A Leading Restaurateur on What It Takes to Scale a Winning Culture

Alison Beard (0:02)

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I'm Alison Beard.

Adi Ignatius (1:04)

I'm Adi Ignatius, and this is the HBR IdeaCast.

Alison Beard (1:15)

Adi, when a business is small, building a great corporate culture can feel relatively straightforward.

Leaders are close to their employees and customers, they can see what's happening on the front lines, and intervene when something feels off. But what happens when the organization gets much, much bigger?

Adi Ignatius (1:31)

This is a classic business dilemma, and I think a lot of companies get it wrong even though they understand the risk, right? They make trade-offs for efficiency and profitability, they add layers of management, they forget about what made the business special in the first place.

Alison Beard (1:45)

Exactly. So joining me today is Danny Meyer, the restaurateur who founded and scaled Shake Shack, as well as an acclaimed fine dining group, and the author of a new book called What Could Possibly Go Right? The Essential Journey to Scale an Enduring Culture. In an extremely demanding industry, we're talking about Michelin-starred Manhattan restaurants to a global burger chain. He's stayed successful for decades, but he's also really candid about the mistakes that he's made and corrected along the way. I talked with him about the building blocks of a strong organizational culture, the frameworks he uses to ensure that diverse dispersed teams stay on the same page, and when a leader should step in versus step back. Here's our conversation.

So when you first started out with your first restaurant, Union Square Cafe, how did you articulate the culture that you wanted to create and get the team to successfully execute on it?

Danny Meyer (2:40)

I didn't.

I never articulated anything to anybody because I didn't know the first thing about opening a restaurant, starting a business. I just did what came naturally to me and what was intuitive. I think over time, I started to use my words as we used to teach our kids. Instead of just trying to embody the behaviors I wanted to see, I really was trying to let people know what they were. And that's when things started to get pretty good, because it's not fair to ask your team members to be guessers as to what really matters.

Alison Beard (3:17)

You talk about this idea of enlightened hospitality. Explain what you mean by that.

Danny Meyer (3:23)

So the idea of enlightened hospitality, in fact, occurred to me when I opened my second restaurant, which was Grand Mercy Tavern, almost 10 years after opening Union Square Cafe. It didn't feel right to me in there, and I couldn't figure out why. For the first time in my career, I was not 100% of the time at the front door in one restaurant. So I was going back and forth. And if I've learned one thing about culture all these years later, culture is what happens when you're not in the room. And half the time I was not in the room and I had not done a good job of defining it. There was one awful day, a Union Square Cafe regular dined at Grand Mercy Tavern and she came up to me furious after her meal. And she said, you know, what I just experienced never would have happened at Union Square Cafe. And she was really talking about horrible lapse in hospitality. You know, she went into great detail about what we had done. And I was so upset with myself because I realized I had never really clarified our culture to our team at Grand Mercy Tavern.

I hosted an all-staff meeting the very next day. And that's when I coined the expression enlightened hospitality. And I said, guys, from this moment on, we are in the business of hospitality. Yes, we're going to always try to make our food much better. We're going to always try to have better wines on our wine list. But when someone pays their bill at the end of a meal here, what they're paying us for is not the food and wine. You got to pretend all that stuff was free. What they're paying us for is how we made them feel. Hospitality. Here's what hospitality means to me. It means that the person on the receiving end of your service truly believes that you were on their side.