- The heart of hospitality, this week on "Firing Line."

- What I did understand was how I wanted to be treated when I went to a restaurant.

What I knew was that good food might taste even better if you were just nice to people.

- That simple philosophy has carried Danny Meyer to dizzying heights since he opened his first restaurant, Union Square Cafe in Manhattan when he was just 27.

Now, head of a restaurant empire, he is a legend in the industry.

- My guide is the hospitality Jesus himself.

- You want to try that, don't you?

- It looks delicious.

- Meyer's innovations have transformed both fine dining and fast food.

- Never seen a line this big.

It's a good old fashioned good burger.

- But not every idea was a success.

In 2015, you made headlines when you eliminated tipping in your restaurants.

- I learned that Americans like their tips.

- He has distilled a lifetime of learning into a new book, "What Could Possibly Go Right?"

What does Danny Meyer say now?

- [Narrator] "Firing Line" with Margaret Hoover is made possible in part by Robert Granieri, Vanessa and Henry Cornell, the Margaret and Daniel Loeb Foundation, The Beth and Ravenel Curry Foundation, Cliff and Laurel Asness, and by the following.

- Danny Meyer, welcome to "Firing Line."

- Thank you, Margaret.

- You were raised in St.

Louis.

You grew up eating in restaurants around the world, thanks to your father's travel business.

You received your degree in political science and your first job was working on a presidential campaign.

But at the age of 27, without any formal culinary education, you opened Union Square Cafe in New York City.

Since then, your career has reshaped American hospitality from fine dining to Shake Shack.

What did the 27-year-old version of Danny Meyer understand about restaurants that the chefs didn't?

- I don't know that the chefs didn't understand it, but what I did understand was how I wanted to be treated when I went to a restaurant.

You mentioned that I grew up in St.

Louis, and they treated you great in St.

Louis.

The food wasn't as good then as it is now, and it certainly wasn't as good then as it was in France or Italy or in New York City, but they had something going for them, which is they made you feel welcome.

And when I came to New York as a 22-year-old, I just kept saying, "Why are these people not treating you well?"

And it was almost like the Studio 54 mentality of the 80s had crept its way into restaurants, which is you're not good enough to get in, you're not good enough to get any table other than the one by the bathroom.

And so what I knew was that good food might taste even better if you were just nice to people.

- What made you think that a good dose of Midwestern nice could work in America's toughest restaurant city?

- I actually wasn't sure that it would work.

I just knew that that's who I am and that's how I wanted to do it, and fortunately it worked.

- Rave reviews from "The New York Times."

- We got a really, really good two-star review and we went from zero to 60 overnight after that first review came out.

- You went on to open 27 restaurants.

You write very vulnerably about how you've closed 10, but I think most Americans know you as the founder of Shake Shack, which began as a hot dog cart in Madison Square Park and has now grown into more than 700 locations around the world.

But you didn't set out to start a global chain.

This was nowhere on your bingo cart.

You followed what seemed like a good idea at the time.

What did Shake Shack teach you about following an idea before you know where it will lead?

- Shake Shack taught me that if you follow your passion, and my passion was hospitality, my passion was caring for the community.

The only reason I had opened two restaurants on Madison Square Park in the first place, which were 11 Madison Park and Tabla, which opened four weeks apart from each other, was to actually do something for that park.

The park was for Lauren.

- You partnered with The New York City Parks Foundation, raised millions of dollars to restore it, installed public art, which is very important to you, and eventually when Shake Shack grew, you shared a portion of the profits with New York City for the park's maintenance.

If you come to New York City today, Madison Square Park is one of the city's most vibrant neighborhoods.

Why did you approach that project with a sense of responsibility for the community you would be serving?

- The two things my parents really had in common, the thing that sustained their marriage for 25 years before it ended, were art and community.

And so it's really not a surprise as I think back that it was bringing art to Madison Square Park while trying to restore and revive that park that actually led to Shake Shack.

And what a good outcome that is.

- Danny Meyer's name is not written without the tagline hospitality, but you write about enlightened hospitality.

Describe enlightened hospitality.

- Enlightened hospitality basically says, "All right, if hospitality is the thing we're selling, you think when you come to one of our restaurants, we're selling food, that's almost beside the point.

We're selling how did we make you feel.

And you will either come back or not based on how we made you feel."

Enlightened hospitality is what I called a virtuous cycle where the first person that gets the hospitality on our team is our team.

We put our team members actually before our customers, which is not what I learned growing up in St.

Louis.

I learned that customer's always first, customer's always right.

I think we do a better job for our customers if first the people who work in the restaurant love working with one another.

Our third stakeholder after our guest is the community we work in, and then our suppliers and then our investors.

- I mean, what you've just referred to is sort of a flip on the traditional sense of how capitalism works, right?

If you're creating a product, you're creating it for the customer, but you believe very strongly in taking care of your employees first.

And you write in the book that while you're a very proud capitalist when you were in your younger days in the 1970s, capitalism had a bad rap.

You wrote, "I had internalized the feeling that being an unabashed capitalist was something to be ashamed of, that somehow making money was incompatible with caring deeply for our people, our product, and the planet."

Now, William F. Buckley Jr.

who hosted this program originally, had several debates about the moral virtue of capitalism.

And in 1976, an economic theorist named Jeremy Rifkin argued that corporations put profits ahead of people.

Here's what he said.

- The opinion survey suggests that the American people believe that what's good for GM is not necessarily good for the American people.

A majority of Americans believe that the corporations are involved in excessive profit at the expense of the consumer and worker.

A majority of Americans feel that the giant corporations have come out of control and tend to dominate much of American life.

Are we all misinformed?

Are we all misguided?

- Substantially, yeah.

- In other words- - I may have even seen that particular episode at some point.

(Margaret laughs) There was a lot of that feeling.

- Yeah.

- That's when I graduated from high school and that's when I was taking all those kind of classes.

I took my first economics class in 1977.

And you know what?

One of the things that we learned in 1977 was the University of Chicago professor Milton Friedman basically saying, "If you put your investor first, everything else will follow from that."

And I just firmly reject that.

I just think that I believe in the power of both a virtuous cycle and the power of a vicious cycle.

And if I really want to take care of my investor and I believe in a virtuous cycle, why would I put them first?

I want the input to be our people.

And by the way, it's not just what can I do for our employees?

It's what do I hold them responsible for doing for each other?

Their first customer is each other.

It's not Big Daddy up here.

It's their job because the degree to which our employees love coming to work to be with each other, to learn from each other, to, you know, find new ways of doing things with each other, that totally translates to having really happy customers.

- Well, it sounds like you're trying to create a family or the idea is to create a kind of family.

- That's something that I learned through the process of writing "What Could Possibly Go Right" is that we're not a family, and so I am full of contradictions.

- What's the difference?

- The difference is that we are a business and that you cannot fire a family member.

And sometimes we have to fire people.

- Right.

- It's never fun when you do it, but it's really disingenuous to tell people who work for you that it's a family.

On the other hand, you want to create a feeling of the functional parts of being a family, which is a group of people that have something in common.

- You write in the book about how one of the things you've learned is not to belabor decisions that you know you need to make.

You write painfully about keeping Tabla open for two years longer than you needed to.

You write with a real rawness and earnestness about that experience.

20 years forward, what have you learned?

- I've learned so much from the experience of closing Tabla.

I had never laid off anyone in my life and going into this restaurant that had 130 employees and speaking to the managers and the chef and saying, "We are going to be closing this restaurant in four months," I just felt like a complete failure for everything I had always worked at and believed in.

- You made headlines during COVID by requiring diners to show proof of vaccination.

Are those moments when you're in the headlines, when your moves as a businessman are leading the news, how do you navigate them?

Does it give you heart palpitations?

- Yes, yes.

The first thing that I always try to do is ask, "Is this the right thing for our business?"

But it starts with us.

Is this consistent with our values?

The first time I did this was in 1990, soon after my dad died from lung cancer, and I was so mad at, he wasn't even a smoker, but I was mad that every night I'd come home smelling like an ashtray and I eliminated smoking at Union Square Cafe.

There were people who said, "Oh, we're never coming back to your restaurant again."

But we got busier and we got more popular.

So the vaccines, I was so tired of not being able to open our restaurants.

And so every bit of science I read told me that vaccinations were actually lowering the risk of COVID.

And so I required both our staff and our guests to show proof of a negative COVID test in order to work and to dine there.

By the way, this was happening in France.

You had to get a passe sanitaire to walk anywhere.

Everybody had to do it.

I don't know what the big deal was in this country, but the good news was- - A lot of people who didn't like being told they had to get a vaccination.

- I know that, we are all about our freedoms in this country, but it's hard to be free when you're dying.

- In 2015, you made headlines again and the Time Magazine 100 list of most influential people by eliminating tipping in your restaurants.

You called it hospitality included.

And you wrote that, "Tips have become a drug for all of us."

And yet five years later, when the COVID pandemic hit, you were forced to abandon the effort.

What did you learn when you eliminated tips about what it fixed and what it got wrong?

- Here's what it got right.

It got right on understanding that the tipping system is inequitable because tips are not permitted to be shared between waiters and cooks.

And if you've ever worked in a restaurant, you know that cooks are working just as hard as the people bringing the food out to the table.

- And that's because of an idiosyncrasy in New York state law.

- Many states, actually.

- Okay, okay.

- Many, many states have that same law.

And furthermore, it's exacerbated by the federal government, which pays a commission to restaurants for every tip reported.

And so that's the drug that's- - There's a tax credit.

There's a tax credit given to restaurants for the money that they don't pay their employees because of the tax.

- Yes, because the government realized a long time ago that a lot of tips were not being reported.

So they said, "We will enlist the restaurateur to report all the tips.

In fact, we'll pay the restaurateur."

So a lot of restaurateurs don't want to eliminate tipping because then they eliminate this tax credit that they get, which is meaningful.

- But you elected to forgo that tax credit.

- I elected to do it anyway.

- Because it was going to help equalize the pay of the staff.

- Yes, and so our cooks were making 25% more money.

Our waiters had a set schedule.

We were paying them an hourly wage to equate to what their tips had been.

Here was what the problem was though.

In order to make hospitality included work, whereby 100% of the price you see on the menu pays for 100% of the things we're trying to do, including family leave, including health insurance.

I mean, we really wanted to get this right, but in order to do all the stuff we wanted to do for our team and not charge too much to our guests, there just was not enough left for our investors.

And so by the time the pandemic hit and everyone in the city was rehiring at the exact same time, we were at a competitive disadvantage because people wanted to make tips.

And by the way, restaurant goers wanted to leave tips.

They wanted to say thank you.

They've been pent up in their apartment for the last five months.

- Was it just the timing that was bad?

Do you think there'd be a better shot of it working in 2026?

- I don't think there's a better shot of it working.

I think I learned that Americans like their tips.

They don't necessarily like it always.

They don't necessarily like it if they're, you know, just going to a fast food place or a coffee shop or something like that where they didn't have an opportunity to have a relationship with a server.

But I think when you're sitting down for a meal and somebody's been hosting you for a couple hours, I think people actually like it.

- People like it when they're sitting, but there is a huge frustration with tipping now and the tipping culture, which has gone completely in the opposite direction from hospitality included.

I mean, now you walk into a Starbucks and you can tip the barista, you walk into a bodega and buy a bottle of water and you can tip the guy behind the counter.

I mean, tipping is omnipresent.

What are your rules for tipping?

Do you tip for coffee to go, tip for takeout, tip for a bottle of water from the bodega?

- I do because- - In all cases.

- Yeah.

Do I enjoy doing it all the time?

No, but I feel like I have a special responsibility being in the hospitality industry and I know that when you see that tip... Look, we've had the tip jar forever, but what we have not had forever is the electronic screen that is shoved in your face and you can give me one more dollar, three more dollars or five more dollars for the $1 bottle of water that I just bought.

- So you do it, but you don't like it.

Why don't you like it?

- I don't like it because I know what's going on.

What's really going on is that the store or the restaurant or the shop really wants to pay its people more money.

That's a good thing.

- Yeah.

- And the store or the restaurant or the shop does not want to raise their menu prices because the consumer is going to balk at that.

And so the outcome is that we have this tip, which is subsidizing people's compensation, which otherwise would just be in the price.

And at some point, we should have a real conversation with a whole lot of consumers and a whole lot of proprietors and a whole lot of employees and say, "What do you guys want here?

Because we know you need to make more money.

You should have a good living wage.

And if we put your living wage into your compensation without the tip, then we will not be competitive on our price and they're going to go buy their coffee somewhere else."

It's a real conundrum for people.

I tip, I don't enjoy it, and I feel even worse when I don't tip.

I hate that feeling when the guy spins the screen around and goes, "You didn't tip, that's not good."

There still has to be a better way.

- President Trump has signed into no tax on tips, which you oppose because as I understand it, you believe this actually widens the inequity between the servers and the chefs.

To many people, a tax break for tipped workers sounds like a good thing.

So why does it make the problem worse?

- Well, first of all, it was clearly a political ploy to win Nevada, and it was a bipartisan political ploy.

It wasn't just the president, and it was to curry favor amongst the waiters unions.

But the problem with it is that we already have a big disparity between what tipped employees make and what kitchen workers make.

- Yeah.

- Kitchen workers are not getting a tax credit because they don't get tips.

- Yeah.

- And so the people that make the most money in restaurants are tipped employees because a tip is a multiplier of ever-increasing menu prices.

It's good for them.

- Right.

- All right?

But the kitchen workers, their hourly wage remains relatively stagnant, and when menu prices go up, they don't necessarily make more money.

- Right.

- So I oppose it because I think it would actually exacerbate the very disparity that we were trying to address by just eliminating tipping and making hospitality included.

- I don't know if you're aware, but there's a chef on YouTube named Nick DiGiovanni who has 46 million followers- - Oh boy.

- on YouTube.

And his YouTube channel has brought an entire generation of children, including mine, into an appreciation of the culinary arts, of how to prepare food, how to make things tasty- - That's fantastic.

- and have an experience.

Is there a place for enlightened hospitality in these new channels on YouTube to access and reach a new generation?

- I think so, I think so.

You know, when I wrote "Setting the Table," I haven't shared this publicly ever, but the primary reason that I finally decided to write this book about hospitality and pulling the curtain back on how we do business, this is 20 years ago, was because Anthony Bourdain had been so successful with his book, "Kitchen Confidential."

And even before his book came out, I read an excerpt in "The New Yorker" and I went, "Guys, that's not my reality of our business.

We're not just a bunch of, you know, drug knife throwing people here.

Restaurants can be really civilized places, and I wanted to show a different way."

- Anthony Bourdain, like you, played an outsized role in changing the food media landscape.

And you wrote after he died, quote, "If a life can be measured by the number of other lives it inspired, enlightened, enraged, delighted, provoked, instructed, touched, and ultimately devastated, Anthony Bourdain sits on top of the list."

Eight years since his death, how do you think about his legacy?

- His legacy is beautiful and complicated.

- Yeah.

- So I knew- - How is it complicated?

- Well, I knew him when he was just the chef of Les Halles, really fun guy, really good cook.

And he's one of the people that started boycotting our restaurants because I had eliminated smoking, and he was vociferous about it.

He told everybody like, "Who is that guy to be telling me what I can do and what I can't do?"

And he just kind of stayed away for a while.

And then all of a sudden I started noticing that he was tweeting all these incredible things about Shake Shack.

And so I said, "Danny, it's time to bury the hatchet with this guy."

So I reached out to him and we reconnected.

But that period of time when he was boycotting all my places as he was writing "Kitchen Confidential," it ginned up my competitive spirit, and that was one of the motivators for writing "Setting the Table."

But you know what?

He did so much to open the world of discovery, and I think one of the great things about food is discovering new things.

It really is, it's exciting.

- In the book, you know, you write about wanting to become this century's Charles Delmonico, who was, for the 19th century, a pioneer of fine dining here in New York City.

We in this country have restaurants that are historic restaurants, and we value preserving pieces of our history.

In New York City, we have Fraunces Tavern where George Washington said farewell to his troops, and we have Delmonico's, one of the original fine dining restaurants in New York City from the 19th century.

At what point does a restaurant stop being just a business and become an institution that we have an obligation to preserve?

- Boy, that is such a good question.

When we lost our lease after 30 years at Union Square Cafe, because the landlord wanted to triple the rent and we said, "No, thank you," I wrote an op-ed piece for the New York Times saying, "Why can't our city..." It wasn't boo-hoo for Danny, but why can't our city be more like what you see in London or what you see in Paris or so many other places where we preserve our institutions?

It's not just, "Well, the lease is up.

Sorry, I'm going to double the rent now.

I'm going to triple the rent right now."

And, you know, to really preserve tradition, not just for restaurants, but bookstores, novelty stores, things that are part of the real fabric of a neighborhood, because at the end of the day, do we really want to just become, you know, a bunch of big national chains everywhere?

- Zohran Mamdani has been mayor of New York for almost a year now, and critics warned that his democratic socialist policies would be hostile to business and send companies fleeing from the city.

What's the mood in the food industry and in the restaurant industry now one year into Mayor Mamdani's tenure?

- Well, the good news is we're busy and part of that, again, I'm speaking from a very New York perspective because that's where all of our full service fine dining restaurants are, but we are benefiting from the up and to the right part of the K-shaped economy and- - Because your customers are- - They're doing well - wealthy customers who are doing well - They're doing well.

- and can afford to buy meals out, yeah.

- Yeah.

As far as the mayor is concerned, a mayor's job, if you ask me, is keep the streets clean, keep the subways safe, and cheer on people wanting to live and work in the city.

- How's he doing?

- I think it's okay, and I'm rooting for him to succeed.

- As technology increases and handles more interactions between restaurants and guests, you have indicated that there's no way the robots can replace enlightened hospitality.

Why?

- I don't know a robot who knows how to look me in the eye and empathize with me and read what my body language is saying that I need and want at that moment and make me feel human.

I will never say never to anything, but I'll come real close when it comes to putting robots in our dining rooms.

I just think that it's antithetical.

We have more connectivity than ever, and yet there seems to be less human connection happening than ever.

Restaurants are an antithesis to that, and I feel really, really happy about that.

- Danny Meyer, thank you for joining me on "Firing Line."

- Thank you, Margaret.

- [Narrator] "Firing Line" with Margaret Hoover is made possible in part by Robert Granieri, Vanessa and Henry Cornell, The Margaret and Daniel Loeb Foundation, The Beth and Ravenel Curry Foundation, Cliff and Laurel Asness, and by the following.

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