Why Shake Shack's Danny Meyer Says the iPhone Helped End the Fast-Food Era
The future of fast food is upon us. And, according to Shake Shack founder Danny Meyer, there's no going back.
"No change whatsoever has floored me any more than the one we are going through right now, which is something I never thought I would see in my entire lifetime – the convergence of fine dining and casual dining all at once," Meyer said during a talk on Saturday at TEDxManhattan, an annual event focused on food trends.
Meyer has a name for this massive shift that his burger chain helped create: fine casual.
"Fine casual means taking the cultural priorities that fine dining, at its best, believes in," he told Entrepreneur. "How do you hire people who care about hospitality, how do you source ingredients responsibly, cook them with as much care as possible, and make restaurants that actually taste like where they are?"
Fine casual restaurants, like Shake Shack or the Meyer-funded salad chain Sweetgreen, sell products that match fine dining menu offerings in quality at a fraction of the price. Closely linked to what most people call "fast casual," these concepts cut costs wherever possible while refusing to compromise on core principles.
According to Meyer, America is on the cusp of a tidal wave of fine casual restaurants ready to flood the market. As chains following the example of Shake Shack, Chipotle and Starbucks begin to adopt higher quality ingredients and focus on hospitality, fine dining chefs are simultaneously realizing the potential of quick service for their own businesses.
"I think that more and more and more really talented restauranteurs and chefs from the fine dining world are going to try their hand at fine casual," says Meyer. "They're going to say, why not us?"
Why is this happening now? One reason is that customers are demanding it. Meyer says that his kids refuse to eat fast food. Even if they did eat it, he says they would be ashamed to be seen with the bag.
Among those with weaker aversions to fast food, traditional fast-food chains draw in customers with the assumption that food will be cheap, fast and predictable. There's not much of a focus on creating an engaging atmosphere, retaining employees or serving healthy and sustainable food. However, with a growing understanding of and taste for food that is raised naturally and healthfully, customers are increasingly looking beyond convenience and speed in choosing where to eat their dinner.
There are also less obvious forces in play in the creation of a fine casual industry – for example, the iPhone, which Meyer calls the biggest game changer in the restaurant business since the invention of the automobile.
"I think that Shake Shack wouldn't exist had it not been for Twitter," says Meyer. "I don't think you would have gotten a hundred New Yorkers to stand in line for an hour if they couldn't have made their time really productive and organized snowball fights, ordered free hot chocolate, and you know, Instagrammed photos."
New tech additionally allows restaurants to cut costs associated with fine dining. Customers can order and pay for food before they arrive, alert restaurants of their preferences and receive rewards for repeat visits. All these new features create new ways to convey the hospitality that Meyer insists on in all of his restaurants, from Shake Shack to Gramercy Tavern. Plus, fine casual is trendy on social media, allowing Shake Shack to be 100 times more successful than McDonald's on Instagram, according to some analysts' measures.
"In 10 years people are going to have less time, not more time… [Due to technological advances,] we can do a lot more things, so we do a lot more things," says Meyer. "That high-tech increases people's need for high touch. So, I believe that people will seek out more experiences that save them time with no cost in quality, no cost in hospitality and that allow them to connect with people."
Ultimately, the most important reason that fine casual is flourishing is that pioneering restaurateurs and chefs proved to customers and investors that it was possible to have the best of both worlds, with a little help from the tech sector. When rising customer demand meets practical solutions, a new market is born. As the world of fine casual dining grows, restaurants are getting closer and closer to fast-food prices – figures that Meyer believes that someday fine casual chains will be able to meet and beat.
Today, a ShackBurger, made with freshly ground beef with no hormones or antibiotics, costs a little over $5. A quarter pounder from McDonald's costs a little less than $4. Even as McDonald's cuts antibiotics from its products and attempts to revamp its image, the freshly ground, all-natural ShackBurger has easily established itself as the higher quality product. With Shake Shack's recent IPO, the chain is quickly expanding. If the market for sustainably-raised meat continues to grow, increased supply has the potential to help reduce costs for fine casuals like Shake Shack. If McDonald's and other fast-food chains want to compete, they need to start making changes now.
"The one thing that never goes out of fashion or need is hospitality and the need to be restored," says Meyer. "I think that any business that thinks that the transaction is 'you give me money and I give you food, next, you give me money and I give you food, next,' without understanding that people deeply want to feel restored is in danger."
Kate Taylor is a reporter at Business Insider. She was previously a reporter at Entrepreneur. Get in touch with tips and feedback on Twitter at @Kate_H_Taylor.