Restaurateur Danny Meyer, CEO of Union Square Hospitality Group, founder of Shake Shack and one of Time Magazine’s 100 Most Influential People of 2015, sat down for an interview with Food Marketing Institute President and CEO Leslie Sarasin at this year’s FMI Midwinter Executive Conference in Miami Beach. During their discussion of “The Future of Food,” Meyer revealed where he thinks the food industry is headed and how both restaurateurs and supermarkets providing foodservice can continue to meet ever-changing consumer demands.
Food Creates Opportunities for a Personal Touch
Although Meyer works in the restaurant business, he explains that grocery stores and restaurants have one important thing in common: an emotional connection with food and customers.
“In my own profession, I get, to this day, enormous joy out of watching people eating the food we’ve prepared. And I think a lot of that has to do with what I think any good professional should do, which is it all comes down to love. We’re all in the same business, which is if you don’t think food is love just go back to the first five minutes we were all born and the provision of food came with a hug and with eye contact, and it’s what we’re looking for all the time. So when you see that connection people have with what you actually prepared for them, it’s magical. I go to supermarkets and watch the transaction where the butcher or the deli man is actually handing the food that someone just ordered, and you can see a love connection and then you say there’s magic happening. If it just looks like a transaction, which is ‘Next!,’ here’s my ticket, give me my food, it’s probably not going to go anywhere.”
Good News and Bad News for Food Industry’s Future
Technology is changing the world of foodservice rapidly. With the advent of smartphones and food delivery services that can be engaged with at the touch of a button, brick-and-mortar restaurants and grocery stores are facing more competition—and more nimble competition—than ever. Although these new service models present challenges to traditional foodservice, competing against technology and startups gives brick-and-mortar stores a chance to shine through above-and-beyond service and personable employees.
“The population is getting bigger; people are continuing to want to eat. So what’s changing? What we see more than anything is what I call the pleasure/value quotient, and the numerator is how good is that food?…So the numerator of this quotient is pleasure; the food has to be good food; it has to make you feel good, it has to feel like somebody cared, put some thought behind it. The denominator is always time, price and trouble. The bigger the denominator, the bigger the time it takes, the more it costs and the more trouble it’s causing in my life, where I’m trying to have less trouble, not more trouble, trying to have more time and trying to have more money, that is what were are trying to do—always trying to increase the numerator and trying to decrease the denominator on that equation. The people who are challenging all of us are people who are finding ways to make that equation more top-heavy and more bottom-light…
“Everyone has a smartphone and it has become your remote control to everything you want in life. To the degree that I can take that out and presto, get a meal delivered to my office or to my home, that’s a challenge. That’s a challenge to your industry, that’s a challenge to my industry, because I have spent a lot of money to create a beautiful environment in a restaurant with a 20-year lease, and I may not even make my money back for eight years. And if some guy can set up shop in a warehouse with a tiny, tiny rent and you can just push your button and have that meal delivered wherever and not have to come to one of my offices or one of your supermarkets, that’s a new way of doing business and we are going to have to confront that.”
Hope for brick-and-mortar lies in hospitality
“I’m not really great with the ‘hot’ new things…I’m big on the old thing, which is hospitality. It’s the one thing that human beings will never stop craving—how did you make them feel?…What we try to do, and I think what you do at your best as well, is we try to become essential in people’s lives, meaning that the very fact that we exist made someone’s life better, whether someone works for us or whether it’s someone who does business with us.”
Good Service and Hospitality Aren’t the Same Thing
Good service isn’t what sets foodservice operators apart from new delivery startups or from brick-and-mortar competitors. It’s what operators and employees do to exceed customer expectations that differentiates them from the rest, according to Meyer.
“I grew up, you all grew up, hearing that service is the crucial win-all in business. What dawned on me is that service is a subset of performance, and service is a fantastically important thing. Service is a way to describe did you do what you were supposed to do? In my business, it’s did we get the right food to the right person at the right table at the right temperature at the right time, and did we get your coat back and did we seat you on time for your reservation and all that kind of stuff… Service is like air conditioning. No one raves about it when it works, but everyone complains about it when it doesn’t work. So we think service lives in the category called performance. We want to get 100 on our test; the most points we can get for doing everything we’re supposed to do perfectly is 49. Can you imagine getting a failing grade of 49 if you did everything perfectly? But that leaves this whole amazing avenue for 51 points, which is hospitality…
“Hospitality has nothing to do with what I expected you to do; it has everything to do with what you did over and beyond that—what kind of thoughtful things did you do for me? Hospitality always exists when the preposition “for” is present. If I seat you on time and if you’re the one who ordered the salmon medium rare and I got the right dish to you, did I do something for you? No, I did what you expected. On the other hand, if you’re back next week and I remembered that you like your salmon medium rare, now I’m starting to act from my heart, and thoughtful means thinking and feeling—now we’re in the realm of hospitality.”
Your Hospitality Can’t Be Plagiarized
With the changing landscape of retail formats and customer demands, hospitality is the only offering that is never going to change and, most importantly, that no competitor can copy from you, says Meyer.
“Everybody walking around with a smartphone also is walking around with a camera and they’re walking around with a transmittal system. So the opportunities to plagiarize every good idea we have—and I do it all the time myself—if I have a great menu item, I’m taking a picture of it and will send it to the chef or send this flower arrangement to our florist. Or this wine decanter to our wine director. The shelf life of innovation is about two seconds today, but you cannot take a picture and plagiarize how I made you feel. So the realm of hospitality becomes our greatest competitive advantage, if we want to drive a wedge between us and some upstart that is much more transactional.”
Employee Satisfaction Should Always Be Your No. 1 Priority
Contrary to popular wisdom, Meyer doesn’t put the customer first at his restaurants. In order to take the best care of his customers and to provide them with true hospitality, it is essential that employee well-being is put above all else, he told conference attendees.
“We actually put our customers second. We put our employees first. We all have the exact same five stakeholders, and one of the fun things is, as a business person, you get to determine in which order you prioritize your stakeholders. We do something we call the virtuous cycle in hospitality. We want to have the happiest possible customers, just like you do. We want our investors to make the most possible money… So the virtuous cycle we try to create is we put our employees first. Why? Because we don’t think our customers will ever be happier than our employees are.
“So the way we put this to work is something we didn’t invent but it’s good, old-fashioned servant leadership, which is to invert the org chart, believing in gravity. So I’m the guy at the very bottom, and when I go to work every day, yes, it’s my job to say this is what matters to us, and we talk about this hospitality culture. The minute you’re hired we tell you, do you want to work in a company where 49 percent of your bonus is going to be based on how well you do your job? You went to the Culinary Institute of America to become the best possible poissonier, and the most you can possibly earn as a bonus is 49 percent if you make that fish perfect every time. Fifty-one percent of your bonus is going to come from how did you make your co-employees, how did you make our customers feel, how did you take care of our community, how did you take care of our suppliers? And then, we believe, in that virtuous cycle, that’s the way to make the most money in a sustained way for our investors.
Embracing Old-Fashioned Hospitality Doesn’t Mean Ignoring Technology
Although grocers and restaurateurs can set themselves apart from startups based on new technology by prioritizing friendly, personalized service, business owners still need to recognize when advances in tech can enhance their offerings.
“You also have to realize that just as I did years ago when we took OpenTable, which is online reservations, and I did not want to give up what I considered to be one of our greatest assets, which is really friendly reservationists. Why would I want to give that up to somebody making their reservation, then on a computer and now on a handheld? And one of my business partners said, ‘Well, guess what, Mr. Hospitality? What if somebody doesn’t want to pick up the phone and call? How are you on their side if you’re preventing them from making a reservation the way they want to?’”
For grocers, this means embracing delivery
“I’ve never used Blue Apron, but I understand why it’s working. If I’m starved for time and not only can I get the ingredients for a meal delivered to my home but they’ve already been prepped and I’m not wasting food, that makes sense to me. But guess what? I’ve seen many supermarkets that have a section where you have actually prepped the food, and you can do that just as well. But you can do something Blue Apron can’t do…I don’t know who delivers the food for Blue Apron but I do probably know the person in your store that I am going to have eye contact and a smile with who is going to remember me and is going to remember what I got last time and that is going to feel good. That’s part of increasing the numerator, which is the pleasure part of it.
“As far as the time is concerned, I guess you can get into the delivery business just like anybody else can. How is it that in New York City I can push a button and have a meal delivered by Uber within 10 minutes? I’m sure you can do the exact same thing and do it better than anybody else because you have the supply sources, and you can farm out the delivery part as well. The good news is the whole delivery business for food is blowing up right now.”
Responsible Sourcing Also Has Its Place in Hospitality
When it comes to changes in the food industry, technology isn’t the only disrupting factor. From GMOs to antibiotics to locally sourced products, consumers are increasingly demanding to know how and where their food is being produced. Although this can pose some challenges to foodservice operators, reassuring customers that their food meets all their expectations only enhances their experience.
“It’s not fun to be on the receiving end of petitions saying why aren’t all of your eggs cage-free—stuff you guys probably hear about all the time. You have to acknowledge that that has actually impacted the supply chain. In fact, there is more poultry and there are more meat products and non-GMO foods being raised… We’re using non-GMO buns here in America. It takes time to get the supply chain to work out, but consumers, activists, the press…I can tell you from personal experience it’s not fun to be on the receiving end of threats…but I will tell you that ultimately it does impact change. Not just for me but for our suppliers…
“I truly believe that pleasure is what drives consumer behavior, and I think if we can be responsible producers of pleasure—I don’t mean I’m going to create pleasure by processing so much salt and sugar…—but if we can produce pleasure that is responsible, that is going to drive more consumer behavior than anything. And that gets back to hospitality because that’s where real pleasure lives.”
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