After one of the hardest years on record for restaurants, Danny Meyer, founder and CEO of the Union Square Hospitality Group, is hopeful. Warmer weather is coming, vaccinations are up, and the House just passed a Covid relief stimulus bill that includes $25 billion in grants–not loans–to restaurants and bars, which he views as a step toward making these businesses whole again.
Even so, Meyer said the past year has been a period of deep reflection for him as he watched the industry–and his own establishments–go through periods of zero revenue, massive layoffs, and a shaking up of long-held practices.
“Never again in our careers will we be able to take the boat out of water and put it in dry dock for a year to inspect every inch of its underbelly and make it seaworthy again,” Meyer said during a live webinar with the Washington Post Tuesday. “We want to make sure when we put the boat back in the water, it’s a sounder boat and does business in a better way.”
And in some cases, he said, “I hope we never return to how we were.” Below are four things Meyer says will never again be the same for the restaurant industry.
1. Racial injustice
On average, 60 percent of the people who work in the “front of house,” which includes tip-eligible positions like servers, bartenders, and hosts, are white. Meanwhile, 70 percent of the “back of house” employees–such as cooks and dishwashers who are not eligible for tips–are people of color, Meyer said. “The racial injustice and bias in our industry have been something not to be proud of. We’re great in terms of giving people a first job, but we’re not great at promoting people into economic freedom,” he said.
Meyer wants to see the entire industry right this wrong and he views the pandemic as an ideal time to do so. His companies Shake Shack and Union Square Hospitality, which includes Gramercy Tavern, Union Square Cafe, and more than a dozen other eateries, had to lay off 90 percent of employees. He said he aims to build back the company with the kind of diversity it should have had all along. The company’s website has published its progress so far. Meyer also confessed that he believes one of the biggest mistakes of his career thus far is failing to recognize the crucial difference between running businesses that are non-racist as opposed to actively anti-racist. Now, he said, he aims to do the latter.
2. Pay inequality
Of course, racial inequality is closely tied to pay inequality, which is why Meyer supports the $15 minimum wage. While he says this year may not be the one in which to establish it, he argues that the industry needs to embrace a phased approach. “Every restaurant across the country is responsible… and needs to do its job to make it feel better to work in our industry.”
Meyer also called for an end to the “sub-minimum wage,” referring to the lower per-hour wages tipped employees earn. “Every person in the restaurant industry should get the same minimum wage,” he says.
While Meyer was a pioneer in the industry for a no-tipping policy at his restaurants, he ended the practice during the pandemic. He did away with tips back in 2015 expressly to bring about more pay equity. Instead, his restaurants tack on a hospitality fee to bills to be shared among entire staffs. In the past year, patrons insisted on leaving generous tips as a way to say thank you, and Meyer said he didn’t feel right about denying his employees that gesture. So Union Square has reinstated tips but now pays a portion of revenue every night to everyone in back-of-house positions.
3. Inefficient operations
Those 18-course meals served over four hours and encyclopedic menus? Meyer doesn’t see those ever coming back, in part because they require cramming dozens of cooks into small spaces just to be able to offer the breadth of menu choices. Instead, he predicts menus will focus on say, six to eight great entrees, as a function of smaller teams in the kitchen.
Likewise, he foresees restaurants will look for ways to eliminate the number of things guests must touch, such as plastic coat check tags and physical checks, with technology. He says he’d prefer a payment experience that’s similar to how people pay for ride-sharing: when you’re done with your meal, you pay with your phone, instead of needing to wait for a server to initiate the process.
4. Third-party delivery apps
Asked about the fraught relationship between restaurants and third-party delivery apps, Meyer acknowledged that companies like Door Dash, Uber Eats, and Grubhub have offered a lifeline to restaurants when take-out and delivery were their only options for survival over the past year. At the same time, he’s bullish about people wanting to return to the restaurant experience. The shift may change the power dynamic between restaurants and the app companies. Meyer has a warning for those app makers for when that happens: “They have to make sure their business model is one that is on our side. [Demanding] an ounce of flesh every time someone orders… is not a good, sustainable business model.”
