Danny Meyer Still Thinks Being Nice Is a Business Model

Danny Meyer was 27 when he opened Union Square Cafe in Manhattan, with no culinary training and a political science degree. He has spent the four decades since proving a point that sounded naive in the 1980s and still sounds a little radical now: that the way people are treated is the product.

Sitting down with Margaret Hoover on PBS's Firing Line this fall, Meyer explained what the younger version of himself understood. He grew up in St. Louis, where restaurants made you feel welcome even when the food couldn't match Paris or New York. When he arrived in Manhattan at 22, he found the opposite. "And so what I knew was that good food might taste even better if you were just nice to people."

I.A park, a hot dog cart and a public company

Meyer went on to build Union Square Hospitality Group, home to Gramercy Tavern and The Modern, and to open 27 restaurants. He writes openly about the 10 that closed. But the business most Americans know is one he never set out to start.

Shake Shack began as a hot dog cart in Madison Square Park. Meyer told Firing Line that he had opened Eleven Madison Park and Tabla on the park because he wanted to help restore it, and that bringing art to the park is what led to the cart. The Shack went public in 2015, as CNBC notes, and now has more than 700 locations around the world.

II.The order of the stakeholders

Meyer can explain his philosophy in under a minute. Enlightened hospitality, he told Hoover, says that "if hospitality is the thing we're selling, you think when you come to one of our restaurants, we're selling food, that's almost beside the point. We're selling how did we make you feel."

Then comes the part that surprises people. Meyer ranks his stakeholders: team first, then guests, then the community, then suppliers, and investors last. He told Hoover he learned the opposite growing up, that the customer is always first, and that he rejects the investor-first view he was taught in his first economics class in 1977. To CNBC he put the logic in one line: "When you have happier employees, you get happier guests, then you get more revenue."

He also refuses the warm language a lot of companies use. On Firing Line he said "it's really disingenuous to tell people who work for you that it's a family," because a business sometimes has to let people go and a family can't. What he wants instead is the functional part of a family, a group of people who have something in common and hold each other to it.

III.The experiments that didn't work

What makes Meyer credible is that he talks about his misses. Closing Tabla, he said, left him feeling "like a complete failure," and he admits he kept it open two years too long. In 2015 he eliminated tipping across his restaurants under a model he called Hospitality Included, so cooks and servers could be paid more fairly. When the pandemic hit and every restaurant was rehiring at once, the model put him at a competitive disadvantage, and he reversed it. "I think I learned that Americans like their tips," he said.

It's an unusual thing to hear from a founder of his standing. He doesn't claim the idea was wrong. He says the market told him something, and he listened.

IV.Where machines stop

Asked about technology in restaurants, Meyer drew a line. "I don't know a robot who knows how to look me in the eye and empathize with me and read what my body language is saying that I need and want at that moment and make me feel human," he told Hoover. He allowed that he will never say never, but said he'd come close when it comes to robots in his dining rooms.

His new book, What Could Possibly Go Right?, revisits these lessons twenty years after Setting the Table. The throughline hasn't changed. Meyer still believes the most durable competitive advantage in a service business is how people feel when they walk out the door, and that it starts with how the staff feel when they walk in.

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Danny Meyer