It’s Shake Shack’s World, You’re Just Eating In It

The First Second Shake Shack

Congratulations on 100 stores. How are you feeling as a team?

Danny Meyer: I would first of all say 100 Shacks, we don’t have stores — but thank you. The appropriate response would be thank you. Randy, how are we feeling?

Randy Garutti: We wake up every day pinching ourselves. The surprises have never stopped surprising us, I guess.

I want to go back to the years between the 2004 opening and the 2008 Upper West Side opening — Shake Shack's "first second restaurant," to borrow a phrase from the Gramercy Tavern book. What were the questions you were weighing in those years?

DM: In the case of Gramercy Tavern, it was the first time we opened a restaurant other than Union Square Cafe, but it was not another Union Square Cafe. So Shake Shack was going to be the first time we had ever done any one thing for a second time, and it just was not part of our DNA. Interestingly, a number of people externally were suggesting that it would be a good idea, and I remember distinctly that none of us talked about it at all for at least two years. At about the three year point I remember Randy starting to say, "What if?" I was probably the guy that said, "No way."

I think we all agreed that the learning curve of running this kind of business was very different for all of us. We really wanted our roots to take hold before creating more fruit. Randy had gotten so much traction running the operations of Shake Shack that he justifiably had a credible voice. When he said, "No, I mean it. We’re ready and we can do this," and he had a space that seemed fascinating, that was the tipping point. Now Randy, what's your story?

RG: I was the director of operations of the company [then], so I’d spend one day at Eleven Madison Park, the next day at Gramercy Tavern, the next day at Shake Shack. We would finish at Shake Shack with a $5,000 day, and we thought that was the biggest thing that could ever happen: "Oh my god, we made it through this crazy line, we sold $5,000 worth of hamburgers." Today we regularly have a $30,000-plus day at that Shake Shack. It was a transformative time.

DM: Are you kidding?

RG: I found that Shack walking home in the Upper West Side... Then I was able to say, "Hey, let’s think about focusing on this and about what kind of team we can bring on board." Five or six of our original managers [from the Upper West Side Shack] now are area directors, and my buddy Mark [Rosati] sent us a resume and said, "I work at Gramercy Tavern, I’m interested in this burger thing, what do you think?" The rest is history: We were lucky to find Mark. Back then, I was working the line. I was working expo, I was cooking burgers. At that time we never dreamed there’d be a 10th Shake Shack, let alone 100. We went out and made the second one awesome.

Were you scared of what it could mean for Shake Shack to do a repeat, especially as that’s not something you had done before?

DM: We were actually hopeful that a second one might make the line a little less long at first, and the opposite happened. The line got even longer because more people knew about it. To the degree that I had concerns, there were two. Randy was great at disabusing me of the first one: I said, "We’ve never paid a rent like that in the history of this company." I didn’t know what it was like to be on something like Columbus Avenue. Randy was really convinced that we could make that work.

The second concern, and I think all of us share this, was that we were one-for-one with a standalone building in a public park. We did not know why Shake Shack was as beloved as it was. We love the burger, we love the shakes, but maybe it was only that successful because it was in a park. I wouldn’t say "scared," but to the degree that there was a concern, it was: What if the very essence of why Shake Shack is so beloved is now missing?

Mark Rosati: I was feeling so excited. There was never any fear in my mind whatsoever, because the vision from day one was to make sure this restaurant had a good connection with its new neighborhood. We said, "Why don’t we try developing three new Concretes that are based around this new location?" We looked across the street at the Museum of Natural History and said, "What could be fun there?" We created one called the Crunchstillation, which is inspired by the planetarium, and we said, "Why don’t we donate a portion from the sales from this concrete back to the museum, to make that connection really tight?" While this was Shake Shack and I was very much used to working in Madison Park, to me this felt fresh.

RG: It’s just taking the team [and going] from there, we had the same conversations that Danny has had every single time. All of a sudden it was, "Okay, we’re going to go into a glass building in the Theater District near Times Square." I remember Danny sitting us down and saying, "How are we going to make this glass building feel like a Shack? By the way our neighbor is an adult book store/dance club, we're gonna have kids lined up next to this place." I can tell you that conversation, for every single Shack of those first 10. We struggled with it... I think that’s where we really made a difference.

Shake Shack Today

With that growth, what do you see as the biggest changes to Shake Shack, either in the restaurant experience, or the company of people?

DM: I think what's changed the most is that, while the intuitive sense of how things should be done remains as vital, or more vital, than ever, the level of intentionality behind that intuition has increased. If something felt like it was the right thing to do in Shack number one, we just tried it. If it worked we kept doing it, if it didn’t work we would adjust it or kill it. Because now each time you come up with an intuitive thought, you could be impacting the lives of that many more people, you really have to put massive intentionality and even systems behind it.

It’s harder. Randy has a framed picture in his office that says, "the bigger we get the smaller we need to act." The company has never stopped trying things. It’s just that when you try, you have to add intentionality to your intuition.

RG: The beauty of our company is that Danny, me, and Mark — the three people you have now in the room — still try to do that stuff every day, and the company is like, "What? Are you guys crazy?" When I come up with an idea that doesn't sound right to Mark, he gives me stone face, like he doesn't want to say you’re crazy, but he’s saying it.

MR: I’m going to change my poker face now.

RG: Yeah, you should not be a poker player.

From left: Randy Garutti, Mark Rosati, Danny Meyer. [Photo: Nick Solares/Eater]

Shake Shack has had an undeniable influence on the direction of the broader American restaurant scene, especially in this emerging fast-casual space.
DM: Which we call fine-casual.

We’re seeing it more and more every year, fine-dining chefs are looking for their own scalable quick-service idea. Do you see the growth in this space as sustainable?

DM: Absolutely. People are not going to stop eating. So that’s good. Most people are not going to stop wanting more quality for fewer dollars and less time; that equation is not going to go away. So absolutely it’s sustainable... especially at a time when classic fine dining as we know it is more and more challenging. It’s undergoing a massive shift right now. All the fixed costs are rising like crazy and meanwhile I think what Shake Shack and many others are proving is that people don’t want to go backwards in terms of how their food was sourced, how it was cooked. But they’re willing to give up some of the niceties of full service, if they can get the quality and save a bunch of time and money.

As the space continues to grow, and there are more operators dipping their toe in the water, how does that impact Shake Shack?

RG: The greatest companies that endure are those that evolve So I think what's great is everyone says, "Okay, I’m not eating fast food and I want a burger, Shake Shack’s my place." Now there’s amazing pizza, there’s an amazing chicken sandwich, or name your favorite thing. That’s going to keep happening. With that, we’ve got to keep evolving.

We just opened in Los Angeles. That was number 94 or whatever. I actually think that LA might be the finest expression of everything we’ve ever done at Shake Shack, put in one community, the coolest artisanal food makers that Mark has found and teamed up with, one of the best burgers that we only do there. All of a sudden we are at our best at number 94, and we’ve got to keep doing that. If we stay who we are that’s not going to work, and yet at the same time we always we’ll protect the core menu.

Has there been any impact on your ability to source your food and find staff, now that there are more restaurants in the fast-casual space?

RG: It’s only helped, especially when you talk about the most important thing we do, which is all natural, no hormone/no antibiotic beef. The more chefs that require [it], the more people in our country and hopefully in the middle of America decide to eat that way... It’s going to make it easier. Mark’s leading the way. He’s one of the most important people in the country doing that right now.

MR: Something that’s important to us as we grow is trying to localize as much as we can in all those cities, from something as simple as a frozen custard. We’re going to open a Shake Shack in London: [So] why would we possibly source beef anywhere else but from the UK, which has amazing beef, spending the time to go and find those cattle, and then finding a great butcher, find the Pat LaFrieda the UK, to bring it all together. That’s something we’re very passionate to do any chance we get.

DM: Part of what I most love about Shake Shack is [that we] ask ourselves: If this were the only Shake Shack in the world, what would we have done?

A Big Mistake, Well-Handled

One of the phrases that lingered with me from Setting the Table is "mistakes well-handled." Looking back at the 100-store journey of Shake Shack, can you think of a critical "mistake well-handled"?

[Laughter] DM: On the count of three, it’s two words. Say it: One, two, three...

I assumed that was where this was going. How did you guys say, "Okay, we’ve made a mistake?"

DM: We make mistakes every single day. Sometimes they are operational, sometimes they are attitudinal, hospitality mistakes, sometimes they are culinary mistakes. It’s very easy to, in a handcrafted product that’s not stamped out, not made by a machine. Before we talk about the fries, there was one that happened about three months ago that, if I were ever going to write a sequel to Setting the Table, I would want to write about this. I got a letter from a guy... Randy, do you mind if I tell this story from Boston?

RG: Please.

DM: I got a letter from someone that started with the obligatory first paragraph explaining how experienced he was as a diner, used to be on the board of the James Beard Foundation, has traveled to all the best restaurants in the world, and has always loved our restaurants. And that’s when I’m always waiting for the other shoe to fall. He said his grandson, who was six, wanted nothing more than to go to Shake Shack in Boston. His grandson got there and wanted nothing more than a hot dog, and he got up in front of the line, which they waited in for some time, only to learn that we had run out of hot dogs that day. He couldn’t believe that we would run out of hot dogs.

It’s a honest human mistake, but the bigger problem was that the cashier didn’t really apologize and didn’t offer to do anything about it. So the grandfather asked to see a manager, who was able to scrounge up a hot dog, but then served the hot dog wrapped in a piece of lettuce, because they had run out of hot dog buns, as well. The guy writes, "There’s a 7-Eleven right next door, I read Setting the Table. Any of your restaurants would have gone next door to buy some hot dog buns, instead of disappointing a kid with that." Naturally when the team saw the letter, they went into motion.

No one instructed this, this just blew me away. They found out from the grandfather where his grandson goes to school. The team at Shake Shack called the school and said, "What if we come in... this little boy was so disappointed, what if we turn him into a hero? What if we give a class on how to make a Chicago-style hot dog to this whole kindergarten class? We bring all the hot dogs. He gets to be the star. You can invite all the parents you want."

I guarantee you that restaurant will not run out of hot dogs again. I guarantee you if they do run out of hot dogs, they’ll figure out how to go buy something somewhere, but meanwhile they ended up telling an even better story than if the mistake had never been made. I couldn’t have come up with a better chapter myself and I was so proud. You want to talk about fries now, don’t you?

Fresh-cut fries. [Photo: Shake Shack]

It was just such a prominent moment. The restaurant world had their eyes on how Shake Shack would handle a public mistake. I want to hear about how you approached it, what you learned, and what you think you did right or wrong in handling that?

RG: We started with frozen fries, because we had a 400-square-foot kiosk in Madison Square Park. We had no other room, so we picked the best fry we could think of, crinkle-cut classic, nostalgic fries. Everybody loved them. Every now and then there were some loud voices who said, "Why don’t you have a better fry? Why isn’t it fresh? You guys say you stand for something good." Capping off the moment was when Pete Wells gave us a wonderful one-star review. We were pretty pumped. But he says, "Danny Meyer, the owner of all these great restaurants, why can't one of your chefs teach you how to make a great fry?" That’s what capped off a few years of complaints. We looked each other in the eye and said, "Let’s do this."

Then Mark set out on almost a year-long journey and I believe created the best damn fresh fry ever made. And everyone hated it. That’s just how it transpired. I stood there many days handing out fries myself, and I had people telling me, "You’ve ruined my life. I’m never coming here again. I hate you. Shake Shack is ruined, you guys are terrible."

Meanwhile, we had invested over a million dollars in the restaurants. It’s costing us more labor, more time, more of everything. The hardest thing we’ve ever done and people are hating it. This goes on, we kept saying, "But they don’t know any better. We know better, this is fresh, I’m telling you they’re going to come around." For about six months we let it roll. We would get 30 complaints a day. Our marketing team would just hate their jobs, because all they do is answer fry complaints. Our teams in the Shacks were saying, "There’s more water around here. My potato cutter breaks and I’m out of fries."

DM: "Someone slipped on water on the floor! Potato peels!"

RG: "Too much grease!" Everybody’s starting to get upset, but still we press forward, because now we know we’re right. We had conviction. I’ll never forget the weekend two things happened. First thing was Jessica and Jerry Seinfeld host their kid’s little league baseball game, and we brought a bunch of Shake Shack to the game to support the team. She takes an Instagram post that said, Shake Shack, love you, thanks for the free food or whatever, but "PS can we talk about the fries."

On that very same weekend, I had my own kid’s little league game that I coach, and I didn’t even order fries for my own kid’s team. Because deep down at some subconscious level I was embarrassed, I knew they weren’t going to be good, and knew the kids wouldn’t like them. I remember coming in that Monday morning, Danny and I sat in my office, looked at each other and clearly said...

DM: "Are you thinking what I’m thinking?"

RG: I said, "I think we fucked this up." That was the therapy moment, where we both were able to breathe and look at each other and allow this conversation after six months of denying it. When we told the teams, you cannot believe the relief. When we sent out the the Instagram of crinkle-cuts coming back, it’s to this day the most-liked thing we’ve ever done. It was a moment where as a leader you say to yourself, "When something I decide is true north and you know you are doing the right thing, yet everyone along the whole ride is telling you it’s not the right thing, at what point do you look yourself in the mirror and admit it?"

We were way late but we had to go through it, and experience has made us a better company, better leaders, in every way. Better listeners than we have ever been. I could go on for hours about it, but it was a turning point in the company’s history.

DM: We have to remind ourselves this was not a scandal. This was a very well-intentioned effort that in retrospect, from a consumer standpoint, was a mistake. Shake Shack didn’t invent fries, burgers, shakes. What we’ve always tried to do is to take a construct that has existed originally for the purpose of bringing people together and to say, "How can you take something that people know and make it even better than they knew it could ever be?" We’ve all grown up hearing that fresh is always better than frozen. We certainly know that with beef.

When we were hearing from some highly respected food people, almost goading us, say, "Why are you taking the easy way out, which is opening a bag of frozen fries and dumping them into a fryer?" We took that as challenge to do it fresh, and boy did we learn that fresh is not always better than frozen.

I disagree that they always sucked. There were times when those fresh fries were amazing... But I would say that we were in a moment of willful suspension of objectivity, because we so wanted to do the right thing.

Then something amazing happened: We opened in London. We didn’t have the equipment or the space to do fresh fries. Whether we liked it or not, they were going to be crinkle-cuts in London. But then we learned that our crinkle-cut fries were unacceptable in terms of government regulations. That forces us to find a crinkle-cut fry that was absent the coloring agent, absent the preservatives, and low and behold it ended up tasting better than the one that we used to have in the United States. For me this is a big part of the story, because it gave us a chance to come back to the United States and say, "Not only are you guys going to get your crinkle-cuts back, but they’re going to be better tasting and even maybe better for you than they ever were."

MR: At the same time we were in the process of opening London, we were working on the fresh-cut fries. I took that opportunity to visit some famous chefs known for making traditional fries, thrice-cooked chips, all these fun variations.

The best one that I tasted was from Heston Blumenthal, and I go into the kitchen and see the process. I was shocked to see that in their perfect world of taking potatoes, testing the sugars, and going through all these various methods to create their thrice-cooked chip, they actually added a freezing [step]. They said, "That’s very important, because before we fry, it locks in all the water molecules so when you fry them, they almost explode and create this soft interior." The other big moment for me: They actually take the thrice-cooked chips off their menu when the potatoes are not great, because there’s no way of tempering spiked sugars in a potato.

That gave me a lot more confidence to say if these guys can't master that and they’ve done it so much longer than we have — and they actually do freeze even their perfect potatoes — maybe frozen is not really as bad as we think it is.

The first Shake Shack in Austin, TX. [Photo: Robert J. Lerma]

100 Shacks From Now

When the ChickenShack trademark came to light, there was a bit of a media frenzy around whether or not it was a separate restaurant concept. Could you ever see yourselves creating a whole new multi-unit concept apart from Shake Shack?

RG: We never say never about anything. That was an exciting moment to see how the world believes in what we’re capable of. The brand of Shake Shack, Danny’s fond of saying, there’s a reason "burger" is not its name. Shake Shack could be anything. It could go anywhere. All that said we’re big dreamers, we are excited about what’s next, but we’re squarely focused on building Shake Shack as you know it today. There’s no plan at all for anything else, but who knows where it could go in future.

Is there a place for increased automation in an employees-first, hospitality-driven restaurant, and what might that look like?

RG: I would say it a little differently. There is a huge opportunity for technology. We think differently about automation because what we do takes full hands and full hearts. It takes human beings and we have no desire to turn human beings into machines, iPads, or other things that take away the opportunity for people to experience Shake Shack with the hospitality that built our company for 32 years.

But that said, there’s always going to be a change in how people want to experience it, so we’re constantly thinking about how to [improve] the line, the waiting, the pick up, maybe someday you want it delivered. We want to meet people were they are, and that’s how I think the future will go. But that’s going to take more human beings than we’ve ever had to make those things happen.

DM: I remember the recession in 1991, right after the Gulf War. Restaurants all over New York were asking, "What can we cut back on because our margins are low?" They would take two kinds of bread out of their bread basket, and they would turn their table cloth into a piece white butcher paper, just looking for every way to cut back.

I don’t think that’s how you make a better restaurant necessarily, and what Shake Shack is constantly looking at is, How can we offer more hospitality? How can we offer a better product? I know there is a temptation to replace human beings with robots or with iPads. We want you to leave you there just skipping with delight, and so far we haven’t found anything that does that better, either in terms of the food or the hospitality, than people.

When you think about Shake Shack 100 Shacks from now, what do you see?

DM: I hope there’s one in St. Louis by then.

RG: He’s been saying that since number two, though...

This interview has been edited for clarity and length.

Hillary Dixler is Eater's senior reports editor.
Editor: Erin DeJesus
Lead photo: Helen Rosner