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Food & Drink Danny Meyer Is No Longer CEO of His Influential Restaurant Group

08:20  03 august  2022
08:20  03 august  2022 Source:   bonappetit.com

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  Danny Meyer Is No Longer CEO of His Influential Restaurant Group © George Rose/Getty

Danny Meyer, one of the most influential restaurateurs in modern dining, is stepping down as CEO of Union Square Hospitality Group (USHG). It’s a big deal: Meyer founded the New York-based company nearly 40 years ago, and in that time the success of his businesses, such as Gramercy Tavern and Shake Shack, has shaped a lot of the norms in the hospitality industry. His “employees first” and “enlightened hospitality” mantras influenced how a generation of restaurateurs talked to (and about) their staff, while his book, Setting the Table, became a bible for many in the industry. Since then, critics have called into question how much influence he should have had all along—but the fact remains that for years, Meyer and USHG were considered a gold standard for how to run restaurants. By many, they still are.

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Current president and chief operating officer Chip Wade will take over on September 6. Before joining USHG in 2019, he was the executive vice president of operations at Red Lobster and the senior vice president at its former parent company, Darden Restaurants. This doesn’t mark the end of Meyer’s influence in the food world though: The restaurateur will remain involved at USHG to help craft new restaurants. He’s also still the board chairman of Shake Shack, which is a separate company, and a partner at Enlightened Hospitality Investments, which backs businesses such as Salt & Straw and Goldbelly.

As the chef steps away from the day to day of running his group of thirteen distinct USHG restaurant concepts, here’s a look back at some of the most notable aspects of Meyer’s career as CEO of USHG, and some predictions for what he may do next.

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Union Square Cafe played a notable role in New York restaurants’ use of seasonal ingredients.

In 1985, a then-27-year-old Meyer opened Union Square Cafe in New York City, and the restaurant eventually became a dining institution. Its American- and Italian-influenced menu was shaped by the availability of produce from the nearby Union Square Greenmarket, which has since become foundational to New York’s dining scene. Its service was also congenial, a hallmark of Meyer’s style that’s been copied by restaurateurs across the country.

Union Square Cafe’s popularity paved the way for the whole Meyer empire. In standard New York fashion, the original location closed due to a rent hike. It reopened a few blocks away in 2016, and by then, the company had other favorites like Gramercy Tavern, Marta, Maialino, and The Modern.

Meyer prioritized working conditions at USHG restaurants, and influenced others to follow suit.

Throughout his long career, Meyer strived to make USHG a haven for employees in an industry known for its long hours, low wages, and at times abusive dynamics. He famously operated from the perspective that if you put your employees first, the customers will follow.

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In 2015, Meyer introduced a “Hospitality Included” policy, which eliminated tipping from all USHG restaurants. The move was intended to create more wage equity between servers, who received gratuity, and the kitchen staffers, who didn’t. (In New York and Washington DC, where USHG operates, labor laws dictate that tips are limited to workers who spend the majority of their time interacting with customers.) To ensure the policy was viable, Meyer increased menu prices, wages, and introduced employee benefits—like family and parental leave policies, ESL classes, and a 401k matching program. Though he wasn’t the first to nix restaurant tips, the USHG news caused tidal waves in the industry and sparked a national anti-gratuity movement, with David Chang, Tom Colicchio, Andrew Tarlow, and others following suit. The thinking, it seemed, was that if someone with as many employees as Meyer could successfully make the shift, surely anyone could.

For most restaurants influenced by USHG, the no-tipping experiment didn’t last long. And by summer 2020, despite many Americans agreeing that the entire practice of tipping is immoral, gratuity won out. Meyer ended the no-tipping policy at his own restaurants.

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Meyer’s initial move away from tipping challenged age-old U.S. hospitality norms, but it didn’t stand up to the pandemic, when labor shortages, layoffs, and closures hit restaurants across the country. The recent return to tipping at USHG comes with some conditions: Company revenue is shared with kitchen staff, base salaries increased by an average of 25% across full-service restaurants, and the company promised to lobby state and federal lawmakers for policy changes to legalize tip-sharing.

Despite Meyer’s reputation for benevolent leadership, a 2018 Eater report detailed various staff allegations of what they believed were human resources failures. The claims against the company included protecting people who behaved inappropriately towards their colleagues, and feeling like serious complaints of aggression and sexual harassment weren’t taken seriously.

Meyer’s landmark book, Setting the Table, inspired the business world and altered perceptions of hospitality and labor—for better and worse.

The restaurateur published his New York Times best selling instructional manual in 2006. It’s packed with lessons Meyer learned while opening restaurants and developing the book’s central philosophy: “enlightened hospitality,” which later became the name of his investment fund. The tenets emphasize extending as much care to employees as you would a customer; delineating service (merely about the delivery of a product) from exceptional hospitality (influencing how the recipient of said product feels); practicing patience and gentle leadership; and hiring employees with high emotional intelligence. The book became a guide for many restaurateurs fed up with the status quo. It also reshaped public opinion of hospitality work from menial to valuable, skilled, and glamorous.

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Since then, Meyer’s ideologies have come under fire. The book has been criticized for validating the kinds of hyper-entitled, post-pandemic customers from hell; the ones accused of rude, aggressive, and verbally abusive behavior towards restaurant staff. At a time when hospitality workers bore the brunt of job insecurity and financial turmoil, a book appearing to promote zealous worker generosity without acknowledging the personal cost, seemed somewhat tone deaf and out of touch. But while aspects of his successful book may not have aged well, Meyer’s advice lives on—it’s quoted in business listicles almost to the point of memeification.

The Shake Shack success story forged a whole new dining category.

Like the Midas of the restaurant business, everything Meyer touches seems to turn to gold. But none more than his uber successful chain of burger-and-fry joints, Shake Shack. What was just a Madison Square Park hot dog stand in 2001 has since exploded into a publicly traded company with 250 locations worldwide, beloved for better-than-average stadium fare. It’s a $2.1 billion success story built on a model that’s been nebulously defined as “fine casual”: a category that includes low-key counter service joints that features the kind of elevated food and carefully sourced ingredients you might find in a full-service restaurant.

Regardless of what you want to call it, Shack Shack inspired a trend towards these hybridized spots—which are often helmed by chefs and culinary directors with fine dining backgrounds. Meyer’s impact is everywhere. The East Coast’s Dig restaurants serve takeout containers of seasonal, vegetable-forward new American food to corporate workers. Dig also has a farm, special menu collaboration with Jetblue, and two separate restaurants: 232 Bleecker and Dig on 4th. (Meyer’s investment fund, Enlightened Hospitality, invested in Dig in 2019.) Lauded, national salad brand Sweetgreen prides itself on serving expensive locally grown lettuces sourced directly from growers. The “fine casual” category feels like it’s only just getting started.

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Danny Meyer, one of the food world’s next big investors?

When Wade started at USHG, the plan was always for him to take over, according to the company. So what’s next for Meyer? The writing has been on the wall for a while now: He’ll probably be making more money in food, for more people.

Since it launched in 2016, the Enlightened Hospitality fund has been ramping up its investments, with plans to expand many notable food and food tech companies. It’s put millions into businesses like taco chain Tacombi, coffee company Joe, reservations app Resy, and chickpea pasta company Banza. The fund’s growth and Meyer’s continued involvement suggests that his taste and expertise will now be geared toward growing companies other than his own.

The fit is almost too obvious. Though Meyer made his name in fine dining, his real big splash (and cash) comes from Shake Shack. The burger chain is still expanding. With all the ways Meyer’s influenced the restaurant world, is it any surprise that people are willing to give him their money to invest in hopes of building the next Shake Shack?

That’s all to say—this is certainly not where Meyer’s imprint on the food world ends.

Disclosure: Ali Francis previously worked for Dig.

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