CHAPTER 5

RESTAURANT-SMART VS. CORPORATE-SMART

'Before you fall head over heels with this one way of doing things, make sure you understand there are different approaches out there.'

He knew how much I loved working for Danny Meyer and affirmed that what I was learning there, I couldn't learn anywhere else. But at the time, Danny's company had only four restaurants. Even if they were four of the best restaurants in the country, my dad was encouraging me to consider working for a bigger restaurant group-one with procedures and systems in place that USHG hadn't yet had the time to implement.

I was expecting my dad's excitement to match my own when I called him on my late-night walk home from dinner service at Tabla to tell him I'd been offered my dream job at Blue Smoke. Instead, in his calm, measured way, he questioned whether it was the best step for me to take-and listed all the reasons why it might not be. I listened, as I always did, because my dad didn't just give advice; he always took the time to explain why , a leadership skill I've always tried to emulate.

It was on that call that he introduced me to the concept of restaurant-smart vs. corporate-smart.

He described the distinction between the two. In the simplest terms: Where do the highest-paid people in the company work? In the restaurants themselves, or in the corporate offices? That says a lot about how the company is run.

In restaurant-smart companies, members of the team have more autonomy and creative latitude. Because they tend to feel a greater sense of ownership, they give more of themselves to the job. They can often offer better hospitality because they're nimble; there aren't a lot of rules and systems getting in the way of human connection. But those restaurants tend not to have a lot of corporate support or oversight-the systems that make great businesses.

Corporate-smart companies, on the other hand, have all the back-end systems and controls in areas like accounting, purchasing, and human resources that are needed to make them great businesses, and they're often more profitable as a result. But systems are, by definition, controls-and the more control you take away from the people on the ground, the less creative they can be, and guests can feel that.

Restaurant-smart companies can be great businesses, and corporate-smart companies can deliver great hospitality. But their priorities are different, in ways that fundamentally affect the guests' experience.

I could see my dad's point. Danny was the most restaurant-smart guy out there, but his company had grown organically, so there was very little big-company infrastructure in place. At the time, USHG didn't even have a corporate office; in fact, Danny's own office was just a room in the basement of Gramercy Tavern.

My dad recognized that I was getting an incredible education in restaurant smarts with Danny's company. But he wanted me to one day run a company that was corporate-smart and restaurant-smart.

The people who worked for Danny had a tremendous amount of autonomy, which was fantastic for creativity-a chef didn't have to justify a special and expensive ingredient or fill out a thousand forms to clear it. But all that autonomy sometimes meant leaving money on the table, too. If all the chefs in the group were buying dishwashing detergent from different suppliers-which they werethe company had lost a valuable opportunity to collectively negotiate for a better price on an item that would have no impact on their guests.

It was time to go get the other half of my education.

Control Doesn't Have to Stifle Creativity

Tabla was one of the hottest reservations in New York when I left my job there to go work for Restaurant Associates, my dad's old company, as the assistant purchaser and controller for the restaurants at the MetLife Building. In other words, I'd gone from the front door of one of the most glamorous restaurant jobs in New York to the basement at one of the least.

It's impossible to overestimate how important it was that I was doing both jobs simultaneously. Food and beverage costs average thirty cents out of every dollar a restaurant makes, and most of what lands in a walk-in won't last more than a few days. Oysters weren't theoretical to me as a luxury line item or a cell in a spreadsheet-they were the valuable, ugly little rocks I'd counted by hand earlier in the day, packed in ice, and nestled into their fish tub.

Ken Jaskot, the purchaser at RA, didn't need a full-time assistant, and the controller, Hani Ichkhan, didn't need one, either. So I split my days between them. From six a.m. to noon, I learned how to inventory a walk-in refrigerator, how to receive a delivery, how to calculate costs of goods sold, and how to order food and supplies. After lunch, I would take off my whites, put on a blazer and a tie, and start in with the numbers in the accounting department upstairs.

Upstairs, Hani made me run administrative reports pertaining to all aspects of the business-accounts payable, accounts receivable, payroll, food costs, and inventory-every single day. So I spent my mornings making on-the-ground decisions, and the rest of the day tracking the impact those same decisions would have on the company's bottom line. It was boot camp and business school, rolled into one.

Hani was so old-school, he still used a leather ledger. In his office, 'in the red' wasn't an expression-it was ink. Watching him page through a report was like watching Floyd experiment with spices at Tabla; for the first time, I saw someone approaching the financial side of the business with the same unreasonable passion and ingenuity I saw Danny putting into enlightened hospitality.

The big surprise? I loved it.

It was thrilling to see what was possible. One afternoon, Hani flagged one of my reports-he'd noticed that food costs at a particular restaurant were way up, and for the second month in a row. He pulled another of my reports from the pile; the restaurant was selling a lot of lobster. Yet another report: lobster prices had skyrocketed. A quick call to Ken to confirm: yup-demand had outpaced supply, and prices had gone through the roof.

Meanwhile, in our office: 'Will! Figure out who else in the company is selling lobster.' Another series of phone calls. . . . Lobster season at Restaurant Associates was over.

A call to the chef: Were we undercharging for the dish? Definitely, given what we were paying for the ingredient, but he couldn't raise the price high enough to get costs in line without sticker-shocking our guests. So the path forward was clear: the dish, popular as it was, had to come off the menu, at least until lobster prices dropped. Luckily, the chef had been playing with a scallop dish he could replace it with.

The thrill of the chase was infectious; watching that analysis unfold had been so exhilarating, I'd wished I'd had a bag of popcorn. But the episode was also a masterful display of the power of the systems Hani had put in place. As soon as he saw that food cost number, he had all the resources he needed-and the authority -to uncover and solve the problem. He'd saved the company an untold amount of money in twenty minutes, and without leaving his desk. Suddenly, my boring sub-reports didn't seem so boring anymore.

But overhearing that phone call taught me that someone in corporate wielding that kind of control isn't always unwelcome. The chef's bonus was tied to his food costs, and if his numbers were consistently below par, he'd be out of a job. That explained the relief I'd heard in his voice when Hani told him where he'd been bleeding. Our back-office efficiency meant that guy didn't have to worry about the numbers and could go back to being a chef. We weren't stealing his creativity; we were returning him to it.

In a restaurant-smart company, that phone call most likely would never have happened. And if the controller did happen to catch the mistake (if the company had a controller at all!) and reached out to the chef, they'd likely be told to stay in their lane.

People talk about how hard the restaurant business is, and it's true that it's not easy; restaurant owners face unique variables and narrow margins. But whatever terrifying statistic you've heard about how many restaurants fail in the first year has a lot more to do with the people who open restaurants without understanding the business part of the business.

When I'd left Tabla to go to RA, I thought I wanted to be Danny when I grew up. After the lobsters, I wanted to be Hani.

Trust the Process

Just because I was having a great time learning from Hani didn't mean he wasn't driving me crazy, too.

So the whole time I worked for Hani, I was desperate to get my hands on a P&L for one of the restaurants he oversaw. But he guarded those P&Ls like a dragon; I wasn't even allowed to look at them.

In my accounting classes at Cornell, they'd told us everything starts and stops with the profit and loss statement. It's the thirtythousand-foot view, the Big Picture-a snapshot of the business that tells you what you're doing well, and what requires attention.

That didn't stop me from pestering him: 'Can I see a P&L? Now?? Is it time?? What about now?' Every day, he told me to go run my reports.

Then one day, six long months in, Hani dropped a P&L in front of me. I'd hardly opened it before he started peppering me with questions, but he'd prepared me well; running those endless subreports meant I knew how to attack every problem that could possibly crop up. And because I was working upstairs and downstairs, I had an almost preternatural sense for what the spreadsheets were telling me. Naturally our disposables line was high! But not because of waste or overordering; the company had sent us too many of our custom-printed to-go bags, and the guys downstairs had loaded them onto the shelves before we'd caught the mistake. So, yes, they needed to double-check the receipt before unpacking an order, but at least I knew why that line didn't look right.

I'm so thankful to have had a leader like Hani at that point in my life; there's so much I wouldn't have learned if I had skipped steps. I thought of him often, later in my career, when I was managing young people hungry for more responsibility or a bigger title. Hani hadn't been doing me a disservice by making me wait; he had been forcing me to strengthen my foundation, a solid base I relied on for years afterward. Waiting didn't dim my ambition or hamper my progress; it taught me to trust the process-a lesson I would see the wisdom of when I was showing my own staff that the right way to do things starts with how you polish a wineglass.

There's no replacement for learning a system from the ground up.

Sometimes Control Stifles Creativity

After nine months, RA moved me from my hybrid purchasercontroller assistant position and gave me another one: the assistant general manager and controller of Nick + Stef's Steakhouse at Madison Square Garden.

As assistant general manager, I ran around on the floor during the pregame crunch, solving problems and helping servers. I was thrilled to be back in the dining room, talking to guests and finetuning their experience. During the off-hours, I did the restaurant's accounting, putting into practice everything I'd learned from Hani.

Nick + Stef's is an unusual restaurant, in that it's basically dead all the time-except right before a game at MSG, when it turns into one of the most popular restaurants in New York. Two hours before the game, people swarm in like locusts, order massive steaks and beautiful bottles of wine-then, ten minutes before tip-off, the whole restaurant stands up en masse and swarms out again. Because of that unevenness, everyone who worked there wore multiple hats-which made it perfect for me.

After two months, the changes I'd made had improved the restaurant's profitability by two points-and I was just as excited to run that report as I had been the first time I sent a host to top up someone's parking meter at Tabla.

Two days later, though, the arrangement was back in its original spot. I asked my general manager why. 'Arts and Design from corporate stopped by, and they weren't happy. You can't move stuff without asking them; that's not our job, it's theirs.'

Then, one afternoon, while helping out behind the bar, I realized that a floral display was blocking the bartenders' ability to make eye contact with the guests sitting at the two stools at the end of the bar. Easy fix: I moved the vase to the other side of the bar, where it looked just as good. As a bonus, the new placement blocked the guests' view of the busy and sometimes messy service bar, where servers stopped to pick up the drinks that bartenders had made for their tables.

Wait, what? I couldn't move a vase ?

Still. How could people in an office-who'd never been behind any bar, let alone ours-think they knew better than us about where that vase should be placed? The question nagged at me every time I saw that vase-and the bartenders craning their necks to see their guests around it. I had learned from Hani that corporate-smart didn't by definition stifle creativity. But that vase taught me that, left unchecked, it would.

At one level, I understood. When you have a lot of restaurants, you have to put some controls in place. I happen to have a decent sense of design, but not everybody does; you can't have random people making arbitrary decisions about how your restaurant is going to look.

Still, this was only a blip in an otherwise great experience, and I didn't dwell on it. I was still having fun on the floor on game nights and getting lots done in the back office.

Then, a month or two later, I ran into trouble with a server. Let's call him Felix. Felix's type will be familiar to managers in every kind of customer-service business. They're notoriously disrespectful to their coworkers and often an absolute nightmare to work with, but they're considered unfireable because they're so beloved by the company's customers.

I have strong feelings about the Felixes of the world. Just because a few regulars love an employee doesn't mean they should be allowed to erode the foundation of everything you're trying to build. As charismatic and charming as these people may be with the public, and as valuable as the relationships they have with guests may seem, the collateral damage the Felixes do to the culture of a business is too dire to be tolerated.

One night, Felix rolled into work halfway through a dinner service, a full two hours late. That was a problem, because the dinner rush at Nick + Stef's before a game was no joke, even when we were fully staffed. Still, when he walked through the doors, I channeled the charitable assumption. 'Hey, I've been calling you. You had me worried-is everything okay?'

Without apologizing, Felix casually informed me that he'd 'lost track of time.' That was when I went from concerned to furious. 'We've all been running our faces off, covering for you. Where have you been?'

'Don't bother changing,' I called after him. 'You're fired.'

'I don't need to explain that to you,' he scoffed, pushing past me and heading toward the locker room.

The next day, I got a call from Human Resources. 'Felix called. We know he can be tough, but regulars love him and his check averages are routinely high, so we've made the decision to go ahead and rehire him. He'll be at work tomorrow; it would be great if you could apologize to him.'

I did, and I was livid. Corporate-smart was all fine and good, but at what point do you need to trade some control in favor of trusting the people on the ground, the people who are connecting in real time with your team and your customers?

Again-at one level, I get it, I really do: a big company can't afford to have a twenty-three-year-old manager firing everyone who annoys him without cause. But whoever was sitting in that office reviewing how much food and wine Felix was selling on a spreadsheet could have no idea of the destructive impact he had on the team as a whole.

Former navy captain David Marquet says that in too many organizations, the people at the top have all the authority and none of the information, while the people on the front line have all the information and none of the authority. I was learning that, taken too far, corporate-smart could be restaurant-dumb.

I have thought of this experience many times when mediating disputes among my own employees. 'We put our employees first' should mean all employees. Many misunderstood this about the first tenet of Danny Meyer's enlightened hospitality. When he said, 'Take care of each other first,' he didn't mean it was only a manager's job to take care of the hourly employees; it was everyone's job to take care of everyone .

I still stand by my decision to fire Felix. And I still feel that HR reversing my decision without consulting me-without even asking for my side of the story-was unacceptable.

Managers are employees, too. That doesn't mean they're automatically right or should be allowed to fire loyal, long-standing employees on a whim. But if you take care of your managers and give them what they need to be successful, you put them in a better position to take care of their teams.

One afternoon a few months later, on a day off, I had lunch at Union Square Cafe, where my old boss Randy was general manager. (I didn't have a ton of money at the time, and eating where your friends work usually results in some free snacks.) Leaving the restaurant, I ran into Danny Meyer in Union Square. He didn't know me well, but we'd had a good relationship when I worked at Tabla, and we stopped to talk for a minute.

After some grumbling, I brushed off the incident, figured out how to work with Felix, and got on with the job. But I'd be lying if I said that incident didn't change my relationship to my work. I felt disempowered, because I had been. And it was hard, from that disempowered position, to give all of myself-to spend twelve to fourteen hours a day executing someone else's vision-knowing that they'd had so little trust in me.

I wanted to stay connected to Danny because he was someone I admired. So a day or two later, I sent him an email, filling him in on what I'd been up to since I'd left Tabla the year before, including everything I was learning about accounting and purchasing.

Danny wrote back the next day, telling me in confidence that he'd signed an agreement to run the restaurants at the newly renovated Museum of Modern Art. 'I'd love to talk to you about it sometime.'

The Modern's opening would unquestionably be among the hottest and most eagerly anticipated of the year, but that wasn't what interested me. When I got Danny's email, my first thought was: Whoa. They're taking over the restaurant operations of an entire museum. Imagine that P&L.

It was 2004, and MoMA was reopening after a two-year-long, $450-million renovation and expansion. Danny would be opening a high-profile fine-dining restaurant on the ground floor of the museum called the Modern, which would look out onto MoMA's legendary Sculpture Garden. The chef was Gabriel Kreuther, a rising star from Alsace who who was one of Food & Wine' s Best New Chefs in 2003, and the dining room design was stunning-modern and serene. The Bar Room, a more casually designed area in front, would serve small plates and cocktails at the long, luxurious bar.

And at our meeting, Danny proceeded to offer me the exact job I wanted: general manager for the casual food service operations in the museum. These included two cafés, where museumgoers could grab a salad for lunch or a cup of coffee as a pick-me-up; a staff cafeteria; and an in-house catering team that could service meetings and small gatherings. In other words, I would be responsible for everything except the fine-dining restaurant downstairs.

It was perfect. I had loved my time at Restaurant Associates, and I owe a lot of my success to what I learned there. I could easily have stayed with that company and gone on to do great things with them. But what Danny was offering me was truly unique and right up my alley: the chance to find out if I could bring corporate-smart to the most restaurant-smart company in the world.

Find the Balance Between Control and Creativity

I loved MoMA.

The museum staff had relocated to a satellite facility in Long Island City during the extensive renovation, so I was the first employee to have an office in the new museum. Coming into the empty building as the final pieces fitted together was the ultimate behind-the-scenes experience. The first couple of weeks, I passed Monet's Water Lilies every morning. It was leaning up against a wall, like the framed Pearl Jam poster I never got around to hanging in my college dorm.

That was true, even within my own company. Everyone at USHG was focused on what was happening down at the Modern and at the Bar Room, both of which were huge hits right out of the gate, equally and instantly adored by the critics and by the crowds.

My first office at MoMA was on the fifth floor. It was enormous -probably eight hundred square feet-and overlooked the Sculpture Garden. Before you get too excited, I was only up there because they were finishing the floors from the top down. When the museum staff started moving back into the building, I got systematically bumped down, floor by floor, like Milton in Office Space , until I ended up in the sub-basement. Which tells you how high-priority the food and beverage program was-at least, the food and beverage program I was responsible for.

The museum cafés, meanwhile, were the redheaded stepchildren of USHG, and I loved it. We were flying under the radar and had lots of creative freedom as a result. I immediately set out to implement my vision: to make the cafés at MoMA corporate-smart and restaurant-smart. But what I discovered almost immediately is that walking that line is really, really hard.

One example, of many: our food costs in the cafeterias were high, largely because of waste; we refilled the prepared-food cases with fresh items right up until we closed, which meant we threw out a ton of food at the end of the day. The obvious solution was to stop restocking the cases at the end of the day, but I hated the thought of latecomers settling for whatever sandwich or salad happened to be left over.

Every decision I made seemed to expose the natural tensions between improving the quality of the experience the guests were having and doing what was best for the business. Restaurant-smart meant leading with trust-including allowing the people who worked for me to do what they felt was best for the guests. Corporate-smart meant running a tight ship. Which was right?

Hani would probably have sat down with the chef, Meg Grace, to explain why she had to use ham instead of prosciutto. But that wasn't the relationship I had with Meg, and it wasn't what either of us wanted for our guests, either.

It was a step in the right direction, if not a perfect solution; I did miss the orderly abundance of a fully replenished case. But the experience showed me that creativity was going to be the main ingredient in striking a true balance between restaurant-smart and corporate-smart.

Meg and I found a compromise we could both live with: she'd keep using expensive ingredients, and we'd stop topping up the cases an hour or so before we closed-instead, we'd make all the salads and sandwiches on the menu to order for people who came in during that final hour. The labor costs were more than offset by what we saved on wasted food.

The Rule of 95/5

MoMa's Sculpture Garden is a unique New York space. Originally opened in 1939, it was redesigned in 1953 by Philip Johnson (who also designed the Four Seasons) as a 'roofless room'-an everchanging outdoor gallery that would combine nature with architecture and art in a brand-new way. Massive sculptures rest on graceful, asymmetrical marble-paved areas, while birds sing from the plantings as if they don't know they're in the middle of Midtown.

About a year into my job at MoMA, I was starting to get a little restless. I missed the energy of the opening; there's something magical about bringing a new idea to life, and I wanted that experience again.

There's nothing remotely like it in the city.

So I became completely, utterly obsessed with designing a gelato cart for the Sculpture Garden. Since the cart would be sharing space with artwork by Henry Moore, Pablo Picasso, and Henri Matisse, not to mention rotating installations by contemporary artists like Richard Serra, everything about it would have to be perfect.

I needed the right partner, so I reached out to another notorious perfectionist: Jon Snyder, who owns il laboratorio del gelato, a company on the Lower East Side that makes small batches of dense, world-class gelato from chef-quality ingredients.

We threw ourselves into the project. Jon proved to be an extremely dangerous co-conspirator. For example, he found a company in Italy making amazing, tiny blue spoons. How amazing could a plastic spoon possibly be? You're going to have to trust me on this: they were paddle-shaped, extraordinarily well designed, and completely unique. They were also preposterously, heartbreakingly expensive.

Jon jumped at the chance to be the official ice cream of MoMA's Sculpture Garden. Given the high-profile nature of the opportunity, I convinced him to pay for the cart and to give us a bargainbasement deal on his ordinarily very expensive gelato. (At that volume, he'd still do very well.)

But I had to have them; the Sculpture Garden deserved them. Nothing else would do.

I'd managed 95 percent of my budget aggressively, leveraging MoMA's brand to get excellent gelato at a steep discount, and the beautiful cart for free. I'd earned the right to splurge on those spoons, the one small detail I believed would dramatically transform the experience of getting an ice cream at the cart.

The first time my boss saw one of those spoons, she narrowed her eyes and asked me what they had cost. I told her, and her eyes got even narrower: 'We'll talk about this later.' But a month later, we sat down to review the first P&L for the cart, and I never heard another word about those spoons.

This is what I would later call the Rule of 95/5: Manage 95 percent of your business down to the penny; spend the last 5 percent 'foolishly.' It sounds irresponsible; in fact, it's anything but. Because that last 5 percent has an outsize impact on the guest experience, it's some of the smartest money you'll ever spend.

This was affirmed for me one afternoon when I watched Glenn Lowry, the head of the museum, buy gelato for a group of visiting curators. Every single one of them spent a second or two admiring the spoons. I'd like to think some museumgoers went back to the cart for seconds, just because they loved that spoon.

If you love wine, it's always exciting to drink Grand Cru Burgundy. But the chance to do so almost never happens during ordinary wine pairings-so imagine how excited our guests were when it did! The Rule of 95/5 gave us the ability to surprise and delight everyone that ordered those pairings, making it an experience they would never forget.

The Rule of 95/5 would turn out to be one of my central operating principles at Eleven Madison Park. Wine pairings-a taste of wine to accompany each course in a tasting menu-are common in fine dining. And, as with everything, there was a budget for what we could spend on those pairings. But instead of splitting that budget evenly across all the wines we served, which is how it's often done, I'd ask our sommeliers to select slightly less expensive wines for the majority of the courses (these were no less excellent, because our wine director was so expert and our cellar was so diverse). Then, at the end, we could splurge on one special, rare, and more expensive glass.

The Rule of 95/5 extended to how we managed staffing expenses, too. My experience in Hani's office was never far from my mind when I was dealing with personnel; wherever we could, we worked to minimize expensive turnover and the dreaded overtime. But then, a few times a year, I would spend a truly obnoxious amount of money on an experience for the team, whether that meant closing the restaurant for a day so we could host a teambuilding retreat or hiring a DJ and buying a couple of cases of Dom Pérignon for the over-the-top staff parties we were famous for. The Rule of 95/5 ensured that I wasn't blowing the budget; I could afford these indulgences because I'd been so disciplined the rest of the year.

And when, at EMP, we threw ourselves into the concept of Unreasonable Hospitality, that 5 percent worked harder than it ever had before. One of my favorite examples: a family of four from Spain was dining with us on the last night of their New York City vacation. The children at the table were incandescent with excitement, and for the most wonderful reason: thick snow was falling past our massive windows, and they'd never seen real snow before.

This rule played a huge role in my success, and its lineage can be traced directly back to the amazing education I received in the basements and back offices at Restaurant Associates. My dad, per usual, was right; I'm so glad he encouraged me to take that leap.

Spur of the moment, I sent someone out to buy four brand-new sleds. After their meal was over, we had a chauffeur-driven SUV whisk the whole family up to Central Park for a special nightcap: a few hours of play in the freshly fallen snow. That 5 percent, spent 'foolishly' (really, with tremendous intention), allowed us to create those special memories for our guests.

My experience at MoMA showed me that it was possible to be corporate-smart and restaurant-smart at the same time. The team was empowered, the guests were happy, and we were running a lean, mean, profitable business.

Then Danny asked to meet with me again.