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Forget Mars colonies and AI. Kaplan declared he had “developed a set of technology that allows us to make the perfect grilled cheese.” The innovation was as meaningful as it was miraculous: the sandwich had “that nostalgic thing,” Kaplan explained. Grilled cheese sandwiches were the fast food equivalent of Proust’s madeleines, priming them for disruption.

Swisher and Mossberg openly smirked. “I feel like this is post-traumatic stress from Cisco,” said Swisher. “I think he went home and looked at his money,” Mossberg deadpanned.

Kaplan was unfazed. Armed with a tech founder’s unflappable confidence and ambitious growth targets, he announced plans to open 500 fast-casual outlets within five years — all of them company-owned, not franchised. Never mind that it had taken Chipotle three times as long to hit that milestone using the same model. Kaplan felt confident in his melted-cheese rocket ship.

The Melt boasted an elite group of investors — including Sequoia Capital, better known for its bets on Instagram and YouTube — and enough cash to launch twenty restaurants, at a cost of $500,000 to $1 million apiece. Kaplan had recruited some of the Bay Area’s top names, including Michelin-starred chef Michael Mina and former Apple executive Ron Johnson, the genius behind the tech giant’s retail stores.

With the home appliance company Electrolux, he’d created a device that delivered a restaurant-quality sandwich in 45 seconds flat—a “huge breakthrough” in sandwich technology. (“Sandwich presses have been around forever,” protested a skeptical Mossberg. “Not a sandwich press!” Kaplan retorted. “This is two induction burners! Microwaves! Silpats!”)

Next month marks the six-year anniversary of The Melt’s onstage debut. Far from 500 stores, it now runs a grand total of 18 outlets. In the years since it first opened shop, The Melt has grown in fits and starts — launching, then dismantling, a fleet of food trucks, for example. Last September, Kaplan was replaced as CEO by Ralph Bower, a restaurant industry executive with more than 25 years of experience at companies like Domino’s Pizza and KFC.

Falling short of its 500 restaurant goal hardly qualifies The Melt as a flop. Shake Shack, the burger chain founded by longtime restaurateur Danny Meyer’s Union Square Hospitality Group, took 13 years to reach one hundred outlets and is now worth over $1 billion. But former employees at The Melt, ranging from the top echelons of the company to in-store crew members, tell a complicated story of a company that had to roll out sweeping changes to its initial model after overestimating the competitive advantage of its technology — which proved to be both a source of strength and, at times, a liability.

The Melt’s blundering trajectory is instructive, as Silicon Valley wunderkinds seek to recast everyday objects with help from algorithms and apps. Entrepreneurs frequently embark on these missions with vast sums of money and a deep belief in technology’s power to solve all problems — which is not always a formula for success in the brick-and-mortar business of ordinary life: delivering groceries, selling luggage, or making sandwiches.

“Don’t let the fact that it’s just grilled cheese fool you,” said a former senior leader at The Melt, speaking on condition of anonymity. Making a grilled cheese “in 45 seconds, and doing it perfectly, and doing it profitably: That ain’t easy. It’s harder than even we thought it was going to be — and certainly harder than a lot of smart money thought it was going to be.”

When The Melt opened its first restaurant in the summer of 2011, its offerings were comfort food to the core. A minimalist menu of five soup-and-sandwich combinations included “The Classic” (cheddar on potato bread with tomato soup) and, on the more exotic end, “The Wild Thing” (gruyere on white wheat bread with mushroom soup). The Melt prioritized all-natural ingredients, offered Boylan soda in place of Pepsi or Coke, and featured tug-at-your-heartstrings sides — think Cracker Jacks and warm chocolate cookies.

Though the all-American fare was selected to evoke nostalgia, the chain’s kitchens boasted cutting-edge equipment meant to eliminate uncertainty from preparing a sandwich and churn large numbers of customers through its doors. “It’s been created in a way that a $10-per-hour worker can make a high-end restaurant-quality sandwich,” Kaplan boasted at All Things Digital. Forget griddles and guessing: The Melt’s Electrolux presses — which staffers nicknamed “WALL-Es,” after the robot in Pixar’s film — relied on what Kaplan called “proprietary” software and hardware, which decreased the strength of microwave to “increase the quality of the grilled cheese that’s being made.” The Melt also developed equipment for cooking burgers that controlled the heat, time, and pressure through software—“much closer to the way a fryer, microwave, or convection oven that had a timer on it would work” than how an experienced chef would deduce cooking times, Kaplan explained.

Other tech wizardry was more visible to The Melt’s guests. An online ordering system let customers skip lines by buying their meals in advance. Scanners allowed diners to swipe a QR code and activate those orders without ever speaking to a human. With input from NASA consultants, the company engineered (and patented) a “Smart Box” that could keep French fries crispy and melted cheese gooey, even an hour after being made. Thanks to software and hardware that regulated humidity, heat, and air circulation in these mobile units, The Melt could cater offsite without sacrificing food quality. The Melt continually added tech-enabled perks : ordering kiosks, app-based geo-fencing that kickstarted food prep as customers approached the restaurant, in-store soundtracks that changed songs according guests’ musical preferences, and an app-based loyalty program.

In short, like many entrepreneurs, Kaplan harnessed software and hardware to tackle the critical problem of his own satisfaction. “Today when I want my burrito to be fresh and hot, I have to go in and wait on a long line to get my hot fresh burrito,” he said at the All Things D conference. In Kaplan’s mind, that merited action: “We needed to reinvent the whole fast casual restaurant business.”

Startups pride themselves on naïve ignorance that allows them to rethink traditional industries — think Airbnb going up against hotels, or Uber taking on taxi unions. It’s easier to “move fast and break things” when you haven’t yet been indoctrinated into the thing you’re trying to break. Kaplan himself noted that his lack of experience with video recorders had proved an asset when creating the Flip cam; logically, the sentiment applied to his new business. “I didn’t know anything about the video camera ten years ago,” he boasted in a 2011 interview with Forbes, “and I don’t know that much about grilled cheese sandwiches or soup.”

But it didn’t take a grilled cheese savant to taste that in practice, The Melt’s “breakthrough” cooking technology fell short of its promise. Staffers found the Electrolux machines temperamental, and the kitchen’s focus on efficiency and speed often came at the expense of quality and flavor. Some said the 45-second sandwich lacked a soul. “It’s a grilled cheese, all right, but a sterile one,” wrote SF Weekly restaurant critic Jonathan Kauffman. “[T]here are no compressed spatula marks in the bread, no globs of cheese that have escaped the bread to crisp on the griddle.”

San Francisco Yelpers raved about getting the “best grilled cheese ever” and grumbled about greasy bread, inattentive staff, overpriced sandwiches, and minuscule portions. “Silicon Valley money, high profile concept, lots of hype, plans to expand everywhere. But they forgot to make the food taste good,” wrote an online poster.

And from the beginning, Kaplan clashed with his staff about The Melt’s pared-down offerings. “I’ve already had many, many fights with my team about adding all kinds of things to the menu,” Kaplan said in an interview shortly after The Melt opened its doors. “What’s amazing to me is it reminded me of the early days of the Flip. Everyone wanted to add another feature to the Flip — let’s make it a phone, let’s make it do this, let’s make it do that.”

Yet the the Melt’s purist menu had a flaw: Diners don’t usually eat sandwiches for dinner. Many Melt outlets were chaos at lunchtime and crickets at night. At first, The Melt tried to boost business by launching a breakfast menu in 2012. Two years later, breakfast was out, and The Melt tried again with another menu, featuring burgers and other hearty fare. It stuck. From the original selection of five soup-and-sandwich combos, The Melt now offers six different grilled cheeses, four cheeseburgers, three chicken sandwiches, three French fries, two salads, two mac n’ cheese dishes, four desserts, and only a single soup.

The new dishes attracted customers; adding meat entrées yielded an impressive “25 or 30 percent increase in sales overnight,” according to Bower. But the menu overhauls proved challenging. Introducing — then dismantling — a breakfast menu is more complex than, say, a software update. Ditto for burgers: As several ex-Melt employees told me, the push into meat required remodeling stores to accommodate new equipment, re-training crews to handle new processes, sourcing different ingredients, and, in some cases, closing and moving existing stores. (Some food courts have rules in place to ensure tenants do not compete in the range of foods they sell.)

Amid these changes, former employees describe growing pains. It was tough to retain talented workers, train them, and simultaneously keep customer service and satisfaction high. “We’re not making major changes like that anymore. But we had to redesign the kitchens, we had to get different equipment, so, yeah, lots of operating issues,” said Melt investor Michael Marks, a founding partner at the private equity firm Riverwood Capital. (“We haven’t had operational issues,” Kaplan told me, when asked about this period.)

To Kaplan, the public’s anemic appetite for grilled cheese at dinnertime was not a foreseeable issue. “No one had ever tried to open up grilled cheese restaurants across the country,” he told me. But ex-Melt staffers, as well as an investor, raised concerns that the company might have benefited from a leadership team with greater experience in fast-casual restaurants — which might have allowed them to predict this challenge.

“They were all good people, and they all wanted good things. They just didn’t know anything about running restaurants, and they ran it like a tech company instead of like a restaurant,” said one employee who worked in a Melt restaurant. Kaplan counters that The Melt was “always a combination of restaurant people and technology folks.” Yet at the top level, The Melt’s board was — and remains — dominated by tech industry veterans: Kaplan, the former Apple executive Ron Johnson, and the venture capitalists Mike Moritz, Michael Marks, and Bruce Dunlevie. Chef Michael Mina, whose restaurant empire has traditionally hewed closer to tablecloth-and-valet-type destinations than Chop’t, is a notable exception.

The Melt has lagged behind its peers in the fast-casual business, especially as competing outlets have wizened to the benefits of integrating technology. Chains like Starbucks copied many features that originally distinguished The Melt, such as its digital loyalty program. Though The Melt may not have behaved enough like a restaurant, other restaurants have begun behaving like tech companies, eroding the startup edge that had initially given The Melt an advantage.

Though the restaurant has fallen far short of its goal of opening hundreds of locations, Kaplan places the blame squarely on external forces: “Real estate, real estate, real estate,” he told me. “Our ability to get as much real estate as we wanted, as quickly as we wanted, was limited.” And while yes, the headaches of real estate in the Bay Area—where The Melt first set roots—are well established, fingering real estate is a bit like pointing out that it gets cold every winter.

“[T]echnology was the promise, and it also may have been the Achilles’ heel,” said a former Melt employee, who declined to be named. “That’s where the arrogance was: We’ve got all this money, we’ve had success in our individual careers in the past, so we can’t get it wrong.”

The ex-staffer told me the experience had been humbling. Given the chance to do it over, “we should have been spending a lot more time on the food, the customer experience, the management, and the operations.”

Recently, The Melt has undergone yet another makeover: “Our number one focus is going to be on the food,” The Melt’s new CEO, Ralph Bower, told me. (Which begs the question: What was the number one focus before?). The restaurants have received a handful of tech upgrades: second-generation sandwich presses—this time from Nemco, not Electrolux—screens in kitchens to streamline orders, additional order kiosks, and more TVs in the dining areas that display information on the integrity of the Melt’s ingredients.

But the more dramatic changes have centered on the old-fashioned business of making good food and courting diners. The Melt’s décor has gotten a facelift, its bright-white subway tiles and metal stools have been traded for minimalist furniture and bleached wood, which lend a warmer feel. Bower is introducing a rotating menu of seasonal specials, in an effort to “romance the food.”

And internally, The Melt’s mission statement has changed. “The Melt was founded on the idea of ‘better food for our kids, and jobs creation,’” a publicist for The Melt wrote in an email. “While this remains core to what the company does today, the team recently updated and refocused The Melt’s mission statement.” The Melt’s new mission statement? “We consistently provide craveable grilled cheese and cheeseburgers handcrafted by friendly crew members using the best all natural ingredients enabled by helpful technology and served in a warm, welcoming environment.”

The Melt’s revamped mission is telling. Before, it envisioned itself tackling ambitious and systemic world problems, much as a tech company would. Now, its goals are individualistic and basic: delivering delicious sandwiches to customers. In short, it sounds like a restaurant. And technology has been reduced to a supporting role; The Melt’s tech should be “helpful,” just as its décor should be “welcoming” and its staff “friendly.”

At a time when tech is rushing into new realms, promising solutions to problems that may or may not exist beyond a pitch deck, this shift is revealing and significant. As The Melt discovered, that there are certain human needs that are still best satisfied by the high-touch, not the high-tech. Though processes may be disrupted, changing our desires — especially for something as instinctively pleasurable as grilled cheese — can be far more difficult.

“I think if you’re looking for the angle of, like, what went wrong, I would say that nothing went wrong,” Kaplan told me when we last spoke. “But what we did learn is that the quality of the food is the most important reason why someone comes to a restaurant.”

Via [Foodofficials]

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