The Exchanges

Q Square Cafe went down to, like, number three in the Zagat rating from two, and, um, and you were kind of kicking yourself, thinking, oh, this was a mistake, I can't do both things really well, I can only do one thing really well, and now I'm like, I'm taking my eye off the ball at Union Square Cafe, and was that, were you, did you have anxiety about that?

A Oh, boy, did I have anxiety. I was so depressed, but it really forced me to learn to articulate a bunch of things that had perhaps been intuitive before, but that I had never actually been intentional about. The biggest one was that I really, really understood the power of hospitality. For the first time, I understood that hospitality was a completely different thing than service. I think service is a way to describe the technical delivery of the product. Did you do what was expected? Did you get the right food to the right person? And I think hospitality is a very different thing, which is, oh, by the way, how did you make the recipient of your service feel while you're doing it?

AI assessment note: “Oh, boy, did I have anxiety. I was so depressed”

Q these higher-end restaurants, right? But, I mean, Shake Shack is a totally different business model. It's, it's a burger joint, right? There's, there's counter service, you're cooking burgers and fries and making shakes. So, so, I mean, you don't have to buy a Foie gras and have a fancy wine list or do all those other things that, you know, that make 11 Madison Park work as a restaurant, right?

A That's true. There's about 70% of the cost taken out. There's not a, if you look at any Shake Shack, there's not a chef or three sous chefs or a pastry chef or a maitre d' or a reservationist or a florist or a linen company, and I, you know, that's probably only half the cost I'm talking, there's no bartender's If, if you just take out all those costs, but then you continue to give the same level of quality ingredients. You start to have a pretty interesting value proposition, and the old rule of two that we all grew up hearing about, whether it's construction or, you know, certainly fast food, which is, there's only three salient issues, an architect will tell you. Speed, quality, and price. Which two do you want?

AI assessment note: “That's true. There's about 70% of the cost taken out.”

Q No. What explained it? Well, how did you explain it to yourself?

A I think we hit a really lucky point in time, and there was one winter where there was a massive snowstorm, and somebody used Twitter to announce, big snowball fight in Madison Square Park, meet up at blah blah blah, and we heard about this, and we started giving away hot chocolate to everybody for free who was in this snowball fight, and somehow the tech crowd adopted Shake Shack. At that moment. And it became something more than a burger place. It became exactly what it was supposed to be, which was A place that you went to to see people, and, and this was going to be a place that kind of forced you to just slow down a little bit, and to, and to be with people.

AI assessment note: “I think we hit a really lucky point in time, and there was one winter”

Q Now, I think about this, you're like, What, 27 years old? I mean, 14 years must have felt like a, a really long lease. I mean, weren't you scared of making a commitment to a lease for 14 years?

A No, not at all, because I think, I've come to learn that a hallmark of being an entrepreneur is that you are upsided, as in, you can only see up. You don't see what could go wrong, and it just, not only did it never Dawn on me that this thing would fail or could fail, but it almost didn't matter because if it had failed, I was confident that I was not going to spend all the money that I had. And I was also confident that I had nothing to lose, because reputationally nobody had ever heard of me, so who would know or care if it failed? I just had to get it out of my system.

AI assessment note: “No, not at all, because I think, I've come to learn”

Q Where would you advertise? Just like in the classifieds?

A I didn't advertise anywhere. This is an interesting part of the story. Before I went to France, I was taking a wine class at a place called L'Académie du Vin in New York, and there was a person in the class Who I really hit it off with, and every night after the class, the two of us would try to go discover a new restaurant in the city to go eat at. His name was Brian Miller, and he had just left the Hartford Courant as a young journalist. So I'm now in France cooking, and I get a letter one day from Brian, and his letter says, I've got great news. The New York Times has just hired me to become Diner's Journal. I wrote him back, and I said, guess what? I've got really good news. I'm going to be opening a restaurant in New York. And so, I don't want to diminish the role that Brian Miller played in helping me, because he introduced me to some pretty important people in the food world. People like Craig Claiborne, who was really the first restaurant critic in America. People like the top Meat purveyor to all the French restaurants in New York named Marc Serrazan, who knew every chef and sous chef at all the French restaurants in New York, and that was back in the days when You weren't taken seriously as a chef if you were not able to cook in a French restaurant. So he introduces me to a young guy, and his audition with me was the same audition that I think I had given to two other…

AI assessment note: “I didn't advertise anywhere. This is an interesting part of the story.”

Q And did you ever cook in the kitchen?

A I cooked in the kitchen, I think, a total of three times. One of which... It was disastrous. It was the first Thanksgiving we were open, and by this point, the chef and the sous chef had fallen in love, and we were not very busy, and when the sous chef said that she wanted to take the chef back home to meet her parents, I said, that's fine, because as far as I was concerned, the restaurant was not going to be busy on the Friday night after Thanksgiving, and so I had my Brooks Brothers suit and red tie on with a white shirt, And, um, the kitchen went down. Everybody in the dining room was begging for their food. Where is it? Where's my appetizer? Where's my salad? Where's my bowl of soup? We couldn't even ladle soup. We were so far behind. So I threw on kitchen whites over my suit, and I started trying to help the kitchen dig out of all of this mess that we were in. And the next thing I hear from one of our servers is, Danny, I need you in the dining room right now because there's a gentleman who's had too much to drink. He's walking around the dining room with a tie tied around his forehead, and he's complaining that we don't have baked potatoes on the menu.

AI assessment note: “I cooked in the kitchen, I think, a total of three times.”

Q Wow. And, and this was going to be a hot dog stand, or did you say, let's make this something different?

A Yeah, so I, I said, we gotta start with hot dogs, and I just sat down one day, just scribbled on a piece of paper the menu, and the menu I scribbled that day is kind of 95% what we serve at Shake Shack to this day, and it was basically just going into my own memory bank from growing up in St. Louis. All the things that I used to love doing, you know, as soon as you got your driver's license at the age of 16, the whole point was to get out of the house and, and be with your friends, and the, the safest place to do that was a parking lot, and it was usually a parking lot connected to a burger joint, and New York didn't have a, a, people don't have cars, kids don't have cars, so there's not that culture, but we do have parks, and I said, what if we could do for this park what parking lots always did for us and have a place that people could come together So on the menu, joining the hot dogs would be the same kind of burgers I had loved growing up, the same kind of shakes I had known growing up, and we just added, you know, crinkle cut fries, which I had loved growing up.

AI assessment note: “So on the menu, joining the hot dogs would be the same kind of burgers”

Q of pandemic shut everybody in, and we, we was still uncertain what was going to happen. You really were the first kind of major restaurateur, um, to decide to shut down all of your restaurants immediately, and you had to let go, I think, thousands of people. Um, tell me, how did you guys come to that decision? I mean, I'm sure it was Agonizing. Walk me through what happened.

A Yeah, the, the every day has been agonizing. Every day for the last 11 and a half weeks has been agonizing because you're alternatively in reaction mode to something that you've never faced before. It was clear really quickly that Well, we, we had no idea how long this was going to last. As a matter of fact, uh, when you and I last spoke, it was the first day of spring break for our kids in college, et cetera, and we were pretty sure that they might go back to school. We weren't, you know, we, we just didn't know how long this was going to be. And, uh, I think there was a really pivotal day in very early April where one of our former colleagues, a beloved chef by the name of Floyd Cardoz passed away from COVID. And it was about then, or even maybe right before that, that I said, look, as much as we want to pay all these employees of ours We can't. We're gonna, we're gonna run out of money, and then where will, where will we be? We will, we will not be around when this is over. We won't be able to get back to being good employers, and that's when we shifted into this whole mindset of, okay, if we cannot be good employers right now, how can we possibly recast ourselves as being really good unemployers? And we started making a whole host of decisions. Uh, the first one was pretty easy for me, and that was that we would Set up an employee relief fund. I gave a hundred percent of my…

AI assessment note: “as much as we want to pay all these employees of ours We can't.”

Q So you started to kind of piece together a team. But you were kind of collecting names and meeting people who you knew, I guess, down the road could help you build this restaurant. Is that, is that right?

A You're, you're absolutely right. And, um, I had a vision for what I wanted to do, and it was a weird vision. The vision was to open a restaurant that you couldn't necessarily put your thumb on, and that was different. You had Italian restaurants, you had French restaurants, you had American restaurants, but you didn't have eclectic restaurants. You didn't have a restaurant that had a little bit of Rome with a little bit of Tuscany with a little bit of Lyon with a little bit of Bordeaux with, you know. With a little bit of San Francisco, I might add, and, and so when Union Square Cafe opened, even though we had absolutely no idea what we were doing, and we made mistakes left and right, and it was a different kind of restaurant, and, and it worked.

AI assessment note: “You're, you're absolutely right. And, um, I had a vision”