It was 1983, the night before the LSAT, when Danny Meyer decided to ditch the law and follow his passion: food. He got a job at a seafood restaurant in New York City, and the next year he opened his first restaurant, Union Square Cafe, at age 27. Today, his Union Square Hospitality Group stretches across 15 restaurants and a burger chain, Shake Shack, that Meyer grew from a single hot-dog cart in a city park to a billion-dollar enterprise with locations from Connecticut to Dubai. His restaurants have been celebrated by critics not only for their food, but also for their meticulous attention to hospitality. Eleven Madison Park, which Meyer opened in 1998, is one of just five restaurants to currently hold The New York Times’ highest ranking of four stars. Meyer is increasingly seen as a leader in bringing progressive values to a cutthroat industry. Case in point: In 2015, he announced that a number of his restaurants would eliminate what he’s called “one of the biggest hoaxes ever pulled on an entire culture”: tipping.
AL: In 2015, you upended one of the longest-standing conventions in the industry by ending tipping at several of your fine-dining establishments. What was your motivation? What are the benefits, from the business side?
DM: The tipping system has allowed restaurants to make it the customer’s responsibility to pay the lion’s share of servers’ compensation, and has unwittingly created several consequences. Menu prices don’t reflect the true cost of dining out; cooks and nontipped employees are squeezed with very low pay; tipped employees get hooked on a “gratuity drug” that prevents them from advancing their careers; and a false master-servant relationship often exists between restaurant patron and server.
Since eliminating tips, we’ve been able to increase the pay for nontipped, back-of-house employees; increase hourly pay and add a revenue-sharing model for servers; and create a merit-based system for servers to receive raises based on technical skills and hospitality. Eliminating tips means servers have an opportunity to earn steady pay other than on weekend nights. It also means we’ve been able to get far ahead of minimum-wage increases that will impact other restaurants which still accept tips.
AL: You’ve often been ahead of the curve, from ending tipping to banning smoking at Union Square Cafe more than a decade before New York City passed its smoking ban. What do you think is the next frontier?
DM: We are far from finished with the movement away from tips, so it feels premature to think of the next frontier. Our industry needs to educate itself and then restaurant consumers to understand that dining well costs a lot more money than meets the eye. If we want great ingredients grown with care and without pesticides, animals raised humanely, and restaurant employees who can afford to live in our communities and thrive, then we have to be willing to pay what it truly costs to have it all.
AL: Your burger empire is clocking in at more than 125 locations and growing, with investors aiming for a goal of 450 Shake Shacks. That’s a lot of burgers. Is it possible to make fast food sustainable and ethical? How do you source your meat and ensure that your values of sustainability, animal welfare, and worker protection are embedded in what must be a very complicated supply chain?
DM: No one has ever suggested that Shake Shack is fast food. We call our category “fine casual,” since we’ve adopted and fully value many of the standards and philosophies from our fine-dining restaurants. These include how we source ingredients, design our restaurants, work in our communities, and hire, train, and treat our employees.
The supply team at Shake Shack cares deeply about every ingredient that goes into our products. Our meat is free of antibiotics and artificial growth hormones; the eggs and chickens we use are cage-free; the french fries are non-GMO. Each Shake Shack is built with an eye on sustainability; every single Shack selects and supports a local not-for-profit organization; and our employees have a clear understanding of how to advance their careers.