Chapter 33 - Setting the Table: The Transforming Power of Hospitality in Business
Today’s Chapter is based on the book “Setting the Table: The Transforming Power of Hospitality in Business”, an autobiography by Danny Meyer, the founder of Shake Shack.
Buy it on Amazon here:
https://www.amazon.com/Setting-Table-Transforming-Hospitality-Business/dp/0060742763
Here’s what I have learned:
Enlightened Hospitality
“Service is a monologue—we decide how we want to do things and set our own standards for service. Hospitality, on the other hand, is a dialogue.”
— Danny Meyer
Danny Meyer’s core business philosophy is based on providing the best hospitality to his customers. He mentions that “virtually nothing else is as important as how one is made to feel in any business transaction. Hospitality exists when you believe the other person is on your side.”
More importantly, Meyer believes it is important to know the difference between service and hospitality. In fact, he explains that his success comes from understanding this distinction between the two of them. While service is the technical delivery of a product, hospitality is the way you deliver it and how you make the recipient feel. Here’s how Meyer explains the difference between service and hospitality:
“When you are seated at the precise time of your reservation at the exact table and with the waiter you requested, that is a reflection of good service. When the right food is delivered to the right person at the right table at the right temperature at the right time—that’s service. When you see a member of the waitstaff decanting a bottle of wine with care and grace, that’s service. When your empty plate is cleared from the table in a graceful manner, that too is service. When, in answer to your question, the waiter can explain the nuances of the wines on our list, that’s service. But hospitality, which most distinguishes our restaurants—and ultimately any business—is the sum of all the thoughtful, caring, gracious things our staff does to make you feel we are on your side when you are dining with us.
(…)
Hospitality cannot flow from a monologue. I instruct my staff members to figure out whatever it takes to make the guests feel and understand that we are in their corner.”
— Danny Meyer
Furthermore, Meyer made sure to implement a democratic approach on how his restaurants would treat guests. As a matter of fact, they would not give any priority treatment to the rich and they would make sure to treat first-time visitors the same way they would treat their regulars. His restaurants would also be welcoming to solo diners and would treat them the same way as they would other customers. This idea came to Meyer from his experience as a one-person party; he mentions that “when I thought about how much time and care I put into choosing where to take myself to dinner, and how often I recommended those places that treated me well (and conversely, how strongly I warned everyone off the inhospitable ones), I knew that treating solo diners as royalty was both the right thing to do and smart business.”
Danny Meyer’s essence of hospitality was inspired from Giorgio Smaldone’s favorite expression “There is to make them feel important. Always start with the one who most need feel important!” Meaning that the most successful businesses that depends on human relationships are the ones who know how to make people feel important. And yet, Meyer quickly understood that in the restaurant business, the people that would matter the most to his success weren’t his guests but his employees! That was the birth of his famous concept of “enlightened hospitality”, a business philosophy that would prioritizes employees over customers.
“At this moment, “enlightened hospitality” was born. In a meeting of the entire staff of Gramercy Tavern, and with full agreement and support from Tom, I began to outline what I considered nonnegotiable about how we did business. Nothing would ever matter more to me than how we expressed hospitality to one another. (Who ever wrote the rule that the customer is always first?) And then, in descending order, our next core values would be to extend gracious hospitality to our guests, our community, our suppliers, and finally our investors. I called that set of priorities enlightened hospitality. Every decision we made from that day forward would be evaluated according to enlightened hospitality. We would define our successes as well as our failures in terms of the degree to which we had championed, first, one another and then our guests, community, suppliers, and investors.”
— Danny Meyer
This concept of “enlightened hospitality” reminds me of the story of Isadore Sharp at Four Seasons. Sharp understood that his hotels’ competitive edge is service which is delivered by frontline employees. As such, Sharp would often tell his managers, “that your success depends upon the success of your employees. So your number-one priority can’t be what you as managers want. Your priority has to be, as far as possible, an environment and a structure that gives your employees what they want.”
Similarly to Sharp who had to convince his managers of this concept of treating employees as assets of the company rather than expenses, Danny Meyer had to convince his investors that this idea of enlightened hospitality is a strong business model that will lead to long-term sustained profitability. As a matter of fact, rather than focusing on profitability, Meyer was far more focused on excellence and hospitality. Obviously, it was a lot easier for Meyer to convince his investors as he was personally invested in every single one of his businesses and his interests were aligned with the investors.
“Today, earning a profit is still not the primary destination for my business, but I know that it is the fuel that drives everything else we do. Whether you call it enlightened hospitality or enlightened self-interest, it’s the safest and surest business model I know.”
— Danny Meyer
Shared Ownership
“If I belong to a party, I am for my party; to an army, for my army; to a State, for my State. (…) That's the only truth.”
— Napoleon
Danny Meyer mentions that his goal as an restaurateur is to earn regular, repeat customers from a large number of people who will dine at his restaurants between six to twelve times a year. As a matter of fact, regular guests are your apostles. Meyer mentions that your customers shall “proceed to sell your product for you by telling the world how much they like it. Automobile companies and watchmakers have long understood that people buy their products not just because of how the product itself performs, but to tell a story about themselves.”
As such, the job of a restaurateur is to give people a story worth telling so that their guests can be proud to identify themselves with the restaurants. As a matter of fact, Meyer mentions the importance to create a sense of community and a feeling of “shared ownership” among his customers. As it is human nature, there is no stronger way to build a relationship than by taking a genuine interest in the other human being and by giving him a sense of belonging.
“Shared ownership develops when guests talk about a restaurant as if it’s theirs. They can’t wait to share it with friends, and what they’re really sharing, beyond the culinary experience, is the experience of feeling important and loved. That sense of affiliation builds trust and a sense of being accepted and appreciated, invariably leading to repeat business, a necessity for any company’s long-term survival.”
— Danny Meyer
By consequence, Meyer consistently reminds his staff to try to initiate a relationship with their guests whenever it was appropriate. In fact, Meyer mentions that “there’s always a story behind a story if you look for it; and you can augment your success at “hooking” customers by taking the care, time, and interest to look.” One way of doing it can be by simply asking guests where they are from. Often this can lead to make a connection because of a common friend or cheering for the same sports team.
“The old game of “Do you know So-and-so?” is a classic example of turning over rocks to further human connection. And it works. When you are considering several restaurants for dinner, other things being equal, you’ll choose the one whose maître d’ went to the same school as you, or roots for your sports team, or has the same birthday as you, or knows your second cousin. You’ll also tend to choose a restaurant whose chef came out to greet you on your last visit, or who saved you the last soft-shell crab special, knowing it was a favorite of yours. The information is always there if it matters enough to look for it.”
— Danny Meyer
Meyer also mentions the importance of turning over rocks to hunt for more details concerning the guests with the main purpose of making connections with them. He mentions that “dots are information. The more information you collect, the more frequently you can make meaningful connections that can make other people feel good and give you an edge in business.”
Not only that, Meyer had the habit of studying the faces of his guests, especially their eyes direction as it can be a great indicator that there is something wrong and for you to fix the problem. As a matter of fact, the greatest advantage of a restaurant over many other businesses is that you can get instant feedback from the consumers who are consuming your product. Take advantage of it!
“I’m constantly turning over rocks, hunting for those details—a guest’s impatient look or a glance at a watch, an untouched dish, a curious gaze at our artwork. These details could indicate that someone is bored, impatient, in need of affection, puzzled, interested, or just daydreaming. But each gesture is a potential opportunity for me to visit the table and provide some hospitality.”
— Danny Meyer
“I study the faces of our guests. If I see that the direction of their eyes intersects at the center of the table, I know that they are actively engaged with one another and I’m confident that everything is fine. This is an inopportune time to visit. Guests dine out primarily to be with one another, and their eyes tell me they are doing precisely what they came to do. Whenever I see that the direction of someone’s eyes is not bisecting the center of the table, then a visit may be warranted. I am not certain that something is wrong, but I am certain that there is an opportunity to make a connection without feeling like an intruder. It could be that a guest has been waiting too long for his or her food and is looking for a waiter. It could be that someone is simply curious about the architecture, a work of art on the wall, or, for that matter, an attractive guest across the dining room. Or a guest could be momentarily bored, or just taking a pause, or having a fight with a companion.”
— Danny Meyer
This concept of “shared ownership” reminds me of the Principle of Liking, elaborated by Dr. Robert Cialdini in his book “Influence”. Cialdini explains that people are more persuaded to buy something from someone they like and with whom they can identify themselves with. This idea is based on the concept of similarity bias that are commonly used among salesmen. In fact, salesmen are often trained to look for similarities with the potential customers to produce a favorable and trustworthy image. I think it is fair to say that Meyer’s “shared ownership” concept is a perfect example of how powerful similarity bias can become.
“If there is camping gear in the trunk, the salespeople might mention, later on, how they love to get away from the city whenever they can; if there are golf balls on the back seat, they might remark that they hope the rain will hold off until they can play the eighteen holes they scheduled for later in the day; if they notice that the car was purchased out of state, they might ask where a customer is from and report—with surprise—that they (or their spouse) were born there, too.”
— Robert Cialdini
51 Percenters
“We look for three things when we hire people. We look for intelligence, we look for initiative or energy, and we look for integrity. And if they don't have the latter, the first two will kill you, because if you're going to get someone without integrity, you want them lazy and dumb”
— Warren Buffett
As mentioned previously, employees are the key to the success of any restaurants according to Danny Meyer. As a matter of fact, Meyer believes that the only way for a company to grow and to remain successful is to consistently attract, hire and keep great people. Since hospitality is a dialogue, he is firm in placing all his effort on hiring the best possible staff to engage with his guests.
When looking to hire staff, Meyer tends to evaluate candidates’ emotional and technical skills. However, he puts a lot more emphasis on the emotional side of things. In fact, he mentions that, “theoretically, if the ideal candidate were to score 100 on a suitability test, his or her potential for technical excellence would count for 49 percent, and innate emotional skills for hospitality would count for 51 percent.” Here’s how Meyer explains his concept of 49/51 when hiring staff by comparing businesses with lightbulbs:
“Imagine if every business were a lightbulb and that for each lightbulb the primary goal was to attract the most moths possible. Now what if you learned that 49 percent of the reason moths were attracted to a bulb was for the quality of its light (brightness being the task of the bulb) and that 51 percent of the attraction was to the warmth projected by the bulb (heat being connected with the feeling of the bulb). It’s remarkable to me how many businesses shine brightly when it comes to acing the tasks but emanate all the warmth of a cool fluorescent light. That explains how a flawless four-star restaurant can actually attract far fewer loyal fans than a two-or three-star place with soul. In business, I want to be overcome with moths. Our staff must be like a scintillating string of one-hundred-watt lightbulbs, whose product is the sum of 51 percent feeling and 49 percent task.”
— Danny Meyer
Meyer also explains that a 51 percenters usually possesses five core emotional skills:
Optimistic Warmth: genuine kindness, thoughtfulness, and a sense that the glass is always at least half full
Intelligence: not just “smarts” but rather an insatiable curiosity to learn for the sake of learning
Work Ethic: a natural tendency to do something as well as it can possibly be done
Empathy: an awareness of, care for, and connection to how others feel and how your actions make others feel
Self-awareness and integrity: an understanding of what makes you tick and a natural inclination to be accountable for doing the right thing with honesty and superb judgment
Danny Meyer would not be the first entrepreneur to favour emotional skills over technical skills when hiring employees. This can be simply explained that it is possible to train technical aspects, while emotional skills are most likely innate and impossible to train. In fact, Meyer mentions that the secret of his success is to hire people to whom caring for others is a selfish act, people whom he calls “hospitalitarians”. He says that there is “a special type of personality thrives on providing hospitality, and it’s crucial to our success that we attract people who possess it. Their source of energy is rarely depleted. In fact, the more opportunities hospitalitarians have to care for other people, the better they feel.”
“Over time, we can almost always train for technical prowess. We can teach people how to deliver bread or olives, take orders for drinks or present menus; how to describe specials and make recommendations from the wine list; or how to explain the cheese selection. And it’s straightforward to teach table numbers and seat positions to avoid asking “Who gets the chicken?” (That question sounds amateurish and makes a guest feel as if the waiter didn’t pay attention to him or her in the first place.) A cook needs to know from his chef precisely what the sautéed sea bass is supposed to look like when it’s sautéed properly, how it tastes when it is seasoned perfectly, and what its texture should be when it has been cooked gently and properly. We can and do train for all that. Training for emotional skills is next to impossible.”
— Danny Meyer
This is eerily similar to the way Edwin Land would hire his employees at Polaroid. Based on the motto “an education without a degree”, he did not require any technical experience when hiring new staff. Since his company’s office was located nearby, he frequently hired fresh graduates or students from Harvard or MIT. Furthermore, Land preferred to hire bright young liberal students over applicants with technical experience. As a matter of fact, he believed that they could learn the routines of the laboratory and the structure of scientific discipline as rapidly and, more importantly, they had little to unlearn.
While Land did not expect his new hires to have technical knowledge, he expected his employees to continue their education as an integral part of their working career. He fully believed that individuals in the industry would be better qualified to increase their technical competence and at the same time make their job fully satisfying through continuous learning.
Finally, Meyer mentions a final but critical test when evaluating potential hiring candidates. He requests that all of his managers ask themselves one final question before hiring someone: “Do they believe the candidate has the capacity to become one of the top three performers on our team in his or her job category? If people cannot ever develop into one of our top three cooks, servers, managers, or maître d’s, why would we hire them? How will they help us improve and become champions?” This is incredibly important as it helps to weed out mediocrity as it is extremely dangerous for a company to hire a “whelming” candidate as it can cause an organisation a long-lasting harm.
“Overwhelmers earn you raves. Underwhelmers either leave on their own or are terminated. Whelmers, sadly, are like a stubborn stain you can’t get out of the carpet. They infuse an organization and its staff with mediocrity; they’re comfortable, and so they never leave; and, frustratingly, they never do anything that rises to the level of getting them promoted or sinks to the level of getting them fired. And because you either can’t or don’t fire them, you and they conspire to send a dangerous message to your staff and guests that “average” is acceptable.”
— Danny Meyer
Finally, keeping great people in your company is primordial to a restaurant’s success and it starts by the way you treat them. In fact, Meyer believes in treating his employees the same way he would manage volunteers. He explains that, “even with compensation as a motivator, I know that anyone who works for my company chooses to do so because of what we stand for. I believe that anyone who is qualified for a job in our company is also qualified for many other jobs at the same pay scale. It’s up to us to provide solid reasons for our employees to want to work for us, over and beyond their compensation.”
Meyer mentions that his preferred technique for leadership, guidance, and coaching is to use “constant, gentle pressure”. He believes that it is his job to be clear with his staff concerning the company’s non-negotiable core values and to use constant and gentle pressure to make sure that they are respected. This is especially important to keep pushing the business forward and to avoid complacency. Here’s how Meyer explains his management philosophy:
“It helped me understand that we needed all three words—constant, gentle, pressure—working at once to push our business forward. This is one aspect of business where batting .667 isn’t a winning average. Leave any one element out, and management is far less effective. If you are constantly gentle but fail to apply pressure when needed, your business won’t grow or improve: your team will lack the drive and passion for excellence. If you exert gentle pressure but not constantly, both your staff and your guests will get a mixed message depending on what day it is, and probably won’t believe that excellence truly matters to you. If you exert constant pressure that isn’t gentle, employees may burn out, quit, or lose their graciousness—and you will probably cease to attract good employees. Leaders must identify which of the three elements (constant, gentle, or pressure) plays to their greatest natural strengths and, when necessary, they must compensate for their natural weaknesses. For example, over the years I’ve learned that constant and gentle are my natural instincts, and so I’ve had to focus on developing ease at applying pressure.”
— Danny Meyer
Meyer is also a follower of the concept of “servant leadership”, where he believes that organizations are the most effective when leaders encourage collaboration, trust, foresight, listening and empowerment among his staffs. By flipping the traditional organisational chart upside down, upper managements are at the service of the frontline staffs rather than the opposite.
“But a wonderful thing happens when you flip the traditional organizational chart upside down so that it looks like a V with the boss on the bottom. My job is to serve and support the next layer “above” me so that the people on that layer can then serve and support the next layer “above” them, and so on. Ultimately, our cooks, servers, reservationists, coat checkers, and dishwashers are then in the best possible position to serve our guests. A balanced combination of uncompromising standards and confidence-building reassurance sends a very clear and consistent message to your team: “I believe in you and I want you to win as much as I want to win.” You cannot have a dynamic organization unless you are constantly encouraging people to improve, and believing that they can do it.”
— Danny Meyer
This is awfully similar to Bernie Marcus and Arthur Blank’s “inverted management” at the Home Depot. In fact, they considered themselves at the complete bottom of the pyramid. As such, Home Depot’s main office’s goal is to provide support to the stores and its sales associates who are the key to the success of the company.
“And that is exactly what we say to our people at the Store Support Center. In our inverted management structure, everyone's career depends on how the associates in the stores function. If the people in the Store Support Center or divisional offices don't feel like they are selling a product to customers in the stores, then they are part of a bureaucracy, and they will stymie the stores, not help them.”
— Bernie Marcus & Arthur Blank
Context, Context, Context
“A restaurant is a compendium of choices that the owner has made. If you look around a restaurant, everything represents a choice: the kind of salt shaker that's on the table, the art on the walls, the uniforms on the waiters.”
— Danny Meyer
While it is commonly mentioned that the most important thing for success in the retail industry is to pick the right location to set your shop, Meyer believes that context is a much more significant factor, hence the implementation of his motto “context, context, context”. Meyer explains that “a powerful example is Tiffany’s famous blue box. The box is the context that provides a strong indication of what you can expect to find inside. Whatever is in that box may not be the exact gift you were anticipating, but it must be entirely consistent with your expectations of something that belongs in a Tiffany box. The box enhances the value of the object inside; and conversely, the object inside supports and further defines the meaning of the blue box. That’s not location. That’s context!”
As such, whenever Meyer established new restaurants, rather than opening it in a luxurious neighbourhood, he much preferred opening it in an emerging neighbourhood. In fact, while he was not an expert in real estate, he understood that if he chose a location correctly and if his restaurant could succeed in playing a role in transforming the neighborhood, with a long-term lease locked in at a low rent, he could offer extreme value and excellence to his customers.
“This combination (value and excellence) would attract smart, adventurous, loyal customers, in turn giving other restaurants and businesses the confidence to move into the neighborhood until a critical mass had been reached and the neighborhood itself changed for the better.”
— Danny Meyer
Considering the importance his restaurants could play in improving their neighborhoods, Meyer insisted on investing in the community. As a matter of fact, he believed that a business that understood how powerful it was to create for the community will have a much higher chance of creating wealth for its investors. He once said, “I have yet to see a house lose any of its value when a garden is planted in its front yard. And each time one householder plants a garden, chances are the neighbors will follow suit.” This is no suprise considering that Meyer’s business philosophy puts employees first, guests second, and community third.
“If you have a philosophy that puts employees first, guests second, community third, suppliers fourth, and investors fifth, you implicitly have a long-term perspective—at least as long as your lease. We create restaurants for the long haul, and we make decisions based on that commitment. Every time I’m faced with a decision that involves an investment of money, I analyze the potential return by asking, “Will this yield today dollars, tomorrow dollars, or never dollars?” Only the third alternative—never dollars—is unattractive to me.”
— Danny Meyer
Furthermore, context is also an important theme in terms of finding the restaurant’s concept. As a matter of fact, Meyer compares creating a restaurant to composing music: “there are only so many notes in the scale from which all melodies and harmonies are created. The trick is to put those notes together in a way not heard before.” In fact, whenever he feels an entrepreneurial spark, he always ask himself a series of questions to force himself to examine and challenge the status quo. Each of his questions begin with the following five words: “Who ever wrote the rule…?”
“Who ever wrote the rule, for example, that you shouldn’t be able to enjoy a refined dining experience, with the finest ingredients, served on Limoges china, in a rustic tavern? Or that you can’t serve slow-smoked pulled pork with a glass of champagne or Chianti Classico, just off Park Avenue? Or that you can’t create a classic burger-and-shakes drive-in in New York City, where no one drives? Or that live jazz sounds good only in a late-night club and only if everyone around you is smoking?”
— Danny Meyer
As it is the case with all of his new ventures, the main goal is to draw on the best elements of the classics, make it as authentic as possible based on its present context and try to execute it with excellence. As a matter of fact, Meyer believes that there’s nothing particularly innovative about any single component of Shake Shack. However, once you blend all of these components together, he make it feel original. Here’s how Meyer describes his thought process when opening a new restaurant:
“My ultimate mission for any new restaurant is always to begin with a subject I love, zero in on what I enjoy most about it, and then envision a new context for it. I take something that is already accessible (such as frozen custard) and try to make it better; or I take what’s excellent (a selection of artisanal cheeses or a wine list) and try to present it in a more user-friendly context. I’m never out to invent a new cuisine. Instead, I’m interested in creating a fresh “hybrid” dining experience; and then, like a museum curator, I strive to put a complementary frame around it, find the right wall to hang it on, and aim just the proper lighting on it. The care with which we design our restaurants and the thoughtful way our chefs create the food on our menus are two elements that add significantly to the artistry and the handcrafted feel of a new restaurant.”
— Danny Meyer
Beyond the Book
Watch "S2 E02 | Danny Meyer P2 | Enlightened Hospitality" by The Entrepreneur's Studio
Read "Bias from Liking/Loving: Why We Comply With Those We Love" by Farnam Street
Read "Warren Buffett: The Three Things I Look For in a Person" by Farnam Street