The Exchanges

Q So marry well. Um, one of the interesting things about your universe is you have restaurants like Manhattan that are one-offs and I think probably designed to be one-offs. You have restaurants like Daily Provisions that have expanded but are still, you know, relatively small. And then you have Shake Shack, which is incredible scale and, and scaling. How, how do you Decide which ones are meant to be what?

A Well, that's a great question. Um, That implies that I ever decided Shake Shack was going to be a scaled concept, because I didn't. I won't go into the whole story, um, but it started as a hot dog cart. This was the summer of 2001. We didn't open a second Shake Shack for five years. So getting back to your question, I had my hand on the emergency brake of scaling forever because of the stuff you asked me about earlier. And really the, the thing that Pulled me over the edge to open a second Shake Shack. It's not anything I ever wanted to do was another two things. The first one was that the biggest problem we had with that first Shake Shack was way before there were apps on telephones, you know, where you could cut the line by having an app. And the biggest problem we had was people complained. I'd go there more often, but the line is too damn long.

AI assessment note: “That implies that I ever decided Shake Shack was going to be a scaled concept”

Q each other? Because this is obviously, you know, culture is no longer something that you think of as only as yogurt, but obviously something that as part of a scaling organization, which is really key. But how did you get it so that, okay, it's not just from me, not just from how I'm leading, but how from everyone's treating each other? What were some of the key parts there?

A Well, I'll start by talking about a stumble. Even though I called it a virtuous cycle, I think People really thought I meant take care of each other, which is great, but I think that I failed to say, so that you can take even better care of our guests, so that we'll have even more revenue with which we can do more things for our community, and have better suppliers, so that we'll have more money left over for our investors. I didn't go through all that stuff at the beginning. I think the other thing that I didn't do a great job of at the beginning was making it really clear that it's your job to take great care of each other. I think a number of people, when I said, we come first, made the assumption, what can Danny do for us? And, you know, you can take Romulus and Remus, but there's just, there's not enough milk to go around for all of Rome, ultimately. You gotta, you gotta have the Romans take care of each other. And so, finally, I found an even stronger way to describe it, which was, it's not my job to take great care of you. It's your job to take great care of each other.

AI assessment note: “it's not my job to take great care of you. It's your job”

Q Gold Belly. Um, how, how are you deciding where to, where to make investments to help others on their scaling journey?

A Yeah. Well, so after Shake Shack had its public offering in 2015, um, a couple things happened. That was another thing I wasn't all that excited to do, but I'm really glad we did because it was a wealth creator for people on our, a hundred percent of everyone on our team at that point got a chance to buy stock at the strike price, which was 21 dollars. The first trade happened at 46 dollars. We never, you know, people were retiring mortgages and school loans and Um, you know, car payments. We never, ever could have done that on our own. But I said to myself, this was so great. Could we do it again? And I realized that I'm not smart enough and I don't have enough ideas necessarily to ever do that again. So that's when we came up with the idea of what if we could identify other entrepreneurs who had fantastic ideas we wish we had come up with, but we just hadn't. And And who were leading cultures that we would be proud to associate with Union Square Hospitality Group, um, in terms of being an employee first, caring deeply for the guest experience, caring deeply for their communities and their suppliers, and obviously their investors had to be good businesses, and so we raised a first fund, and then we raised a second fund, and we've got about 26 investments at this point, and I get a chance to be I'm not on any one of the boards, which is great, but I'm at meetings three days a w…

AI assessment note: “identify other entrepreneurs who had fantastic ideas we wish we had come up with”

Q Now for him, please. Um, Danny, we were backstage together. I was watching you, listening to that. What, what did that bring up for you?

A It's actually bringing up a lump in my throat. Truly. I can't believe this is happening right now. Can we go on to a different question? Sure. No, you know, it's, uh, I think I've just composed myself, but, um, first of all, I, I recorded that well before the pandemic. In fact, my voice even sounds younger then, but I think what I was trying to get at is the joy of discovery and how infrequently that happens as you get older. The fact that you get to Taste something for the first time, see something for the first time, smell something, experience something for the first time, and They're still out there. In fact, one of the reasons I love traveling and I just constantly stay curious, um, Audrey and I go to new restaurants all the time, right here in New York or wherever it is we're traveling, but is to get new discoveries. It's just, for me, it's like the greatest joy there is, is to learn something new that you never thought of before. And then, and I'll just share one other thing, because I know you guys think about entrepreneurialism and innovation all the time, but innovation For me is never about inventing something that was never there. It's truly about how many of these discoveries did I store in my taste memory, my heart memory, wherever, and then use that file cabinet and pull out those things and combine them at the right time and maybe freshly, um, you know, in a way…

AI assessment note: “It's actually bringing up a lump in my throat. Truly.”

Q Italy at 12, um, and, and a source of so much inspiration for what you've done in your life and career. Um, you've talked about, um, your, your dad having declared bankruptcy a couple of times in your youth. Um, one might imagine that would be daunting then for someone to go and be an entrepreneur and, and build businesses. Um, what, what, what do you think got you there?

A I don't think I, Never ever considered anything other than being an entrepreneur. That was what I grew up with. I watched my dad doing that, and I loved the creativity aspect of it. I loved that he was a great writer. He always had a fresh idea up his sleeve, and it didn't, it wasn't daunting for me to, to take something that I was obsessively passionate about, which is Going out to restaurants and knowing how I wanted to be treated, and trying to create a restaurant which became Union Square Cafe that, if only it existed, would have been my favorite restaurant. And I, it was really easy for me, and in retrospect, um, It, it just made complete sense. We didn't have any restaurants in New York in 1985 like Union Square Cafe. We had really fancy places, and we had a couple chain places, but we didn't have a place that you could eat really good, like today, there's hundreds of them in New York City, in Brooklyn, you know, where you can eat really good food, and doesn't matter whether you're wearing jeans or, or a coat and tie, um, and they treat you well. It used to be in New York that the restaurants that treated you the worst were the most popular. Bizarre, but true. Um, so, what did, ah, if someone had told me, you know, during the first 10 years of my career, I only had one restaurant. If someone had told me I was gonna one day be on a show called Masters of Scale, I would hav…

AI assessment note: “I don't think I, Never ever considered anything other than being an entrepreneur.”