core of your earlier question about scaling culture. If you don't have language, you cannot teach. And I did not have language and I was not teaching. So I did call an all-staff meeting. I think it was maybe even the next day. It was a Saturday before our lunch service. And I brought everyone in and I told them from this moment on, this is how we're going to be doing business. And that was the day that I named for the first time what I would call enlightened hospitality.

39:30And I said, we are in the business of serving hospitality. And we lead with generosity. We are in business for tomorrow dollars, not today dollars. You actually, by charging that woman for a piece of salmon that she clearly did not like because you were afraid that she was trying to rip us off and that if you had taken it off the bill, she would come back again and try to. I mean, that's insane. It's just like, where's the charitable assumption? Where's the sense that maybe she wasn't trying to rip us off? Maybe we made a mistake and overcooked it. So I named Enlightened Hospitality. I said, the name of our game is hospitality.

40:11And from now on, the first customer we have here is you. The way you treat each other with a generous spirit and with a charitable assumption and doing thoughtful things for each other, that's first. And then you're going to do extraordinary things for our guests. And then we're going to do extraordinary things for our community and our suppliers. And I believe if we do all those things, we're going to have more money left over for our investors. And guess what happens? When we have happy investors, you guys are going to get raises and you're going to get promotions. If you break this anywhere, starting with how you care for each other, it's not going to work.

40:47That was the day that I came up with that idea. And it came from the pain of doing it so wrong the day before with how we treated this guest. I'd like to beat her sometime. I wish I could remember who she was, but she gave us a gift by complaining. She really did.

41:03Ryan Hawk:If you don't have language, you cannot teach. That's so good and so useful because, yeah, it's like a lot of people, you're a great player and you go out and you just keep playing, even though now you're in a leadership role. well, it's time to be a player coach and or a coach slash general manager slash leader. I think a lot of people who are excellent at their craft can identify with that, Danny, and realize, oh, it's now I got to do more. It's about finding my voice. It's about having language so that I can teach. Another example of a conflict I thought was good to read about was in chapter 15, which is titled, How Could You Not Know?

41:43Ryan Hawk:How Could You Not Know? and there's a story there, but I like focusing on what it is to be nice versus what it is to be kind. There's a difference. Can you tell me more about this difference between nice and kind and how you also learned that one the hard way? Yeah, I continued to learn that one the hard way. I'm a proud native St. Louisan and I think that there's a sense that people from the Midwest are nice. And I think nice is not a bad thing in the world of hospitality, but sometimes the word nice, I think, is a way to avoid addressing problems, which I'm just going to keep things nice. And I think there is a big difference between nice and kind.

42:30I think kind actually means I'm on your side and I'm going to be kind to you. But one of the ways I'm going to sometimes be kind to you is to hold up the mirror and give you the opportunity to improve. It's not being kind, and it's not even being nice if you're not measuring up, and I just let that go on. That's not being kind. So I do think that kind involves the courage to give people honest feedback in a way that is on their side. It's not honest feedback that demoralizes people. And by the way, sometimes it's really, really hard. One of the stories in What Could Possibly Go Right is something that went very wrong for so many of us, which was the pandemic.

43:17It was really, really hard to be told by the government, for good reason, you cannot be in business because this COVID-19 is not only incredibly highly transmissible, and we were losing thousands and thousands and thousands of people in New York City. I think our city got it worse than first. And so we could not be in business. We couldn't offer hospitality. It almost, it took away all of our tools. And it was so hard that we were still paying rent. Granted, we got some, a little bit of rent relief in most of our places, not all of them. But the insurance company was still charging. The landlords were still charging.

44:01And so we had to lay people off. That is not a nice thing to do. But the kind thing to do was to do it one by one with actually several hundred people. No one got laid off by tweet. No one got laid off by a big mass email. Everyone got spoken to by their boss. And it was a very hard thing to reconcile. How can you be a people-first company and then lay all these people off? I had to come to grips with the fact that ultimately, if we went out of business, that wouldn't serve anyone. On the other hand, if we could get back into business, once this thing was over and we all assumed someday it would be over, then we would be able to be in a position to hire most of these people back.

44:55Ryan Hawk:Shake Shack, man. It's incredible. I feel like anytime I see one, it's - I like the way that this question started. Shake Shack. I just want to hear you tell the origin story of it and how this whole thing got going, why it got going, how it helped other parts of your business. Well, I've got to really credit what we just spoke about, enlightened hospitality. So this goes back to 2001. We had a hot dog cart in Madison Square Park that was part of a piece of art that we had helped to bring to Madison Square Park for the purpose of bringing people to the park. Why? Why do we do that? Well, we wanted to have art to take care of our community.

45:35That was part of enlightened hospitality. Madison Square Park was the front yard of two of my restaurants, 11 Madison Park and Tabla. Take care of your front yard. A rising tide lifts all boats. That's what I was thinking about. Take care of your community. And when the artist that we brought in said, hey, listen, I've got this crazy idea for a piece of art. We've got four taxi cabs on stilts, and I'm going to decorate a hot dog cart that I want underneath it. and I need somebody to operate the hot dog cart. And, you know, I went to my teammates and I said, you guys, we have to do this. And they said, you're crazy.

46:09We're too busy running 11 Madison Park, Taubel, Gramercy Tavern, Union Square Cafe. They don't have time to operate a hot dog cart. We don't even know what we're doing. And I said, no, no, no, you don't understand. Let's imagine what could possibly go right. That's kind of the first big time I put that to, actually, I put it to use even before that, but what could possibly go right was this. I said, let's put enlightened hospitality in action. Someone's got to work that hot dog cart. Let's take our coat checkers who otherwise aren't going to get to come to work till the weather gets cold in late October.

46:42Let's give them a job all summer. That's taking care of our people. Number two, let's serve not only great hot dogs, but let's serve Chicago style hot dogs. Why? Because they've got eight classic toppings. and let's see if our four coat checkers can remember everybody's special way they like it. Ryan's the guy that likes everything except pickle relish. Danny likes double sport peppers. Jill can't stand mustard. Let's see if we can actually show that hospitality is not just for fancy restaurants, but it's for everything. And lo and behold, that hot dog cart would attract, you know, hundreds of people.

47:20Literally, the line would go through Madison Square Park. and we did that in 2001 we lost a fair amount of money because there's a reason hot dog carts don't have four people working it we did it again in 2002 the community said even though the art's down please bring back our hot dog cart now I love that when they said our hot dog cart I said we're there we got that heart share right they felt shared ownership brought it back again in 2003 now having lost money in the first two years, I came up with a great idea. In year three, 2003, I said, this year, because we only did it during the summer, I said, we're going to donate all of our profits to the Madison Square Park Conservancy.

48:00That felt like a good bet because we kept losing money. Wouldn't you know, in year three, just by saying that, we made$7 ,500. And that's when I got the idea, let's turn this hot dog cart into a permanent kiosk. And that became Shake Shack. And I have read this great book called The Cathedral Within by Billy Shore, which was all about creating community wealth. And I wanted to put his theory to work that if you want to take care of a community, historically, the ways that this happened were either philanthropy on one hand or money from politicians. You know, the government earmarks the money for this.

48:40His thesis was you can actually use capitalism to create community wealth. And so I took a page out of that book, donated this kiosk, which cost$750 ,000 to Madison Square Park. So Madison Square Park would be the landlord, whereby we would own the business, but they would own the building. And therefore, if this worked, it would not only attract people to using the park, which would keep it safe, but a percentage of every sale would go right back into the park to keep it beautiful, safe, programmed, et cetera. Called it Shake Shack. Never had any dream of having a second one. Nevermind today we have 700 of them in 22 countries.

49:27It's a public company. We didn't even open a second one for five years. But to this day, Ryan, that first Shake Shack in Madison Square Park, pays just shy of a million dollars a year in rent to that park. Wow. So you want to talk about what could possibly go right. A great piece of business for a not-for-profit public-private partnership, Madison Square Park, which is as beautiful as it could be. We got a nice business out of it. Thousands and thousands of jobs have been created and launched. and I think it's made a whole lot of people happy who happen to like burgers and shakes.

50:06Ryan Hawk:Yeah, incredible. What a story. Dan, I know we gotta run, man, but I'm curious. This is called The Champagne Question from my friend Jason Gaynard. He's a huge fan of your work as well. We're fast forwarding one year, exactly one year from today. You're surrounded by all the people you love and you're popping bottles. You're celebrating like crazy. I'm curious, what are you celebrating? We're celebrating the fact that my new book, What Could Possibly Go Right, actually meant something to a lot of people. And that they understand that while I wrote it selfishly to teach myself, because I learned by writing, that some of these lessons I've learned while scraping my knee along the way were actually useful for them.

50:51And if I learn that, that will make me feel like it was all worth it.

50:55Ryan Hawk:So good, man. The book is called What Could Possibly Go Right? The Essential Journey to Scale an Enduring Culture. The reason I love it is because it's very, very portable to business leaders, to sports teams, certainly to people in the restaurant and hospitality industry, hotels. But your storytelling ability is as good as it gets. And it's also very practical and entertaining. So thank you for doing it, man. And thank you for being here. This is so much fun. And I would love to continue our dialogue as we both progress, man. I'm really grateful. And thank you for all the fantastic questions.

51:31I'm just going to throw in one thing, which is that 100 % of your listeners have either eaten in a restaurant or worked in a restaurant. I happen to have been working in the restaurant business for many years. That's the laboratory for these stories. But as you just said, these stories, it could have been a ball bearing factory. It's just that most of us haven't eaten in one before.

51:56Ryan Hawk:So good. I appreciate it, man. I look forward to it. Hopefully, it would be fun to do this again next time in person, man. It would be great. It would be great. Thank you so much, Ryan.

52:08Ryan Hawk:It is the end of the podcast club. Thank you for being a member of the end of the podcast club. If you are, send me a note, Ryan, at learningleader.com. Let me know what you learned from this great conversation with Danny Meyer. A few takeaways from my notes. Think about your entrepreneurial athleticism filter. Danny hires leaders for optimistic warmth, curious intelligence, work ethic, empathy, self-awareness, integrity, and the ability to connect dots before your next hire or promotion. Write down a few of the non-resume traits that actually predict success on your team and build an interview question for each.

52:46Ryan Hawk:An example of this, if you value self-awareness like Danny does, what's the greatest misperception other people have about you? Good one. And then do the nice versus kind audit in your own life. Danny talks about the difference between being nice, where you kind of avoid conflict, and kind, where you care enough to tell somebody the truth. Identify a conversation or two where you've been putting off because you'd rather be nice, which is the feedback maybe you're softening or the expectation you haven't set, and go have that kind conversation now. Now, one of my favorite quotes of all time, business like life is all about how you make people feel.

53:28Ryan Hawk:It's that simple and that hard. As a leader, it's all about how we make people feel. It sounds simple, but it's very hard in practice. It's worth it to think about every single day. How are we making the people we're serving feel? Once again, I want to say thank you so much for continuing to spread the message and telling a friend or two, hey, you should listen to this episode of The Learning Leader Show with Danny Meyer. I think he'll help you become a more effective leader because you continue to do that. And you also go to Spotify, Apple Podcasts, subscribe to the show, rate it, hopefully five stars.

54:03Ryan Hawk:write a thoughtful review by doing all of that. You are giving me the opportunity to do what I love on a daily basis. And for that, I will forever be grateful. Thank you so, so much. Talk to you soon. Can't wait.