A techie with foodie ambitions

©Thor Swift
It is just before noon on a Monday in San Francisco’s financial district and already a line is forming for lunch at one of the city’s newest restaurant chains.
However the queue seems a little unusual – on two counts. First, office workers seem to be fallin g over themselves to pay top-dollar for something they could almost as easily make themselves – melted cheese on toast. Second, The Melt restaurant has installed a high-tech ordering system that means there should, in fact, never be a need to stand in line – you can just scan a code displayed on your smartphone’s screen and your order is on its way.
Neither of these issues disquiets Jonathan Kaplan, founder of the The Melt, as he surveys the scene in the white-tiled outlet with some satisfaction, wearing the same dark work-shirt as his employees, on which “the crew” is embroidered.
After all, the previous business he started – the Flip video camera – was successful, despite there being no perceived need for another camcorder at the time. But millions of people soon “got” the simple one-button recording of the Flip and he thinks they are likely to adapt to online meal purchasing in the same short order.
What is hard to grasp is why an established tech entrepreneur, backed by Silicon Valley venture capitalists, would want to follow up a consumer electronics success – more than 2m Flips were sold before Cisco bought his company, Pure Digital, for $590m – by trying to start a national chain of melted-cheese sandwich joints.
“I think of the business the way I thought about Flip,” he says, watching me sample Brie on wheat with a wild mushroom soup side dish and a sharp cheddar on potato bread with a tomato and basil broth. As with the camera, he says, the plan is to “create a great customer product, regardless of what the world says is possible or not possible, and deliver that in a way that makes money for our investors and employees and is a great value for consumers.”
For Mr Kaplan – who is not alone as a tech entrepreneur who has gone on to explore his foodie inclinations (see box) – there is no boyhood obsession for American jack cheese nor nostalgia for the fare of classic American diners.
Nor is a love of Welsh rarebit behind the backing he got from Wales-born Michael Moritz, a board member of The Melt and managing partner at venture capital firm Sequoia Capital.
“He didn’t know a heck of a lot about the video camera business before getting into that,” Mr Moritz says of Mr Kaplan. “What you want in an entrepreneur is someone who has a really good idea, is not afraid to admit that he doesn’t know a whole raft of things, surrounds himself with people who have the skills and then orchestrates the whole hullabaloo.”
In keeping with Mr Kaplan’s tech background, ordering online generates a unique “QR code” – a kind of barcode – for scanning in-store and avoiding the regular order queue.
While his talent is more technological than culinary, Mr Kaplan and his backers believe he has assembled the ingredients – in food and management terms – for a successful business.
Here is his people recipe: first, take two venture capitalists – in this case, Mr Moritz and Bruce Dunlevie of Benchmark Capital. “They have pattern recognition,” he says. “They have done this so many times they can see the mistakes before they happen – they are like the chess players that know the fourth move from now, whereas the entrepreneur only has the experience of their own companies, three or four in my case, but not 50 or 60 like them.”
VCs are also vital for helping to arrange the equity and debt financing for a large-scale venture. The aim is to open 500 Melts nationwide in five years at a cost of half a million dollars each. Currently, Mr Kaplan has enough capital for the first 50 and the San Francisco Bay Area is home to the first four.
Next, add someone with knowledge of the restaurant business – Michael Mina, whose eponymous San Francisco establishment was Esquire’s 2011 restaurant of the year in the US.
“He helps us to figure out what goes in this sandwich . . . and how to make it taste the same in Hawaii or on the East Coast, with no stabilisers, nothing that’s bad for you,” Mr Kaplan says. The Melt belongs to the growing “fast casual” sector, which offers high-quality food made with fresh produce and costing $5 to $10, compared with under-$5 fast food. He points to Chipotle, the Mexican fast-casual chain that has grown quickly to reach an $11bn-plus market capitalisation.
The next ingredient is to add a master retailer at board level – in this case, Ron Johnson, who created Apple’s minimalist design and hugely popular stores before becoming chief executive of the JC Penney department store chain last year.
“The right location is critical, he’s commented on design and the customer experience – how you are treated when you come in . . . when you go to an Apple store not only is it beautifully designed and in the right location, but the experience is great,” enthuses Mr Kaplan. The slick service at the financial district’s The Melt certainly seems to match Apple’s.
Finally, sprinkle the concoction with some magical theme-park seasoning from Disney. The Melt’s restaurants have hourly-paid workers rather than full-time staff, so Mr Kaplan consulted a Disney executive on how to keep them committed to a company’s culture. On their first day, The Melt workers do not go near the food, but learn about issues such as conflict resolution and being part of a team – “the crew”.
For blending his actual ingredients, Mr Kaplan struck an exclusive deal with Electrolux, the appliance maker, to produce a customised version of its panini makers, so the bread is not pressed down as hard – still melting the cheese but ensuring the bread stays light and aerated. Similarly, customised tureens heat the soup side dishes very slowly and whip them to a fluffy creaminess without the chemical stabilisers that are common elsewhere.
Customers have a choice of five $8.75 combos, and they can follow up with desserts including a S’more – marshmallow and chocolate melted between toasted bread.
In keeping with a clientele interested in high-quality fast food, The Melt adds a dash of philanthropy and eco-awareness to its menu – ingredients are fresh and local, everything is recyclable and customers are encouraged to round up payment to the nearest dollar, so the difference can be donated to charity.
“Maybe we’ll be selling in the millions one day, just like we did with the Flip,” says Mr Kaplan. “But right now there’s a line every day and that’s enough to tell me we’ve found another product people love.”