Episode 66 · 23 November 2023 · 41:30

How Shake Shack & USHG are Rethinking Restaurant Culture, featuring Patti Simpson

Featuring Patti Simpson

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Meet Patti Simpson and the Union Square Hospitality Group
interview#patti-simpson #ushg #hospitality
What is USHG and the Hospitality Quotient?
interview#ushg #hospitality-quotient #danny-meyer
Recruiting for culture: the 51% qualities
interview#recruiting #culture-fit #hiring
The virtuous cycle of hospitality culture
interview#culture #restaurant #hospitality
How do you know if your culture is working?
interview#culture #turnover #employee-retention
Building culture from day one and finding great managers
interview#culture #management #onboarding
COVID: letting 2,700 people go and the HUGS fund
interview#covid #layoffs #hugs-fund
The vaccination-only policy and quick decisions
interview#vaccine-policy #decision-making #leadership
Eliminating tipping: the 20% wage experiment
interview#tipping #wages #fairness
Technology, AI, and the future of hospitality
interview#technology #ai #future-of-work

Show notes

How Shake Shack & USHG Are Rethinking Restaurant Culture — with Patti Simpson

Guest: Patti Simpson — Chief Administrative Officer at Union Square Hospitality Group (USHG), Danny Meyer's restaurant group behind iconic brands including Shake Shack.

What happens when a world-famous restaurant group decides to tear up its own rulebook? Patti Simpson joins Al and Leanne to take us inside USHG's culture transformation — from the controversial decision to let go of 2,700 employees in a single day at the start of COVID, to the vaccination-only policy that sparked national debate, to the bold move to eliminate tipping and raise wages by over 20%.

Patti pulls back the curtain on the "virtuous cycle" at the heart of Danny Meyer's hospitality philosophy, why the founder is always the Chief Culture Officer, and how USHG is navigating the future of hospitality — including the role of AI and robots. Plus, she shares the 51% qualities that are non-negotiable when hiring, and why she applauded the Great Resignation.

Top 3 Takeaways

Culture starts with the employee, not the customer. USHG's "virtuous cycle" treats employees the way they treat guests — and that investment flows directly to the customer experience.
Hard decisions made quickly are essential. When COVID hit, USHG let 2,700 employees go in one day and kept just 49. It was brutal, but it allowed the company to survive and rebuild — and the decision-making speed was only possible because of entrepreneurial leadership.
Hire for the 51%. Technical skills can be taught. What you can't teach are the core qualities: warm optimism, empathy, self-awareness, and integrity. Get those right and you can train the rest.

Related Episodes & Resources

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Full transcript

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Al ElliottThe dirty little secret is that most businesses think they know their customers. They have the data, the records, the history, but it's scattered across 3 teams and 4 systems. And in our case, it's about 216,000 spreadsheets, which means nobody can actually use it.

Leanne ElliottWhat you should be doing is using HubSpot, because why? HubSpot connects it all— every interaction, every support ticket, every conversation— into one platform every team can work from. So when sales talks to a customer, marketing already knows the full story. And when you know more, you grow more.

Patti SimpsonNice.

Al ElliottCheck out hopspot.com, the agentic customer platform for growing businesses.

Patti SimpsonAnd in the first 9 months, we raised, I think it was $2.1 million. We put sales, future sales. Danny did some PR events with Ina Garten. We did a lot of stuff. to raise that money, and we gave it all away in 9 months to our former employees.

Leanne ElliottHello and welcome to the Truth, Lies and Workplace Culture podcast, brought to you by the HubSpot Podcast Network, the audio destination for business professionals. My name is Leanne. I'm a business psychologist.

Al ElliottMy name is Al. I'm a business owner.

Leanne ElliottWe are here to help you simplify the science of people and create amazing workplace cultures.

Al ElliottWe have had quite a few— we've looked at quite a few different workplace cultures recently, but Lee, we're talking about one specific one today.

Leanne ElliottWe are. Today, we are looking at the hospitality industry and how you can build a workplace culture in which can be a pretty, pretty tough work environment.

Al ElliottYeah, for once, I can step up as something of an almost expert here because I spent my early life in hospitality. I even did my degree in hospitality, management in the service sector, and I spent my early years running pubs and bars and restaurants. So, I've worked in plenty of places where the culture was pretty shit, to be honest. Like, we had one place where I came in at 8 o'clock to do a, to do a stock count and found the chef drunk behind the bar because he'd drunk all of the Taboo, which is such an odd choice to, to, to get drunk on in the morning. Fights in the bars, managing door staff. Um, I've even got a literal scar on my head from when a customer smashed a picture frame over my head. In most cases, the management at the time would just go, well, just say, Well, this is what happens. This is the hospitality industry. Things have changed, I suspect. I wanted to find an organisation where they took the workplace culture very seriously and they looked after their employees. And the leader in this sector is the Union Square Hospitality Group, which is run by the world-famous Danny Meyer.

Leanne ElliottYeah, I remember you telling me about reading Danny's book. What was it? Setting the Table?

Al ElliottYeah, New York. Bestseller, I think.

Leanne ElliottYeah, yeah, bestseller. And it really did open my eyes to how culture could work in hospitality. I'm, I'm not like Al. I don't come from a background in hospitality. I've had a few jobs as a student in bars and pubs, so I have some experience, um, but I've mainly worked in service industry. I consult within the service industry.

Al ElliottAnd I think that the thing is, with the hindsight of the work I've done and the skills I have as a psychologist, I can really genuinely see how the hospitality Yeah, and what's interesting is when I spoke to today's guest, she was so passionate about culture and how it underpins every single thing that she and her colleagues do at Union Square Hospitality Group. So let's find out more about our guest. She worked her way up from TGI Fridays to become the Chief People Officer at Union Square Hospitality Group. She recently got promoted to Chief Administration Officer— easy for me to say— and she's one of the key drivers behind Hospitality Quotient, which is the company's leadership learning and development consortium.

Patti SimpsonYeah.

Al ElliottShe helped create the HUGS Employment Relief Fund, which was created to support the team members who were facing unexpected hardship after COVID. We'll learn more about that in a second. But for now, let's go meet Patti Simpson.

Patti SimpsonI'm Patti Simpson. I am the Chief Administrative Officer at Union Square Hospitality Group, Danny Meyer's group. You're probably famous or understand our Shake Shack brand if you don't know our other restaurants.

Al ElliottNow, what's interesting about entrepreneur-led businesses is that they tend to have like quite a broad sort of range of companies and ventures. One of the things that USHG has done is to spin off this company, which I mentioned before, Hospitality Quotient, into an actual consultancy that helps other businesses. So I asked Patti just to explain very quickly what the difference between Union Square Hotel Group and Hospitality Quotient was?

Patti SimpsonUSHG is the parent company for Hospitality Quotient. Years ago, after Danny wrote the book Setting the Table, people came to us asking, hey, does that work for us? It feels like hospitality as a business differentiator is a great idea. So at that time, I wasn't here. We built a class, and we would run classes on teaching people in other industries how to do that work. And during COVID we dusted it off because there were, as you know, many people were in front of a Zoom. All day long, and people had money to spend. So we reconstituted the program. So we now— we're doing Hospitality Quotient as an in-person convening. We just had one last week with 24 people from around the world, and we run that 4 times a year. It is also a consulting firm. We do a lot of work with larger companies that are saying, how can I insert hospitality into my My, let's say, legal firm or my hospital so that we are different than our competitors? How do I hire for people like you do? What do I look for in that candidate? So we spend a lot of time consulting with large companies and just having a lot of fun about how we do things. We're a vitamin, not an antibiotic. So we're not a big consulting group, but we try and tell people how we do it and see if that is— meaningful for them.

Leanne ElliottSo now we know who Patti is and what she is famous for. We're not going to go soft on her. We're going to be asking all the difficult questions. We want to know, did they really fire all 2,700 employees during the pandemic? Why was the vaccination-only policy enforced? Controversial one. Will robots and AI replace people in hospitality? And why did they take the tips away from employees. But let's start at the beginning— recruitment. I have always said that an amazing workplace culture starts with recruitment. It is the first step of our culture roadmap that we use at our consultancy Oblong for a reason, and that's because finding the right people for the right role is fundamental to building the business and culture that you want to lead. And the really irritating part for me is it's the simplest thing to get right. If you engage a psychologist and design an evidence-led recruitment process, you're guaranteed to find the right person for the right role every time. There's more than 100 years of research that's been done to use psychological assessment at work to predict, to predict, mind-read, predict the future, the future of the work performance of the candidates you are assessing. And still, even with that predictive power, hardly any owner-led businesses take advantage of this. It's not just a tried and tested method, it's a tried and tested and retested and validated method. Really, I can't stress this enough, when it comes to simplifying the science of people, this is the easiest thing to get right. I've been reading Fortitude by the incredible Bruce Daisley recently, and he summed it up perfectly for me in his book. He said, I have to confess, I'm always a little bit skeptical when someone tells me their workplace culture is special or that our people are our best asset. It makes me wonder how they managed to come up with a recruitment process that was clearly so much better than that of their competitors. Spoiler: they didn't. Unless the organization in question has made specific decisions about identifying specific employee profiles, the outcome seems to be more down to self-selection than careful planning. Otherwise, it's like saying our people are our best asset, whoever they are.

Al ElliottApplaud.

Leanne ElliottHonestly, I was just punching the air when I read this because I— and I honestly feel that me and Bruce are going to be the bestest of friends. It is true, an evidence-led recruitment process is the cornerstone of culture, or at least the cornerstone of an intentional culture. And I stand with Bruce. If you don't have that recruitment process carefully planned out, I too am going to be very skeptical, skeptical when you tell me that your workplace culture is special. So that's why we had to start this interview by asking Patti what she thought made a great hire in the hospitality industry.

Patti SimpsonThe, the recruiting model might be different because you're looking for different skill sets in terms of who— if you want a hospitalitarian and you want to hire somebody that cares about making people feel better as a result of your interaction, you have to find somebody that has that HQ. And it is the combination of warm— warmth, optimism, integrity, work ethic, self-awareness. Those qualities to us matter more, just a little bit more, than the technical. And so we look for that first because we know we can't train it. You can't train someone to have integrity. You can't train them to be kind and warm and optimistic. You either wake up that way every day or you don't. And there are plenty of jobs where you don't have to have that skill set. But for us, and for those who want to put hospitality first, that's what we're looking for. And the hiring process is when we interview you, we get your resume, we get your application. We're looking for that fit, that cultural fit. Do you want to be of service? Is that what you like to do? Because if you feel that way, We know it, you know it, and you get a kick out of making other people feel great after being with you. If that's not how you feel, and we've all worked with people that, you know, they're there for them, they want to go on, they have to make as much money as they can for whatever reason, and they want to leave. There are jobs for people like that. It just isn't here. And it's important that we find people that are in it. To be of service to people.

Al ElliottAs a marketer, one of the things that I am quite passionate about in terms of recruitment is the employer brand. Because if you create an amazing employer brand, then you're gonna have people queuing out on the street to come and work for you, just like a great company who's got a great brand has got customers queuing up to buy from them. I wanted to find out whether this applied to the restaurant industry. Should the employer brand be Matching the customer-facing brand?

Patti SimpsonAbsolutely. It, it, we treat our employees the way we treat our guests. And so it's important that everybody feels like they belong. And you, you can't walk, you have to walk your talk. So taking care of each other first and then taking care of our guests, we're known for that. And that is the hospitality is being on the side of people. And hospitality happens when things happen for you, not to you. And then that applies for our guests and our employees. So from a branding perspective, it's the same.

Leanne ElliottI think a lot of people might think that working in hospitality is for students and people waiting for their real job. Patti has made a conscious effort to reverse this thinking.

Patti SimpsonI don't believe that hospitality is seen as honorable work by everyone. And so you, you often hear people say, well, I'm going to stay here till I get my real job. And this is my real job, and it has been my real job for 35 years. I think that if you want to make a career out of it, you can, or it can be a job. Our philosophy is we want you to stay a little bit longer than you thought you would. And not everybody is going to be here for 10 years or 15 years, but there's a place for people for a 1-year or 2-year stint where you're, you're going to learn some skills that are going to help you in life.

Leanne ElliottSo what makes a good culture in a restaurant, for example?

Patti SimpsonWell, we have a virtuous cycle in setting the table that starts with the employee, and we take care of each other first. It then goes to the guest, which is, you know, we're nothing without our guests. From there, it goes to community, and we really want to be a partner in our communities. We sign long leases. We're not flying in and flying out. From there, we talk about our partner suppliers and then our investors. And when everyone in that cycle is happy, it just, it's a flow flywheel and it keeps on going. What's different for us than maybe some other restaurants, I'm not sure, is that we, we want you to be economically prosper— prosperous. No question. We're all working for money. But we also want a shared emotional connection, that it matters that what we're doing, that you're here to make people feel better as a result of being with us. And that's a different level than just, oh, I can get a dollar more down the street. Or I could, you know, I could find this other job and have different shifts or different hours. We're looking for a little bit more of a commitment and a tie to something that matters more than just a paycheck. We we have a lot of people. We've we're at 2,700 employees now post COVID. We have most of our positions filled in management, so we're doing pretty well in getting people to work for us. But it isn't. What I say, it's what people do in our businesses and how they feel about working here. The culture has to be about them first, and then all the other stakeholders come after that. Because if we're people first, then we take care of where their heads are, what they need, and make it a great place for them. It makes it easier for them to take care of our guests and so forth, so forth around the cycle.

Al ElliottSo culture is clearly at the heart of the Union Square Hospitality Group. We wanted to find out from Patti how she knew and when she knew she was getting it right.

Patti SimpsonThere's a couple of things. I think the easiest way to know is your turnover. If people are staying, you know that you're doing all right. We have employee experience surveys, and there are some backend things in our systems for scheduling and for clocking in where we can gather some information on how people are feeling because they can rate their shift every day and how things went. But they tell us based— I mean, we have a very open culture, so people tell us what we need to hear. In many cases, we have an open-door policy, so they can tell us things that might be hard for us to hear. But we also— I think turnover is one of the best indications of how your culture is, because if people stay, exit interviews can also give you that information. And, you know, we don't always get it right. We're trying to get it right every single day, but there might be— there may be a time where We're short-staffed and things happen on a shift and people aren't comfortable with how many hours they have to work, or something goes sideways and we hear about it after the fact. We want people to tell us. If you can tell me face-to-face, great, but I want to make sure that you can tell me. And if it isn't face-to-face, you have to have that mechanism where people can tell us something. It may not be hard for us to hear, but it may be hard for them to share.

Al ElliottHaving worked in busy restaurants and bars, it is kind of difficult to work out who's in charge. But just actually, when you think about it, when the door's shut, who's in charge of culture?

Patti SimpsonI would say that the CEO or the founder is always in charge of the culture. Danny is our Chief Culture Officer. He's our founder, Chip. I think if we all take care of it, it's easier. If one person owns it, you're— I don't ever want to be seen as the only person that cares about it. You know, everyone cares about it. Here. What you probably need is someone that knows how to hire people within your culture. And that, you know, the first couple businesses when you're opening restaurants, you can do that with a management team that you have. But as you start to grow, when you get to different jurisdictions, and as you know, in America, there's so many different laws and regulations, you probably need someone after you get to 3 or 4 businesses that can help you with that growth to help you understand what you need to do. What are the rules? What are the requirements? Are you compliant? But culture starts with every single person, every single hire along the way. And as you scale, you probably need somebody after, I don't know, 3 or 4 restaurants that can help you take it to the next level. When you are growing, there's a different set of— there's a different speed. When you're working in a restaurant company that's mature and everything is going the way you want it to, you might— let's say you have 30 businesses. Everyone in that business is working to try and do their work every single day. It's a different level of intensity when you have 3 and you're trying to go to 4. And so, everyone on the bus believes that they're part of the future, which they should. You want them to, but not everybody in that organization is ready to grow, to lead. They may be there. But it doesn't mean they're the right people to go from 4 restaurants to 10 restaurants. So I would give the advice that you have to be very selective in your leadership. And you may not have everybody, even though their tenure and their enthusiasm is great. You may need some people from the outside to take you to that next level because you don't want to be caught with having very enthusiastic people without the skill set to take you to the next step.

Leanne ElliottDid you know that the UK's number 1 management podcast— that's us, by the way— and the UK's number 1 marketing podcast are both on the same podcast network?

Al ElliottWe actually have a lot in common. We both use behavioral science to help people do better at work.

Leanne ElliottAnd we both had to wrangle Rory Sutherland on an episode.

Al ElliottAnd 2 out of 3 of us are devilishly good-looking. And you're not going to get away with that, Rory. I'm not gonna say which. Phil, host of Nudge, UK's number one marketing podcast. It's brought to you— we need to do this in threes—

Leanne Elliottthe HubSpot Podcast Network, the audio destination for business professionals.

Al ElliottSeamless, seamless. Tell us about your latest episode, Phil. Uh, we've just done an episode on fake fandom and how New York indie bands are paying agencies to create fake TikTok videos about how much they like their work. And we talk about the behavioral science behind fandom and how that Encourages people to enjoy the music and all of that good stuff and do some big things about how this affects the world of politics, business, and brands as well.

Leanne ElliottIt is. It's such, it's such a good show. Of course, you'll hear all the stuff you want to hear about how to grow your business by using behavioural science in your marketing. But there's also just some really interesting episodes that'll be right up your street. Personally, I enjoyed Can Balsamic Vinegar Make Beer Taste Better?

Patti SimpsonIt can.

Leanne ElliottAnd Are We All Just Status-Seeking Monkeys?

Al ElliottOh, I am. Go and listen to Nudge wherever you get your podcasts.

Leanne ElliottBut come back.

Al ElliottYeah, come back. Definitely come back, because Nudge isn't as good as this, so come back. I'll cut that out. Keep that in.

Leanne ElliottTalking of growing, culture really is something you can start thinking about from day one.

Patti SimpsonI think you have to start with where you are. It's really important that you, you know, when things— you set your standard of what you want to do. And if culture is important, that starts when you have one employee, it's yourself. And then as you hire from there, often you'll hear Danny say, I just wanted to make a good bowl of pasta. You know, he did not grow our business based on the fact that he wanted to take Shake Shack public, for example. The opposite was true. If you do great things, growth will happen. And that's kind of been our philosophy up until Shake Shack went public. And now we can see, we've been there once before, we can see that trajectory, but it comes on the foundation of all of our businesses that we run every day. Sitting here today, you can't say, well, we're going to go do X, Y, and Z unless we take care of our business that we're running. And we start every day just like every other restaurant with zero guests, and you have to take care of them every single day. So growth comes from having a vision of where you want to go. Making sure that your culture is tight, that you talk about it, that everyone knows where you are, and that as you grow, you find people that can help you do that. You want them to be just as excited about where you want to go.

Leanne ElliottUnless you're a new listener, if you've heard one of these episodes before, you'll know that I harp on about managers. I harp on about how managers are so critical to workplace culture. But when you're in a hugely frenetic business, When you've got so many plates to spin, sometimes literally, how do you know who will make a great manager and who will be able to cope?

Patti SimpsonFinding the great leaders. So, the 51% qualities I talked about before are non-negotiable: warm optimism, empathy, integrity, self-awareness, work ethic. We want that in someone, and we have questions that we use to tease that out. But you want someone that knows enough. So while we can't train those things, we're looking for people that have the experience, that have the track record in managing people, in managing a busy shift. You know what it goes like when it goes crazy on a Friday night in any business. There's something about that buzz. I'm sure you had it in the pubs and the bars that you worked at in England. I remember one of the busiest bars, restaurants I ever worked at was the TGI Fridays in Covent Garden. And, you know, the line was around the building or Haymarket. You want somebody that looks at that busy shift as the best thing that ever could happen, not as, oh my gosh, we're going to get crushed. And you get a buzz from that, you know, like it's like a ballet dance, making your way through the restaurant and making sure that things are going the right way. So we're looking for people that want that work. And, and really enjoy managing from beginning to end that, that show, that absolute, you know, this is where you come to get this kind of environment, this kind of food, these kind of beverages from these kind of people. So we're looking for people that want to do that and want to do it well. And it takes a certain level of tenacity. work planning, all the things that you might want to see in someone, but you have to be able to do it all at one time in the restaurant, as you know. So we're looking for people that have that ability.

Al ElliottCOVID clearly affected all of us in some way. But if when the world is literally stuck in the house, not allowed to go outside, then you can imagine the impact it's going to have on the hospitality industry. So what happened at Union Square Hospitality Group? Was it as disastrous as it sounds like it would have been? Patti was behind something called Hugs, which is an initiative to raise money for the employees who were let go and also who were struggling and in financial hardship.

Patti SimpsonWhen COVID started, we let everyone go on one day, 2,700 people by Zoom. We let them go. We kept 49 people. And we only kept them so we had something to build on when we were hoping to come back. And we didn't know how long it would be. We certainly had No idea it was going to be as long as it was. Very quickly, we realized that there were the GoFundMe pages coming up. I can't pay my rent. I have a health problem. I need my medication. So, when we let everyone go, we let them go before anyone else because I anticipated this thought that unemployment is going to be a bear to get through. So, as hard as it was to be first, we knew it was the right thing. If you can't keep everyone safe, you can't keep anyone safe. So we closed on the 13th of March. We told everyone that day. We gave them a couple weeks of pay. And then we got busy doing Hugs. And in the first 9 months, we raised, I think it was $2.1 million. We put sales, future sales. Danny did some PR events with Ina Garten. We did a lot of stuff to raise that money. And we gave it all away in 9 months to our former employees.

Leanne ElliottCOVID led to a different way of thinking about work. helped a lot of us to question whether we were doing the work that we wanted to, whether we had the right work-life balance. It led to what is now called the Great Resignation. Interestingly, Patti is actually in favor of the Great Resignation.

Patti SimpsonThe last year, there was so much about quiet quitting and the Great Resignation. I applauded that. I'll be honest with you. I don't, I don't want anyone to ever feel beholden to an industry, beholden to a job. It gave people a chance to say, is this really what I want to be doing? And I don't know, in the UK or where you were during COVID there were so many people. There were a lot of new dogs and there were a lot of sourdough starters. You know, everyone was trying to figure out what they were going to do with their lives. I love that for people. I don't ever want people to feel like they have to work here and this is the only thing that they can do. The new generations coming through have a different sense of it isn't work-life balance, it's life and work. And how do we— and that's not bad for any generation, honestly. It's a good thing for people if we can work that out, if we can find a way to take this honorable, noble work that we're doing in serving the public and making life better for others and make it more sustainable by having a life-work balance that is easier for people. Then, then we'll be doing our best work. It's something I'm really focused on for the next 18 months. But I think you have to meet people where they are, and they all have different needs. And maybe some newer workers want all of their training on their phone, and others may need to be trained hip to hip on the line so that they understand it more deeply. So I think you have to meet people where they are, find the right person, and then train them in the way that they learn best. And let them go to do their best work.

Leanne ElliottIt also helped the management team realize that hard decisions made quickly were essential.

Patti SimpsonWe like to be ready in that when it was vaccinations, we made a tough decision to say vaccinations were required, for example, and we just eased up on that. So I think it was July 1st that you don't have to be vaccinated to work here, but if something happens like right now, the, the COVID in the city is high again, very high again. If we have to make a change, we'll change it on a dime and proactively to make sure we take care of our people. So, I think you have to be ready. Don't wait.

Al ElliottAnd as I mentioned before, having an entrepreneur who leads your organization means that you can make quick decisions much easier.

Patti SimpsonThis is an incredible opportunity. And working for an entrepreneurial founder is different than working for, you know, the president of TGI Fridays or of Ignite Restaurant Group. So, and those people were amazing. But this is different because you can move the ship more quickly when you're sitting in the room with the decision makers. And in many cases, we're all decision makers. We're all moving this in a way that we want to go. But having the opportunity right now in New York, I'm sure you've read about the asylum seekers and having an opportunity to try and make a difference. Not just in our space, but in the space of humanity and people that need a better place to— you know, we right now, I think we have 100,000 asylum seekers in New York City. And we're trying, we're working with the community and the governor and a large group of people to try and give jobs to those people. Because we have a need, we have this, you know, you hear about turnover in our, in our hospitality segment, and they need jobs. So.

Leanne ElliottYeah.

Patti SimpsonTo be able to foundationally have the time to make those things happen is really, really cool. So working here is fun. It's exhilarating, but it's really, it's, um, it's humbling in the way that we're just a little company compared to so many big companies, but we have really, really big ideas. And that's, that's awesome.

Al ElliottRegular listeners will know that we live in Europe. And if you come from the UK, you know, the tipping is kind of, it's, it's a gratuity. It's something which you generally do if you get good service. However, in the US, it is very, very different. In fact, most servers, most people in the hospitality industry rely on the tips to top up their actual salary. So why did Union Square get rid of all of the tips?

Patti SimpsonAnd the goal was to be more fair between the front of the house and the back of the house wages. As you know, and I've worked in restaurants as an hourly before, I've seen it around the world where at the front of the house will be standing you know, counting all their cash at the end of the night, and the person working making all the food isn't able to share in that level of tip. So the goal was to try and even that playing field.

Al ElliottSo obviously Union Square didn't just take away the tips. They raised everyone's salary by about 20%, 21%, so that tipping wasn't required.

Patti SimpsonSounds quite fair when you think about it, but it did not seem to go down So, what we saw in retrospect is that the employees in the back of the house and in the front of the house, we had a lot of turnover. We had turnover in the front because people could make tips down the street and they wanted that cash in their pocket. And so, we lost great salespeople. And we have some really, really great chefs. And we need people that can sell their food. And if you don't have experience in fine dining, you're not going to be as adept at that as somebody that does. So that was one, one piece of it. So we had turned into an extreme training company where we had brand new people in this space that didn't have the experience that we were trying to teach our way to. And then COVID happened. And it gave me some time to really look at that program and say, okay, what, what was happening here? Do people understand it? Do they get the intent of it? Because there seemed to be a little bit of confusion. We realized that, and then we realized during COVID— and I don't know if you were in the States at all during that time— but if you got out of your house and somebody served you a cup of coffee, you would over-tip. I know I would over-tip. And we thought about— we have these employees, they were frontline workers, they were leaving their house, and this is the time when you were washing every egg in the crate that you brought home from the store. You were taking off your clothes and washing them before you went in your house. We had no vaccines. We didn't have any protection against this disease. And we were asking our people to go to work. So it would have been awful for us to say— and for those people that are working in tip positions, you can't take that extra generosity that somebody passes across the counter. It would not have been on their side. So, we decided that we would evolve into a new employee value proposition, and reinstating tipping was, was part of that evolution.

Leanne ElliottDo you know, it's funny, I don't have much experience in the hospitality group, but I do have some experience with this. I used to work for a pub chain called Wetherspoons, and quite famously, they, they do not allow their employees to take tips.

Al ElliottI didn't know that.

Leanne ElliottYep, they do not allow that. Well, they used to. This was back in, what, 2000 and Oh gosh, 4.

Al ElliottYou're so old.

Leanne ElliottI know. But yeah, back in the day, you weren't allowed to take tips. And it was awkward because a customer would go, and one for yourself, love. And you go, oh, I'm sorry, I'm not allowed to take tips. And they'd get offended. They're like, I want to give you a tip. So I can, yeah, I can see from both an employee perspective and a customer perspective, when there is a tradition, a custom in place, taking that away can feel a bit awkward. I love that Patti and her colleagues not only had the confidence to make that kind of decision, quite a controversial decision given in, as you said, Al, the, the how the hospitality industry operates in the US. But I guess more, more importantly, the humility to reverse that decision when they discovered that it wasn't popular. Perhaps it is because Patti has those years of experience in hospitality, from being a server to a bartender to a manager, and now in corporate. We had to ask her, how does she think hospitality has changed over the years?

Patti SimpsonI love the old days. I mean, they're my stress dreams. Sometimes I wake up and I'm standing in a service bar full of orders and I can't find the blender, you know? But, guests were different in the old days. And, there was less— I don't want to say seriousness, but it was a little bit easier. Yeah. Didn't have such full heads. I think we have gone through something that's changed how people are in the world today. And what I really miss is the inability for everyone to be in a space together. We're learning now how to be together. So if you go on Twitter or X or whatever the heck it's called, people fight over the color of the sky. So the old days to me is it was much easier to be having a conversation with 2 people side by side that didn't know each other. And It really didn't matter that they had different political ideas or different anything. Right now we're really stuck against each other for some reason. So I miss the just, let's just have a good time here. This is not brain surgery. This is amazing food, amazing service. And it doesn't have to be hard. We make it harder than it is sometimes just being humans on the earth right now.

Leanne ElliottWhat was true then is still true now.

Patti SimpsonLet's say you're going out for a memorial service and you're there to break bread about the person that is no longer sitting at that table. When you're having a meeting and you've lost your job, we're not just there on the bad day— the good days. It's the bad days too. So, humanity comes alive at a table. And, it's really important that we keep that in mind as we try and find new ways to make money, save money, build our business. We have to really keep it about what does a guest want? How can we be on their side? And not thinking for them, but asking them what they want.

Leanne ElliottAnd as we always say, change is inevitable.

Patti SimpsonHospitality changes every day. We are a 37-year-old startup. So if you— the people have to focus on where the winds are going, and what is it that you need to do differently to attract and retain and nurture that new talent pool. Of course, there'll be new ideas on how to use technology, and maybe you don't need 10 people in the front of the house, you need 7. I don't know. But making sure as you make the— as we evolve into whatever this next future looks like, that we stay true to the reason we're in business, which is to be of service to be hospitable to people. And you can't do that behind a glass screen on a kiosk. You have to have human interaction. And there's not a time, and I can't imagine it being any less so in 35 years, where we need each other more to be part of this collective community where we can solve problems together. And, you know, food is the best condiment for humanity. So, let's find a way to keep setting tables. that people can eat and drink and, and find a happiness and a calm that they don't have in day to day right now. The last couple of years have really been difficult for people.

Al ElliottWow, what a line. Food is the best condiment for humanity. She was just such a great interviewee. She just was so eloquent and just gave great answers. And that was one of my favorite things that she said. But she did mention their tech. And for me, AI, because I'm such a nerd, So like the McDonald's idea of going to kiosks instead of people, do you reckon we'll ever be served by robots? I asked Patti what she thought.

Patti SimpsonI think technology enables a better hospitality experience for us. So it— and we have a— one of our pillars is transformational technology. So I can't comment on McDonald's, but— and I haven't been there. I'm not a heavy user of McDonald's, but I love the idea of technology. I don't know that it ever replaces people. But if it's going to drop the fries or drop the wings and get them up, and they're going to be the right temperature, I don't have a problem with that. But you always need people, because people make a difference in how you feel about that product. And I could get, get those same products somewhere else, maybe at the grocery store. So I feel, I feel like if you want a people-centered business that You can use technology to enable that service. I think it's really important that there's technology. You know, now we still have a guest relations team here in the building that take calls every single day. We still sometimes get letters, and but a lot of people want to go online, so you have to be able to do both. And I'm sure McDonald's is ready to do both. In that case, you have to be able to use technology wisely, but it is not a replacement. replacement for all people and all businesses, certainly not for us.

Leanne ElliottSo there we go, another fabulous guest and some important lessons learned. If you want to learn more, then I suggest you start with Danny's book Setting the Table and then go check out Hospitality Quotient using the link in the show notes. Hospitality is definitely a pretty tough environment to work in, but what if you are reporting from a literal war zone? What if you regularly have to investigate animal cruelty as part of your job? Well, next week we talk about how organizations deal with trauma at work. We'll be joined by the Chief Medical Officer of the BBC and an expert from the RSPCA. We'll be learning how modern organizations help employees who have been in traumatic situations. And yes, I know it might sound like a heavy episode, an upsetting episode, But I promise you, we will be concentrating on what leaders can do to protect the psychological well-being of their people and create amazing workplace cultures in even the most hostile of environments.

Al ElliottOh yes, and coming up in 2 weeks' time is an episode I've been so excited to release. Have you ever heard of YouTube? Well, it's not them, but it is in fact the founder of one of their competitors. It's a global video sharing I'm sure you already know who I'm talking about by now. The guy who we're interviewing was so intent on creating an amazing workplace culture, now he's ended up with 92% of his employees just absolutely loving him. All the reviews are amazing. If you want to just get an idea of how that fits in at YouTube, 92% for our guy, 68% for YouTube. Hmm. Yep, we're gonna whisk you away on an amazing journey. Oh God.

Leanne ElliottNo, no, no, I did not approve that message.

Al ElliottThat's staying in. We'll Wistia you away on an amazing journey with the co-founder and CEO of Wistia, Chris Savage. So see you next week for more puns of that quality, I think.

Leanne ElliottYes, and for all of our North American listeners, happy holidays, happy Thanksgiving. Hope you have a lovely restful time with friends and family, and we will, uh, I guess we We didn't— we were meant to position this as a Thanksgiving-type episode, weren't we?

Al ElliottWe've just mentioned it now.

Leanne ElliottAnd we just kind of forgot.

Al ElliottYeah, well, sorry, that's, that's us Brits, you see. We don't really understand what it is. But if, if over the Thanksgiving and holiday period you are going out, then just have a little thought, spare a thought for the person who's serving you and the person who's— the hundreds of people who are behind them, from all the way from the chef, the washer-up, which I was when I was 14, that's my job, washing up, all the way up to corporate HR Just spare a thought and just think about all the work that's been put in just to make your day a little bit special.

Leanne ElliottYes, and what I do know about Thanksgiving, at least I think I do, you know the tradition—

Al ElliottWe'll find out.

Leanne ElliottLet's see. You know the tradition you see in films where you go around the table and say what you're thankful for?

Patti SimpsonRight.

Leanne ElliottI think that's a really great, great, great thing and also a really great start if you have been listening recently and you have been thinking about getting more into positive psychology and gratitude practice. That's a gratitude practice. That is a positive psychology practice. I challenge you, uh, to, to maybe keep that going, say from now until Christmas, a nice 4 weeks, um, and see if that, that makes a difference. But yeah, anyway, enjoy, enjoy the turkey. I think that's what you have, the cranberries, the yams. I've heard yams are a thing.

Al ElliottI don't know what a yam is, and at this point I'm too afraid to ask. So while we go and count our blessings and Google what a yam is, then if you haven't subscribed, then click subscribe. Go and tell 1,000 of your closest friends. We are— we're bringing— we're trying to bring you the very best content we possibly can. I know Christmas is a quite kind of a quiet— or holidays, it's a kind of a quiet time, so we won't be anything doing anything too heavy, but still stick with us. And then in January, we could all go back at it together and create an amazing workplace culture. Goodbye from me.

Leanne ElliottGoodbye from me.

Al ElliottCircumvented the but.

Leanne ElliottWell, the but doesn't make sense. The but is only if it's going to be different.

Al ElliottBut I like buts.

Leanne ElliottI don't like your but. I've never heard the word quotient before. What is it?

Al ElliottUh, quotient, quotient, quotient, quotient. I think it's quotient.

Leanne ElliottOr that our people are our biggest access.

Al Elliott04, straight into 04B. Don't know why I'm talking like this. Hang on, you just smile so I can cut to you. Excuse me.