#20 Danny Meyer The Transforming Power of Hospitality in Business

Summary Notes


In "Setting the Table," Danny Meyer shares his journey from a hot dog cart to creating Shake Shack, emphasizing hospitality's transformative power in business. Meyer, influenced by his grandfather's business acumen and his father's entrepreneurial failures, adopted a cautious approach to expansion, focusing on creating a community and enhancing customer experience rather than rapid growth. He stresses the importance of learning from mistakes, citing Stanley Marcus's advice that the road to success is paved with well-handled mistakes. Meyer's story illustrates that in business, perfection is unattainable, but continual problem-solving and effective management of errors can lead to profound success.

Summary Notes

Introduction to Danny Meyer's Philosophy

  • Danny Meyer believes he was born to be an entrepreneur, specifically in the restaurant industry.
  • His passion for travel, food, and wine led him to his career.
  • Meyer values sharing his enthusiasm for pleasurable experiences with others.
  • He feels that a career in the restaurant business was inevitable for him.
  • The book "Setting the Table" is not a typical business book or a how-to guide.
  • Meyer shares life experiences that taught him about business and life.
  • He emphasizes the importance of creating positive outcomes for human experiences and relationships.
  • Meyer believes that business is fundamentally about how you make people feel.

"You. 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."

This quote encapsulates Meyer's innate drive to become an entrepreneur and his desire to share his passions with others.

"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 that hard."

Meyer summarizes the core of his business philosophy: the significance of the emotional impact you have on people through your business.

Danny Meyer's Background and Influence

  • Danny Meyer is known for creating gourmet restaurants and has a significant influence on restaurant design and management.
  • Meyer's success in the restaurant industry, particularly with Shake Shack, has been substantial.
  • Despite his achievements, Meyer notes that many people may not be familiar with him.
  • His book was written based on personal experiences rather than external research.
  • Meyer's family background, including his father and grandfathers, played a role in shaping his approach to business.

"In the process of writing this book, I've done no research, gathered no evidence, and interviewed no one else."

Meyer clarifies that his book is based solely on his personal experiences and insights, without external research.

Meyer's Entrepreneurial Journey

  • Danny Meyer started as a successful salesperson for Checkpoint.
  • He enjoyed the autonomy and success he achieved while working at Checkpoint.
  • Meyer's family history is filled with self-employed individuals, which influenced his drive to work for himself.
  • He was offered an opportunity to work abroad but realized his true passion was not in that field.
  • Meyer decided against pursuing a law career, despite preparing for it, to follow his passion for food and restaurants.
  • His restaurant business would combine his interests, passions, and family dynamics.

"The joy I was experiencing each day by setting my own personal and professional agenda made it increasingly clear to me that I would never go to work for someone else."

Meyer expresses his realization that self-employment and personal autonomy in his work were crucial for his happiness.

"Why don't you just do what you've been thinking about doing your whole life?... Since you were a child, all you ever talked about or thought about is food and restaurants. Why don't you just open a restaurant?"

This pivotal moment in Meyer's life is when he is encouraged to pursue his lifelong passion for food and restaurants, leading to his decision to become an entrepreneur.

Family Influence on Business Approach

  • Danny Meyer's grandfather, Irving Harris, and father, Morty, had contrasting business philosophies and styles.
  • Irving Harris combined social consciousness with business acumen and was an investor in businesses.
  • Morty Meyer was an intuitive entrepreneur with imaginative ideas for running companies.
  • Danny Meyer admired both but had to navigate the complex relationship between them.
  • Meyer's approach to business was influenced by his grandfather's analytical mind and his father's entrepreneurial spirit.
  • The evaluation of human potential is a key factor in Meyer's success, mirroring his grandfather's approach.

"My three most important male role models were businessmen with profoundly different business philosophies, personalities and styles."

Meyer acknowledges the diverse business influences from his family that shaped his own approach to entrepreneurship.

"Evaluating human potential was every bit as important to him as any other business idea."

Meyer highlights the importance his grandfather placed on human potential, an aspect that he also considers crucial in his own business philosophy.

Early Family Business Failures

  • Danny Meyer discusses his father's early business ventures and the emotional and financial toll of their failures.
  • His father's business, Open Road Tours, expanded rapidly but went bankrupt in the late 1960s.
  • The bankruptcy caused not only financial strain but also emotional distress and family discord.
  • His father then entered the hotel business with high hopes but faced operational and financial challenges, leading to more family strain.
  • Danny Meyer reflects on the impact of these experiences on his own approach to business, emphasizing caution and control.

"At one point, this is his dad's business. Open road tours had offices and staff in Chicago, Los Angeles, New York, and Paris. Later it opened offices all over Europe. I never fully understood how or why, but sometimes, in the late 1960s, when I was still a young boy, open road tours went bankrupt."

This quote highlights the rapid expansion and subsequent bankruptcy of Danny Meyer's father's business, Open Road Tours, which had a profound effect on young Danny and his understanding of business risks.

Lessons from Father's Business Endeavors

  • Danny Meyer's father created a new business, Caesar Associates, targeting a niche market of interliners with discounted group tours.
  • Despite initial success, his father's tendency to gamble on risky ventures led to another failure, impacting his personal life and family.
  • Danny Meyer learned from his father's inability to build a strong team and his lack of emotional skills and discipline.
  • These lessons influenced Danny Meyer's own business philosophy, particularly his cautious approach to expansion and emphasis on building a competent team.

"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."

This quote encapsulates the reasons behind Danny Meyer's father's business failures, emphasizing the importance of emotional intelligence, discipline, and a strong support team in entrepreneurship.

Danny Meyer's Business Philosophy

  • Danny Meyer's cautious approach to business expansion is a direct response to his father's failures.
  • He prioritizes self-control and is not a gambler when it comes to business decisions.
  • Meyer's experiences have led him to value infrastructure and the right team before considering growth.
  • He reflects on his journey as a restaurateur, noting that for many years he maintained just one restaurant before expanding.

"I'm not risk adverse, but I have tight self control, and I am not a gambler, so I want to bring that up."

Danny Meyer states his personal approach to risk in business, indicating a balanced perspective that favors calculated decisions over gambling, influenced by his father's history.

Smart Business Decisions

  • Meyer recounts his decision not to become a chef but to focus on being a "restaurant generalist."
  • His culinary education in Europe helped him communicate with chefs, but he realized his strengths lay in the broader aspects of restaurant management.
  • This decision to not be a chef is considered one of his smartest business moves.

"Firing myself as chef turned out to be one of the smartest business decisions I have ever made."

This quote reflects Danny Meyer's self-awareness and strategic decision-making in his career, which led to his success in the restaurant industry.

Importance of Optionality

  • Danny Meyer emphasizes the importance of optionality in business, particularly in the context of lease agreements.
  • He sought assignable leases to ensure flexibility and mitigate risk, a lesson learned from witnessing his father's business struggles.
  • Meyer advises new restaurateurs to prioritize getting an assignable lease as a safeguard against failure.

"To this day, getting an assignable lease is the first piece of advice I give any new restauranteur."

This quote demonstrates Danny Meyer's commitment to risk management and the value he places on having the option to transfer a lease, which he regards as critical advice for newcomers to the industry.

Determining Restaurant Location and Value Proposition

  • Danny Meyer identified the potential in selecting a less desirable neighborhood to establish a restaurant.
  • He aimed to transform the neighborhood through his restaurant's success, creating a draw for other businesses.
  • Meyer was confident in the upside of his decision and had a backup plan in case of failure.

"I understood on a gut level that if I had 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."

This quote highlights Meyer's strategic decision to choose a location based on potential growth and value, rather than current desirability, to provide an excellent dining experience at a reasonable cost.

Conceptualizing a Unique Restaurant Identity

  • Meyer chose to create an original restaurant concept rather than replicate an existing successful model.
  • He believed in innovation over imitation to shape his own business and design sense.

"But replicating something already in existence isn't where my own business or design sense has ever guided me."

The quote reflects Meyer's philosophy of originality in business, where he prefers to pioneer new concepts rather than copy existing ones, which is crucial for creating a unique brand identity.

Recognizing and Correcting Business Mistakes

  • Eleven Madison Park initially struggled to establish a clear brand identity and customer understanding.
  • Meyer realized the mistake of extending the brand before solidifying the core product.
  • The focus shifted back to improving the restaurant's fundamentals, which led to a turnaround in business.

"We had made a fundamental mistake of trying to extend an original brand without first having established the core brand."

This quote underscores the lesson Meyer learned about the importance of establishing a strong core brand before attempting to expand or diversify the business offerings.

Starting Shake Shack and Embracing Small Beginnings

  • Shake Shack began as a modest hot dog cart in an art installation, which Meyer took seriously as an opportunity to test hospitality concepts.
  • He questioned conventional standards and sought to elevate the ordinary hot dog cart experience.
  • Despite initial financial loss, Meyer identified inefficiencies and iteratively improved the operation.

"Could a hot dog cart be anything more than just a hot dog cart?"

This rhetorical question encapsulates Meyer's challenge to the status quo and his pursuit of excellence in even the most humble business ventures, setting the stage for Shake Shack's eventual success.

Growth and Expansion Philosophy

  • Meyer embraced the concept that significant achievements start small, akin to Jeff Bezos's "biggest oak" metaphor.
  • He recognized the potential for the hot dog cart to evolve into something greater and pursued the opportunity to establish a permanent kiosk.

"The biggest oak starts from an acorn if you want to do anything new, you've got to be willing to let that acorn grow into a little sapling and finally into a small tree."

The quote from Jeff Bezos, as referenced by Meyer, highlights the philosophy of patience and nurturing small beginnings to achieve large-scale success, which Meyer applied to the development of Shake Shack.

Community as a Business Core

  • Danny Meyer emphasizes the importance of community in business success.
  • He admires Starbucks for creating a community experience around coffee consumption.
  • Meyer recognizes that selling a product is secondary to fostering a sense of community.
  • A business that does not understand its purpose in fostering community will likely underperform.

"We understood that people just don't go out to eat. They also select restaurants in order to be part of the community experience."

This quote highlights the insight that dining out is not solely about food but also about being part of a community. Meyer values the community aspect as a key to business success.

"A business that doesn't understand its reason for existing is fostering a community will inevitably underperform."

The quote emphasizes the idea that businesses need to recognize their role in creating and nurturing communities to succeed.

Learning from Best Practices

  • Meyer studied various burger and shake stands across the country to identify best practices.
  • He visited establishments like Ted Drew's, Steak 'n Shake, and In-N-Out Burger to gather ideas.
  • This research was aimed at creating a unique offering for Shake Shack.
  • Meyer's approach was similar to learning from great company builders.

"As soon as we'd won the bid, I'd set off to study burger and shake stands all across the country."

This quote explains Meyer's meticulous research process, where he visited multiple establishments to gather the best ideas for Shake Shack.

"Always in search of the best of breed it was funny when I was rereading this the first time I read this book."

The quote reflects Meyer's commitment to excellence and his continuous search for quality, comparing it to the podcast's goal of learning from successful company builders.

Product Development and Attention to Detail

  • Meyer used Eleven Madison Park's private dining room as a laboratory for Shake Shack.
  • He experimented with different beef mixtures to find the perfect burger blend.
  • The Shake Shack team carefully selected ingredients and debated over specifics like bun type and condiments.
  • This attention to detail contributed to Shake Shack's instant success upon opening.

"We worked hard to come up with just the right mixture of freshly ground beef, tasting many variations until we landed upon what we thought was the perfect ratio of ground sirloin steak to brisket."

This quote details the meticulous process of product development that Meyer and his team undertook to create the signature Shake Shack burger.

"We chose every one of our ingredients with extreme care and with an eye toward authenticity."

The quote underscores the deliberate and careful selection of ingredients, highlighting the importance of authenticity in Shake Shack's product development.

Growth and Challenges of Success

  • Shake Shack faced challenges due to its unexpected success.
  • The team struggled with the high volume of orders in the first summer.
  • Meyer introduced beer and wine to the menu, challenging conventional fast-food norms.
  • Shake Shack's success was recognized by New York magazine, calling it "Burger Heaven."

"That first summer saw our team struggling to assemble and serve more than 500 different items per hour at the PICKUP WINDOW in a nine-hour day."

This quote illustrates the operational challenges Shake Shack faced due to its popularity and high demand.

"Before long, New York magazine was calling Shake Shack Burger Heaven and wrote that our shack burger was the city's best burger."

The quote shows the positive reception and acclaim Shake Shack received, solidifying its reputation in the burger industry.

Embracing Mistakes and Problem Solving

  • Meyer shares lessons learned from Stanley Marcus about the importance of handling mistakes well.
  • He understands that striving for perfection can hinder risk-taking and problem-solving.
  • Meyer believes that business success comes from effective problem-solving, not the absence of problems.
  • He encourages embracing mistakes as opportunities for learning and growth.

"The road to success is paved with mistakes, well handled."

Stanley Marcus's advice to Meyer, as shared in the quote, is a profound reminder that handling mistakes is crucial to achieving success.

"The best companies are those that distinguish themselves by solving problems most effectively."

This quote from Meyer underlines his belief that problem-solving is the essence of business and a key differentiator for successful companies.

Business Insights from Literature

  • Meyer discusses the interconnectedness of literature and business insights.
  • He references a quote about books being the original hyperlinks, highlighting the value of reading.
  • Meyer shares how reading led him to learn about Stanley Marcus and potentially further reading material.

"Books are the original hyperlinks."

This quote, attributed to the founder of the Brain Pickings blog, captures the idea that books provide interconnected knowledge, much like hyperlinks on the internet.

"I just got a sample delivered to my kindle. If the sample is interesting, then I'll order the book, and maybe that appears as an episode down the line."

Meyer's quote reflects his continuous pursuit of knowledge and learning, showing how one book can lead to another and contribute to his business philosophy.

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