EATING OUT is one of life’s greatest pleasures. Part performance art, part physical gratification, a good meal refuels spirit as well as body. Yet when did you last have a memorable – not just expensive – meal in a restaurant? What’s on the plate has to emulsify perfectly with service, atmosphere, expectation and, not least, the bill. If just one element fails to gel, the pleasure seeps away.

That makes running a restaurant one of management’s stiffest challenges and one that most establishments fail. The food is uninspiring, the performance pretentious or sloppy, and all too often you come away feeling vaguely cheated, whether by ambitious prices and mean portions, pressure to buy expensive extras and wine, or mistakes on the bill.

But it doesn’t have to be like that. In his fascinating Setting the Table: The Transforming Power of Hospitality in Business (HarperCollins), Danny Meyer recounts how he built one of America’s most consistently successful restaurant groups, both gastronomically and financially, by giving, not taking. As the subtitle of his book suggests, Meyer, who made his name with the Union Square Cafe and now presides over 11 New York establishments, has made his creed ‘enlightened hospitality’, and it is what distinguishes his restaurants from the rest.

Hospitality, Meyer suggests, exists when the other party to the deal is on your side. If that sounds glib or gushing, it’s a measure of our cynicism, since deep down we have learned that most businesses are not on our side: they are out to fleece us of as much as possible while still keeping a straight face about customer service (small print, hidden extras, unfathomable tariffs – you name it). But service, Meyer insists, is not the same as hospitality. Service is the technical delivery of the offering; hospitality is how the service makes the recipient feel. Hospitality is an individual transaction, which is, crucially, what prevents the performance becoming rote. Both are needed for restaurant success.

This is a management philosophy built on optimism and generosity, and it runs right through the operation. It also inverts the usual business priorities. Because performance depends on everyone being at the top of their game, it starts with the staff, who are recruited for attitude over aptitude (there is no shortage of good applicants fleeing the fear-driven kitchens of others). Their priority is being hospitable to customers. Next comes the community. Most of Meyer’s restaurants have been launched in run-down areas that needed a boost – good business in two senses, because rents are lower, while investing in the community generates the proverbial rising tide that lifts all boats. Investors come last, after suppliers – but they aren’t complaining either, since they too have received rich portions from Meyer’s patient, generous approach.

Which, of course, is the decisive counter to the inevitable reaction that all this is too good to be true in today’s unforgiving environment. Consider that restaurants are one of the most brutal (in all senses) businesses in the world, legendary for failure rates, overpowering egos, staff turnover and chef burnout – and that New York adds to these a fickle public and the toughest critics around. Yet Meyer’s restaurants evoke extraordinary loyalty and come consistently high in their respective rankings year after year. This is no flash in the pan.

In any case, as Meyer makes abundantly clear, optimism and generosity are by no means a soft management option. There’s no getting around vicious competition, so standards are uncompromisingly high. Meyer talks of the ‘blood sport’ of competing for the city’s best staff. Yet he is just as uncompromising about the destructive effects of internal competition – as when an award turned the head of a young waitress at the Union Street Cafe, causing deep disruption and resentment (the opposite of hospitality) until she left.

Setting the Table is far more than an engaging book about establishing and running restaurants: it is studded with reflections that have wider application to business and management. By basing his enterprise on a cheerful, optimistic vision of human nature, Meyer sets up a direct challenge to the dominant game theorists, transaction-cost economists and management scholars who put economic man, the rational utility-maximiser, at the heart of their desiccated equations. While he cordially accepts that there are other ways to run an organisation, by recognising that management can be a powerful amplifier of energy and excellence or the reverse, Meyer has effectively turned his restaurant group into a purveyor of hope, optimism and humanity as well as good food. It’s an uplifting message. ‘There is almost no downside to a hospitable, charitable assumption,’ Meyer asserts.

So nice guys do win. Or, as he puts it: ‘No amount of generosity has so far succeeded in putting us out of business.’

Enjoy your Sunday lunch.

The Observer, 8 April 2007