Rapid Response: When you should require vaccinations w/ Shake Shack founder Danny Meyer

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A year and a half later, we've lost a couple restaurants. We've lost a jazz club. We've lost a lot of people. We went from twenty two hundred employees. The low point.

was forty five. And now we're back up to about twelve hundred. We're marching in the right direction, and I'll just be damned if we're gonna go back again because we've just done too much work to fold our hands. This is a really, really hard thing because

Чанцер да саме уверф. We'll say I don't want to be vaccinated and they'll look for other jobs. We are now bringing Mobile vaccination units.

Into our restaurants. I wanted to take a leadership role. And Make it clear that this mattered. That's world renowned restaurant tour Danny Meyer.

CEO of Union Square Hospitality Group And founder of Shake Shack. This is the fourth time Danny's been on rapid response. To talk about how the pandemic is impacting the restaurant business, cities like New York, and entrepreneurs everywhere who've been under the gun. I'm Bob Safian.

Former editor of Fast Company, founder of The Flux Group, and host of Masters of Scale Rapid Response. I wanted to talk to Danny again because in late summer he proactively announced that his full service restaurants would require Covid nineteen vaccination for all staff and guests. Danny's process in making this decision is an instructive lesson in leadership. And in forward looking business strategy. Danny's insights about the mindset required during the ups and downs of Covid.

Are also poignant and universal. He knows that his actions, his choices, and his demeanor resonate. To his employees. And to broader stakeholders in the community. Challenging times provide an opportunity for impact and influence that ripples broadly.

It's a lesson that all business leaders can learn from. I'm Bob Safian and I'm here with Danny Meyer, CEO of Union Square Hospitality Group and founder of Shake Shack. Danny, thanks for joining us again. Well, it's always a pleasure. Well, you've appeared three times before on this podcast. First in March of twenty twenty, after COVID forced you to

Shut the New York City restaurants and lay off 2000 employees. Then in May of last year, as you began experimenting with New models and dying away. You came on again in January of this year, January twenty twenty one. Just as a renewed wave of infections had disrupted recovery plans. Now We're heading into the fall of twenty twenty one.

You're back over a thousand employees. You've got a new restaurant launching, not just a reopening, but a launching. But at the same time The Delta variant is creating another resurgents. So

Where is your head at? About all of this. My head is in the clouds and you know, depending on the day, it's a rain cloud or it's a cirrus cloud. I feel That during this early part of the summer

There was a lot of optimism. We were Firing on a lot of cylinders. Able to open indoors, able to open outdoors. Covid rates.

We're at a very, very low level in New York City. Truly. The only cloud that we were dealing with in terms of trying to get back into business was that we couldn't do it any faster. And the biggest problem, which you've heard everywhere, which is true.

is that there just haven't been enough people in the workforce. ready to come back into in person jobs and therefore even with our restaurants that are open, we have not been able to open for lunch service because we just don't have enough people. So that's been a tough thing, but then We're still saying, all right, progress is progress, and as somebody said

to me once that really resonated with me, it's kind of like The same feeling you have when You're trying to merge eight lanes into the midtown tunnel. You just have to wait till it breaks. And when you have

So many restaurants and so many retail outlets. All hiring at the exact same time. You just can't turn on a light switch and then all of a sudden have everybody come back. A lot of the people Who used to work in our restaurants.

Probably got other jobs during the last year and a half. Maybe they even left New York City. A huge number of whom are people in the performing arts who couldn't Do their art. Because live performances all shut down and because they couldn't

Have the job that helped support their pursuit of the arts. They just left New York. So it's gonna take a while to get everybody back. One of your colleagues said something to me that if the city responded to the new virus surge by reintroducing restrictions on capacity if indoor dining were prohibited or restrained.

That like The business would be done. That you can't go back. Is that true? I mean, you made it through this wave before, but Why couldn't you again? What is that? About

In large part it's about exhaustion. I've spoken to so many Restaurateurs, chefs. really, really passionate professionals who love Cooking food for the pleasure of other people. Everybody is just exhausted. There are mountains of debt. Many of those dollars are owed to landlords. In some cases there are still a huge amount of debt.

that goes all the way back to January, February, March of twenty twenty. for unpaid bills to Suppliers. When restaurants All closed in March of twenty twenty.

They didn't have the ongoing revenues with which to pay their back bills. And then if you were One of the restaurants that got funding through the payroll protection plan.

That actually in most cases led to even more debt. Because restaurants could not reopen and rehire within the allocated time during which those loans would have been Forgivable. So

I just think restaurateurs are exhausted and I'll I'll take it a a step further. I was Walking on Fourteenth Street and Broadway a couple of weeks ago. And ran into a fantastic chef, a colleague who

has his own restaurant here in New York City. We hadn't seen each other since Covid started, and we started asking each other how it's going, and unexpectedly he broke into tears. He told me that This latest federal relief program, the restaurant relief fund. Which on its face was a great idea.

Provided grants. for restaurants. Independent restaurants. So not a loan like PPP but a grant

That would actually fund restaurants. To the tune of the delta between Your twenty nineteen revenues and your twenty twenty revenues. You guys took it on the chin, you were not permitted to open for all of Twenty twenty.

So we are going to make you whole. Now that would have put An enormous number of restaurants back on their feet. So here's what happened. What happened is that one third of the way into the grant applications.

The government ran out of money. Leaving two thirds of all Independent restaurants in the cold. He said unwittingly the federal government has pitted restaurateurs against restaurateurs. Those who got the money.

Are hiring people away from the restaurants that didn't get the grant. For one or two dollars extra per hour. That can be paid by the restaurants that got the grant money. He said and he's right.

One of the best things that came out of Kovit is that our industry Which is a highly competitive industry, colleagues really banded together because we were all in this together. And he said, Now there's like a wedge. The other thing that he shared and I get this'cause it's Resonates with what we did as well. We were one of the businesses that did everything we could.

To keep The lights on. During twenty twenty, even if it meant Losing money by Doing just takeout and delivery.

He said, and now we are at a disadvantage because So many of the people who got this grant money Just laid off everybody and shut down Everything. In twenty twenty.

So they're getting grant money. For not having Made the effort. to open their doors. So It really hit my heart deeply. So to your question

If we went backwards one more time. and had to reduce capacities and or close our doors. I know for a fact that there are many, many restaurateurs who are just gonna fold their hands and say, I've had it, I've been doing this because I love being in a business that provides pleasure for other people, that employs a lot of people, that buys a lot of products from Farmers and fishers.

That's it. I'm done. Now I will say since the first time you and I spoke in March of twenty twenty. I've had one Prevailing

belief. Sometimes it looks like you're on the five yard line and then you get a penalty and they set you back fifteen or more yards. But my prevailing Guiding belief has been that This will not be the thing that ends the world.

I know that sounds like a trite thing to say, but If you believe that this is the thing that's gonna end the world, then Quit. But if you believe that this will be done at some point, then you say, all right, it's worth doing everything we can to get to the other side. So, you know, a year and a half or whatever this is later.

We've lost a couple restaurants. We've lost a jazz club. We've lost a lot of people, but We went Basically from twenty two hundred employees

The low point. Was forty five. And now we're back up to about 1200. So we're marching in the right direction. And I'll just be damned if we're gonna go back again because we've just done too much work to to fold our hands now.

Mm-hmm. So Part of what you've done. recently to try to keep the momentum moving and to protect against what a resurgents could do is you announced that starting in early September All your employees are gonna be vaccinated.

And that you're gonna require your indoor guests to show proof of vaccination. The vaccine mandate scenario has been evolving, moving around all year long. You put yours in place earlier than most others, but the decision

What was your thought process before What change prompted you to do this now? Delta made us do it. Throughout this entire Experience

We've really tried to have one mantra and that is safety. I remember back in March of twenty twenty we shut down our restaurants almost a week before It was mandated'cause we saw where the puck was going. You can hope for the best, but you can't kinda hope the puck into going a different direction than it's actually going.

And we saw it, so we shut down. And I'm happy to say that nobody ever got sick and died on our watch during this entire time. We also shut down probably ten days. Before

The city was once again mandated to shut down in November. of twenty twenty. Because we saw where the puck was going. And in this case it was the same thing. We just said This is a really, really hard thing because chances are that some of the people who work for us We'll say

I don't want to be vaccinated and to look for other jobs and Couldn't come at a worse time because we're already shorthanded. I wasn't so worried about our guests because There's a lot of anti vaccination fervor around the country.

But I was talking about our full service restaurants. In Manhattan. Where I believe something like seventy

percent of adults are vaccinated anyway. I kinda was making a bet that Maybe this will make us a more attractive place to work. Because more people are vaccinated than not. Maybe this will make us a more attractive place to dine.

know that for companies that do business across the country It was probably gonna be a very, very tough thing to require That their employees and their guests. Because

Let's face it, there are states that will fine you for doing that. New York City had made it very, very clear they wanted to see this happen. If you see that Cases are going up.

Where people are not vaccinated. And you say, I don't want to go backwards again, then you do what you think's the right thing to do. And once again We proceeded What would happen in the city? And many other businesses actually

By probably not more than a week or so, but I wanted to take a leadership role. And Make it clear that this mattered. Mm.

And the geographic element of it. I mean you you're also the board chair of Shake Shack, where there hasn't been any vaccine mandate for employees or guests. And that's because Shake Shack's a national chain, that that calculation is different. when you're going across different localities. Yeah, it's different for a lot of reasons. First of all, I founded Shake Shack and I'm the chairman of the board. My style as chairman is I'm not the executive chairman. We have an amazing CEO. And an amazing team at Shake Shack.

running the business and I completely respect them. To make the kind of decisions that they think are right. And There's absolutely no way Shake Shack Could have done this. Or ever would have done this.

Because Shake Shack operates not only in The majority of the states in the country, many of which have very, very different rules and laws. But secondly, Shake Shack, just like every other chain, has been struggling to get Enough people to staff the restaurants.

smaller percentage of the employee base has been vaccinated. I've spoken with other CEOs of companies that do business across the country. What we all try to do at the outset. was to lead with the carrot. In my company.

Union square hospitality group. We provided for A full day pay. For every Shot you got.

Shake Shack. cared a lot about this to the degree of Giving out free French fries. for just all you had to do is show your vaccination card. Now you may say, What's the big deal? Well people like french fries, it turns out We are now bringing

mobile vaccination units Into our restaurants with A nurse translator who speaks Spanish and English. to counsel and coach and inform People on our team who have not been vaccinated. We're up

in our company right now to about close to seventy percent at this point. We've got another two or three weeks before we're gonna have to start letting people know. We're not gonna be able to pay you. If you haven't been vaccinated, but we've been doing everything we can to guide people to do what we think is the way to be as safe as possible given the delta variant and the conditions we know to be true.

And you haven't thought about like institut rapid testing for those who come into restaurants? I mean, I know some Wall Street firms are doing that at frequency. No, we can't not only can we not afford to do that, but we made a choice that It would set up A really strange culture in our business. Where you have

people who are vaccinated and people who are not vaccinated and the whole point was to make a safe workplace. So No, we're not opting to go in that direction. When you build substantial wealth through your business, it's often tied up in a single equity position.

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I hope to see you there. Before the break. We heard restaurant Danny Meyer explain his thought process in mandating vaccines for employees and customers. Now Danny talks about some new opportunities.

As well as the change conditions that are forcing him in new directions. He spells out the difference between unpleasant decisions And hard decisions. And he talks about the challenge of leaping. In slow motion.

So Despite all these complications with the virus, you had some new brand growth. at Union Square Hospitality Group. You have two new locations for daily provision concept, if I have that right, right? And you have An all new restaurant concept. Launching also.

It must feel nice to be able to Exercise that creativity embarking on something new in the middle of this? It absolutely does. And what I can share is that in each one of those three cases, the two outposts of daily provisions as well as the new full service restaurant, which will be called Chi Siamo. In each of those three cases, they have been gestating For close to three years.

So Just to be really clear. If someone had asked me any time in this last year and a half, do you want to open a new restaurant, I likely would have said, No, thank you. But these were already in the oven baking. So yeah, it feels good to be able to

Make a vote of competence in the future of our city. In the case of our restaurant Chi Siamo, We didn't name it. Until A handful of months ago, the design of the restaurant.

has existed for over two years. We picked a fantastic chef, Hillary Stirling. And the name Chisiama. Is one of my favorite expressions that you hear in Italy, and whenever someone says it You smile because it means

We're here. We're finally here. We've arrived. It's all good. That's the sentiment that I'm feeling.

or hoping to feel right now and I'm really hoping that when the restaurant opens It will mark that moment for New York'cause we need it. Is it easier? Now To start a new place versus reopening

You know something that's been closed? Well, I'll tell you after we've done it. I'll tell you that reopening is incredibly hard. It's like the restaurant became a stage set. But it lacked its actors. In some cases even the play changed.

You wanna come back to Your favorite restaurant. And you see that the menu's changed. And you see that It's a different Matre D.

Than the one you always knew. And your favorite waiter moved back home to Kansas City. It feels different. So We're really, really working hard to

break these restaurants in and we're doing a pretty good job. In most cases, but there are You know, we go on losing streaks. Just like a baseball team does. And it's still gonna take a while. And one of the really tough things, and I think this is the case

Everywhere, all over the country. Is that There's also a different mentality that is Perceptible. Amongst

restaurant goers, which is a lack of patience and in some cases a lack of niceness. Two The people who are doing the cooking and serving. I've seen this on airplanes where passengers are not Being civil or polite.

to the flight attendants. I've seen this In restaurants. Where Half the staff is green and new. And the restaurant goer

is impatient and not treating people nicely, and that is going to exacerbate The labour shortage. Because it's not a way to make more people want to work in the hospitality industry. One of the Great. moments and hospitality.

Is what I call the hug of hospitality, which is When I serve you Whether it's a glass of wine or a good plate of food. And you're really happy about it. You're actually hugging me back.

Form out the hug I gave you. And that makes me love being in this business. And when you hire the right kind of people with the right emotional skills that hospitality hug becomes a self perpetuating reason to love working in our industry and love going to restaurants. So if we break that hug

That's a dangerous time. When you mention the word hug, it reminds me that you announced you're launching a spAC. Back in February called Hug. Is that dedicated to the hospitality business? What prompted that effort? What are you looking for? Well the first thing I was looking for when we launched the spac was If you can't be in the real business you're in, I I wanted to do something that would make

Us feel like we were moving ahead in some way. The thing that gets me more excited than anything about coming to work, covet or not, is a belief that businesses that prioritize their stakeholders Which we call enlightened hospitality.

Businesses that believe that when you first Are on the side of your own employees. That probably increases the chance that they're gonna wanna take great care of your second stakeholder. Which is your customer.

And if you do a great job of that, that means you're probably gonna have a greater Top line revenue. Which means you can do more things for your community, which is our third stakeholder. And then we take great care of our suppliers. And we put our investors, our shareholders, our fifth stakeholder, but it's a virtuocy. It's not

Where the employees on the very top and the shareholders on the bottom, it's truly a virtuous cycle where one good thing Keeps leading us up even better. So I believe in that so much and

I believe we don't have all the best ideas in the world. So If we had the opportunity to create an investment vehicle where we could invest in another business that does this thing. Incredibly well. Irrespective of what sector they're in.

That would be fantastic. And so we created this spec. Hugs is handily an anagram for US H G Unisquare Hospitality Group. We have been Using this last

get to know founders and CEOs of a lot of really Interesting businesses. Some of Ben Consumer goods. Some have been software companies. Some have been

e commerce marketing platforms. Some have been in the food business. Some have been in the grocery business. But what they all have in common is that they resonate with the notion Of what we call night in hospitality.

And so we're betting on culture. Even before we're betting on the business itself. And we're betting on leaders. It's a lot of time, it's a lot of thought, but it's a lot of learning and Some of the businesses that we've interviewed have given us really good ideas that we can utilize with the Unisquare Hospitality Group.

As you're talking, I'm I'm thinking about the journey that you've been through in twenty twenty one. Versus the journey of twenty twenty Whether you think about those as two different Phases. Are there different lessons that you've drawn?

From this stage of the recovery than either been reminders or reinforcing. That's such a good question, Bob. The first thing I need to say is I have lost track of time. When you say twenty twenty or twenty nineteen, twenty twenty one It's like I don't even know what happened to time.

I think the first year was absolutely Survival mode. And What are all the really Hard decisions and unpleasant decisions.

And I'd always categorize those as two different things. 'Cause there's the decisions that are actually easy, but you don't do them'cause they're so unpleasant. And then there's a lot of decisions that are truly hard Like I'm not sure which way to go. Most of the decisions we had to make in

twenty twenty would be under the category of Really unpleasant. We knew that we couldn't get across the rickety bridge. If we carried all that weight. And some of those decisions like closing restaurants and

Losing great people from our team. We're just incredibly unpleasant decision, but There really wasn't much of a choice. But I think twenty twenty one Has been all right.

We're probably gonna survive. At least with most of our restaurants. Now how do we get back to thriving? How do we get out of this crouch position? 'Cause our knees are starting to hurt a lot. But

How do we get into a point where we can start to leap forward. It's like leaping in the slowest possible motion. Sometimes you lose your balance when you're trying to get from the crouch position into the leap in such a slow way. People are on our team, including me.

are probably under the mistaken notion that we can outwork this thing or we can outrun this thing. And you gotta preserve your energy because I think this year has been about Pace. It was incredibly frustrating. to learn that we would not get

the restaurant relief funding for Any of our full service restaurants. Because the government had run out of money. And we were counting on those funds to help us with a whole lot of debt that we have in the business. This year's been a constant test of

Can you stick with the progress? Can you win the game despite getting the setbacks here and there? When we talked last time I asked you if you were optimistic. And you said, Well no, you're hopeful. But the distinction seemed a little bit more cautious.

Are you still hopeful now? Are you more optimistic? I'm still hopeful. Still hopeful. It's just too hard. Yeah, if you had asked me, you know, I don't think it's probably been more than Five weeks.

I had never heard of the Delta variant six weeks ago. I had never heard the expression breakthrough case. Five weeks ago. These things that become part of our lexicon and part of our understanding If you had asked me A month and a half ago I would have said I'm amazingly optimistic because

I really think this thing is gonna be in our rear view mirror sooner than later. I had so many reasons I would have said I'm optimistic, and now You're starting to see businesses Including ours, where We were all set to have everybody come back to work in September.

Albeit on a what we call a two three two schedule, which was acknowledging that Want you to take two days off a week. We love working in person and collaborating. So we want you in the office three days a week, but we're also acknowledging that One of the things we all learned during

Quarantine is that You can be really productive. In places other than the office. So we were all set to have a two three two Requirement.

Of our team starting In September. And with the delta variant, like so many other businesses were saying Guess what? If you want to come in, come in. If you think you can be more productive

And you believe you would be far safer at home. Go do that. So Right now I'm Back in the camp of hopeful.

And Can't wait to get back. to optimism. You know, I hear in your comments, I know you're you're named chair of the New York City Economic Development Corporation in April about economic development in New York driving it forward and uh New Yorkers are so gritty. Right. And there is this kind of feeling, I feel in a little bit in the city that like we can

push our way through this, like we're gonna get through it. And sort of what I'm hearing from you a little bit is like we have to remember that When it comes to A virus like this, there's just some things that are not in our control that maybe we just can't push it through.

Yes and no. Absolutely right that there are many things that we cannot control, but What we can control is what we should be focused on. So for example We have Homecoming Week in New York and we've got a homecoming concert and this was actually an idea that I had When the mayor asked me if I would chair the economic development corporation.

back in April and he he asked if I would serve in this capacity. And I mean I I love this city so much. So of course I said yes and I shared this idea I had and I said the problem right now is that we haven't given people a reason to come back to the city. And we need a good homecoming to remind people Why they love New York so much.

Wouldn't it be great if we could do that and create reasons for people to be with people and remember what a live performance feels like. Of people. I think the mayor made a great decision to require proof of vaccination to get into the concert. I think

There was a great decision. to have the concert broadcast internationally on CNN. To remind the world that New York is alive and well. So you can do things. That remind people why they love New York. If we've learned anything about this virus, it's gonna do what it's gonna do.

But I do believe we've learned as human beings that That we can do things to mitigate our risk. And we can do things to accelerate Economic.

Recovery. I really do. And I guess accept and embrace the progress That comes even if it may not be the progress that we wanted. Even if it's not linear.

And it has not been linear, but it's kind of like the stock market. There will never be and has never been. A straight line from day to day. or week to week with the stock market, but You can absolutely look at the trend line.

And we are in way better shape today. Certainly than we were a year ago. Well, Danny Thank you again for doing this, for talking with me about it. Each time we've talked, we say next time, we're gonna talk about the triumphant recovery. World keeps putting obstacles in the way, but I'm hopeful that you'll come back at least one more time. When that happens and hopefully it's soon from now. So thank you so much again.

Thank you, Bob. Masters of Scale Rapid Response is a wait what original. The show is recorded remotely using sanitized audio gear. I'm your rapid response host, Bob Safian. Host for Masters of Scale is Reed Hoffman. Our executive producers are June Cohen and Darren Triff.

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