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The concept: The Melt
The details: A San Francisco-based fast casual specializing in comfort food including burgers, grilled cheese, fries and mac and cheese. It currently has seven units.
The backstory: A group of investors and tech industry workers founded The Melt in 2011 with a plan to create a high-tech concept. The chain grew to 17 units, with locations in California, Colorado and Texas. But the brand struggled to differentiate itself in a crowded market. In 2016, The Melt hired Ralph Bower as CEO, charging the former president of Popeyes and CEO of Pei Wei with turning around the brand. Among other changes, Bower made the decision to shutter 10 of the chain’s 17 units, leaving just the stores in California.
Why it’s worth watching: After some bumps, The Melt appears to be on a smoother path. The brand reported same-store sales growth of 17% in 2019 and average unit volumes of $1.6 million, and there are plans to add three units this year. Bower comes to the company with decades of big chain restaurant experience. “There was nothing particularly sexy about what we did,” Bower said of the changes made in the last couple of years at The Melt. “We listened to our guests and our team members. They will always tell us what you need to do to be successful.”
Photograph courtesy of The Melt
HERE ARE FIVE GROWTH-MINDED QUESTIONS WITH BOWER:
What were the first steps you took when trying to turn around sales at The Melt?
For the first year, I just analyzed the business and took a look at where we were in the marketplace. I sent out a letter to everybody in our database. I introduced myself. I asked two questions: What do you hope I change, and what do you hope I don’t change? We got 1,100 responses. I met with all my teams in the field and asked the same questions.
What did you hear?
Some of the feedback was tough. Although our food was good, our guests said it wasn’t good enough to differentiate us from other burger and sandwich chains out there. In August of 2018, we set out to totally reinvent the brand. We redid the recipes of every single item on the menu. We made things cheesier. We made the recipes a little more elevated. We totally changed our burger offering. I’d been inspired by a visit to Brooklyn, where I had a product called a chopped cheese at a bodega. I thought, “What would happen if we had a hamburger that was like this chopped cheese?” We call it a Melt Burger. It’s 6 ounces of Angus and wagyu. We chop a pickle and jalapeno mix into the burger. Then we put on about twice as much cheese as anybody uses. When you chop the burger, you get all that cheese into every nook and cranny of the burger. That cheese works to hold the burger together. Today, we sell slightly more burgers than we sell grilled cheese.
In addition to menu changes, you’ve worked on changing the culture there as well. What have you done?
It started from guest feedback. We had a guest who said, “I love it here.” And she explained why she loves the brand. I thought, “What would happen if every single guest said, ‘I love it here?’” We launched a new brand promise: To deliver an “I love it here” experience to every guest. It’s been pretty powerful. It seems like such a simple thing. We have rallies twice a day, before each shift. Everyone talks about our No. 1 goal. Everyone in our restaurants can tell you what the No. 1 goal is. That’s probably been as responsible for our success the last two years as anything. We’re not prescriptive on what they need to do to deliver the “I love it here” experience.
The Melt originally had a very strong tech focus. Is that still an important part of the brand today?
We use technology where it can help us to deliver that guest experience. In our restaurants, guests can order online, at the kiosk or at the front counter. What tech does is it gives the guest a choice to order in the manner they’re most comfortable with. … With kiosk ordering, some look at it as a way to reduce labor. What I have found is that you can’t look at it like that. You’ve got to look at tech as a way to enhance the guest experience. … About 30% of our orders come at the kiosk, but I don’t really think it reduces our labor. It’s solely to tailor that guest experience.
Did you receive any negative feedback about menu or other changes at The Melt?
When we introduced the new menu, we drastically increased portion sizes. We took the burger from 4 ounces to 6 ounces. We increased the amount of cheese by about 75%. As a result, we took a price increase that was about 25%. The interesting thing is that we actually reduced our number of customer concerns about price by about 90%, and that is just because people are willing to pay a premium for food that is really amazing and differentiated. … I sent another letter out to everybody in our database. I explained that based on their feedback, we were making some changes.
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