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Danny Meyer Sees A Unique Opportunity To Rebuild And Reshape The Restaurant Industry

March 4, 2021

Prominent restaurateur Danny Meyer spoke with Washington Post journalist Jonathan Capehart earlier this week about the state of the hospitality industry and its potential recovery in the coming months. Meyer is the founder, chairman, and CEO of New York-based Union Square Hospitality Group, which operates numerous restaurants including Gramercy Tavern, the Modern, and Maialino, among others. He’s also the founder of Shake Shack. In his talk, he provided insight not only into the immediate challenges facing restaurants and bars but also into his reflections on how the industry can up its game as normal operations resume.

The conversation quickly touched on the $1.9 trillion Covid relief package making its way through Congress and the $25 billion it provides for restaurants and bars, which Meyer called “a step in the right direction.” He noted that the structure and terms of this stimulus will be helpful to the hospitality industry in a way that last spring’s payroll protection program loans were not.

The PPP funds were technically loans that were meant to be forgiven if businesses kept requisite staff employed or hired them back by certain dates. But, Meyer noted, mandated restaurant closures forced many venues to miss those deadlines, meaning they will be required to pay back the loans, worsening their financial outlook. The new stimulus, by contrast, consists of true grants that come without such strings attached.

“Comparing 2019 revenues to 2020 revenues, and then making a grant, not a loan, should allow restaurant owners to get whole,” Meyer explained. In addition to paying staff, the money will allow restaurants to pay their vendors, who have also been hard hit, and to pay back rent, a tremendous burden otherwise.

Reflecting on his experience of the last year, Meyer characterized it as a once-in-a-lifetime opportunity to slow down and scrutinize every aspect of his business. “We will never again have the opportunity to take our boat out of the water and put it in dry-dock 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,” he said. “Let’s make sure it’s one that does business in a much better way.”

At the top of Meyer’s list of priorities for evolving his business is a focus on equity, both financial and racial. He bemoaned the standards of compensation across the industry, particularly for back-of-house staff, whom he noted are far more likely to be minorities than front-of-house staff, and returned to the crushing rent burdens endemic to operating in a major U.S. city. Rising rent, he said, is the factor most responsible for eroding profit margins and making it untenable to pay adequately.

This point led Meyer to a more explicit discussion of racial inequality in the restaurant business and its reliance on—and failure to advance—people of color. He noted that Union Square Hospitality is moving forward in this regard and has a dedicated page on its website to provide updates and transparency on its efforts. Meyer reproached himself for not doing more sooner: “That’s something that I’m sorry to say we never did before. Having spent my entire career 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.”—Danny Sullivan

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