How Danny Meyer Built His Global Restaurant Empire

Danny Meyer

Photo: Business Insider

Danny Meyer has built one of the most successful and respected restaurant groups in the world. The New York Times calls him “the greatest restaurateur Manhattan has ever seen.” His Union Square Hospitality Group runs everything from fine dining restaurants like the Gramercy Tavern to the enormously popular and rapidly-expanding Shake Shack.He built his empire by focusing intensely on the diner’s experience and hospitality. For example, stiff formality is not particularly enjoyable, Meyer found. So even his fine dining restaurants are about the food and being hospitable, not decor or grandiosity. That friendly experience is just as intensely managed and thought out as a stiff and choreographed classic service might be.

Both that attitude, and the frozen custard at Shake Shack, were inspired by Meyer’s St. Louis upbringing. “While I was growing up, wherever there was genuine, warm hospitality, there was not cutting-edge food. And wherever there was cutting-edge food, there was not the warm hospitality,” Meyer said in an interview with the St. Louis Beacon. “So I think I was in a unique situation to marry those two things for New Yorkers. Maybe that is what one of my contributions has been.”

His father owned hotels, and taught him those notions of hospitality, and introduced him to the food world. “My dad gave me the gene to enjoy cooking, and to enjoy consuming good food and wine,” Meyer told The New York Times.

However, his father overextended himself in his own business life, expanding to own two hotels overseas, and ended up going bankrupt at the age of 42. 

Meyer has tried to never make that mistake, putting an incredible amount of time into each restaurant to make sure it would meet his high standards, and that the business side of things was always on rock-solid ground. He opened his first restaurant, Union Square Cafe, in 1985 with his own savings, and took four years to open his next one, Gramercy Tavern. He’s made sure every restaurant is completely unique, and part of its community.

He’s also had to realise his own limitations. Meyer spent one night trying to work the line at his first restaurant, and the night went just about as badly as it possibly could. 

He told Business Insider that he had given the chef the night off the night before Thanksgiving, expecting a slow night. It ended up being the busiest night the restaurant ever had, so Meyer put on chef’s whites over his suit, without having eaten all day. It was the worst night of service we ever had,” Meyer said, “the tickets were backed up in the kitchen, my red tie was bleeding all over the shirt, I was about to faint.”

He ended up getting into a confrontation with a drunk customer, having a punch thrown at him, and punching back. “That was the last night I cooked on the line,” Meyer said.

Since then, he’s stuck to his area of expertise, managing the experience and growth of his empire. The focus and measured growth remained constant as Union Square Hospitality Group grew into an organisation with thousands of employees and more than 20 restaurants. 

But he’s encountered some resistance. Meyer had to close Tabla, a fine dining Indian restaurant, which he described as “excruciatingly hard.” He avoided the decision as long as possible, holding off for years when he probably should have already closed it, and laid people off for the first time.

But he’s still proud of the restaurant, and learned from his mistakes with it. He told Business Insider that the real story of the restaurant, which he “still misses and loves,” was that they were able to to keep an “improbable restaurant” alive for 12 years.

“It was too big. If there was any one lesson, I would not in the future take a concept which is the most narrowly focused and give it the biggest stage,” Meyer said. “It was our biggest restaurant in terms of seats and Indian food is not the most expansive and accessible concept. I would do it again in a heartbeat, but I’d do it in a smaller space.”  

Since then, Meyer’s strategy has paid off. He did not open a second Shake Shack location for over five years after the first one opened, despite the incredible popularity of the first branch, which routinely saw hour-long waits. That’s glacial growth for a fast food chain.

That’s because Meyer and his company insist that everything is right before expanding, and that even though it’s a place to get a burger in fries, that every Shake Shack is unique to its community, and firmly set up for success. 

The expansion’s more rapid now, but that doesn’t mean it’s any less thoughtful. A new Shake Shack will only open if these three criteria are met, Shake Shack CEO Randy Garutti told us:

  • “We believe all the other shacks will be better in the process of opening another one. If there is ever a moment when we say because we’re opening more the other ones will get worse, that just won’t happen”
  • “When we have communities that are excited and are asking for a Shake Shack.”
  • “We have developed the leadership that can continue to grow and run that restaurant as well as every other Shake Shack. So we don’t want growth to out pace out ability to get better every day.”

Garutti says the lessons Meyer he learned from his father and his early struggles are embedded in the whole organisation. “You know what quote I use when I talk to our team, that’s a good one for us? ‘The bigger we get, the smaller we need to act,'” he explains.”What that means is, you know, a lot of companies when they grow and keep growing they just act bigger and they forget how they used to act when they had one restaurant. Now for us, the bigger we get, the smaller we need to act. So when we make a decision we ask ourselves: ‘OK, that’s a good decision. But would we make the same one if we only had one restaurant?’ And we challenge every growth decision by that.”

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