Whether it's beef carpaccio or smoked lobster, the food served at Danny Meyer's restaurants is of the high-end variety. And the last thing a chef in a top-tier restaurant wants to do is scrimp on ingredients. So given that food prices are on the rise, Meyer is in a tough spot. He's the founder of New York City-based Union Square Hospitality Group, which runs nine restaurants, including Gramercy Tavern, one of the best restaurants in New York and home to the aforementioned smoked lobster. Usually, Meyer's company posts strong annual revenue growth. But 2008's sales are only slightly ahead of 2007's. So Meyer has been searching for ways to cut spending. Inc. associate editor Hannah Clark Steiman talked with him about how he persuaded his chefs to work together to keep costs down.
Most people are loath to cut their own budgets. How did you get your chefs and general managers on board?
We began by finding items that we knew every restaurant used -- paper towels, bottled water, cleaning detergent, the kinds of things that really have very little impact on the artistry that distinguishes one restaurant from another. When restaurants started receiving rebates, it encouraged more of the chefs and general managers to say, "You know what? The sweet corn from that farm is really just as good as the sweet corn from the farm I'm already using."
It's appalling to me how ignorant we were before we got into this. Once we showed ourselves and our chefs and general managers all the places we were leaving money on the table, they started asking us to expand the program to food products -- things like butter, cream. I know there are varying qualities of milk, but I'll be darned if I've ever gone into a restaurant and been able to identify whose milk it was working with. Then we went into perishables, fruits and vegetables, and once again we began to deliver savings. Then we said, OK, now we're getting into the stuff that makes you you: where you buy your bread, your pork, your veal. We're not going to tell you whom to do business with, but we're going to tell you what you could do. We still want them to decide who they think has the best product for what they want to cook.
Do you have any more advice for other business owners worried about the economy?
Challenge your team to "happen" to the recession, and to not allow the recession to happen to them. Use the downturn to do all the things you never have time to do in an expanding economy. Write that extra thank-you note to a regular customer. Give the extra pat on the back to a staff member. Recruit top talent, and prune the non-performers from your team. A down economy allows strong leaders to distinguish themselves through imaginative responses, when so many others are playing the woe-is-me role.
Source: Hannah Clark Steiman in Inc. Magazine