Danny Meyer on surviving Covid, inflation, and the next Shake Shack

Executive overview

The hospitality industry absorbed simultaneous shocks — pandemic, inflation, supply chain collapse, and labour upheaval — that individually would each have been historically severe. Danny Meyer, founder of Union Square Hospitality Group and Shake Shack, reflects on navigating all of them at once and why the conditions that made the last two years brutal are quietly creating a better industry.

Entrepreneurs need problems the way surfers need waves — and we've never had more problems to solve.

Surviving the pandemic and returning to strength

• USHG went from 2,400 employees to 45 across three rounds of cuts; is now back to full headcount
• 70% of current employees joined after the crisis began — the team was effectively rebuilt from scratch
• Omicron forced closures during the highest-revenue weeks of the year (Christmas, New Year's)
• Planned CEO succession to Chip Wade was delayed to avoid abandoning the organisation mid-crisis
• Meyer frames the executive chair move as "stepping up" — getting higher in the tree to see more, not stepping back

The two-pocket framework for decision-making

• Every leader's real title is Chief Problem Solver
• Two types of problems: genuinely hard to figure out, and problems where you know the answer but it's too unpleasant to act
• The second pocket — the avoidance pocket — only gets worse the longer it goes untouched
• The pandemic forced Meyer to empty that pocket: racial equity, structural layoffs, vaccine mandates, cultural decisions

Diversity and accountability

• Hired Dr. James Pogue to lead diversity work; Pogue insisted Meyer himself take the chief diversity officer role
• Rationale: until an organisation sees diversity as the founder's personal priority, it stays hollow
• USHG now posts diversity statistics by job on its website — not for customers, but for internal accountability
• Built an employee relief fund with guests that raised $2 million; distributed in increments of up to $2,500 per person to bridge the gap before CARES Act payments

Inflation: unprecedented and counterintuitive

• Meyer has run restaurants for 37 years and says current cost conditions are unlike anything he has seen
• Suppliers are voiding contracts mid-term — something that has never happened in his career
• Restaurants already operate on thin margins; price increases are unavoidable, not discretionary
• Counterintuitive upside: inflation drove wage growth that government minimum-wage policy had failed to deliver
• Tipped employees are earning significantly more as menu prices rise — and wage floors, once raised, don't come back down
• Commodity prices will fall; labour gains are permanent — that sustained shift is the lasting benefit of this period

Business, politics, and the consumer company dilemma

• Meyer's view: business is politics — companies run for office daily, with employees and customers as constituents
• USHG mandated vaccination for staff and guests before the city-wide mandate; faced organised protests on at least three occasions
• Shake Shack faced a boycott campaign over its hamburger bun supplier's political donations — a donation USHG had no part in
• His compass: when asked to take a stand, ensure it is consistent with company values regardless of commercial pressure

Enlightened Hospitality Investments and the search for the next Shake Shack

• Fund invests post-venture, pre-liquidity-event in businesses led by founders with a matching "heart set"
• Core thesis: shareholders are the outcome, not the input; the inputs are team, customers, community, and suppliers
• Portfolio companies serve as a two-way learning ecosystem — USHG both backs them and adopts their ideas
• Slutty Vegan (Atlanta): half-mile opening queue in Brooklyn; exemplifies "earning a tribe"
• PreziTaste: AI cameras using body heat to predict kitchen order volume, cut waste, and reduce wait times
• NotCo: uses a fruit-and-vegetable algorithm to replicate the flavour, texture, and appearance of animal products — NotMilk is made from pineapples and cabbage
• Goldbelly: invested pre-pandemic; became a household name when food delivery exploded

Why this is a golden age for entrepreneurship

• Problems of this scale and density are rare; entrepreneurs who thrive need exactly this kind of wave
• Capital is still sitting on the sidelines — lower public-market valuations reflect hesitation, not absence of money
• The right idea, passion, and leadership skills are sufficient to access that capital right now
• Meyer shifted from "hopeful" (passive) to "optimistic" (on the balls of his feet, ready to move)