Afterthoughts: Danny Meyer’s New Rules for Expansion

 

In 2002, Union Square Hospitality Group opened Blue Smoke, a pit barbecue restaurant offering a selection, so notes the website, “of regional barbecue styles from across the country including St. Louis, Kansas City, Memphis, North Carolina, and Texas.” In 2004, Shake Shack opened in Madison Square Park, the prototype for a chain of “modern-day” roadside burger stands. To date (2011), there are five Shake Shacks open, four in New York, one in Miami Beach with more on the way (see below, from Bloomberg Business Week).

Also in 2004, New York’s Museum of Modern Art selected USHG to create and operate the restaurants at its renovated and expanded museum: a fine-dining restaurant, The Modern, and two cafes, Cafe 2 and Terrace 5. No sooner had these restaurants opened, they garnered critical acclaim from the media and customers; and, according to Danny Meyer’s hypothesis and words of caution (as noted in February 1999: Danny Meyer: A Reluctant Expander), were presumably “as excellent as the restaurants that preceded [them] and . . .[improved] the previous restaurants in the process.”

ESTO                                                                     

Now, along comes this in 2012: according to Bloomberg Business Week (Jan. 16-22, 2012), “[Meyer] has agreed to sell  . . .a partnership stake in Union Square Events [USE], the catering, sports, and entertainment unit of [his] culinary empire . . . to  Related, the New York real estate developer behind Manhattan’s Time Warner Center . . .and owners of a $15 billion real estate portfolio.” For Meyer, the partnership provides USE opportunities to expand the reach of Shake Shack (left) and Blue Smoke throughout the kinds of projects Related develops.

Forgive me my cynicism—it’s in my DNA—but as each Shake Shack and Blue Smoke opens will it, according to The Meyer Hypothesis (TMH), “be as excellent as the restaurant that preceded it and improve the previous restaurant in the process”? I know, I know, we’re talking chains here, chains that are as different from USHG’s Union Square Cafe as McDonald’s is from The French Laundry; chains where one unit is not much different (indeed, if there is a difference) from the one that precedes it and not much of an inspiration for the one that follows. So? So, I thought I’d speculate:

Each Shake Shack and Blue Smoke may be a link in a chain, but one dares not lose sight of the fact they still will be managed by USE and USHG and eye-balled by Danny Meyer who knows intuitively and from years of study and research that a chain’s failure “to excel or improve” (n.b., TMH) is not only a result of the obvious—neglect, boredom, inattentiveness—but of an unconditional conformity to the conventional, the curse of most chains whose obsession with consistency from link to link to link precludes any desire to innovate, stimulate, modify or inspire.



Status quo? What’s that?
 

Here’s what I think: even though the menu and service and the marketing of both will remain relatively the same, I figure the next in the line of ’Shacks and ’Smokes will be as excellent as the first while enriching it in the process. No one has ever accused Danny Meyer of being happy with the status quo.

About that IPO filing late January 2015? Grist for another Afterthought. Or maybe not. Stay tuned.

(End note. USHG closed Tabla in 2010, 12 years after it opened. It is the first time USHG was forced to close one of its restaurants. Tabla closed because it had difficulty filling its 283 seats in an economy that could neither sustain nor support a restaurant with a menu, Indian, some described as too ethnically pure. Also, a year before Meyer closed Tabla, he sold Eleven Madison to exec chef, Daniel Humm, g.m., Will Guidara and financial backers. Why? No need to get into that here. For details Google Eleven Madison; for more on Tabla, Google it as well.)

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