Danny Meyer

Restaurateur and the CEO of the Union Square Hospitality Group

“When you know you didn't do something wrong in the first place, you kind of put that aside and say, that's fine, but what's the right thing to do now?”

Summary

In this episode of Leadership Matters, Alan and his good friend Danny Myers discuss what makes someone a successful leader, including doing the right thing.

They discuss how Shake Shack had to adjust their business plans after controversy over getting $10 million in government assistance through the Small Business Loans during COVID-19. Danny explains his thought process behind applying for the loan, his reasoning for returning the loan, and how he sees the restaurant business bouncing back after the pandemic. Danny Meyers is the founder of Shake Shack and the founder and CEO of Union Square Hospitality Group, which includes Gramercy Tavern, The Modern, Maialino, and more.

Mentions & Resources in this Episode

• Shake Shack – Click here to learn more.

• Union Square Hospitality Group – Click here to learn more.

• LinkedIn Article about decision to return money – Click here to read.

Guest Bio

Daniel Meyer is a New York City restaurateur and the chief executive officer of the Union Square Hospitality Group. He was born and raised in St. Louis. During college, Meyer worked for his father as a tour guide in Rome and then returned to Rome to study international politics. After graduating from Trinity in 1980 with a degree in political science, Meyer worked in Chicago as Cook County Field Director for John Anderson's 1980 independent presidential campaign. Meyer later gained his first restaurant experience in 1984 as an assistant manager at Pesca, an Italian seafood restaurant in the Flatiron District of New York City. He then returned to Europe to study cooking as a culinary stagiaire in both Italy and Bordeaux.

In 1985, at age 27, Meyer opened his first restaurant, Union Square Cafe. Meyer's other restaurants and businesses include Gramercy Tavern, Blue Smoke and Jazz Standard, Shake Shack, The Modern, Cafe 2 and Terrace 5 at MoMA, Maialino at the Gramercy Park Hotel, Untitled at the North End Grill, Marta, Porchlight, GreenRiver, Union Square Events, and Hospitality Quotient. Union Square Events, USHG's catering division, operates several concessions at major sports facilities including Citi Field, Saratoga Race Course, and Nationals Park.

Follow Danny on Twitter at @dhmeyer.

Clips from This Episode

• "We will all be remembered for 'who were we?' & 'what choices did we make?'

• On why the company chose to return it's $10 million PPP loan

• Thoughts on how the US government should manage PPP Loans

Episode Transcription

Alan Fleischmann 

So I'd like to start with, you're on Leadership Matters. The business channel on Sirius XM radio with Alan Fleischmann, your host, and my good friend, Danny Meyer, who is known for many things. Danny, how do I describe you? Well, you are the restauranteur who's kind of defined the New York restaurant scene, but actually, nationally, you're about service and employees first. You've been challenged recently with that. You're the founder of Shake Shack, you've done some really good things, and you're active and involved in so many communities. And I know, I know that this has hit you personally because you care so deeply about every employee of every restaurant, not only your own. And you know, so you're in the news today, because you did something quite remarkable, in my opinion. Like everyone else, you're looking at all these displaced workers among all the restaurants, including Shake Shack, and you're realizing you got to do something and you apply for a program at the Small Business Administration. You got, you know, $10 million. And as you were about to tell me, you're telling me now, you know, that was on a day that you were going to the public markets for further assistance. And when you realize that this program got shut down, and so many of the small businesses that needed it didn't get it, you decided to give the money back.

Danny Meyers 

Yeah. I mean, we returned it and we had to, we really had to because, well, I'll go to my grave saying that Shake Shack, Randy Garutti, the CEO, and the team made the right choice to apply for the PPP funding in order to keep as many people employed for as long as possible in the face of declining sales and operating losses every day that—every day since the virus began Shake Shack has endured operating losses. They did the right thing to apply for it the plan. The government said that this would apply to any business with fewer than 500 employees per location. And Shake Shack has on average 50 employees per location. But I also think that while they did the right thing to apply for the plan, once Shake Shack learned that so many had been shut out for a whole host of reasons, lack of funding, lack of proper contacts with banks, loan officers, then it put Shake Shack in a position to do the other right thing, which was to return the funding so that those who didn't have that kind of access, could get it And I, you know, I feel really proud for the decision. But I'll say it was a, it was a struggle because when you know you didn't do something wrong in the first place, you got to kind of put that to the side and say, that's fine. But what's the right thing to do now?

Alan Fleischmann 

With those circumstances being what they are, with so many people—money went fast. You know this well. So many of the restaurants and businesses out there are cash businesses that don't even have strong relationships with financial institutions, with banks. So even to get themselves ready to get access to the resources that would have been available, it took time. You know, those who were more sophisticated can move quicker those who are less sophisticated, in the banking world, were a little bit more of a, you know, more delayed. So I think, no, it shows an enormous amount of empathy. I'm sure you're still worried about every worker that's been displaced at Shake Shack as anybody. And that still goes on.

Danny Meyers 

That's true, but all it's also true that for a public company, the advantages of being able to use the public marketplace to raise capital is an advantage that smaller businesses don't have, and the banking—pre-existing banking relationships, etc. And I think that, again, I'll just say it again. The company did the right thing to apply for the loan. And they equally did the right thing, once learning that the program itself needed to be fixed. And that's one of the things we're advocating for in the LinkedIn article that we—that Randy and I co-wrote.

Alan Fleischmann 

I love that LinkedIn article because had recommendations and wasn't just about you giving back the money, which is extremely important and a symbol, hopefully that others will follow. There are other chains that got money as well, they probably need to do the same. But you put specifically in your LinkedIn posts from you and Randy, recommendations for Congress and for the US government in general. Can you make mentioned a couple of those real quickly?

Danny Meyers 

Sure I can and I was heartened to see that Secretary of the Treasury Mnuchin tweeted the article and saying how happy he was to see that Shake Shack had returned the money. So we know that this message reached, you know, I guess, as high as you can get in terms of planning this thing. And the three recommendations were these, Allen, it was number one, fund the thing adequately. You know this has shown that no restaurant is unsinkable. I think it's a mistake to—for those who say, well, there should be a different program for very small business, middle-sized business, and large business. I think restaurants are restaurants. And I think that if the government can understand that it's not right to pit restaurants against restaurants, but rather fund the thing adequately so everybody who needs help, which is everybody, because all employees matter, all employees who go to work at Shake Shack, you know, if there's 50 employees at a Shake Shack in New Jersey, or St. Louis or California, they're no less important—no more or less important than 50 employees going to a fancy restaurant or a diner, or mom and pop store, it just doesn't matter. Have one plan for all restaurants and fund it adequately. Number two, we would urge that the government assign a local bank to administer this for every business that is applying for a loan so that if a business does not have a pre-existing loan relationship with a bank, they are not shut out. And it also gives business to local banks, which I think is a good thing. And, and then third, really, really importantly for our industry, there was a one size fits all date of June 30. After which, if you hired back your workers after that date, the loans would not be forgivable. Well, that just doesn't work. That arbitrary single date when you have a virus that's sweeping the country in different waves at different times. And so for example, if you're in New York City, it's pretty unlikely that you're going to be able to hire back the preponderance of your team by June 30, because it still probably won't be safe to be—if you're a full-service restaurant, to be in business. And so, we're also advocating that that June 30 arbitrary date be changed to being—that the loan would be forgivable for all restaurants of all sizes six months after their state or their city, allowed restaurants to be back in business. And I think that if what we're trying to do is acknowledge that restaurants drive a massive part of this economy, then we should do what we can to help all restaurants get back into business and get back into the business of hiring people. As an industry, we have laid off a massive number of people because you cannot carry a payroll in the absence of revenues. So everybody shares the same goal right now, which is, let's get people back to work. And the only way to do that is to have restaurants get back up on their feet.

Alan Fleischmann 

They would almost be better for this to be a subset of whatever program they come up with next so that it really deals with the restaurants because the restaurants are, to your point, a huge part of our economy. They're also a huge part of our society from a cultural point of view. I mean, the idea of walking through cities in America with shut down and boarded up restaurants and no place for us to collectively come together. It's literally taking the lifeblood of our soul and our culture away. And it's much more meaningful than people realize. And your point is, they gotta pay rent, they have to pay, you know, people have to hold on. And if the money doesn't come quickly, they can't even do that. You know, and, you know, they just, it just becomes a feverish thing. I know. One thing I just want to mention to you, which I'm always struck by Danny, and I'm part of this crusade with you, is that when you rank the most important stakeholders you have, you've always said clearly, it starts with employees. Then it goes to your customers, and then it goes to your investors in that order. And the reason why you do it is you know that if your employees are not taking care of, your customers won't feel the soul and spirit of the restaurant. And if they're not taken care of, then you can't actually do well by your investors. You're living that right now. And I hope that we can continue our conversation, you and me and others out there to get the kind of support that you're talking about, to put this incredible limelight. I saw you on 60 minutes. I've seen you do other programs. You got to get out there more. I know this is something that is creating enormous grief and anguish to you personally, as a leader. You are one of the few that actually can spotlight this incredibly important but vulnerable population called our restaurants and our restaurant employees. So I am grateful to you, we are. Let us know what we can do to kind of join you in this fight. And just know that what you just did, what you and Randy just did with Shake Shack, I hope others will follow suit as well. So thank you so much.

Danny Meyers 

Thank you, Alan. And what I would say is you've provided a platform to lead for so many people. And I think that's what this moment is doing for so many people. This is, you know, we will all be remembered for who were we and what choices did we make at this time? And, you know, that's—if there's any silver lining in this besides getting to spend more time with my family, it's that this is a platform to lead and to make choices, and they're not always easy.

Alan Fleischmann 

I hope that the values in which you lead, the values in which we aspire to, highlight among other leaders, becomes part of the day going into this next phase. So thank you. You've been on Leadership Matters on Sirius XM. You're a great friend, Danny Meyer, as this goes forward, come back on because we want to continue to spotlight what you're doing. It's important. Thank you. I'll talk to you soon.