Mark A. Leavitt, ’83, the brand-new chief investment officer of New York–based Union Square Hospitality Group, has had a seat at some most-interesting tables. Those in the esteemed restaurants of his Trinity College classmate Danny Meyer are only the latest, including Union Square Cafe, Gramercy Tavern, and the Modern. (Union Square Hospitality Group also launched Shake Shack in 2004, as a permanent kiosk that grew out of a hot dog cart in Madison Square Park. It is now a separate public company with more than 75 domestic and international locations and a market value of about $1.2 billion.)
Before joining USHG, Leavitt for nearly eight years led global technology, media, and telecommunications investment banking at Piper Jaffray. He’s been on the boards of the Harlem Globetrotters, Leap Wireless, TSF Communications, Trinity College, and several radio broadcasters, including Citadel Communications and US Radio. He currently serves as chair of the board of Jacob’s Pillow Dance Festival in Becket, Massachusetts, and, since Booth, has been working to grow and partner with companies at varied intersections of entertainment, media, and tech.
After decades of friendship, Leavitt and Meyer went into business together this fall. Meyer is also a University of Chicago legacy, the grandson of Irving Harris, who endowed the Harris School of Public Policy. “I don’t know anyone who has more knowledge and with whom I share so many values as Mark,” Meyer said. “Nobody better captures the things that are critically important to me—shared values, savvy, experience, and loyalty. The only thing that was even remotely challenging about the prospect of working with such a close friend is that you want to be sure to not mess up a good thing.”
The good thing the two are now working to build together is the inimitable Danny Meyer–USHG brand of enlightened hospitality—which, if not by name, was something Leavitt had been honing for more than 30 years with his clients.
“We’re looking for investment opportunities and talking to funding sources,” said Leavitt about how one goes about transforming a portfolio of restaurants into a portfolio by and for investors. “We’ll be more of a value-added partner.”
Regarding new ventures, the old friends agree on priorities for the company, both in-house and in considering potential partners.
“Danny always says, and I agree,” said Leavitt, “you can’t accomplish anything if people are unhappy with their jobs.” He, a man who’s clearly happy with his job, spoke with Chicago Booth Magazine about where investment banking meets enlightened hospitality, what’s next in the restaurant industry—and who picks up the bill.
CHICAGO BOOTH MAGAZINE: Chief investment officer isn’t exactly the most obvious executive role in a hospitality company. It’s kind of an “An investment banker walks into a bar . . .” setup, and certainly a unique initiative for the restaurant industry. Tell us about the leap from Piper Jaffray to Union Square Hospitality Group. How do the two seemingly different business realms connect—or not?
Leavitt: For a long time, I knew I wasn’t interested in going to an investment banking competitor. And the intersection between the two industries, finance and hospitality, is actually great. I spent 30 years in the deal business as an adviser finding good companies to work with and figuring out how to help them grow.
I do that every day here. The only difference is that the client is us. It makes things both more challenging and more interesting from the perspective of being a principal.
The first thing I look at is management. Because good management can make good opportunities great. Bad management can screw up great opportunities.
CBM: As well as from the perspective of the best seats in the house, at some of the best restaurants in New York.
Leavitt: Yes. I’ve had a really good viewpoint to watch how they do things here. It’s a cool work environment, a lot different from an investment bank. When I got here on my first day, there was a magnum of champagne on my desk with a note, signed by everyone in the office, that said, “Say hi to me. I’m new here.” They don’t do that in investment banking.
CBM: No, they do not. So maybe you can bring the cheers to investment banking here?
Leavitt: We’re early in the investment game, but it’s been exciting from day one just observing how well organized and how well run this company is—and how deep and strong the management team. There’s such a group of talented people to call on for expertise. Hospitality is a team sport. This is not just the Danny Meyer show.
CBM: And you also happen to be a huge fan of the Danny Meyer show.
Leavitt: Since college we’ve been each other’s biggest cheerleaders, even as we went in very different career directions. Many years later, we agreed that the expertise is related. We got to say it would be fun to do this together.
CBM: Your industries were coming together as well.
Leavitt: I’d increasingly seen a convergence of my clients in technology, entertainment, and media becoming more and more interested in the food and hospitality space.
The genesis of this job was Danny telling me that Union Square Hospitality Group is like an electromagnetic field right now. He said so many people are showing us opportunities that we need someone to organize it all into a business.
CBM: People throwing money at you! Now that’s the kind of problem an investment banker wants to solve.
Leavitt: Exactly. And in a private-equity world, where everyone’s dollars are commoditized, every investor starts to look the same. In enlightened hospitality, on the other hand, you can really stand out. I think people will want to work with us, as we take a different approach to long-term investing.
The common theme is that we come to it from the perspective of hospitality. People feel welcome and integral. That really drives our customer experience and can take all sorts of forms and businesses.
CBM: For example? What does the investment arm of a hospitality company look like?
Leavitt: I believe there are two parts to setting up our investment business. One is more internal, to build growth and opportunities for talent within USHG. We want our portfolio of companies to continue to attract and retain the best talent. Our restaurants are just really friendly places. Our people walk the walk and talk the talk. The first thing you have to look out for in any company is each other. You have to put your employees first.
The second aspect is about USHG as a potential investor in other kinds of businesses—thinking broadly in hospitality. We don’t have a monopoly on good ideas. A lot of people are doing incredible things out there that we’d like to be a part of.
If it’s meant to be, the underlying trust in a friendship helps you navigate the issues that invariably come up when you’re solving problems—which is what business is about.
CBM: In the technology sector?
Leavitt: Broadly in hospitality, not necessarily in tech. One of our investments to date is in Tender Greens, out of California. They have a great concept, what they call “slow food done fast,” with 22 locations. We like working with them. We know we can do interesting things together. We have a minority interest. We went in with a private-equity firm that was also an investor in Shake Shack. Tender Greens wanted our expertise from the growth of Shake Shack, which was why they took our money.
CBM: You yourself were an early investor in Danny’s business, right? So you’ve experienced that side of it as well.
Leavitt: Correct, way back in the day. I invested in Eleven Madison Park and Tabla almost 20 years ago, and then in Blue Smoke a few years later. Even then, I was never concerned about working with a friend. We’ve always had a relationship where we speak very directly to each other.
CBM: Direct communication and rigorous debate in business being highly valued at Booth. What other qualities or experiences from your time there do you remember most?
Leavitt: That’s easy. Taking a corporate finance course with Merton Miller was amazing. After having undergraduate classes where we studied the Modigliani and Miller theorem on capital structure, and then getting to sit in a classroom and hear the guy who invented it? It doesn’t get any better than that. Not only was he a brilliant mind, but he was a brilliant teacher, too. He also had a great sense of humor.
CBM: And the course you might want to forget?
Leavitt: I’m sure there’s some obscure statistics class in an area I haven’t looked at since. But it was all part of the overall Booth experience. It was and still is a very quantitative program, and it has served me well.
Where some other schools respond to a problem with, “We can get a case study about that,” the Booth approach is one that really stays with you. I use it all the time. A-B-C-D, always be connecting dots. Having the analytical underpinning to your business-school education allows you to figure out what’s happening.
CBM: And what is happening in the hospitality world? Other than everyone taking pictures of their food, that is.
Leavitt: Yeah, everyone’s a restaurant critic now. You sit at the table and photograph the food and report to everyone about your meal. We’re happy people think enough of the food to take a picture. What gets lost in that, though, is the pure pleasure of people sitting around having conversations.
Technology has evolved to a place where we can have such a detailed database. We’re able to really track and meet our customers’ tastes. If you go to one of our restaurants now, the sommelier can say, ‘We know you like this wine,’ and if it’s not in that particular cellar that particular night, we’ll ship it over.
CBM: Where else are we headed, in terms of restaurant technology and defining hospitality for the digital age? What’s the next frontier as far as improving the customer experience?
Leavitt: Well, Danny’s recent no-tipping innovation has really been something. He was way ahead of his time on this one. We have a newsletter from 1994 where he talked about going to this European model.
There are a lot of ways to play the reservation game and the payment game. The holy grail on the payment side is to find a way that people can prepay to the point where when they’re done with their meals, they can just leave. We’ve found that when someone is finished with his or her meal, the waiter arrives either too quickly and the diner feels rushed, or the waiter doesn’t get there in time to deliver what the diner wants. It’s tough to anticipate whether that’s drinks, dessert, coffee, or all or none of the above, and to coordinate it for the table. Then, of course, there’s the actual scramble for the bill. It unnecessarily creates hard feelings. We want to make that payment part of the evening undetectable. Imagine if all of the issues around paying were no longer a part of the meal.
CBM: It would encourage such loyalty. Take the money part away and you’d really feel like a guest.
Leavitt: Similar to investment banking, the best measure of how well we’re doing our job is in the number of repeat customers. When someone leaves, do they walk away and say, “That was so great. I want to come back and tell my friends about it”?
The same applies whether you’re a white-tablecloth restaurant or a burger place or a private-equity company. It’s all about creating a better customer experience, one that compels people to return and to trust that the quality will be there again and again.
—By Amy Goldwasser