Thirty Minute Mentors Podcast Transcript: Shake Shack CEO Randy Garutti

I recently interviewed Randy Garutti on my podcast, Thirty Minute Mentors. Here is a transcript of our interview:

Adam: Our guest today is the leader of one of America's favorite fast casual restaurant chains. Randy Garutti is the CEO of Shake Shack, where he oversees more than 12,000 employees across more than 350 locations around the world. Randy, thank you for joining us.

Randy: Thanks, Adam. Really excited to be here with you today.

Adam: I’m excited that you're here with us. And I wanted to ask you, if you could take listeners back to your early days. You've been in the restaurant business for almost your entire life. What attracted you to this industry? And what were the key experiences that led you to become the CEO of one of America's leading restaurant chains?

Randy: Well, thanks. I was born in New York City and grew up most of my life in New Jersey. And I started working at a bagel shop, making $3.50 an hour making taylor ham, egg and cheese sandwiches which you only know what that is if you're from Jersey, when I was 13. And I just fell in love with the restaurant business. And I was lucky. I got to work in all kinds of restaurants and study restaurant management in school. And I decided early I was going to use that experience to live where I wanted to live and have the life that I wanted to live. And in a number of years, I got to live and travel through Europe. I lived in Aspen, Colorado- my first management job. That company then sent me to Maui and I lived in Hawaii. And then I got to live on a houseboat in Seattle. And when I was 24, I met a guy named Danny Meyer and came back to New York City in the fine dining restaurant business and at the time we had restaurants, still do, but like Union Square Cafe, Gramercy Tavern, MoMA, all the restaurants at MoMA and New York's favorite fine dining restaurants, and that was what I did. I was a fine dining guy. I was working on the floor. I was serving wine, wearing a suit and tie every night. And through all of this back and forth in 2001. Outside of our fine dining restaurants we had a park named Madison Square Park in New York City. And in 2001, that park was in disrepair, it was falling apart, it was in terrible shape. And we helped to raise a fund and they created the Madison Square Park Conservancy and their first way to raise money, as many great neighborhoods turnaround was through an art project. And that artist put New York taxis on stilts. And as part of the exhibit said, I would like a hotdog cart. We had restaurants next door. We knew how to cook food. So we made some hotdogs. People lined up all of a sudden. 50 people, 100 people were lined up for our hotdogs. We ran that little hotdog cart for three years. Whatever money we made, which wasn't really anything, went right to the park as a donation. And in 2004, the city came to us and we won an RFP to turn that little hotdog cart into a little shack- 400 square feet. We named it Shake Shack. And we put the burger on the menu, the shack burger. And I guess the rest is history from there. But like what I was saying earlier in this chat is we never wanted this. We never dreamed of it. We never thought there would be a second Shake Shack, let alone the first being an iconic New York global experience. Five years later, nearly 2008, I found a site walking home one day and I went to Danny Meyer, our founder and chairman. And I said you know I think this Shack thing people kind of like it, they seem to line up. Why don't we do a second one? That was 2008. After all those years, we opened the second Shake Shack, and it was busier in the first year.

Adam: Amazing. And a couple of key lessons for listeners. Number one, the importance of identifying opportunities. And number two, once you identify the opportunities, seize them. And in your case, Randy, you saw an opportunity and you jumped on it. And you approached Danny who has been your mentor and you made a pitch to him and said let's do this. Let's open a second location and I want to ask you, if you could talk about not only your second location or your third location, but you're now above 350 locations around the world. Can you share with listeners how you've been able to grow and scale Shake Shack from one location to this multi billion dollar business? How did you do it? What are the best lessons that you have for listeners on how to grow and scale a business?

Randy: Well, you know, look, I think it's a great happy accident, the whole Shake Shack story. And that's why it happened that way. Look, I meet with business people all the time, young entrepreneurs, people who I'm mentoring or who are looking to start a business and everybody comes with ideas, you know, Hey, I got this idea. And it's gonna be huge. I got this restaurant, I'm going to have 100 of them. And I say, that's great. How's the first one going? Because that's all that matters. And all we did back then was want to serve people a good cheeseburger. We asked the question, whoever wrote the rule, that fast food needs to become what it became like, why can't we just do it better, fresher, no hormones and good ingredients. And happy nice people taking care of you in really cool community gathering places. Why can't we put that together and stand for something good? And what we do, we just chipped away one thing at a time. And five years later, we got to open the second one. Even at that time, when we first went out and got some investment money, if you had told me that we would have 10 Shake Shacks, at that time, I would have said that was a pipe dream. Crazy. Because we were so focused on just doing what we did every day, day in day out, one burger at a time. And because of that, we earned the right to open a third one at Citi Field where the Mets play, and the right to open a fourth one in Miami, and a 10th and a 20th. And here we are. And every day we fight for the right to open another one. And we only do that by one burger at a time, day in day out. And I always tell people, when they're asking for advice on that, like, just focus on the one. If the one is awesome, then maybe you'll have a second.

Adam: So much wisdom there, Randy, and the lessons that you shared one day at a time, one step at a time, achieve success today, and tomorrow will take care of itself. And the last thing, which I love- is a very clear understanding of who your customer is, and a dedication to serving your customer. Customer centricity has been integral to your success as a leader and to Shake Shack success as a business. And I wanted to know, if you could share with listeners what your best tips are on the topic of customer centricity?

Randy: You bet, it starts with team member centricity. We don't believe we can take care of any guests until we’ve first taken care of our team. That's it. And we believe there's a virtuous cycle that happens when we take care of our team, well, then they can take care of our guests. Together, all those people can take care of our community. And we've got to take care of our suppliers. And if we do that, our shareholders, our investors, everybody, it's going to work financially, it's going to work, you know, the score takes care of itself in the long run. So then we say, okay, team, how are we going to take care of these guests, the guests' experience, everybody's got to leave loving this place. I'm famous for saying, when I go to an opening, and I'm talking to our team for the first time, put us out of business with your generosity. If somebody doesn't have something that's outrageous, it's not pay for all of it, give them more, like just put us out of business with your generosity. And when we don't do that, we know it, we feel it. And I'm sure that happens every day in every restaurant of ours. But when we do do it, people tell stories, people come back, people are touched, you can feel the difference. And at our best we are generous, we are centered on each other. And when we do that, we're taking care of our guests.

Adam: I want to talk more about the topic of teams. What do you look for in the people you hire and, in your experience, what are the keys to building a winning organizational culture?

Randy: Well, we've you know, Danny Meyer wrote an amazing book called Setting the Table that really set the standard for our values of what we call enlightened hospitality. And it talks about what we call 51 percenters, right? There's 100% of a person- 49% of that- technical stuff that we got to do to do our job. You cannot work here without that. But the 51% is that emotional skill set- that, we can teach it. And if you've got it, we can teach you the rest. So we're looking for those people that are self aware, that have a strong work ethic, that are determined and then when I'm interviewing them- and what I try to teach people, the expectation is, anyone who's ever been interviewed by me probably has heard this at some point, I'm going to ask if you like moving mountains as the baseline of your work day, because if you don't, you're probably not going to like it here very much. Because we're constantly growing, we're trying to do more, trying to be better, we're constantly unsatisfied with the work we did yesterday, because we can do better. So you need to be signed up for moving mountains. And then the last thing I'll say is, when I noted self awareness, that's about being your best self. I tell people all the time, if you roll into work today, and you find that you are trying to be someone else, please leave. Like, it's not worth it, your life's too important, you only get one shot around this thing. So like, be your best self, if this place helps you do that, because of the values that we share, it's gonna be awesome. It doesn't matter if we're cooking burgers, or selling shoes, we're going to be our best selves. And we're going to make a great company. If we can do that for each other, it'll make all the difference. And that's the environment we try for. And we fail too, but we should try hard every day to make that work.

Adam: I love it. And I love the themes that you shared, which align with the themes that we talked about throughout this podcast, the importance of self awareness. I give a talk on the core principles of resonant leadership. And the first principle I share is self awareness. Before you can effectively lead others, you need to be able to lead your own life. And it starts with understanding who you are, understanding your strengths, understanding your weaknesses, and no one's going to follow you until you understand who you are. You need to have a very clear and deep sense of yourself as a human being. That's where it all starts. And secondly, I which I think is so important. Don't try to be someone else. An anecdote which an early guest on this podcast, Victor Rojas, who at the time was the play-by-play announcer for the Angels, shared a story about his time calling games early on in his career. And he was around a legendary Hall of Fame broadcaster and had tried so hard to emulate the voice of that broadcaster that he forgot who he was. And it wasn't until he remembered the importance of being himself using his own voice in the booth, that he was able to excel as an announcer and Excel to the best of his abilities. And that advice and that anecdote is applicable in everything we do in every aspect, personally, and professionally.

Randy: I love that. I love that. So good.

Adam: Randy, you've mentioned the name Danny Meyer, a couple of times. So far, Danny has clearly played an important role in your life in your career. He's been the key mentor to you professionally along your journey to becoming such a successful CEO. The power of mentorship is a key theme, not only of your career trajectory, but the key theme of this podcast. And I wanted to ask you, number one, what are the best lessons you've learned from your years working so closely with Danny Meyer? And number two, from that experience, what are your best tips on the topic of mentorship?

Randy: Thank you. I've been so lucky to work with Danny now for 22 years and to have mentors before Danny. But I've learned so much from them. And to this day, I have about four mentors in my life who I continue to call upon, to this day all the time. I think people need to be mentors, need to have mentors, at every level of their life. Danny took a chance on me when I was 24. And he literally said to me, I'm not sure you're ready for this, but I think we're going to give you a shot. And he's probably said that to me in different ways for the last 22 years at every different step I've taken. So right there is a lesson is, first of all, you know when people have ability, and somebody's got to give him a shot, be the one to give them a shot. Believe in people. I think that's the biggest thing a mentor needs to do. Second, Danny is always just constantly teaching us long term dollars. Like everything is long term, like nothing needs to be had in the next quarter. And trust me when you're a public company CEO, you have to think about the next quarter all the time. But nothing about that is good for the business- long term, nothing. And you have to have long term dollars and belief that the decisions we make today will grow fruit in the future years. And then I just think it's the lessons that he's given- to take care of each other, that we're so thankful that Danny, as our founder really, really gave us. I also think when I think about some of the other mentors that I've had in how some of the things they've taught me, I always ask people to understand that life is a series of seasons. And boy, we're all in heck of a season right now. Right? We've all lived through the last year and a half of COVID. But seasons change, seasons change, sometimes they get better, those get worse. They get sunnier, warmer, colder, harder, whatever it is, real learning. This is the lesson. Real learning doesn't happen when you just jump ship to the next thing. When you just move on to the next thing, you just create the next thing. Real learning happens when you see the seasons change around you and you're sitting in the same chair. Those things keep coming around, and you keep learning. A lot of people think well, I'm going to learn just by jumping ship into the next thing, especially now, you know, post COVID, everyone is searching for a new life, a new place to live. And then that's great, that may be the answer. But I would remind people all the time, you know, the first person you're going to meet, when you move to that new city or take to that new job. First person is yourself. You cannot run from that person. And what I've been taught by mentors in my life is to hang out for a while, see the seasons change, make decisions around the same topics that have changed in a new season. And that's where I have found the greatest gift of wisdom of leadership happening around me and the people that I've had in my life for years.

Adam: I want to ask you more about leadership. But before I do, I want to ask you more about the topic of learning. And you shared a lot of really interesting perspectives on how leaders can think about approaching different situations we’re in as learning experiences. And I want to ask you about one that has been in the public eye Shake Shack attracted a lot of controversy back when the PPP loans were first coming out and first coming to the public eye. And you're a leader of a high profile company. You have to make decisions on the fly. You now have the perspective and the ability to look back. What did you learn from that experience? What were the key lessons that with the ability to look back, you've been able to take away?

Randy: Yeah, that was one of the great leadership moments and learning moments in our company's history. And here, let's go back in time, April 2020. Everything in the world is falling apart. No business is unsinkable. Not Shake Shack, not anyone. No one knows where the next day's sales are going to come from. We're laying people off. We're burning millions and millions of dollars a week. And we're not sure how long it can last. And we learn that there's government funding available for companies like ours. And we get right on that. And we were fortunate to get one of the first PPP loans. And we were able to take $10 million. About a week after that happened, you started hearing stories in the news about, oh my god, wait a second, the very people who this was most intended for- small businesses who were really, really in trouble, way worse than us, they're not getting it. They weren't getting the funds. And at that moment, Danny Meyer and I got on a phone call. Never forget, it was a Sunday, days after we got the money. And we said, we're not supposed to have this money. We're gonna give it back. And we're gonna be the first people to start a national conversation about why companies like us shouldn't have gotten this money in the first place. We sent a letter out that Sunday night, late at night after we wrote it. That said, our whole thought process, our whole learning and within a week of that happening, we returned the money. We were the first company to do so. And we began the national conversation for all the other companies like ours that also realized following our leadership, that that money was not for us. And then you saw that play out over the course of the pandemic of much better process, much better setup and the smaller businesses who were intended for getting that money. Look, that's life. That's learning. We had a lot of people who said, well, how could you have taken that? But you wouldn't believe, Adam, how many people and it was probably 10x the observable who called us and said, I can't believe you guys did that. Thank you for your leadership. I just got my loan yesterday, thank you. And it was amazing. And it's funny, it was one of the busier weeks that we had during the pandemic was the week right after we announced that we were giving the money back, there was a whole bunch of people who really came in to support us and say thank you.

Adam: In addition to the experience of having to make such a difficult decision on the fly, which leaders have to do, you're also navigating this incredibly difficult PR crisis. Can you talk a little bit about that, and what lessons you might have learned that could be relevant for listeners of this podcast?

Randy: I think there's only one solution. It's leading with integrity, and leading with honesty and transparency and being forthright about the decisions, and whether that decision or anything else, every company will have a crisis, some will be bigger than others. But if we're working to be learners, number one, we're not perfect human beings, we will make mistakes, and we will make mistakes as a company. We'll have triumphs, and we'll have challenges. As we answer those, we're going to share what we learned, we're going to share what we're after trying to set up the goals to be a better company every day and learn from the mistakes that we've made. And I think that's what any human being should be asked to do. As we continue to march towards this journey of growing as we go through life. And as we go through the trajectory of a company's story.

Adam: Which I think is important advice for anyone and everyone listening to this conversation. If you do something that is wrong, or whether it's wrong or perceived to be wrong, the important thing is to own it, not to pretend that it didn't happen, to acknowledge where things are going and to course correct. And in your case, in the case of Shake Shack, the lesson that listeners can take away from this experience is that immediately you and Danny jumped in and acted. Leaders have to make difficult decisions. Good leaders make decisions, great leaders make good decisions. Along those lines, I want to get your thoughts on the topic of leadership. In your experience, what are the key characteristics of an effective leader, and what can anyone do to become a better leader?

Randy: So there's a couple that I try to lead by. And I'll just use this last couple years, as you know, the most challenging leadership environment that most people have encountered. My message to our team has been hope- reality and hope. We are going to lead with hope, we are going to act on reality. And we're never going to stop coming back to hope and what's in what's ahead. Hope is not a dream is not real, unless you have to make decisions that are reality based. And that's hard. And that's what leaders do. I believe this is my my comment, the one in the organization with the most hope bleeds. And if we don't have that, if you're not gonna be me, who is it gonna be? So I'm always gonna be that and be that in a really sincere and genuine way. The other thing I think leaders have to do all day, every day, is tell people what's important to them. Danny taught me that, you know, after working with Danny for 20 years, there's nothing that could ever happen in our company that I don't know how he might think about it. Right? Because he has spent 20 plus years with me, telling me what's important to him, even to a point where he knows I know, but he's going to repeat it just like I'm going to repeat to my kids, eat your vegetables, wear your helmet on your bike, like they know it, and I'm gonna keep saying it anyway because that's what leaders do. Leaders constantly, all day, every day tell you what's important to them. So that when they're not around, you know, and that's what I try to do, as imperfect as the next person. But you can bet I'm going to be consistently sharing what is important to me.

Adam: What can anyone listening to this conversation do to become a better leader?

Randy: I think it's just like working out. If you're working out, staying in shape, you got to exercise, right? You have to be a student of leadership. You have to watch great movies about leadership and read great books about leadership. You have to be constantly learning and thinking you need to be listening. My grandfather was famous for saying it because I was a pretty talkative young lad, and he would say you know, Randy, you don't learn anything with your mouth open. And also, here's the other thing. We talked about mentors, right? The best leaders are the best followers. I love being a follower. Being a follower- just because I'm a leader of 12,000 people doesn't mean I don't want to follow people all the time. And you have to be willing to do that in a way that there's constant learning and a constant growth of my own skill set, as a leader, and I think that it's working out, working out as a leader.

Adam: I love it. And I love your grandfather's advice. I love your advice, something that I tell audiences I speak to all the time, great leaders are great listeners. And a guest I had on this podcast, the Great General Martin Dempsey wrote a book on leadership and one of his core principles, which is principle that clearly you believe in very strongly and I believe in strongly and I think everyone should believe in strongly is that the best leaders are also the best followers. Before you can effectively lead others you need to be able to be led by others. So an underrated but an important leadership principle.

Randy: All the time, it's something we don't talk about enough. And great leaders need to do it more often because it also looks like, I mean, it looks like leadership, for your listeners, your leadership is lonely. Especially when you're making tough decisions. Like the statement, it's lonely at the top, like that's really true, right? And often as a CEO, when you're getting to that point, you know, you're alone in the final decision. And you no matter how much you work with your team and listen to your team and collaborate together, at the end of the day, most of the big decisions are on the leader. And you have to be accountable to that. And is this what I say to people who I'm asking to lead certain things, I'll say to everybody, hey, you gotta make this decision. You have researched it, you've been thoughtful, you're ready, and you're gonna do it, I'm gonna support you. And you better be right. And I'm gonna come see next month, if you are right. Like, it's not just I support you, I love you- go delegate and make decisions. That's not great leadership. Great leadership is and I'm gonna come see you in a month. You better have been right. And let's talk about how you did. And if you didn't, if you weren't right, what did you learn? How you can change it the next time? And like, you only get to be wrong so many times, by the way, let's just be real, right? I only get to be wrong so many times in my job. And that, to me, is accountability. And I like to leave the words. I use my team now as autonomous accountability. I want my team to really be autonomous in their decision making and their work and their responsibility, and accountable for the decisions they made.

Adam: Randy, you're reading my mind. As you're sharing your advice, I was thinking, it's a great combination of empowerment and accountability. As a leader, you need to be able to empower those around you. Because if you don't, you're going to be the bottleneck. At the same time. Without accountability, where's your business really going to go?

Randy: It's not a free-for-all. Supporting people and giving autonomy and delegation and empowerment. These are very fancy words. But that's not enough. You have to hire amazing people, believe in them, share your vision and go after it. And you need to also check in and I want accountability. It's one of the beauties of being a public company. Right? It's one of the great things about a quarterly review, right? Imagine, I always joke with people, it's like you people say what it's like to be a public company? I said, okay, has anyone ever had a relationship with another human being? Okay, you're married, or you have a partner, or whatever. So imagine if every three months, you had to sit down in that relationship, share everything you've done well for the last three months, all of your goals for the next three months and check in on how you're doing, wouldn't that be a really healthy relationship? And that's what it is. And that's the beauty of running a public company and whether you're a public company or a small private company, you should endeavor to do that. It's a great forcing mechanism to really think through what you've accomplished. Plan for what's ahead and articulate that to the world.

Adam: Randy, you're talking to someone who's single so your analogy is academic to me.

Randy: Well, maybe this will help.

Adam: How can anyone listening to this podcast develop a winning mindset?

Randy: Okay, I do think there's some nature and nurture here. So I do think people are born who they are, let's just let's be real. I happen to be born as a person who doesn't wake up too worried about the world. I generally believe I’m probably overly positive in most things, I have to surround myself with people who think the opposite sometimes just to make sure we're balanced here. So if you're that person, you have to continue to hang out with people who are of that mindset as well. Because no matter what, you get knocked down in life from time to time, and you have to keep getting up. If you're not that person, you really need to hang out with people who share that mindset. We talk a lot, especially these days, about playing not to lose, right? I shared a story of my team a couple weeks ago. You know, my sons are 12 and 13. They started beating me in ping pong this summer. And you're like, God, what's happening here, you know? And as soon as somebody starts beating you in ping pong, what do you do? You play not to lose. And what happens when you play not to lose, you lose 100% of the time. You lose. When you start playing, not to lose, you gotta play to win, you have to wake up with that mindset, you have to experience winning, you have to experience losing. So I love it when my kids lose on their teams because you got to get after and you have got to want to win. And I think ultimately you have to surround yourself with champions, surround yourself with people who just just want to do cool stuff, and make a difference in the world.

Adam: Saturated advice. And as you're describing it, I'm thinking about Joe Maddon, the manager of the Angels who talks about the different phases that a professional baseball player goes through in the course of his career. And that final phase, that last step, is when the only thing that matters to you is winning, you have enough security, you're secure in your career, you're secure in terms of financial stability, and all that matters to you is winning and being on a winning team.

Randy: Yeah, and I do stick with baseball. You know, one of my favorites, too. I'm a Yankee fan. You know, my wife's a Red Sox fan. So that's one of the tougher parts. But, you know, the great Terry Francona, who managed the Red Sox, he said, well, my only job as a leader is to create an environment where the players make the right decisions. I love it. My job as a leader is to create an environment where players make the right decisions. And that's it.

Adam: And he's done that over the course of his career with the Red Sox with the Indians, even as a minor league manager, managing Michael Jordan with the Barents in the White Sox system. That's actually how he got his job with the Phillies, Michael Jordan, recommended him.

Randy: It's never accidental. When coaches who win keep winning when they change teams, that's not an accident.

Adam: The core principles of great leadership are universal. Great CEOs win across the different companies that are in great managers when across different baseball teams that they lead. And the principles are the same. Whether you're leading a baseball team, whether you're leading a public company, whether you're leading a small business, whether you're leading anything. And with that, I want to ask one last question, which is, what can anyone do to become more successful personally, and professionally?

Randy: Man, success is such a tough word. I think, for the most part, we have the wrong definition of success in our world, because we generally equate that to money. When you say that person is successful, and you generally equate that to some financial thing. And, gosh, I think you're successful when you wake up, you do your work and when you go home at night, at least one person says, if it wasn't for that person today in my life, I would not have had such a good day. And to me, like that's the definition of success. If I go home tonight, and somebody listens to this podcast, or my team had a meeting with me and says, oh man, that guy- I'm really thankful for the role he played in my life because he just made me feel alive and seen and heard. So do that. Find one person every day and make them feel better than I felt before you walked in the room. I love it. That’s George Bailey in It's a Wonderful Life, his definition of success. That's my definition of success.

Adam: Randy, thank you so much for all the great advice and thank you for being a part of Thirty Minute Mentors.

Randy: Thanks, Adam.


Adam Mendler is the CEO of The Veloz Group, where he co-founded and oversees ventures across a wide variety of industries. Adam is also the creator and host of the business and leadership podcast Thirty Minute Mentors, where he goes one on one with America's most successful people - Fortune 500 CEOs, founders of household name companies, Hall of Fame and Olympic gold medal winning athletes, political and military leaders - for intimate half-hour conversations each week. Adam has written extensively on leadership, management, entrepreneurship, marketing and sales, having authored over 70 articles published in major media outlets including Forbes, Inc. and HuffPost, and has conducted more than 500 one on one interviews with America’s top leaders through his collective media projects. A top leadership speaker, Adam draws upon his insights building and leading businesses and interviewing hundreds of America's top leaders as a top keynote speaker to businesses, universities and non-profit organizations.

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