May 7, 2020 • 31 mins
Just a few months ago, restaurants were the places we chose to see friends, mark our milestones, celebrate our special occasions, or unwind after a stressful week. But today, in our social-distancing world, just imagining the typically crowded, intimate scene of a Friday night at your favorite neighborhood spot can send a shiver down your spine. Which is why the restaurant industry has been one of the hardest-hit by the pandemic so far, with more than 8 million employees laid off and a more than 80-billion sales loss. As we continue to explore what life will look like once we begin to get back to some sort of normal, Katie Couric turns to business leaders and entrepreneurs to find out how they see their industries re-emerging. On this episode of Next Question with Katie Couric, Katie speaks with restauranteur Danny Meyer and Shake Shack CEO Randy Garutti to find out how the restaurant industry can get back to business.
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Episode Transcript
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Speaker 1 (00:00):
Hi everyone, I'm Katie Couric, and welcome to next question.
Remember back just a few months ago, when a nice
Friday evening might be spent at your favorite restaurant, that
neighborhood place where the bartender knows your go to drink,
and when it's busy, you can still count on settling
into a spot at the bar, sitting shoulder to shoulder
(00:22):
with the strangers around you. At the end, happy and full,
you make your way through the lingering crowd, only stopping
to give a little hug to someone you haven't seen
in a while before heading back out into the night air.
It's not easy right to picture that. In our coronavirus
(00:45):
social distancing world, imagining that crowded intimate scene is enough
to send a shiver down your spine as you're parrelling
your hands, which is exactly why the restaurant industry has
become one of the hardest hit by the pandemic. So far,
more than eight million restaurant employees have been laid off,
(01:06):
and by the end of April, the industry had lost
more than eighty billion dollars in sales. But restaurant tour
Danny Meyer says that's not all that's been lost. Restaurants
play such an important part in the emotional fabric of
this country. The month of May, we have graduations, we
(01:27):
have weddings, and all these things that just feel good
to people to celebrate and where food plays a role,
just aren't happening right now. As we continue to explore
what life will look like once we begin to get
back to some sort of normal, I'll be turning to
business leaders and entrepreneurs to find out how they see
(01:50):
their industries re emerging. And so today a conversation with
Danny Meyer and shake Shack CEO Randy Garuti to explore
my next question, how will the restaurant industry get back
to business. Danny Meyer, who founded shake Shack, is also
(02:13):
head of one of the country's most prestigious restaurant companies,
the Union Square Hospitality Group, which owns and operates restaurants
and event businesses in Las Vegas, Washington, d C. And
New York, including the famous Union Square Cafe, which he
opened in ninet But on March eighteenth, he had to
(02:34):
lay off two thousand employees, about of the company's total staff,
due to a near complete elimination of revenue. Danny described
that day as the most difficult of his life. Here's
what he told his employees in a video message. We
have laid off more people today then we probably hired
(02:57):
in the first years we've in business. I can't believe
those words have just come out of my mouth. And
we're doing so because we want to be here with you.
We want to be back in business when that gay comes,
which we can all visualize, when our restaurants and bars
and jazz books and events and ballparks and museums are
(03:21):
back to doing business as normal. Can you tell us
a little bit about the process of making that decision?
I understood, and I still understand that this is not
the thing that's going to end the world. It just isn't.
And unless you disagree with me, and then you say,
(03:42):
all right, if that's the case, it's going to be
over at a certain point. And when it's over, the
question will be who were you during the time and
what decisions did you make? Often incredibly distasteful and unpleasant decisions,
But what decisions did you during that time that will
set you up best two re emerge even stronger than
(04:07):
you went into this thing. The reason that was such
an incredibly tough day, and by the way, in my company,
Union Square Hospitality Group, there have been two of those days,
because there came a point when we really really hoped
we could get back into business sooner and create some
revenue sooner. And once we realize that New York at
that point was only getting more and more dangerous, we
(04:29):
actually had to go through a second round of cuts,
which I deeply hope is the last time we will
ever have to do that. But on on the date
you just said we had employees at Union Square Hospitality Group,
today we have seventy. And once we made that decision,
which is that the only responsible thing to do if
(04:51):
you truly care about people, is to set yourself up
to be able to re employ them when it's safe
to do so, then you have to make sure that
your business doesn't go out of business. It was almost
a business version of chemotherapy, because in order to survive,
you had to do something that almost kills you in
the meantime, and at this point, the best thing we
(05:15):
can do is stay alive. The second thing is stay safe,
and the third thing is stay connected. And we've been
trying like crazy to just keep those three things in
our mind in the belief that when we do those things,
we will be in a position to do the next
three things. And the next three things are hopefully benefit
(05:36):
from some advances in science, whether it be testing or
medication or ultimately a vaccine. So science um. And then
secondly to UH to hopefully create the type of safety
structures so that people gradually feel safer uh actually and
(05:59):
emotionally to come back to work and to go out
to eating in And if we can do those things,
I really trust will be will be okay. On the
other end, in the meantime, Danny is donating his own
salary and the pay cuts from his executive staff to
an employee relief fund set up for laid off workers.
He says he hopes to rehire all those who are
(06:22):
let go as soon as possible, but to get to
that point safely, his restaurants, if not the industry as
a whole, will have to change, at least for now.
I would say that what we're going through right now
is probably the greatest experiment in leadership agility that this
planet has ever seen. Every day requires each of us,
(06:45):
in in every leadership role, to pivot. There's generally a
spirit of collegiality, and everybody is really trying to figure
out the same kind of answers, which is, what the
hell do we do right now? And you know, what
are the kinds of things that we can do safely
to bring our team back as quickly as possible. I'm
(07:06):
not talking primarily about full service restaurants. I'm talking about
the kind of restaurants where you've got a host in
a maitre d and bartenders and you've got so many
as pouring wine and they don't know how to pour
wine from six ft away without throwing the wine into
somebody's glass. And you talk about waiters and waitresses. His
job it is to clear tables and touch people's glasses
(07:30):
and touch people's napkins while they're clearing them. And you
talk about co checking and getting a cod check and
handing your coat to someone else, and you know, giving
your credit card to somebody when you don't want anyone
to touch your credit card. The best judgment I have
is that once there's a vaccine, you'll start to see
a lot more people coming back. They'll probably start with
(07:53):
being younger people, because let's face it, younger people statistically
and emotionally have felt a little bit less endangered than
people who are, let's say, north of sixty years old,
and and we'll be we'll be adjusting and making those
adjustments as well to make it feel as safe as
we possibly can. The sad thing, though, is that, unlike
(08:15):
after nine eleven, where there was pre existing technology of
metal detectors that just needed to be deployed at office
buildings and ballparks and Disneyland and obviously at airports, there
is no virus detector that we have so far, and
so it's going to take a while before the public
at large feel safe congregated. And the other thing I'll
(08:38):
say is this another great advantage that I feel very
happy about for shake Shack is that shake Shack is
now proving that you can have no tables in your
dining room, which is the case today, and you can
still create revenue. If you ask a full service restaurant
(08:59):
two make money with fift of their tables removed, because
that's the safety protocol. Not only will it not feel
great in there, but the restaurant is actually going to
be at a financial disadvantage relative to just being closed.
So what do you do about that? Danny? I mean
that sounds pretty bleak. It is bleak, except that it
(09:21):
gets back to this question of agility. And I think
that the great leaders of this minute, the future is now,
it's it's not tomorrow, and it's not six months from now.
The great leaders are going to say, I need to
create a new business scenario. And the reason I'm on
this team is that my leaders believe that I am
(09:43):
emotionally and intellectually agile enough to to work and come
up with a new business scenario. The kind of people
who say that's not how we do it around here
are not going to succeed in this environment at all.
So in our industry, the obvious two things people are
talking about in the full service business our delivery and
(10:03):
pick up. And I'm challenging our teams at Union Square
Hospitality Group every single day to ask yourself, what does
that word delivery mean? All right? Does it have to
mean all of the big delivery aggregators where the person
picking up the food is someone who's never been to
your restaurant and the apartment that they're delivering to is
(10:25):
someone they don't know? What if? What if? Delivery for
Union Square Hospitality Group meant something much more akin to
house calls like we used to get in the old
days from doctors. What if we could take a big
city and make it smaller, and what if the person
who delivered your food is someone who we rehired. Maybe
it's a cook, maybe it's a waiter, and maybe they
(10:47):
have a personal connection. What if delivery was a tight
zone just like it like it used to be in
the old days, where we're actually we're building hospitality experiences
and relationships even though we're not creating the greatest you know,
distance for all of our delivery. Now that's a different
thing that we face. I think shake Shacks doing exactly
(11:10):
the right thing to make a shock Burger available on
any platform that exists. When you talk Danny to just
as a follow up to some of your friends in
the restaurant business, I mean, what are some of the
most innovative, interesting ideas that you've heard, uh to to
fill out this time period between now and a vaccine
(11:32):
or now when when things will feel kind of back
to normal hopefully. Well, we're seeing a lot of exciting things. Um.
One of the ones that I like the most is
the notion of restaurants creating a subscription model where every
Thursday or every you know, pick a day of the week.
(11:53):
You could pick your favorite seven restaurants, you pick your
favorite fifty restaurants. But you can subscribe that on a
given day of the week, that restaurant will deliver to
you either a market basket of ingredients with recipes with
which you can cook, you can get on FaceTime with
the chef, and you know, get personalized instructions. You trust
(12:15):
how Grammercy Tavern sources its fish or its meat, which
or it's vegetables, which helps all of our suppliers, which
is a really important thing. So I love that model.
I also love the model which says, um, tell us,
how many people are going to be sitting at your
family table on Tuesday night, and and we're going to
cook for you, and and this is what it is.
(12:36):
Restaurants do not need to have the same experience. You know,
if if Katie, if if you and Muellner, and Autrey
and I went out to dinner, the four of us
would invariably order four different appetizers and four different main courses.
We'd all want to have the experience of trying a
little bit of this and that. That's different right now,
I think family meal means the restaurant now has the
(13:00):
opportunity to pare down its offerings, which it's going to
need to do to be profitable, and just say, trust us,
you know you love this restaurant. We're doing roast chicken
on Tuesday night. Would you guys like that for your
family of six or whatever? So I love that kind
of thing. I also love UM. Something that we've been
doing at Union Square Hospitality Group is we've been conducting
(13:23):
online auctions and we've been contributing all the money to
our to our Hugs fund UM and we're finding experiences
are selling. We're finding that wine is selling in interesting
ways because now we're able to to sell wine off premise,
which we were not able to do before this. So
what's great is some of these things are gonna stick
(13:45):
even after this is over. And I think that that
if we add those to our pre existing business model,
we could we could emerge from this in a much
stronger place even than we went into it. But we're
gonna have to be patient. When we come back, we'll
talk with Danny Meyer and Shake Shack CEO Randy Garudi
(14:06):
about that ten million dollars small business loan in two
thousand one, shake Shack was nothing more than a hot
dog cart inside Madison Square Park in New York City,
(14:28):
but by two thousand four Danny Meyer opened its first
permanent location inside that same park and expanded the menu
to include its signature burgers, fries, and shakes. By two
thousand fifteen, Shake Shack was a national chain and a
publicly traded company with hundreds of locations around the country
(14:48):
and the world. After COVID hit, some shake Shacks closed,
particularly the international spots and airport locations, but a lot
of them have been able to stay in, which has
required some major flexibility on the part of CEO Randy Garudi,
and he says the leadership of his national teams we
(15:11):
have watched literally um not our executive team pushed down,
although we have said the standards of safety, we need
to stay open so that we can employ our team.
Here's how we're going to take care of our team.
But you tell us how and I have just just
blown away every day and you're following it on people's
Instagrams then posting shape Jack turning into a drive through, Katie.
(15:34):
We've never had a drive through. We don't have a
drive through, but we've got, I don't know, fortify them
around the country right now that our teams just figured
out how to do. We figured out how to sell
Hamburgers to your front door, delivered via FedEx with a
new partner um and constantly thinking about how do we
work six ft away from each other, how do we
(15:55):
keep delivery drivers safe and away from each other, which
is a great challenge, and yet how do we slowly
build back these sales. There's some shake Shacks that today,
in the last couple of weeks have actually done more
sales than they did last year during this time. That
blows my mind. And it's only because of the entrepreneurial
spirit of this team. Uh, they gotta keep going. They're
(16:17):
gonna keep defining how we're going to get out of
this and and that's the most exciting thing. And that's
where on the other side of this, we've already started
saying we're gonna think about shake Shacks differently. We're gonna
be that community gathering place more than we've ever been,
because without question, I believe humans need to gather with
humans and as soon as we're allowed at some level,
(16:38):
we're gonna do it. And Shake Shack is going to
be a place they choose. But in the meantime, we've
got to be more convenient, we've got to be safer,
and no matter how you want it, we've got to
provide that our team is going to be the ones
to answer that, and they're doing that now. You know,
I don't want to get too in the weeds with this,
but I know you had some pushback on social media
Danny when well, when we I don't know who wants
(16:59):
to take this or Randy, when shake Shack received a
ten million dollar P P P loan which has since
been returned. You said, Danny that you understand the frustration,
but you believe that the criticism was was really misdirected. Danny,
mind if I take that too, because I don't mind
at all. I'll look, I'll start Katie. We had, as
(17:23):
every government opportunity has been presented, the p p P
loans immediately to us became an opportunity to keep more
of our team employed for a longer period. Uh No
one during that time imagined that the very small businesses
who was intended for would not be able to be
getting the money. As soon as we received the money
(17:44):
that we applied for, under the terms of the loan.
You started to hear those those stories you started here,
the smallest businesses couldn't get it, if you didn't have
a banking relationship, you couldn't get it. And and we
went through that very quickly, and Danny and I and
our teams we got on the phone that weekend and
we said, this isn't right, This wasn't in turn meant
for us. Um, we're gonna give it back, and we're
(18:06):
gonna lead a national conversation. And shake Check was the
first company to give it back, to explain why we
thought it was appropriate in the first place, and how
we were giving it back immediately. And I believe that
that move caused a national conversation that has caused so
many other companies that also give it back but improve
(18:26):
the terms of the next round of funding, which is
now in playing. You're already hearing as challenging as it
is still for so many it has gone so far,
and we Danny and I's inboxes have been filled with
facts from small business owners saying thank you for leading us,
thank you for starting this conversation. It was not easy.
There's a lot of questions about it, and we feel
(18:49):
incredibly proud of the leadership role we were able to
play in this moment. Danny, you're on the state advisory
group that will guide the reopening of New York So
can you us tell us a little bit about that
and how that's going to work, and how you're coordinating
and some of the key leaders you're talking to. Well,
I wish I could, Katie. I'm also trying to do
(19:11):
it for New York City NYC and Company as well. Um.
I was very happy to answer the call when Governor
Cuomo's team said, will you be one of a hundred
people on the committee? I think it's called Onward New York,
and it's it's for all of New York State, and
I think I'm one of probably of the hundred people
(19:33):
on the committee, probably six of us come from the
restaurant industry. So we haven't had a meeting yet. I
think this was announced in anticipation of of figuring out
how this group would actually provide input. I don't know
whether it's going to be industry by industry, whether it
might be the cultural institutions, the sports institutions, you know, uh, finance,
(19:57):
real estate, whatever, whatever. There's lots and lots of different aspects.
What I will say is that while I have not
been asked any questions yet, um, I'm beginning to ask
a lot of the questions myself. And one thing we
know about this is that this impacts all of us.
This rising tide is going to either lift or drop
(20:17):
all boats. And so the one thing I do want
to do is make it as clear as I can
that I want to be a vehicle or a vessel
through which other restaurateurs can share their thoughts, their ideas.
We all know what our fears are. I don't need
a whole lot of help on that. It's it's it's
been pretty bleak, But I think that getting to the
(20:39):
point that that our industry can make the changes it needs,
and we're gonna need some governmental help on that so
that we can get reopened. You know, the funding that
you were talking to Randy about actually doesn't even work
for most restaurants. So with all the hullabaloo, uh, believe
(21:00):
it or not, I've as much as I've heard positive
response uh from people saying what a great decision shake
Shack made to lead the way. I've heard from restaurateurs
who got the funds and who said why are you
out there moralizing and preventing us, uh, you know, from
(21:20):
using our funds without being embarrassed about it. And I've
also heard from restaurateurs who said, we wish we had
had a banking relationships so we could have gotten them.
But guess what, Katie, I've also heard from a ton
of people who said, these funds don't work anyway for
restaurants because it is a nonforgivable loan for which you're
on the hook if you do not rehire the proponerance
(21:44):
of your team by June, and the full service restaurant
industry will not be ready to rehire the proponance of
their team by June. And so one of the things
I want to do on this commission. Now that's a
federal law, but I also think that there are state opportunities.
They can be very very helpful regulatory wise, and also
(22:04):
some of the taxation aspects as well as some of
the landlord kind of controls that happened staywide. So I'll
be taking in as many good as ideas as I
can and then try faithfully to communicate those to the
to the advisory committee. You know, I'm just thinking, just
hearing you guys, for all the New Yorkers who have
(22:25):
loved your restaurants for many years, who have found so
much joy and community, not to mention great food. Um,
can can people just I know their gift cards? For example,
a friend of mine sent over a dinner we're in
East Hampton from a local restaurant because she wanted to
support that restaurant. UM. I guess that's just one example.
(22:46):
But are there other things that people can do to
help to help rise those boats? If you will, Danny,
There's two things I would say, Katie. One is continue
to talk about the importance that restaurants play in your
life and and in the economic life of this country.
(23:07):
I think that until this moment, that the vast majority
of Americans. I don't say this in a in a
negative way, but I just don't think they understood how
impactful restaurants are to the overall economy of the country.
There are six sixty thousand restaurants in America, second largest
(23:28):
employer next to government. I don't know that the average
American knew that. I think that because there's so many
were not looked at like the auto industry or like
the airline industry, where you can kind of get your
arms around it so be be aware of it. And
I think that that that has risen to the national conversation.
When a restaurant goes out of business, it it impacts
(23:52):
the economy in a massive way. And it's it's the
people who work there. It is people not buying food
at a certain point um from their suppliers or beverages.
There are societal issues as well. When a restaurant is closed,
your neighborhood feels different. Just think about when you've walked
(24:13):
by a closed restaurant. It doesn't feel as good, doesn't
feel as safe. And then I would also say that
restaurants play such an important part in the emotional fabric
of this country, which is it's where you go. Like
this month, the month of May, we have graduations, we
have weddings. It would have been baseball season, it would
(24:38):
have been the Kentucky Derby, and all these things that
just feel good to people to celebrate and where food
plays a role, just aren't happening right now. The other
really cool thing about restaurants is that the people who
work in restaurants do it because they love relationships. They
love when they see you come in, they love when
they see their regulars who are always on table forty
(25:00):
two or forty one. They love that they know that
my wife is allergic to lobster, and somehow that makes
her feel good that they remember that. If everyone in
America wrote a two sentence email to someone who they
know who works in a who worked in a restaurant
and just said we miss you and can't wait till
(25:22):
you guys reopen, if you only knew what that would
be worth, just emotionally, that would feel great when we
come back. Danny and Randy with a pep talk not
only for their employees, but for all of us. Restaurants
(25:49):
are not only the places we choose to celebrate our
milestones and special occasions. They're also the careers and livelihoods
of the more than twelve million people who work in
the industry. Because these are some very anxiety producing times
for those people, I asked Randy Garuti and Danny Meyer
for some words of encouragement. First, Randy, I would continue
(26:14):
to believe that sometime, not far from now, we are
going to be able to be shoulder shoulder together. I
think the most powerful thing we can all do right
now for each other is when we go to a restaurant,
or when you see the FedEx driver uh come up
to your house to bring you food to keep you alive,
or when you go to a grocery store or ride
(26:36):
a bus that you looked that person in the eye.
Eyes are still not covered last time I checked, and
you say thank you, and you really mean it, and
you really really sincerely man. And I think if we
do that for each other and remind each other that
that this truly is temporary, it is even as uncertain
as it is, and we look towards a future where
(26:59):
we will add again. Um. I think that's that's all
we need. One day at a time, one hour at
a time, one hopeful, caring human being to another at
a time. Danny, do you want to add anything to that?
I guess what I want to say is, Um, if
you're someone listening to this and you're feeling anxious, so
am I and and I think that there's room to
(27:22):
feel anxious and and hopeful at the same time. I
think anxiety is a very natural human response to not
knowing what's around the next corner. What I don't want
to see happen to people is to anticipate that the
thing around the next corner is going to be even worse. UM,
(27:45):
and therefore live in that and that feeling of what
you anticipate might be worse, because I really think that, UM,
and I really pray that the worst is behind us
at this point. I think that the there's still going
to be a lot of of pain and hurt and
(28:07):
illness in this country, and we've got to stay resolute
as we have been to this point, otherwise this thing
is going to come back. But I do believe that
we are at a point where UM, we for the
first time we I couldn't have had this conversation two
weeks ago about how do we potentially see reopening restaurants.
(28:30):
I just couldn't see beyond the safety aspects of it.
Now I have to be able to host both of
those things, which is human survival and and then what's
next for the business to survive as well. Again, I
do want to just say that our our guests have
been amazing so far. We've only reached out asking people
(28:52):
either to buy gift cards that we were then contribute
of the revenues to our to our fund UM and
or to buy auction items or in some cases contribute
auction items, Um, and Katie, if you ask me one
more time, I'm going to get you hooked into having
cocktails with Katie and Danny. Hey, I'd be glad to
(29:14):
do that, but you know, I don't know if that
would get I don't know if that would get much money,
you guys, But if anyone out there wants to pay
for that, I am definitely in. And that does it
for this episode of Next Question. The interview with Danny
Meyer and Randy Garuty was recorded as a part of
(29:34):
a virtual Shake Shack leadership retreat and was edited for
this podcast. You can keep up with all of my
interviews as well as the day's most important news by
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(29:55):
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Next Question, I'm Katie Couric. Thanks so much for listening everyone.
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(30:17):
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(30:39):
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or wherever you listen to your favorite shows,
Hi everyone, I'm Katie Couric, and welcome to next question.
Remember back just a few months ago, when a nice
Friday evening might be spent at your favorite restaurant, that
neighborhood place where the bartender knows your go to drink,
and when it's busy, you can still count on settling
into a spot at the bar, sitting shoulder to shoulder
(00:22):
with the strangers around you. At the end, happy and full,
you make your way through the lingering crowd, only stopping
to give a little hug to someone you haven't seen
in a while before heading back out into the night air.
It's not easy right to picture that. In our coronavirus
(00:45):
social distancing world, imagining that crowded intimate scene is enough
to send a shiver down your spine as you're parrelling
your hands, which is exactly why the restaurant industry has
become one of the hardest hit by the pandemic. So far,
more than eight million restaurant employees have been laid off,
(01:06):
and by the end of April, the industry had lost
more than eighty billion dollars in sales. But restaurant tour
Danny Meyer says that's not all that's been lost. Restaurants
play such an important part in the emotional fabric of
this country. The month of May, we have graduations, we
(01:27):
have weddings, and all these things that just feel good
to people to celebrate and where food plays a role,
just aren't happening right now. As we continue to explore
what life will look like once we begin to get
back to some sort of normal, I'll be turning to
business leaders and entrepreneurs to find out how they see
(01:50):
their industries re emerging. And so today a conversation with
Danny Meyer and shake Shack CEO Randy Garuti to explore
my next question, how will the restaurant industry get back
to business. Danny Meyer, who founded shake Shack, is also
(02:13):
head of one of the country's most prestigious restaurant companies,
the Union Square Hospitality Group, which owns and operates restaurants
and event businesses in Las Vegas, Washington, d C. And
New York, including the famous Union Square Cafe, which he
opened in ninet But on March eighteenth, he had to
(02:34):
lay off two thousand employees, about of the company's total staff,
due to a near complete elimination of revenue. Danny described
that day as the most difficult of his life. Here's
what he told his employees in a video message. We
have laid off more people today then we probably hired
(02:57):
in the first years we've in business. I can't believe
those words have just come out of my mouth. And
we're doing so because we want to be here with you.
We want to be back in business when that gay comes,
which we can all visualize, when our restaurants and bars
and jazz books and events and ballparks and museums are
(03:21):
back to doing business as normal. Can you tell us
a little bit about the process of making that decision?
I understood, and I still understand that this is not
the thing that's going to end the world. It just isn't.
And unless you disagree with me, and then you say,
(03:42):
all right, if that's the case, it's going to be
over at a certain point. And when it's over, the
question will be who were you during the time and
what decisions did you make? Often incredibly distasteful and unpleasant decisions,
But what decisions did you during that time that will
set you up best two re emerge even stronger than
(04:07):
you went into this thing. The reason that was such
an incredibly tough day, and by the way, in my company,
Union Square Hospitality Group, there have been two of those days,
because there came a point when we really really hoped
we could get back into business sooner and create some
revenue sooner. And once we realize that New York at
that point was only getting more and more dangerous, we
(04:29):
actually had to go through a second round of cuts,
which I deeply hope is the last time we will
ever have to do that. But on on the date
you just said we had employees at Union Square Hospitality Group,
today we have seventy. And once we made that decision,
which is that the only responsible thing to do if
(04:51):
you truly care about people, is to set yourself up
to be able to re employ them when it's safe
to do so, then you have to make sure that
your business doesn't go out of business. It was almost
a business version of chemotherapy, because in order to survive,
you had to do something that almost kills you in
the meantime, and at this point, the best thing we
(05:15):
can do is stay alive. The second thing is stay safe,
and the third thing is stay connected. And we've been
trying like crazy to just keep those three things in
our mind in the belief that when we do those things,
we will be in a position to do the next
three things. And the next three things are hopefully benefit
(05:36):
from some advances in science, whether it be testing or
medication or ultimately a vaccine. So science um. And then
secondly to UH to hopefully create the type of safety
structures so that people gradually feel safer uh actually and
(05:59):
emotionally to come back to work and to go out
to eating in And if we can do those things,
I really trust will be will be okay. On the
other end, in the meantime, Danny is donating his own
salary and the pay cuts from his executive staff to
an employee relief fund set up for laid off workers.
He says he hopes to rehire all those who are
(06:22):
let go as soon as possible, but to get to
that point safely, his restaurants, if not the industry as
a whole, will have to change, at least for now.
I would say that what we're going through right now
is probably the greatest experiment in leadership agility that this
planet has ever seen. Every day requires each of us,
(06:45):
in in every leadership role, to pivot. There's generally a
spirit of collegiality, and everybody is really trying to figure
out the same kind of answers, which is, what the
hell do we do right now? And you know, what
are the kinds of things that we can do safely
to bring our team back as quickly as possible. I'm
(07:06):
not talking primarily about full service restaurants. I'm talking about
the kind of restaurants where you've got a host in
a maitre d and bartenders and you've got so many
as pouring wine and they don't know how to pour
wine from six ft away without throwing the wine into
somebody's glass. And you talk about waiters and waitresses. His
job it is to clear tables and touch people's glasses
(07:30):
and touch people's napkins while they're clearing them. And you
talk about co checking and getting a cod check and
handing your coat to someone else, and you know, giving
your credit card to somebody when you don't want anyone
to touch your credit card. The best judgment I have
is that once there's a vaccine, you'll start to see
a lot more people coming back. They'll probably start with
(07:53):
being younger people, because let's face it, younger people statistically
and emotionally have felt a little bit less endangered than
people who are, let's say, north of sixty years old,
and and we'll be we'll be adjusting and making those
adjustments as well to make it feel as safe as
we possibly can. The sad thing, though, is that, unlike
(08:15):
after nine eleven, where there was pre existing technology of
metal detectors that just needed to be deployed at office
buildings and ballparks and Disneyland and obviously at airports, there
is no virus detector that we have so far, and
so it's going to take a while before the public
at large feel safe congregated. And the other thing I'll
(08:38):
say is this another great advantage that I feel very
happy about for shake Shack is that shake Shack is
now proving that you can have no tables in your
dining room, which is the case today, and you can
still create revenue. If you ask a full service restaurant
(08:59):
two make money with fift of their tables removed, because
that's the safety protocol. Not only will it not feel
great in there, but the restaurant is actually going to
be at a financial disadvantage relative to just being closed.
So what do you do about that? Danny? I mean
that sounds pretty bleak. It is bleak, except that it
(09:21):
gets back to this question of agility. And I think
that the great leaders of this minute, the future is now,
it's it's not tomorrow, and it's not six months from now.
The great leaders are going to say, I need to
create a new business scenario. And the reason I'm on
this team is that my leaders believe that I am
(09:43):
emotionally and intellectually agile enough to to work and come
up with a new business scenario. The kind of people
who say that's not how we do it around here
are not going to succeed in this environment at all.
So in our industry, the obvious two things people are
talking about in the full service business our delivery and
(10:03):
pick up. And I'm challenging our teams at Union Square
Hospitality Group every single day to ask yourself, what does
that word delivery mean? All right? Does it have to
mean all of the big delivery aggregators where the person
picking up the food is someone who's never been to
your restaurant and the apartment that they're delivering to is
(10:25):
someone they don't know? What if? What if? Delivery for
Union Square Hospitality Group meant something much more akin to
house calls like we used to get in the old
days from doctors. What if we could take a big
city and make it smaller, and what if the person
who delivered your food is someone who we rehired. Maybe
it's a cook, maybe it's a waiter, and maybe they
(10:47):
have a personal connection. What if delivery was a tight
zone just like it like it used to be in
the old days, where we're actually we're building hospitality experiences
and relationships even though we're not creating the greatest you know,
distance for all of our delivery. Now that's a different
thing that we face. I think shake Shacks doing exactly
(11:10):
the right thing to make a shock Burger available on
any platform that exists. When you talk Danny to just
as a follow up to some of your friends in
the restaurant business, I mean, what are some of the
most innovative, interesting ideas that you've heard, uh to to
fill out this time period between now and a vaccine
(11:32):
or now when when things will feel kind of back
to normal hopefully. Well, we're seeing a lot of exciting things. Um.
One of the ones that I like the most is
the notion of restaurants creating a subscription model where every
Thursday or every you know, pick a day of the week.
(11:53):
You could pick your favorite seven restaurants, you pick your
favorite fifty restaurants. But you can subscribe that on a
given day of the week, that restaurant will deliver to
you either a market basket of ingredients with recipes with
which you can cook, you can get on FaceTime with
the chef, and you know, get personalized instructions. You trust
(12:15):
how Grammercy Tavern sources its fish or its meat, which
or it's vegetables, which helps all of our suppliers, which
is a really important thing. So I love that model.
I also love the model which says, um, tell us,
how many people are going to be sitting at your
family table on Tuesday night, and and we're going to
cook for you, and and this is what it is.
(12:36):
Restaurants do not need to have the same experience. You know,
if if Katie, if if you and Muellner, and Autrey
and I went out to dinner, the four of us
would invariably order four different appetizers and four different main courses.
We'd all want to have the experience of trying a
little bit of this and that. That's different right now,
I think family meal means the restaurant now has the
(13:00):
opportunity to pare down its offerings, which it's going to
need to do to be profitable, and just say, trust us,
you know you love this restaurant. We're doing roast chicken
on Tuesday night. Would you guys like that for your
family of six or whatever? So I love that kind
of thing. I also love UM. Something that we've been
doing at Union Square Hospitality Group is we've been conducting
(13:23):
online auctions and we've been contributing all the money to
our to our Hugs fund UM and we're finding experiences
are selling. We're finding that wine is selling in interesting
ways because now we're able to to sell wine off premise,
which we were not able to do before this. So
what's great is some of these things are gonna stick
(13:45):
even after this is over. And I think that that
if we add those to our pre existing business model,
we could we could emerge from this in a much
stronger place even than we went into it. But we're
gonna have to be patient. When we come back, we'll
talk with Danny Meyer and Shake Shack CEO Randy Garudi
(14:06):
about that ten million dollars small business loan in two
thousand one, shake Shack was nothing more than a hot
dog cart inside Madison Square Park in New York City,
(14:28):
but by two thousand four Danny Meyer opened its first
permanent location inside that same park and expanded the menu
to include its signature burgers, fries, and shakes. By two
thousand fifteen, Shake Shack was a national chain and a
publicly traded company with hundreds of locations around the country
(14:48):
and the world. After COVID hit, some shake Shacks closed,
particularly the international spots and airport locations, but a lot
of them have been able to stay in, which has
required some major flexibility on the part of CEO Randy Garudi,
and he says the leadership of his national teams we
(15:11):
have watched literally um not our executive team pushed down,
although we have said the standards of safety, we need
to stay open so that we can employ our team.
Here's how we're going to take care of our team.
But you tell us how and I have just just
blown away every day and you're following it on people's
Instagrams then posting shape Jack turning into a drive through, Katie.
(15:34):
We've never had a drive through. We don't have a
drive through, but we've got, I don't know, fortify them
around the country right now that our teams just figured
out how to do. We figured out how to sell
Hamburgers to your front door, delivered via FedEx with a
new partner um and constantly thinking about how do we
work six ft away from each other, how do we
(15:55):
keep delivery drivers safe and away from each other, which
is a great challenge, and yet how do we slowly
build back these sales. There's some shake Shacks that today,
in the last couple of weeks have actually done more
sales than they did last year during this time. That
blows my mind. And it's only because of the entrepreneurial
spirit of this team. Uh, they gotta keep going. They're
(16:17):
gonna keep defining how we're going to get out of
this and and that's the most exciting thing. And that's
where on the other side of this, we've already started
saying we're gonna think about shake Shacks differently. We're gonna
be that community gathering place more than we've ever been,
because without question, I believe humans need to gather with
humans and as soon as we're allowed at some level,
(16:38):
we're gonna do it. And Shake Shack is going to
be a place they choose. But in the meantime, we've
got to be more convenient, we've got to be safer,
and no matter how you want it, we've got to
provide that our team is going to be the ones
to answer that, and they're doing that now. You know,
I don't want to get too in the weeds with this,
but I know you had some pushback on social media
Danny when well, when we I don't know who wants
(16:59):
to take this or Randy, when shake Shack received a
ten million dollar P P P loan which has since
been returned. You said, Danny that you understand the frustration,
but you believe that the criticism was was really misdirected. Danny,
mind if I take that too, because I don't mind
at all. I'll look, I'll start Katie. We had, as
(17:23):
every government opportunity has been presented, the p p P
loans immediately to us became an opportunity to keep more
of our team employed for a longer period. Uh No
one during that time imagined that the very small businesses
who was intended for would not be able to be
getting the money. As soon as we received the money
(17:44):
that we applied for, under the terms of the loan.
You started to hear those those stories you started here,
the smallest businesses couldn't get it, if you didn't have
a banking relationship, you couldn't get it. And and we
went through that very quickly, and Danny and I and
our teams we got on the phone that weekend and
we said, this isn't right, This wasn't in turn meant
for us. Um, we're gonna give it back, and we're
(18:06):
gonna lead a national conversation. And shake Check was the
first company to give it back, to explain why we
thought it was appropriate in the first place, and how
we were giving it back immediately. And I believe that
that move caused a national conversation that has caused so
many other companies that also give it back but improve
(18:26):
the terms of the next round of funding, which is
now in playing. You're already hearing as challenging as it
is still for so many it has gone so far,
and we Danny and I's inboxes have been filled with
facts from small business owners saying thank you for leading us,
thank you for starting this conversation. It was not easy.
There's a lot of questions about it, and we feel
(18:49):
incredibly proud of the leadership role we were able to
play in this moment. Danny, you're on the state advisory
group that will guide the reopening of New York So
can you us tell us a little bit about that
and how that's going to work, and how you're coordinating
and some of the key leaders you're talking to. Well,
I wish I could, Katie. I'm also trying to do
(19:11):
it for New York City NYC and Company as well. Um.
I was very happy to answer the call when Governor
Cuomo's team said, will you be one of a hundred
people on the committee? I think it's called Onward New York,
and it's it's for all of New York State, and
I think I'm one of probably of the hundred people
(19:33):
on the committee, probably six of us come from the
restaurant industry. So we haven't had a meeting yet. I
think this was announced in anticipation of of figuring out
how this group would actually provide input. I don't know
whether it's going to be industry by industry, whether it
might be the cultural institutions, the sports institutions, you know, uh, finance,
(19:57):
real estate, whatever, whatever. There's lots and lots of different aspects.
What I will say is that while I have not
been asked any questions yet, um, I'm beginning to ask
a lot of the questions myself. And one thing we
know about this is that this impacts all of us.
This rising tide is going to either lift or drop
(20:17):
all boats. And so the one thing I do want
to do is make it as clear as I can
that I want to be a vehicle or a vessel
through which other restaurateurs can share their thoughts, their ideas.
We all know what our fears are. I don't need
a whole lot of help on that. It's it's it's
been pretty bleak, But I think that getting to the
(20:39):
point that that our industry can make the changes it needs,
and we're gonna need some governmental help on that so
that we can get reopened. You know, the funding that
you were talking to Randy about actually doesn't even work
for most restaurants. So with all the hullabaloo, uh, believe
(21:00):
it or not, I've as much as I've heard positive
response uh from people saying what a great decision shake
Shack made to lead the way. I've heard from restaurateurs
who got the funds and who said why are you
out there moralizing and preventing us, uh, you know, from
(21:20):
using our funds without being embarrassed about it. And I've
also heard from restaurateurs who said, we wish we had
had a banking relationships so we could have gotten them.
But guess what, Katie, I've also heard from a ton
of people who said, these funds don't work anyway for
restaurants because it is a nonforgivable loan for which you're
on the hook if you do not rehire the proponerance
(21:44):
of your team by June, and the full service restaurant
industry will not be ready to rehire the proponance of
their team by June. And so one of the things
I want to do on this commission. Now that's a
federal law, but I also think that there are state opportunities.
They can be very very helpful regulatory wise, and also
(22:04):
some of the taxation aspects as well as some of
the landlord kind of controls that happened staywide. So I'll
be taking in as many good as ideas as I
can and then try faithfully to communicate those to the
to the advisory committee. You know, I'm just thinking, just
hearing you guys, for all the New Yorkers who have
(22:25):
loved your restaurants for many years, who have found so
much joy and community, not to mention great food. Um,
can can people just I know their gift cards? For example,
a friend of mine sent over a dinner we're in
East Hampton from a local restaurant because she wanted to
support that restaurant. UM. I guess that's just one example.
(22:46):
But are there other things that people can do to
help to help rise those boats? If you will, Danny,
There's two things I would say, Katie. One is continue
to talk about the importance that restaurants play in your
life and and in the economic life of this country.
(23:07):
I think that until this moment, that the vast majority
of Americans. I don't say this in a in a
negative way, but I just don't think they understood how
impactful restaurants are to the overall economy of the country.
There are six sixty thousand restaurants in America, second largest
(23:28):
employer next to government. I don't know that the average
American knew that. I think that because there's so many
were not looked at like the auto industry or like
the airline industry, where you can kind of get your
arms around it so be be aware of it. And
I think that that that has risen to the national conversation.
When a restaurant goes out of business, it it impacts
(23:52):
the economy in a massive way. And it's it's the
people who work there. It is people not buying food
at a certain point um from their suppliers or beverages.
There are societal issues as well. When a restaurant is closed,
your neighborhood feels different. Just think about when you've walked
(24:13):
by a closed restaurant. It doesn't feel as good, doesn't
feel as safe. And then I would also say that
restaurants play such an important part in the emotional fabric
of this country, which is it's where you go. Like
this month, the month of May, we have graduations, we
have weddings. It would have been baseball season, it would
(24:38):
have been the Kentucky Derby, and all these things that
just feel good to people to celebrate and where food
plays a role, just aren't happening right now. The other
really cool thing about restaurants is that the people who
work in restaurants do it because they love relationships. They
love when they see you come in, they love when
they see their regulars who are always on table forty
(25:00):
two or forty one. They love that they know that
my wife is allergic to lobster, and somehow that makes
her feel good that they remember that. If everyone in
America wrote a two sentence email to someone who they
know who works in a who worked in a restaurant
and just said we miss you and can't wait till
(25:22):
you guys reopen, if you only knew what that would
be worth, just emotionally, that would feel great when we
come back. Danny and Randy with a pep talk not
only for their employees, but for all of us. Restaurants
(25:49):
are not only the places we choose to celebrate our
milestones and special occasions. They're also the careers and livelihoods
of the more than twelve million people who work in
the industry. Because these are some very anxiety producing times
for those people, I asked Randy Garuti and Danny Meyer
for some words of encouragement. First, Randy, I would continue
(26:14):
to believe that sometime, not far from now, we are
going to be able to be shoulder shoulder together. I
think the most powerful thing we can all do right
now for each other is when we go to a restaurant,
or when you see the FedEx driver uh come up
to your house to bring you food to keep you alive,
or when you go to a grocery store or ride
(26:36):
a bus that you looked that person in the eye.
Eyes are still not covered last time I checked, and
you say thank you, and you really mean it, and
you really really sincerely man. And I think if we
do that for each other and remind each other that
that this truly is temporary, it is even as uncertain
as it is, and we look towards a future where
(26:59):
we will add again. Um. I think that's that's all
we need. One day at a time, one hour at
a time, one hopeful, caring human being to another at
a time. Danny, do you want to add anything to that?
I guess what I want to say is, Um, if
you're someone listening to this and you're feeling anxious, so
am I and and I think that there's room to
(27:22):
feel anxious and and hopeful at the same time. I
think anxiety is a very natural human response to not
knowing what's around the next corner. What I don't want
to see happen to people is to anticipate that the
thing around the next corner is going to be even worse. UM,
(27:45):
and therefore live in that and that feeling of what
you anticipate might be worse, because I really think that, UM,
and I really pray that the worst is behind us
at this point. I think that the there's still going
to be a lot of of pain and hurt and
(28:07):
illness in this country, and we've got to stay resolute
as we have been to this point, otherwise this thing
is going to come back. But I do believe that
we are at a point where UM, we for the
first time we I couldn't have had this conversation two
weeks ago about how do we potentially see reopening restaurants.
(28:30):
I just couldn't see beyond the safety aspects of it.
Now I have to be able to host both of
those things, which is human survival and and then what's
next for the business to survive as well. Again, I
do want to just say that our our guests have
been amazing so far. We've only reached out asking people
(28:52):
either to buy gift cards that we were then contribute
of the revenues to our to our fund UM and
or to buy auction items or in some cases contribute
auction items, Um, and Katie, if you ask me one
more time, I'm going to get you hooked into having
cocktails with Katie and Danny. Hey, I'd be glad to
(29:14):
do that, but you know, I don't know if that
would get I don't know if that would get much money,
you guys, But if anyone out there wants to pay
for that, I am definitely in. And that does it
for this episode of Next Question. The interview with Danny
Meyer and Randy Garuty was recorded as a part of
(29:34):
a virtual Shake Shack leadership retreat and was edited for
this podcast. You can keep up with all of my
interviews as well as the day's most important news by
subscribing to my morning newsletter, wake Up Call. You can
find that at Katie Couric dot com and to subscribe
to Next Question, and please do look for us on
(29:55):
Apple podcast, the I Heart Radio app, or wherever you
listen to your favorite shows. Until next time at my
Next Question, I'm Katie Couric. Thanks so much for listening everyone.
Next Question with Katie Couric is a production of I
(30:17):
Heart Radio and Katie Currik Media. The executive producers are
Katie Curic, Courtney Litz, and Tyler Klang. The supervising producer
is Lauren Hansen. Our show producer is Bethan Macaluso. The
associate producers are Emily Pinto and Derek Clements. Editing by
Derrek Clements, Dylan Fagan and Lowell Berlante, Mixing by Dylan Fagan.
(30:39):
Our researcher is Gabriel Loser. For more information on today's episode,
go to Katie Couric dot com and follow us on
Twitter and Instagram at Katie Kurik. For more podcasts for
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Host
Katie Couric
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