Tuesday, August 11, 2015

Setting The Table

The restaurant business is a difficult one in which to develop a moat. You can't patent a flavour or a way of doing things, and you can't prevent the competition from opening next door. Customers are in no way tied to your restaurant just because they came once. As such, it's no surprise that so many restaurants close (60% in the first three years, according to research cited here). But Danny Meyer has bucked this trend, having successfully grown several restaurants, including the famous Shake Shack. In Setting The Table, he discusses his formula for success.

In effect, Meyer appears to have pulled off with individual restaurants what the large chains have done by replicating themselves: generate recurring revenue. Most of the book is about the processes Meyer's restaurants have employed in order to generate repeat business. From software that remembers details about a customer's habits to service that stresses being a customer's agent (rather than the restaurant's gatekeeper), Meyer stresses an extreme form of hospitality which I have rarely encountered at the restaurants I frequent.

Meyer goes a lot deeper than do most entrepreneurs in their tell-all books. There is a lot of detail on specific methods he employs. Meyer delves into his hiring practices, which stress attitude rather than technical skills. Technical skills can be taught, but a positively contagious attitude cannot. He also avoids hot areas of town, because that's where the rent makes it hard to do business. Meyer looks for "up and coming" areas where rents are 50% cheaper, and where landlords agree to transferable leases (i.e. if the restaurant fails, the lease can be sold to someone else).

In some ways, Meyer reminded me of Sam Walton, who used to scour the country and the globe for new retail concepts and ideas that he could test and apply in his own store. Meyer is always sampling from restaurants around the world, ready to steal their best ideas.

I especially enjoyed the chapter discussing some of the mistakes that have been made in his restaurants, and how they were turned into wins by employing some of Meyer's extreme hospitality.

If you're in the restaurant industry, and/or a fan of books by founders/entrepreneurs, Setting The Table is for you!

1 comment:

Dan said...

"Meyer looks for "up and coming" areas where rents are 50% cheaper, and where landlords agree to transferable leases" Maybe that's true generally, but in Austin, TX he's shopped in the "up and came" areas of south lamar and the domain. I doubt rents have ever been higher in either area.

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