Principles of Hospitality as a CEO with Danny Meyer

INTRODUCTION: Welcome to The Daily Bolster. Each day we welcome transformational executives to share their real world experiences and practical advice about scaling yourself, your team, and your business.

Matt Blumberg: Welcome to The Daily Bolster. I'm Matt Blumberg, the Co- Founder and CEO of Bolster, and I'm here today with Danny Meyer. Danny is one of the most celebrated restaurateurs in New York, probably America, probably the world. He was the founder and chairman of both Union Square Hospitality Group and the Shake Shack. He currently runs Enlightened Hospitality Investments. He's a board member at a number of for- profit and not- for- profit companies, and he's the author of an amazing book, which if you have not read, you should read, called Setting the Table. Danny, it's good to have you here.

Danny Meyer: Thank you, Matt.

Matt Blumberg: I just went back through my blog archives and realized that I blogged about Setting the Table in 2007. And I have to say your book is timeless because I still talk about some of the principles that I learned in it, even today.

Danny Meyer: I remember meeting you when we had opened a restaurant near your office then, which was Eleven Madison Park, and we also had Tabla at that point.

Matt Blumberg: That's right, yeah. Well, the question I wanted to ask actually sort of comes from the reading of your book, which you talk in your book about something you called the Hospitality Quotient. You talk about the Virtuous Cycle of Enlightened Hospitality, which is now I get the name of your firm. And so my question for you, for all the CEOs who listen or watch The Daily Bolster is, how do the core principles of hospitality translate into the world of being a CEO?

Danny Meyer: It's something that took me a number of years to figure out because growing up in St. Louis, all I'd ever heard about was service, service, service. The customer's always right. And I had these notions drilled into me by my parents, my grandparents, and it took a lot of years. Back in the old days, the only way we'd get an annual report card was the Zagat Survey, which would come out every fall, the little red book. And in it, they would ask three questions about every restaurant you had been to. What did you think of the food, decor and service? And they also asked, and by the way, what are your five favorite restaurants? And so year after year this thing would come out. And no matter how well we did for food, decor and service, we would do even better in the listing of New York's favorite restaurants. So we were moving up from 13 to 10 to 7, 5 3, finally, number 2 of New York's second favorite restaurant on our way to number 1, I might add with Union Square Cafe. But even in all those years, our food, decor and service we're never as high as the popularity ranking. And I said, " We must be scoring off the charts in something that they didn't ask about." And I called Mr. Zagat on the telephone actually, and I said, " In addition to service, you may want to think about, you may want to put a fourth column. Instead of FDS, you may want FDSH for hospitality." I thought it was really smart. And he goes, " We already covered that with service." And I decided not to argue with him at all, but it really hit me over the head that service and hospitality are completely different things. Service, you got to have great service. My parents and grandparents were right, but that's only a way to describe the technical delivery of the product. Did you do what you said you were going to do? And hospitality on the other hand, is the emotional feeling that you created in the person receiving your technical service. And so if I do all the stuff you expected me to do, that's good service, but it's potentially zero hospitality. And so it really helped to explain to me why there were restaurants with higher service scores below us in the category of favorite restaurant, because while they were doing what they were supposed to do, they weren't making me feel better or they weren't making the vast majority of the people feel better. And that's when I realized this isn't just about restaurants. This is about every single company you do business with. Yes, you want the product to work, but guess what? That product better make you feel better. And another thing I had to throw out the window that my parents taught me was when I was running for class president in fifth grade, and the guy who won over me won because he handed out candy bars to everybody. Really smart. But my parents said, " Popularity is a false measuring stick." Well, guess what? In business, it's not it. It's just not.

Matt Blumberg: So how do you think about the CEO's role in creating a strong culture of hospitality internally and then also one that reflects externally?

Danny Meyer: I think my job is one, I've read many years ago, Robert Greenleaf's book on servant leadership. And by serving my team, realizing that my highest priority is to set the culture, how we do things around here. And the best thing I can do to advance that are two things. Number one, serve our team so they have the tools to do a great job of serving one another and therefore serving our guests. So we put our staff first. Customer's not always right. Customer does not come first, customer comes second. And the odds of pleasing and delighting our customers are greatly heightened when the staff who's coming into work feels great about their job. The other thing that's crucially my job to do is to make sure that I'm promoting the people who are our culture carriers. And furthermore that sometimes I'm exiting the people who are undermining the culture. I've got to do both of those things. I used to think that the top performers were the people who got the biggest jobs, but here's what we do, Matt. We want to get 100 on our test, and we're very, very clear. This recipe has only two ingredients, which is, I wish our chefs could cook this way. It's 49 parts performance, how well we do the stuff that you expect us to do, and it's 51 parts hospitality. How good do we make you feel while we're doing it? Got to do both. A 49 is a failing grade on itself. Perfect food is a fail if we don't make you feel great. But guess what? We can sing Dixie and butter you up all we want, and if the food's no good and the food takes too long, you're not coming back anyway. So we got to get 100 on our tests. But by separating and segmenting those two things, our staff knows what's expected of them, performance and hospitality.

Matt Blumberg: So last question for you. You were in businesses that serve the general population, that serve thousands of individual guests every day. How important did you feel that it was for you to get engaged with guests directly? So I totally understand setting the stage, setting the table for your team to do that work and making sure you have the right people on the team, but you personally as a leader, how engaged did you get with guests?

Danny Meyer: Well, I mean, for the first 10 years of my career, I only had one restaurant, Union Square Cafe, and you would find me on the front door every single lunch and many, many, many dinners. And then even really up to having about five restaurants with Gramercy Tavern and Eleven Madison Park, Tabla, Blue Smoke, Shake Shack. Even when we opened The Modern, which it was the first restaurant we couldn't walk to because it was at the Museum of Modern Art. I would say I was in the restaurants every single day. To this point in time, here's what I do. You'll find me in one of our restaurants every day just because I love being there and I love seeing the people, I love seeing the food, I love seeing the chefs. But the other thing I do is that every night before I go to sleep, well, not right before I go to sleep, I read all of our reservation reports for the following day. So I can see who's going to be coming to the restaurants, and I can send notes to the chef, the general manager. And then in the morning I get to see all the dining reports that our general managers send in, so I can see how last night went. So I have a really good opportunity to stay in close contact with what's going on, and the minute I stop caring about that, it's probably time to hang up my cleats.

Matt Blumberg: Dannie Meyer, Enlightened Hospitality Investments, great advice for CEOs of any kind of business about how to engage around the principle of hospitality. Thank you so much for joining me.

Danny Meyer: Thanks, Matt.