Jonathan Kaplan created a hit video camera, the Flip, that he ultimately sold to Cisco Systems for $590 million. For his next act, he took a big detour to found The Melt, a chain of restaurants specializing in grilled cheese sandwiches.
Now Kaplan is planning more change by tweaking his restaurant menu to include gourmet cheeseburgers, chicken melts and french fries. He is betting that more choices of American staples will draw more customers, never mind all the competition.
“We aren’t touching enough people, and we’re not making enough of a difference,” Kaplan says, using classic Silicon Valley start-up terminology.
Kaplan had previously founded Pure Digital, which struck gold in 2006 when it released the first in a line of pocket-sized video cameras eventually branded Flip Video. Those cameras were known for being dead simple: Press the big red button once to record and again to stop.
In a surprise move, Cisco Systems acquired the company in 2009 for $590 million as part of an odd foray into consumer technology. But after just two years, it abruptly abandoned the effort and killed the Flip camera line.
For his part, Kaplan says he’s not bitter about Flip’s demise and, ultimately, invested in GoPro (GPRO), another popular camera maker that went public in June.
“The mission of Flip was to democratize video for the world,” he says. “The fact that Cisco decided to end that mission, and well, GoPro is continuing it. I love it.”
With his restaurants, Kaplan’s goal is to make healthier meals available to the masses, starting with fast food. The way he sees it, 90% of fast food today is what he calls “quick service restaurants” — chains like McDonald’s (MCD), Burger King (BKW), and Wendy’s that prioritize speedy preparation and low pricing. Less than 10% are “better burger restaurants” that use higher-quality ingredients, he says.
Kaplan argues that his burgers are tastier than those from McDonald’s, yet lower in calories, fat and sodium. But where McDonald’s food processing practices became fodder for eye-opening documentaries like Food Inc., The Melt’s Angus and Wagyu beef patties are all-natural and largely made with locally-sourced ingredients.
The risk, of course, is that there are no shortage of restaurants selling cheeseburgers and fries. His burgers, which start at $4.95, also happen to be more expensive than the typical fast-food joint.
“We knew kids were going to eat American classics,” says Kaplan, who has a 9-year-old daughter. “They’re going to eat pizza. They’re going to eat Chinese food. They’re going to eat grilled cheese. We wanted to pick an industry where we could make a statement by only having 100% all-natural products and not having say, high-fructose corn syrup.”
With that in mind, he launched The Melt in 2011 with undisclosed funding from backers like Sequoia Capital. The chain’s 15 restaurants generate more than $15 million in annual revenues, which is not bad for a grilled cheese startup, but a far cry still from what Cisco paid out for Pure Digital. By offering a larger menu of American staples starting this week, and opening locations in California and Colorado next year, Kaplan obviously hopes The Melt will go mainstream the way his Flip cameras once did.
“When Whole Foods launched, it changed the way people buy groceries,” he says. “We just want to touch enough people’s lives the way they did.”