Enlightened Hospitality: How Danny Meyer Uses Technology to Improve Service & Delight Customers

Restaurateur Danny Meyer does not believe in technology for technology’s sake.

“The technology we’re most interested in is not the technology that puts people out of work, but which reinforces hospitality,” said Danny Meyer, founder and CEO of Union Square Hospitality Group (USHG), at the Cornell Tech @ Bloomberg speaker series. At a time when technology is transforming the restaurant industry, Meyer argues that targeted innovations can enhance the hospitality sector as a whole.

Meyer began his hospitality career over 30 years ago in New York City when he opened his first restaurant, Union Square Cafe. Since then, USHG has grown into a portfolio of some of the city’s most beloved and celebrated restaurants with more than 2,400 employees. He also founded the global burger chain Shake Shack, which went public in early 2015 and is now worth about US$1.3 billion.

Meyer told the audience at Bloomberg headquarters in midtown Manhattan that his restaurants increasingly rely on technology for reservations and back-of-the-house operations, thus improving service and enhancing the customer experience. But he also believes that technology should only be put to work if it clearly helps hospitality and “makes your life better.” As an example, he cites USHG’s early use of, and investment in, the online reservation service OpenTable.

“People ask me, ‘why don’t you use robots to make pizza in your restaurants, or replace waiters with iPads?’” he notes. While such technology applications are gaining ground in the industry, Meyer says he won’t go in that direction. “It doesn’t speak to me. I like to think that part of the reason people enjoy food in a restaurant is that it reminds them of the first gift of hospitality they received.”

When asked about new technologies being used in his restaurants, Meyer mentions the recent debut of Shake Shack’s mobile app, which allows guests to skip the line by ordering their food online and picking it up in 15-minute time slots at the chain’s often-crowded venues. The app required two years to develop in order to accurately reflect the unique ways the brand interacts with its customers. “How you order your food has to feel like Shake Shack and be as much a part of the experience as actually going there,” said Meyer, who is chairman of the board of the popular chain.

USHG also plans to provide Apple Watches to some of the staff at its high-end restaurants, starting at Union Square Cafe. Floor managers and sommeliers — but not waiters, who must maintain eye contact with guests — will use the device to relay information about late arrivals, sequence food and wine orders and even ping the coat-check staff about departing guests. Meyer reckons the sleek, wearable technology will improve team communications and streamline operations. He also adds that Apple Watches look much better than the operator style headsets currently in use at many restaurants, which remind him of the gear worn by rock concert event staff.

Meanwhile, the privately-held restaurant group also champions social media as a tool to gather information from customers about their dining experience. Recalling his fears in the early days of blogs, and how they might be used to publicize people’s negative experiences at his restaurants, Meyer says his company has embraced social media as a way to “hear conversations that are actually happening, between people and with us.” This dialogue allows the company to fix mistakes in real time. “And if it’s a compliment, we can throw gas on it and make sure all our followers see it,” he said.

In building his restaurant empire, Meyer pioneered a philosophy of “enlightened hospitality,” the belief that putting employees first is the key to running a meaningful and sustainable business. Observing the despondent mood among employees after the recent presidential election, Meyer reached out with a letter praising the democratic process and urging everyone to accept the election results, regardless of political affiliation.

The letter, which was widely read outside the industry, points out that hospitality is needed now more than ever to make people feel better—“like a big hug.” Explaining his motivation to address the staff, Meyer said, “This is what leaders do—they name reality and provide hope.”

Enlightened hospitality was foundational to Meyer’s decision to disrupt restaurant industry norms and gradually eliminate tipping at all thirteen of his New York City restaurants, starting in 2015. “The economic divide between tipped and non-tipped employees was just not acceptable, because it wasn’t based on merit,” he reasoned.

Meyer says the revenue-sharing model, which the company refers to as Hospitality Included, is being implemented at his restaurants and has two goals: to help alleviate income disparity between employees and to promote job advancement. Under the new system, the entire restaurant team—from cooks to wait staff—is compensated equitably, competitively, and professionally.

Looking ahead, Meyer says technology will continue to play a large role in his restaurants by, for example, providing a customer-feedback loop. In addition, he foresees the beginning of a seamless, post-tip era in which guests simply leave the restaurant without waiting for the bill. “I would love to see a system like Uber or Lyft where you can just get up and go, and then tell us about the experience.”

You can view the entire interview here.