How can the restaurant industry get back to business?

with the strangers around you. At the end, happy and full, you make your way through the lingering crowd, only stopping to give a little hug to someone you haven't seen in a while before heading back out into the night air. It's not easy right to picture that. In our coronavirus social distancing world, imagining that crowded intimate scene is enough to send a shiver down your spine as you're parrelling your hands, which is exactly why the restaurant industry has

become one of the hardest hit by the pandemic. So far, more than eight million restaurant employees have been laid off, and by the end of April, the industry had lost more than eighty billion dollars in sales. But restaurant tour Danny Meyer says that's not all that's been lost. Restaurants play such an important part in the emotional fabric of

this country. The month of May, we have graduations, we have weddings, and all these things that just feel good to people to celebrate and where food plays a role, just aren't happening right now. As we continue to explore what life will look like once we begin to get back to some sort of normal, I'll be turning to business leaders and entrepreneurs to find out how they see

their industries re emerging. And so today a conversation with Danny Meyer and shake Shack CEO Randy Garuti to explore my next question, how will the restaurant industry get back

to business. Danny Meyer, who founded shake Shack, is also head of one of the country's most prestigious restaurant companies, the Union Square Hospitality Group, which owns and operates restaurants and event businesses in Las Vegas, Washington, d C. And New York, including the famous Union Square Cafe, which he opened in ninet But on March eighteenth, he had to lay off two thousand employees, about of the company's total staff, due to a near complete elimination of revenue. Danny described

that day as the most difficult of his life. Here's what he told his employees in a video message. We have laid off more people today then we probably hired in the first years we've in business. I can't believe those words have just come out of my mouth. And we're doing so because we want to be here with you. We want to be back in business when that gay comes, which we can all visualize, when our restaurants and bars and jazz books and events and ballparks and museums are

back to doing business as normal. Can you tell us a little bit about the process of making that decision? I understood, and I still understand that this is not the thing that's going to end the world. It just isn't. And unless you disagree with me, and then you say, all right, if that's the case, it's going to be over at a certain point. And when it's over, the question will be who were you during the time and

what decisions did you make? Often incredibly distasteful and unpleasant decisions, But what decisions did you during that time that will set you up best two re emerge even stronger than you went into this thing. The reason that was such an incredibly tough day, and by the way, in my company, Union Square Hospitality Group, there have been two of those days, because there came a point when we really really hoped we could get back into business sooner and create some

revenue sooner. And once we realize that New York at that point was only getting more and more dangerous, we actually had to go through a second round of cuts, which I deeply hope is the last time we will ever have to do that. But on on the date you just said we had employees at Union Square Hospitality Group,

today we have seventy. And once we made that decision, which is that the only responsible thing to do if you truly care about people, is to set yourself up to be able to re employ them when it's safe to do so, then you have to make sure that your business doesn't go out of business. It was almost a business version of chemotherapy, because in order to survive, you had to do something that almost kills you in the meantime, and at this point, the best thing we

can do is stay alive. The second thing is stay safe, and the third thing is stay connected. And we've been trying like crazy to just keep those three things in our mind in the belief that when we do those things, we will be in a position to do the next three things. And the next three things are hopefully benefit from some advances in science, whether it be testing or

medication or ultimately a vaccine. So science um. And then secondly to UH to hopefully create the type of safety structures so that people gradually feel safer uh actually and emotionally to come back to work and to go out to eating in And if we can do those things, I really trust will be will be okay. On the other end, in the meantime, Danny is donating his own salary and the pay cuts from his executive staff to an employee relief fund set up for laid off workers.

He says he hopes to rehire all those who are let go as soon as possible, but to get to that point safely, his restaurants, if not the industry as a whole, will have to change, at least for now. I would say that what we're going through right now is probably the greatest experiment in leadership agility that this planet has ever seen. Every day requires each of us,

in in every leadership role, to pivot. There's generally a spirit of collegiality, and everybody is really trying to figure out the same kind of answers, which is, what the hell do we do right now? And you know, what are the kinds of things that we can do safely to bring our team back as quickly as possible. I'm

not talking primarily about full service restaurants. I'm talking about the kind of restaurants where you've got a host in a maitre d and bartenders and you've got so many as pouring wine and they don't know how to pour wine from six ft away without throwing the wine into somebody's glass. And you talk about waiters and waitresses. His job it is to clear tables and touch people's glasses

and touch people's napkins while they're clearing them. And you talk about co checking and getting a cod check and handing your coat to someone else, and you know, giving your credit card to somebody when you don't want anyone to touch your credit card. The best judgment I have is that once there's a vaccine, you'll start to see

a lot more people coming back. They'll probably start with being younger people, because let's face it, younger people statistically and emotionally have felt a little bit less endangered than people who are, let's say, north of sixty years old, and and we'll be we'll be adjusting and making those adjustments as well to make it feel as safe as

we possibly can. The sad thing, though, is that, unlike after nine eleven, where there was pre existing technology of metal detectors that just needed to be deployed at office buildings and ballparks and Disneyland and obviously at airports, there is no virus detector that we have so far, and so it's going to take a while before the public

at large feel safe congregated. And the other thing I'll say is this another great advantage that I feel very happy about for shake Shack is that shake Shack is now proving that you can have no tables in your dining room, which is the case today, and you can still create revenue. If you ask a full service restaurant two make money with fift of their tables removed, because

that's the safety protocol. Not only will it not feel great in there, but the restaurant is actually going to be at a financial disadvantage relative to just being closed. So what do you do about that? Danny? I mean that sounds pretty bleak. It is bleak, except that it gets back to this question of agility. And I think that the great leaders of this minute, the future is now, it's it's not tomorrow, and it's not six months from now. The great leaders are going to say, I need to

create a new business scenario. And the reason I'm on this team is that my leaders believe that I am emotionally and intellectually agile enough to to work and come up with a new business scenario. The kind of people who say that's not how we do it around here are not going to succeed in this environment at all. So in our industry, the obvious two things people are talking about in the full service business our delivery and

pick up. And I'm challenging our teams at Union Square Hospitality Group every single day to ask yourself, what does that word delivery mean? All right? Does it have to mean all of the big delivery aggregators where the person picking up the food is someone who's never been to your restaurant and the apartment that they're delivering to is

someone they don't know? What if? What if? Delivery for Union Square Hospitality Group meant something much more akin to house calls like we used to get in the old days from doctors. What if we could take a big city and make it smaller, and what if the person who delivered your food is someone who we rehired. Maybe it's a cook, maybe it's a waiter, and maybe they

have a personal connection. What if delivery was a tight zone just like it like it used to be in the old days, where we're actually we're building hospitality experiences and relationships even though we're not creating the greatest you know, distance for all of our delivery. Now that's a different thing that we face. I think shake Shacks doing exactly the right thing to make a shock Burger available on

any platform that exists. When you talk Danny to just as a follow up to some of your friends in the restaurant business, I mean, what are some of the most innovative, interesting ideas that you've heard, uh to to fill out this time period between now and a vaccine or now when when things will feel kind of back

to normal hopefully. Well, we're seeing a lot of exciting things. Um. One of the ones that I like the most is the notion of restaurants creating a subscription model where every Thursday or every you know, pick a day of the week. You could pick your favorite seven restaurants, you pick your

favorite fifty restaurants. But you can subscribe that on a given day of the week, that restaurant will deliver to you either a market basket of ingredients with recipes with which you can cook, you can get on FaceTime with the chef, and you know, get personalized instructions. You trust how Grammercy Tavern sources its fish or its meat, which or it's vegetables, which helps all of our suppliers, which is a really important thing. So I love that model.

I also love the model which says, um, tell us, how many people are going to be sitting at your family table on Tuesday night, and and we're going to cook for you, and and this is what it is. Restaurants do not need to have the same experience. You know, if if Katie, if if you and Muellner, and Autrey and I went out to dinner, the four of us would invariably order four different appetizers and four different main courses. We'd all want to have the experience of trying a

little bit of this and that. That's different right now, I think family meal means the restaurant now has the opportunity to pare down its offerings, which it's going to need to do to be profitable, and just say, trust us, you know you love this restaurant. We're doing roast chicken on Tuesday night. Would you guys like that for your family of six or whatever? So I love that kind

of thing. I also love UM. Something that we've been doing at Union Square Hospitality Group is we've been conducting online auctions and we've been contributing all the money to our to our Hugs fund UM and we're finding experiences are selling. We're finding that wine is selling in interesting ways because now we're able to to sell wine off premise, which we were not able to do before this. So what's great is some of these things are gonna stick

even after this is over. And I think that that if we add those to our pre existing business model, we could we could emerge from this in a much stronger place even than we went into it. But we're

gonna have to be patient. When we come back, we'll talk with Danny Meyer and Shake Shack CEO Randy Garudi about that ten million dollars small business loan in two thousand one, shake Shack was nothing more than a hot dog cart inside Madison Square Park in New York City, but by two thousand four Danny Meyer opened its first permanent location inside that same park and expanded the menu

to include its signature burgers, fries, and shakes. By two thousand fifteen, Shake Shack was a national chain and a publicly traded company with hundreds of locations around the country

and the world. After COVID hit, some shake Shacks closed, particularly the international spots and airport locations, but a lot of them have been able to stay in, which has required some major flexibility on the part of CEO Randy Garudi, and he says the leadership of his national teams we have watched literally um not our executive team pushed down, although we have said the standards of safety, we need to stay open so that we can employ our team. Here's how we're going to take care of our team.

But you tell us how and I have just just blown away every day and you're following it on people's Instagrams then posting shape Jack turning into a drive through, Katie. We've never had a drive through. We don't have a drive through, but we've got, I don't know, fortify them around the country right now that our teams just figured

out how to do. We figured out how to sell Hamburgers to your front door, delivered via FedEx with a new partner um and constantly thinking about how do we work six ft away from each other, how do we keep delivery drivers safe and away from each other, which is a great challenge, and yet how do we slowly build back these sales. There's some shake Shacks that today, in the last couple of weeks have actually done more sales than they did last year during this time. That

blows my mind. And it's only because of the entrepreneurial spirit of this team. Uh, they gotta keep going. They're gonna keep defining how we're going to get out of this and and that's the most exciting thing. And that's where on the other side of this, we've already started

saying we're gonna think about shake Shacks differently. We're gonna be that community gathering place more than we've ever been, because without question, I believe humans need to gather with humans and as soon as we're allowed at some level, we're gonna do it. And Shake Shack is going to be a place they choose. But in the meantime, we've got to be more convenient, we've got to be safer, and no matter how you want it, we've got to provide that our team is going to be the ones

to answer that, and they're doing that now. You know, I don't want to get too in the weeds with this, but I know you had some pushback on social media Danny when well, when we I don't know who wants to take this or Randy, when shake Shack received a ten million dollar P P P loan which has since been returned. You said, Danny that you understand the frustration, but you believe that the criticism was was really misdirected. Danny, mind if I take that too, because I don't mind

at all. I'll look, I'll start Katie. We had, as every government opportunity has been presented, the p p P loans immediately to us became an opportunity to keep more of our team employed for a longer period. Uh No one during that time imagined that the very small businesses who was intended for would not be able to be getting the money. As soon as we received the money that we applied for, under the terms of the loan.

You started to hear those those stories you started here, the smallest businesses couldn't get it, if you didn't have a banking relationship, you couldn't get it. And and we went through that very quickly, and Danny and I and our teams we got on the phone that weekend and we said, this isn't right, This wasn't in turn meant for us. Um, we're gonna give it back, and we're

gonna lead a national conversation. And shake Check was the first company to give it back, to explain why we thought it was appropriate in the first place, and how we were giving it back immediately. And I believe that that move caused a national conversation that has caused so many other companies that also give it back but improve the terms of the next round of funding, which is

now in playing. You're already hearing as challenging as it is still for so many it has gone so far, and we Danny and I's inboxes have been filled with facts from small business owners saying thank you for leading us, thank you for starting this conversation. It was not easy. There's a lot of questions about it, and we feel incredibly proud of the leadership role we were able to

play in this moment. Danny, you're on the state advisory group that will guide the reopening of New York So can you us tell us a little bit about that and how that's going to work, and how you're coordinating and some of the key leaders you're talking to. Well, I wish I could, Katie. I'm also trying to do it for New York City NYC and Company as well. Um. I was very happy to answer the call when Governor Cuomo's team said, will you be one of a hundred

people on the committee? I think it's called Onward New York, and it's it's for all of New York State, and I think I'm one of probably of the hundred people on the committee, probably six of us come from the restaurant industry. So we haven't had a meeting yet. I think this was announced in anticipation of of figuring out

how this group would actually provide input. I don't know whether it's going to be industry by industry, whether it might be the cultural institutions, the sports institutions, you know, uh, finance, real estate, whatever, whatever. There's lots and lots of different aspects. What I will say is that while I have not been asked any questions yet, um, I'm beginning to ask a lot of the questions myself. And one thing we know about this is that this impacts all of us.

This rising tide is going to either lift or drop all boats. And so the one thing I do want to do is make it as clear as I can that I want to be a vehicle or a vessel through which other restaurateurs can share their thoughts, their ideas. We all know what our fears are. I don't need a whole lot of help on that. It's it's it's been pretty bleak, But I think that getting to the point that that our industry can make the changes it needs, and we're gonna need some governmental help on that so

that we can get reopened. You know, the funding that you were talking to Randy about actually doesn't even work for most restaurants. So with all the hullabaloo, uh, believe it or not, I've as much as I've heard positive response uh from people saying what a great decision shake Shack made to lead the way. I've heard from restaurateurs who got the funds and who said why are you out there moralizing and preventing us, uh, you know, from

using our funds without being embarrassed about it. And I've also heard from restaurateurs who said, we wish we had had a banking relationships so we could have gotten them. But guess what, Katie, I've also heard from a ton of people who said, these funds don't work anyway for restaurants because it is a nonforgivable loan for which you're on the hook if you do not rehire the proponerance of your team by June, and the full service restaurant industry will not be ready to rehire the proponance of

their team by June. And so one of the things I want to do on this commission. Now that's a federal law, but I also think that there are state opportunities. They can be very very helpful regulatory wise, and also some of the taxation aspects as well as some of the landlord kind of controls that happened staywide. So I'll be taking in as many good as ideas as I can and then try faithfully to communicate those to the

to the advisory committee. You know, I'm just thinking, just hearing you guys, for all the New Yorkers who have loved your restaurants for many years, who have found so much joy and community, not to mention great food. Um, can can people just I know their gift cards? For example, a friend of mine sent over a dinner we're in East Hampton from a local restaurant because she wanted to support that restaurant. UM. I guess that's just one example. But are there other things that people can do to

help to help rise those boats? If you will, Danny, There's two things I would say, Katie. One is continue to talk about the importance that restaurants play in your life and and in the economic life of this country. I think that until this moment, that the vast majority of Americans. I don't say this in a in a negative way, but I just don't think they understood how impactful restaurants are to the overall economy of the country.

There are six sixty thousand restaurants in America, second largest employer next to government. I don't know that the average American knew that. I think that because there's so many were not looked at like the auto industry or like the airline industry, where you can kind of get your arms around it so be be aware of it. And I think that that that has risen to the national conversation. When a restaurant goes out of business, it it impacts the economy in a massive way. And it's it's the

people who work there. It is people not buying food at a certain point um from their suppliers or beverages. There are societal issues as well. When a restaurant is closed, your neighborhood feels different. Just think about when you've walked by a closed restaurant. It doesn't feel as good, doesn't feel as safe. And then I would also say that restaurants play such an important part in the emotional fabric

of this country, which is it's where you go. Like this month, the month of May, we have graduations, we have weddings. It would have been baseball season, it would have been the Kentucky Derby, and all these things that just feel good to people to celebrate and where food plays a role, just aren't happening right now. The other really cool thing about restaurants is that the people who

work in restaurants do it because they love relationships. They love when they see you come in, they love when they see their regulars who are always on table forty two or forty one. They love that they know that my wife is allergic to lobster, and somehow that makes

her feel good that they remember that. If everyone in America wrote a two sentence email to someone who they know who works in a who worked in a restaurant and just said we miss you and can't wait till you guys reopen, if you only knew what that would be worth, just emotionally, that would feel great when we come back. Danny and Randy with a pep talk not only for their employees, but for all of us. Restaurants are not only the places we choose to celebrate our

milestones and special occasions. They're also the careers and livelihoods of the more than twelve million people who work in the industry. Because these are some very anxiety producing times for those people, I asked Randy Garuti and Danny Meyer for some words of encouragement. First, Randy, I would continue to believe that sometime, not far from now, we are

going to be able to be shoulder shoulder together. I think the most powerful thing we can all do right now for each other is when we go to a restaurant, or when you see the FedEx driver uh come up to your house to bring you food to keep you alive, or when you go to a grocery store or ride a bus that you looked that person in the eye. Eyes are still not covered last time I checked, and you say thank you, and you really mean it, and

you really really sincerely man. And I think if we do that for each other and remind each other that that this truly is temporary, it is even as uncertain as it is, and we look towards a future where we will add again. Um. I think that's that's all we need. One day at a time, one hour at a time, one hopeful, caring human being to another at a time. Danny, do you want to add anything to that?

I guess what I want to say is, Um, if you're someone listening to this and you're feeling anxious, so am I and and I think that there's room to feel anxious and and hopeful at the same time. I think anxiety is a very natural human response to not knowing what's around the next corner. What I don't want to see happen to people is to anticipate that the

thing around the next corner is going to be even worse. UM, and therefore live in that and that feeling of what you anticipate might be worse, because I really think that, UM, and I really pray that the worst is behind us at this point. I think that the there's still going to be a lot of of pain and hurt and illness in this country, and we've got to stay resolute as we have been to this point, otherwise this thing

is going to come back. But I do believe that we are at a point where UM, we for the first time we I couldn't have had this conversation two weeks ago about how do we potentially see reopening restaurants. I just couldn't see beyond the safety aspects of it. Now I have to be able to host both of those things, which is human survival and and then what's next for the business to survive as well. Again, I do want to just say that our our guests have

been amazing so far. We've only reached out asking people either to buy gift cards that we were then contribute of the revenues to our to our fund UM and or to buy auction items or in some cases contribute auction items, Um, and Katie, if you ask me one more time, I'm going to get you hooked into having cocktails with Katie and Danny. Hey, I'd be glad to do that, but you know, I don't know if that would get I don't know if that would get much money, you guys, But if anyone out there wants to pay

for that, I am definitely in. And that does it for this episode of Next Question. The interview with Danny Meyer and Randy Garuty was recorded as a part of a virtual Shake Shack leadership retreat and was edited for this podcast. You can keep up with all of my interviews as well as the day's most important news by

subscribing to my morning newsletter, wake Up Call. You can find that at Katie Couric dot com and to subscribe to Next Question, and please do look for us on Apple podcast, the I Heart Radio app, or wherever you listen to your favorite shows. Until next time at my Next Question, I'm Katie Couric. Thanks so much for listening everyone. Next Question with Katie Couric is a production of I Heart Radio and Katie Currik Media. The executive producers are

Katie Curic, Courtney Litz, and Tyler Klang. The supervising producer is Lauren Hansen. Our show producer is Bethan Macaluso. The associate producers are Emily Pinto and Derek Clements. Editing by Derrek Clements, Dylan Fagan and Lowell Berlante, Mixing by Dylan Fagan. Our researcher is Gabriel Loser. For more information on today's episode, go to Katie Couric dot com and follow us on

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