You see him on the screen. He is Danny Meyer. Danny, welcome to Washington Post Live.
MR. MEYER: Thank you, Jonathan.
MR. CAPEHART: So, on Saturday, the House of Representative passed President Biden's $1.9 trillion COVID relief stimulus package. It provides $25 billion in grants for restaurants and bars that have lost revenue because of the pandemic. To your mind, is that enough?
MR. MEYER: Well, we'll find out soon. It sure is a step in the right direction, Jonathan. The PPP program that went to cover all small businesses wasn't really cut out in the first place for restaurants, because as a loan, the only way that it was a forgivable loan was if you hired back a certain number of your employees before a date by which you were not allowed to open your restaurants anyway. So, for those restaurants that took the loans, you now have even more debt than ever.
What this latest act should do and will do is actually to fill the gap between what a restaurant's revenues were in 2019 and then when they fell right off the cliff in 2020.
It will also permit restaurants to pay back vendors. Why is that important? Because it's not just restaurants that have suffered through this, but it's restaurant suppliers who have as well.
It will also allow restaurants to pay back rent, and I would say that probably the greatest untold story of what it's going to take to restart the restaurant industry is what happens with your real estate, what happens with your lease. Restaurants have a boatload of obligations going back, generally as far back as last March, and this act should help us get out of that as well.
MR. CAPEHART: I'm glad you brought that up because I was wondering what else do restaurants need right now, and rent was one of those things that came to mind in terms of rent relief. Does the bill actually do anything in that regard?
MR. MEYER: Well, what it does, by comparing your 2019 revenues to your 2020 revenues and then making a grant, not a loan, but making a grant to those restaurants that qualify should allow you to be in a position to get whole. And if somebody had told me a year ago that we were going to be out of business for a year in order to do the right thing for the health of the people that work for us and the health of the people who dine with us and if they had said, "And the cost of that is that you're basically going to have to put your restaurants to sleep for a year, but when you wake up, you'll be able to reopen," I'd have said, "You know what? I'll do it. I'll sign up because I'm trying to be a good citizen and a good corporate leader."
But if someone had said what actually did happen to this entire industry, that after a year of doing the right thing, you are going to be insolvent because you're going to owe so much money to your suppliers that they won't give you credit to reopen and you're going to owe so much money to your landlords that they may evict you, I would have said, "That's probably not a feasible outcome."
So, this should do it, Jonathan.
MR. CAPEHART: You know, I'm wondering because it's been roughly a year since we went into lockdown, and I'm wondering where are your businesses. Talk a little bit now about where your businesses are today.
MR. MEYER: Well, to answer the question, let me separate which kind of businesses because we're in many.
So, with respect to Shake Shack where I'm the chairman of the board, Shake Shack has been doing great. They were immediately able to pivot to a takeout and delivery model, and because Shake Shack is not the kind of restaurant, a full-service restaurant where you make a reservation and a maître d' seats you and someone takes your order and there's a bartender and the experience is eating indoors, they were able to pivot very, very quickly.
On the other hand, most of the rest of our business was in a zero-revenue mode for about four months. So, think about our biggest business is an events company called Union Square Events. We fly food on Delta. No more. We would put on big corporate galas and charitable galas like the Robin Hood Foundation. No more. We would serve food in people's offices. No more. So that kind of business was in deep trouble.
But full-service restaurants, the ones you mentioned like Union Square Café and Gramercy Tavern, were able, starting last summer, to serve some guests outdoors because New York City started to permit that, and we were also able starting September 30th to seat 25 percent of our dining room, not a very, very good equation, but we tried. And then, unfortunately, things got bad again, and we had to reverse course and lay off more people and close.
And a place like Maialino is another example because both Maialino in New York City and Maialino in Washington, D.C., live adjacent to hotels. Each one of those hotels has not reopened, and so you kind of are at the mercy of where you live. And we happen to be in the kind of climates that has not been especially friendly to outdoor dining.
So, the hope that we all have right now is that sooner than later, the weather is going to get warm. We'll be able to renew outdoor dining, and then as more and more people get vaccinated--and I'm very, very happy to report that in New York State, restaurant workers are now eligible for vaccinations--you'll start to see a little bit of a confidence creep back.
One last thing on this question. No one lives in Manhattan by accident. You live here because you like being with a whole lot of people, and so the very things that have worked best for this island have worked against us really for the last year or so. And a lot of people, because they've seen an absence of street life and they've seen no Broadway shows and they've seen their cultural institutions sort of empty, have just kind of stayed away. But every time you see a little bit of life in the city, you're going to start to see that cascade, and I think more people will come back.
MR. CAPEHART: Danny, has it been difficult to comply with the state guidelines? What's your experience been with that?
MR. MEYER: The guidelines with respect to dining capacity?
MR. CAPEHART: With respect to dining capacity, whether your restaurants can open, how many people you can bring back.
MR. MEYER: Well, you know, I'm probably the wrong person to ask the question because we have been quick twice, quicker than most, to close our restaurants. We closed our restaurants before it was mandated, the first time around back in March and then the second time it was mandated in November. We closed about a week and a half ahead of that because we could feel it coming, and we just didn't want to be in a position to put our staff members or our guests in a dangerous position. And meanwhile, we've been slower than most, and it's a little frustrating, but we've been slower than most to get back into business.
So, we've been really living on a to-go and takeout and shipping food across the country on Goldbelly model, and we've made ends meet. We've looked at this two ways. One is we want to be there. We never believed that this pandemic was going to be the end of the world. We never knew how long it was going to be. We never knew how painful it was going to be, but we also never said this is the thing that's going to end the world. So, if you take that approach, then you say to yourself, "All right. Well, who will we be when it's done, and how will we have changed our company in the meantime?" Because if you just want to look at one positive year, we will never again in our careers have an opportunity, as one of my friends told me, to take our boat out of the water in drydock for an entire year and inspect every inch of the underbelly and figure out how to make it more seaworthy when we put it back in. So, we've spent this year as constructively as we can saying let's be solvent on the other end so we can get back to hiring a lot of people, as many people as we possibly can, and then make sure that the boat we put back in the water is a sounder boat that does business in a much better way.
MR. CAPEHART: That's a nice segue to an audience question that we have from Kenan Block from Washington who asks, "Will fine dining ever return to what it was before? What changes will be long lasting?"
MR. MEYER: Well, in some cases, I hope that we will never return to how we were before.
Let's face a couple facts here. Our restaurant industry, especially the full-service side of it, has been fragile for a long, long time. The profit margins have been eroding every single year as rents have gone up, and restaurants have had a very, very difficult time really making the type of profit that would allow them then to pay the type of compensation that the people who work in restaurants need in order to thrive. And the people who I think have felt that the most have been cooks who don't share in tips, many of which happen to be people of color. We know for a fact that 70 percent of people who work in the back of the house, which typically do not receive tips, are people of color, whereas 60 percent of the people who work in the front of the house where tips are distributable are people who are White. I hope we never go back to that.
I think our industry, like so many, during this period of COVID understood how racial injustice and racial bias in our industry has been something not to be proud of. We have been a great industry historically when it comes to giving people their first job. We have not had the best possible record when it comes to promoting people into more economic freedom and more economic justice.
And so, one of the things that I'm really excited about as we move forward is that if you're the kind of restaurant or restaurant company, as we are, who unfortunately had to lay off 90 percent of our employees back at the end of March, we have absolutely every opportunity now with a blank canvas to pain the type of diversity that we probably should have had for many, many years, and now we'll have the opportunity and I would say quite frankly the obligation to do. So, in that respect, we're never going back.
The other things that I think are never going to go back are the kind of restaurants that are serving 18-course meals over four hours or the kind of restaurants that give you an encyclopedia passing as a menu. I really think that we're not going to want to or be able to have 18 cooks in a small area just so you can have 24 choices of appetizers and main courses. What you'd much rather have, in my opinion, is six or eight great appetizers and six or eight great main courses, and that's going to probably be a function of having fewer people.
I also think that we're going to look for ways to have fewer things that you have to touch all the time, whether it's coat checks. I think we're going to use technology to find ways to get you your coat back without putting a piece of plastic that somebody else was touching in your pocket, and I think that goes for things like waiting around to get your guest check at the end of your meal. Nobody likes that experience. Why can't we have the kind of technology where when you're ready to go, you don't have to hunt down your server? You can get up and go just like you would if you were using a ride-sharing app, and I think that kind of thing is here to stay.
MR. CAPEHART: Danny, you've given a lot to chew on, and I want to go back to the first part of your answer. And that was about diversity within the restaurant industry.
So, you've taken the boat out of the water, and you're doing all the inspecting. Have you figured out ways or found ways how you're going to address diversity issues within your restaurants?
MR. MEYER: Yes, with great intention, with great resolve, and with great commitment.
For the first time ever, you can now go to the Union Square Hospitality Group website, and you would see a page that not only explains exactly what we intend to do, but actually transparently measures where we are in that journey. And that's something that I'm sorry to say but we never did before, and there's just no going back right now.
And we've always known that this is the right thing to do, but I would say that just speaking as a leader myself, if someone were to say name all the different things you've learned during this past year, I could probably write a book about all the things I've learned. And there would be a chapter on resilience, and there would be a chapter on athleticism and all kinds of different things. But the single biggest chapter for me would be understanding that having spent my entire career in business truly as a non-racist has been one of the biggest mistakes I've ever made, because the difference between being a non-racist and being actively anti-racist is the difference between night and day.
And we have a company that is now not only committed, but we understand. If you're called Union Square Hospitality Group and you define hospitality as an act whereby the person on the receiving end believes you're on their side and they believe like they belong in your restaurant and you come to the realization that perhaps unwittingly, you've spent your entire career having some people feel like they belong more than others, that's a big miss, but it's also a great opportunity.
So, we go about this with joy, and we go about this with confidence. And we go about it with a sense that we will end up being a much, much better hospitality purveyor than ever, and truly, the mentality that I want everyone in our organization to feel is that when you spend $10 or $100 dining in one of our restaurants, that pretend like the food was free, and pretend like the thing we were truly selling you for the $10 or $100 is a sense that you belong here. And if we succeed at that, then you're probably going to want to come back.
MR. CAPEHART: Danny, I want you to write that book. I really do want you to write that book. Just what you've outlined there would be an incredible read to see how you realized this and what you're doing to address it.
As you said, you are a leader in the restaurant industry. You're famous for your "hospitality-included policy," meaning no tipping. The tip was included in the bill.
As someone who has dined in your restaurants, it was one of those things. It was like, "Wow! One less thing I have to worry about."
But last July, when outdoor dining was permitted by New York City, you ended your innovative policy. Why?
MR. MEYER: Well, it was one of those really, really tough moments because we had to confront the notion that something we had done, I think, for a good philosophical reason to eliminate tipping was primarily because we saw that those who were tip-eligible were year after year after year making more and more money, and those who were not legally eligible to receive tips, those people in the back of the house, were pretty much stagnant every year, and so this widening gap. Because many prices go up every year and a tip is nothing more than a multiplier of the menu price, it just didn't seem right, and so there was a good reason that we eliminated tipping back in 2015.
And you know what, Jonathan? It worked to a degree, but it was not sustainable, and the biggest reason it wasn't sustainable was we could never quite do all the things we wanted to do for our team members like make sure that a formerly tipped employee could make as much as she made when she was tipped, make sure that we had a 401(k) plan, make sure we had a really, really generous family leave policy. We did all those things, but then we could never quite charge enough for it on the menu price because you were used to paying $26 for the roast chicken at Union Square Café, and all of a sudden, the price was $38. And even though you knew you didn't have to tip on top of it, we really should have been charging you about $42 to do all the things we wanted to do. So, it was not only part--and I was stubborn because I really, really wanted to make this work, and by and large, we did.
But here was the kicker. Last summer, when we first started opening for outdoor dining, New York City, which had so much PTSD and still does from everything that happened back in March and April of last year, when guests would come to our restaurants and sit outdoors, they wanted to be so generous and say thank you to the staff members who were putting themselves on the line to serve them. And after about three weeks of trying to convince our guests that they didn't--not only did they not need to say additional thank you because we were doing it already, but preventing them from saying thank you, and then turning around to our staff members and saying, "You know that hundred-dollar bill that someone put on the table? You're not really allowed to accept that," it felt like the very thing we were trying to do, which was take care of our team, wasn't happening.
So, the way we came to terms with acknowledging that even our well-intended hospitality-included model might need to change was to say this. Since it's still illegal in New York City, weirdly, crazily, doesn't make any sense, it's still illegal that you cannot share tips with everybody. Like, how unfair is it that the person who cooked your food is not deemed to have done as much as the person who carried that bowl to your table?
So, what we decided to do in reinstating tips was we would also pay a portion of revenue every single night to everyone in the kitchen in the back of the house so that they would also do well when the restaurant did better.
MR. CAPEHART: You were always in favor of raising the minimum wage to $15 an hour. You're still supportive of that.
MR. MEYER: I am, and I'm probably an outlier to the rest of our industry because, look--and I totally get it--we've been crushed this past year. The whole industry, mom-and-pop restaurants have been crushed, but I look at it a little bit differently. We're all concerned about anything that could possibly take already very narrow margins as we try to get back on our feet and try to get back into business. What a horrible time to raise the minimum wage.
Well, here is what I would say to that. I believe that anytime you do something that applies to everybody, it's not a bad thing. I think the minimum wage could be raised to $15 in a phased type of way. I don't think it has to come this year. It probably should come this year, but I think if directionally, we're heading in that direction and if every restaurant is responsible across the entire country for doing this, it's a good thing for the country because it will ultimately find all those dollars coming back and supporting restaurants all over the country.
I just think that our industry needs to do its jobs as purveyors of hospitality to make it feel better to work in our industry, and I think that when you look at not only the minimum wage not having been moved in this country for years and years and years, but there is an adjusted minimum wage. Some people euphemistically call it the "tip credit." It's truly a subminimum wage that tipped employees get, which is something that started in slavery at zero dollars an hour, and it just has to go away.
So not only do I believe that minimum wage should rise over a same period of time, but I think we should do away with the subminimum wage. And for me, the best possible outcome for compensation in our industry, which would truly have positive ripple effects throughout the entire country and every community in this country that has restaurants, would be that every person who works in the restaurant industry gets the exact same minimum wage, and number two, that at the bottom of your check, there is a line that says "gratitude." And when you write in whatever number you want to write there, you would know that that expression of gratitude on your part would be shared equally throughout the entire restaurant. That will be a good day when that happens.
MR. CAPEHART: Danny, we've got five minutes left, because I know you have to leave a little bit early. But you mentioned before about having to pivot on a dime as a result of the pandemic, and I'm wondering, with the explosion and the usage of apps like DoorDash and Uber Eats and Grubhub, are those things good or bad for restaurants, and are they good or bad for you?
MR. MEYER: Well, basically, what we're talking about is giving our guests an opportunity to do business with us, especially during a time when the only way that they could do business with us would have been to order through a mobile app and/or pick it up at the restaurant, and I think that they've been a lifeline for the industry.
I think that what we also need to look towards is what could we do as an industry, once it is safe to gather together again, to be ready to welcome people into our homes, because I just know that there's a pent-up demand for people to dine in restaurants. And I think that it's been great to be able to order food at home when you are not able to dine in a restaurant, but there's nothing--there's nothing like being with people, the spontaneity that comes from a restaurant experience, the joy that comes from hearing the sounds and smelling the smells, and not just being with the people you're with, but you might just see someone at the next table you haven't seen for a while. This is life, and this is what restaurants do so well.
So, I think that, thank goodness, we've had companies that have been able to bring our food to people or mobile apps that have been able to allow us to order food to pick up. Those companies who do it, though, a warning, they're going to have to make sure that their business model is one that is on our side, because if their business model feels like they're going for an ounce of flesh every time someone orders food at home, that is ultimately going to do in our industry, and that's not going to be a good sustainable business model.
MR. CAPEHART: Well, Danny, as someone who has dined in your restaurants--and when you were talking about the smells from the kitchen, I went--I was transported back to Union, one of the last dinners Nick and I had at Union Square Café, we so look forward to being able to dine out again and dine out with you and Audrey again.
But, Danny, I don't want to make you late for your next thing. So, Danny Meyer, thank you so much for coming to Washington Post Live, and please give Audrey a hug from me and Nick.
MR. MEYER: Hey, Jonathan, great to be with you, and I cannot wait to see you at a table.
MR. CAPEHART: Great. Have a great afternoon.
MR. MEYER: Thanks, everybody.
MR. CAPEHART: And as always, thank you for tuning in. Come back this afternoon at 2:00 p.m. Eastern for our "Coronavirus: Leadership During Crisis" series with New Mexico Governor Michelle Lujan Grisham. The last time she was here was last August. So, this should be a terrific update on where things stand in the Land of Enchantment. Join us then.
Once again, I'm Jonathan Capehart, opinion writer for The Washington Post. Thank you for watching Washington Post Live.
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