“People still want the highest quality food, but they don’t want the fancy experience anymore,” said Danny Meyer, CEO of Union Square Hospitality Group and founder of Shake Shack.
“We don’t need to eat at fancy places. We like our food better when it’s at a hole in the wall,” continued Meyer, whose company’s restaurant portfolio runs the gamut from tony New York City eateries like the Gramercy Tavern and The Modern at the Museum of Modern Art (MoMA), to classy-casual barbecue joint Blue Smoke, to the fast-growing Shake Shack, which started as a hot dog stand in Madison Square Park and has grown to more than 80 locations worldwide with the opening last month of its first location in Los Angeles.
Meyer was a special guest at the 2016 Convenience Store News Foodservice Summit, held March 15–16 in partnership with Tyson Convenience, where he participated in an interactive roundtable discussion with a dozen leading convenience store foodservice executives.
The trailblazing restauranteur noted that in his many travels around the world, the best croissant he’s ever tasted was at a gas station in Uruguay. “People like to be surprised by high/low experiences like that. It’s a wonderful trend for you all,” he said, gesturing to the convenience foodservice retail executives and chefs gathered around the table.
Meyer, whose restaurants and chefs have earned an unprecedented 25 James Beard Awards, had breakfast with the c-store retailers after they spent the previous day visiting unique food concepts throughout the Big Apple on CSNews’ Taste of Manhattan Tour (see coverage on page 44), which included a stop at Shake Shack, Meyer’s uber-successful hamburger chain.
“We started Shake Shack as a hot dog cart in Madison Square Park in 2000,” Meyer recounted, relating how the creation of the fast-casual chain was “a great experiment in combining capitalism with philanthropy.”
Meyer, then spearheading the rehabilitation of Madison Square Park, which had fallen into disrepair, was asked to supervise operation of a hot dog cart inside an art exhibit that was part of the park’s renewal effort. Already operating several upscale restaurants near the park and elsewhere in New York City, Meyer used the hot dog stand to examine “the meaning of hospitality and what that means outside of a fancy restaurant.”
Selling Chicago-style hot dogs, the stand became extremely successful, drawing lines numbering more than 100 people at a time. Four years later, the city asked Meyer to operate a permanent 20-foot by 20-foot kiosk in the park. That original Shake Shack focused on shakes, not hamburgers.
“I had no idea it would become so famous for its burgers,” said Meyer. “Every year, we had to renovate the kitchens to increase space for burgers.”
In addition to burgers, the restaurant’s menu included its eponymous milkshakes and French fries, and even a ‘Shroom Burger. Since the beginning, Meyer has wanted “everything at Shake Shack to be craveable.”
He eventually donated the original building, which cost $1 million to build, to the park and continues to operate the Shake Shack unit as a tenant. The Madison Square Park location’s sales continue to grow today. During the summertime, the line typically reaches to outside the park and the wait time for service can be an hour or more. A webcam on the Shack’s homepage shows the length of the current line in real time.
Meyer waited five years before opening a second Shake Shack, this time on Manhattan’s Upper West Side. “Shake Shack is the first time we did anything for the second time,” commented Meyer, whose other restaurants are mainly single-unit locations.
Although he eventually expanded Shake Shack to additional locations in New York, as well as in Connecticut, Washington, D.C., Florida, Georgia, Illinois, Maryland, Massachusetts, New Jersey, Nevada, Pennsylvania and Texas, Meyer felt it was important to make every location unique.
“We’re proud to be a chain, but who wrote the rule that every link in the chain has to be the same?” he asked.
Twenty percent of the menu at every Shake Shack is localized and architecturally, none of them look the same, he noted, pointing to the seats at the New Haven, Conn., Shake Shack that look like the seats at the city’s historic Yale Bowl football stadium. Each Shack also carries a wide selection of craft beers local to that particular area.
At this year’s CSNews Foodservice Summit, Meyer had just returned from the grand opening of the first California Shake Shack in West Hollywood in Los Angeles. With international partners, Shake Shack also operates in Tokyo, London, Istanbul, Moscow, Beirut, Dubai, Abu Dhabi, Doha, Kuwait City, Riyadh and Jeddah.
CHICK’N SHACK HATCHED
As Shake Shack has expanded, so too has its menu, leading to the recent introduction of the restaurant’s first chicken sandwich, the Chick’n Shack — a skinless, marinated chicken breast that arrives vacuum-packed to the store and is then freshly battered and fried, and served with bib lettuce, pickles and a buttermilk herb mayo.
The Chick’n Shack has been an immediate hit. “In Los Angeles, we had our busiest opening day in our history,” said Meyer, “and the chicken sandwich sold at 80 percent of the beef burger.”
Meyer asked the c-store retailers to share what they saw and experienced during the Taste of Manhattan tour. He agreed with them that the eateries on the tour illustrated many of the key trends in foodservice, such as the popularity of local, fresh ingredients; the importance of being authentic; and the opportunity to “make food be theater.”
Several of the retailer attendees told Meyer they were impressed with the upbeat spirit shown by the young people working at many of the restaurants featured on the tour.
“Even though we call it ‘work,’ hospitality is a team sport,” remarked Meyer, whose first business book, “Setting the Table” (Harper Collins, 2006), is a New York Times bestseller and examines the power of hospitality in restaurants, business and life.
“If you think about what sports has in common with hospitality, you notice that ballplayers don’t say they’re going to work today. They say they’re going to play to win. That’s all part of our approach to servant leadership. It’s the belief that the power flows from the bottom up, not the top down,” he said.
“Lately, we’ve been challenging our teams to think about what it would be like if we had no prices for the food on the menu and the guest gets a check for how much they enjoyed the entire experience,” Meyer continued. “That’s not to diminish the importance of food innovation, but if we take food out of the equation, how did we make the guest feel?”
Meyer made headlines last year with the institution of a “no tipping” policy at his restaurant The Modern at MoMA, with plans to expand the policy to all his eateries by the end of this year.
A number of observations and personal experiences over the past 20 years led Meyer to launch the paradigm-changing policy on Nov. 15, 2015.
“I travel around the world to learn about food, and the U.S. culture of tipping is unusual,” Meyer relayed to the group. “There’s no tipping in Asia, and much less in Europe. Tipping came about in the U.S. because we wanted to be more like Europe — 150 years ago, when really rich people tipped the help. It was a power thing.”
The adjusted minimum wage for tipped employees in New York City is $7.50 per hour. The National Restaurant Association fights to make sure no legislation changes that. Meyer, by the way, pays his wait staff $9 per hour, $1.50 above the city minimum.
“It’s troubled me for the past 20 years. And now, the last two years, we are in the midst of the greatest labor crisis in New York City history,” he said. “The disparity between the wages of tipped employees and non-tipped employees is huge. The average tip in New York City is about 21 percent, which is great for tipped employees, but we can’t find enough skilled cooks to staff our kitchens.”
Meyer reached his own tipping point, so to speak, about a year ago when he found out he had more Culinary Institute of America-trained chefs working for him as servers than working in his kitchens because they couldn’t make enough money as cooks.
“Because of that, and the fact that I never liked the master/servant relationship that tipping implies, I decided someone has to take a stand and do something about it,” he said.
So, Meyer enacted the following steps at The Modern, and shortly thereafter at Maialino, a Roman trattoria at the Meyer-owned Gramercy Park Hotel:
- He gave all cooks a $2-per-hour raise and built a career ladder for them.
- Menu prices were adjusted upwards by about 20 percent and the policy was branded as “Hospitality Included.” Guest receipts no longer have a tipping line.
- He announced the restaurant would share 13.5 percent of its top-line revenues with all employees — tipped and non-tipped workers.
- He unfurled the most comprehensive communications program in company history, getting input and feedback from all employees, holding town hall meetings, and conducting one-on-ones with affected employees. He shared with the employees what they would have made under the old tipping system and what they are making under the new no-tipping policy.
The bottom line: Cooks are happier with the wage increase and tipped employees were “kept whole,” according to Meyer. Guests pay about the same.
But what about investors? “If I could answer that question conclusively right now, we would have rolled the policy out chainwide. I’ve got to believe that extended tenure, lower turnover and having the employees work as a cohesive team is going to result in improved sales.”
Since Meyer introduced “Hospitality Included” at The Modern, at least eight other top chefs and restaurants in New York City have followed suit with similar no-tipping policies.
Even before the no-tipping experiment, Union Square Hospitality Group was renowned for its world-class customer service. The c-store retailers who participated in the roundtable were interested in learning how Meyer’s restaurants are able to achieve such a superior level of service from its employees; and perhaps, more importantly, how practical is it to think convenience stores could achieve a superior level of customer service with many of its employees making minimum wage or just slightly higher?
In response, Meyer shared his hiring philosophy, which is to hire people based on emotional skills, or having what he calls a high “hospitality quotient.”
“We don’t view high labor costs as something happening to us,” he said. “It’s something we are choosing to do. We feel that it actually drives higher sales volume.”
Managers at Meyer’s restaurants are trained to look for six “emotional skills” when interviewing potential new hires. These skills, with Meyer’s commentary, are:
- Kindness & Optimism: “Skeptics don’t tend to thrive in the hospitality business.”
- Curiosity: “Every day is an opportunity to learn something new.”
- Work Ethic: “I can’t teach you to care about doing things right.”
- Empathy: “What kind of wake do you leave in your path as you go through life?”
- Self-Awareness: “Do you know your own personal weather report?”
- Integrity: “The judgement to do the right thing even if it’s not in your self-interest.”
In addition, Meyer offered some final words of wisdom and encouragement to the convenience foodservice executives.
“The smartphone has given people so many choices today. With just the touch of their phone, they can communicate, get car service, get directions and order food,” he said. “About the only thing it doesn’t do is cook food for you or fill your tank with gas.”
The restauranteur acknowledged what he calls “captive dining” is a thing of the past. “There is a huge number of places to eat.… Today, if I’m eating excellent food in every other channel of my life, why wouldn’t I want that quality at every place I eat?”
He recalled one of his first experiences with restaurant-quality food at a convenience store. “I was traveling to Penn State University and had read that Sheetz actually cared about the food experience,” he said. “They didn’t disappoint. It was clear they didn’t view food as a captive audience experience.”
To the group of retailers, Meyer said, “I’ve probably done business with most of your companies before just traveling around the country and I really admire what you are doing and how your industry is changing, and all of our industries are changing. Whether it’s because people are buying fewer cigarettes, there’s more and more interest in food and how you make your place so much more than what it once was. I think it is a fascinating thing to grapple with.”
Based on what he’s seen of convenience stores’ improved foodservice around the country, he concluded: “You guys are on the right track with foodservice, and people are not going to go back to accepting lower quality food at a gas station.”