9 ms·

Sequoia Capital invests $10mil to let you order grilled cheese over the Internet

54 points by raldi 15y ago

kd0amg 15y ago
I was under the impression that restaurants tend to operate on very thin margins. Is this not actually the case, or is The Melt expected to be an exception, or is it expected to overcome this with large order volume?
- hugh3 15y ago
  If you're clever about it, the markup on a grilled cheese sandwich can be enormous. Fifty cents worth of bread and cheese sells for eight bucks if you make it look fancy enough. Simple menu, assembly-line cheese-grilling, minimal cleaning and packaging, and simplified payment system and you can serve a lot of people in one lunch hour. As long as they can keep the customers rolling in (which is just a matter of (a) marketing and (b) making good grilled cheeses) it's a licence to print money.
- cromulent 15y ago
  Gross margins tend to be good, around 30% I believe. However, there's a lot of overheads and payroll, and volume can vary considerably.
- jonknee 15y ago
  They want to sell grilled cheese at scale. That's where the big money is. Not one location, not ten, but hundreds. With five hundred locations, it doesn't take a large monthly profit per store to add up to a lot of money.
  - fleitz 15y ago
    This business as others have pointed out is not about selling grilled cheese, it's about proving the market and perfecting the system. They'll likely go after big fast food chains which is why they sell a similar product made in a similar way. Oh knows maybe it will be a runaway success but I have a feeling it will be moderately successful return the fund and the cream will be selling the system to everyone else.
johnrob 15y ago
It's a marquee founder trying to explore how to better involve technology in the restaurant industry. Not nearly as bizarre as the press apparently loves to paint it. This is borderline link bait.
erik_landerholm 15y ago
I go to restaurants to get things I can't make well or easily myself...grilled cheese is neither of these things.
- hugh3 15y ago
  For dinner, yes. For lunch, I go to whatever's convenient and sounds tasty. Heck, I'll pay six bucks for a ham and cheese sandwich I could have just as easily brought from home, because I'm lazy. A grilled cheese sandwich I couldn't bring from home (well, not if I wanted it hot) so it's even better! PS. I'm surprised the paleo-diet nuts haven't shown up in these grilled cheese threads yet...
  - jlees 15y ago
    Nuts? Some people who follow paleo style eating are definitely more... evangelist than others, but let's not tar all cavemen with the same brush. I don't eat grilled cheese, but I never thought it was particularly healthy before reading up on nutrition and experimenting with a more paleolithic style of eating, and I certainly don't now; but neither are many other restaurant chains' signature offerings. You can eat them if you like, it's your own body after all. (Aside: My impartiality to grilled cheese is possibly also because I'm British, and you can't get a decent cheese-and-beans toastie here for love nor money; it's nothing without the beans, I say. Nothing!)
    - hugh3 15y ago
      Dammit, I shouldn't have cast that summon-paleo-nut spell. Actually I used to make fun of the paleo diet, then I tried it and discovered it really is a good way to lose weight (if nothing else) without feeling hungry. On the other hand I regained the weight as soon as I came off the paleo diet, and I find it too hard to maintain -- there's very few places you can actually buy a paleo-compliant meal, and I was getting pretty darn sick of eating the same few meals over and over again. Also, there's grilled cheese.
      - sixtofour 15y ago
vessenes 15y ago
I think the interesting thing here is the tech development angle; online / mobile ordering and delivery service. I'm sure that it's agreed at Sequoia that the restaurant chain idea is just a hard testing ground for the technology. The tech is what will be worth the money; the rest of this is just sort of the press being slow. That said, I do really like the idea of a mobile-integrated ordering and delivery system for the restaurant industry, and of course, fast-concept food is the right place to test it.
- hugh3 15y ago
  the rest of this is just sort of the press being slow. Or just the press doing exactly what Sequoia wants 'em to. "Sequoia invests in yet another startup doing mobile payments for restaurants" = boring story. "Sequouia invests in grilled cheese" = exciting story. And here we are, we're part of it, helping out by talking about it. But I don't mind, as long as the grilled cheeses are good.
  - vessenes 15y ago
    You're right. I can imagine the press release now.
  - SeoxyS 15y ago
    Building 500 restaurants sure is an expensive way to get a cool press release, if it's just a PR play.
    - hugh3 15y ago
      Yeah, the 500 restaurants in the next couple of years is believe-it-when-I-see-it territory. I can't see where the money's going to come from.
      - vessenes 15y ago
        That's plenty of funding to set up a franchise system. Franchises are typically how fast food companies get funding; they pull it from want-to-be owners.
onesweetworld 15y ago
You have to wonder if this company will succeed when on America's next great restaurant, the restaurant veterans passed on a similar idea.
- michaelbuckbee 15y ago
  IIRC the reason that Meltworks (the ANGR concept) got rejected was that they felt that the guy who was running it wasn't flexible enough and that they felt he wouldn't be a good partner. Like many investments, it is the team as much as the actual concept.
- jasonwilk 15y ago
  That's like saying an idea won't work because the shark tank turned it down.
clistctrl 15y ago
I wish someone would do a fast food chain that dishes out the croque monsieur. It was my favorite part of france :D
jasonkolb 15y ago
While I have no problem with investing in restaurants I have two problems with this particular investment: A) $10 mil is a hell of a lot for any restaurant B) Pizza hut already does online ordering for cheesy treats
- rokhayakebe 15y ago
  It isn't one restaurant. It is a chain.
imjk 15y ago
Disregarding the potential of Jonathan Kaplan or the driving technology, this title is almost a satirical representation of the current tech bubble/abundance of funding out there right now. I swear this would be a great title for an Onion article.
localhost3000 15y ago
Is it April 1 already?
stevenj 15y ago
I bet this works out well. I'm bullish on the fast-casual market; especially when a restaurant's menu is focused and provides quality food at a fair price. Maybe grilled cheese and tomato soup isn't the right product mix, but I'm pretty sure this market is ripe for disruption. The place I eat at most frequently is Whole Foods' self-serve deli. It's $8.99 a pound and always has fresh, quality food. Whole Foods is a grocery store. But I don't buy groceries there, I just go there to eat. And I'm willing to drive 3 - 7 miles to get to one. Just think if you only had to drive a couple blocks to get a decent cup of coffee or an espresso-based drink.
- lurker19 15y ago
  I'd think you were in Seattle and were very picky about your coffee. I don't get the bit about "drive", though. :-)
T_S_ 15y ago
I order my sandwich at Specialty's in Mountain View using an mobile web app they offer. Even if I eat it there, it saves the time spent in line. It's no different than just-in-time inventory management, which is an old idea now. Mobile just makes it possible to handle lots of orders with nobody on the phone. There's no need to open a chain, though. Just build and sell a system to lunch cafes. I think we all have learned from restaurant web sites that they shouldn't build technology, they should buy it. Except Sequoia's of course.
- cube13 15y ago
  >There's no need to open a chain, though. Just build and sell a system to lunch cafes. I think that this technology might be the end result from this venture, more than the restaurants themselves. Making yourself the client can remove a lot of potential feature creep, especially with non-technical restaurant owners who may not know exactly what they want at the beginning. Starting their own small chain lets them work out the kinks of the system in a much more controlled environment than putting it into production with established places.
  - fleitz 15y ago
    Yup, once it's perfected they will probably roll out to the test locations at McDonalds, and then eventually nationwide. One of the benefits of the McDonalds system is they'll be able to have all their employees fully trained on the new system in 6 months (once all the staff from the existing system turn over)
schnaars 15y ago
What bubble?
latj 15y ago
After reading this I made a joke to a friend that someone should make a parody site claiming to be the airbnb for grilled cheeses. You request a grilled cheese via mobile app and are directed to the nearest house who has marked themselves available to make grilled cheese sandwiches. Then I saw the Google suggest for "airbnb for ".
deleted 15y ago
[deleted]
zackattack 15y ago
They're going for the smartphone crowd with those annoying QR codes. Geeks. Grilled cheese sure was popular at SXSW this year.
deleted 15y ago
[deleted]
tomkarlo 15y ago
Why make the success of the technology so dependent on the success of the food operation? Grill cheese / retro comfort food is hot right now in hipster places (I'm thinking of the new "meatball" shop on the Lower East Side in New York, too) but it might not be in a while. And it might not have the wide appeal nationally, either.
- raldi 15y ago
  And don't forget S'mac.

54 points by raldi 15y ago

I was under the impression that restaurants tend to operate on very thin margins. Is this not actually the case, or is The Melt expected to be an exception, or is it expected to overcome this with large order volume?

hugh3 15y ago
If you're clever about it, the markup on a grilled cheese sandwich can be enormous. Fifty cents worth of bread and cheese sells for eight bucks if you make it look fancy enough. Simple menu, assembly-line cheese-grilling, minimal cleaning and packaging, and simplified payment system and you can serve a lot of people in one lunch hour. As long as they can keep the customers rolling in (which is just a matter of (a) marketing and (b) making good grilled cheeses) it's a licence to print money.
cromulent 15y ago
Gross margins tend to be good, around 30% I believe. However, there's a lot of overheads and payroll, and volume can vary considerably.
jonknee 15y ago
They want to sell grilled cheese at scale. That's where the big money is. Not one location, not ten, but hundreds. With five hundred locations, it doesn't take a large monthly profit per store to add up to a lot of money.
- fleitz 15y ago
  This business as others have pointed out is not about selling grilled cheese, it's about proving the market and perfecting the system. They'll likely go after big fast food chains which is why they sell a similar product made in a similar way. Oh knows maybe it will be a runaway success but I have a feeling it will be moderately successful return the fund and the cream will be selling the system to everyone else.

johnrob 15y ago

It's a marquee founder trying to explore how to better involve technology in the restaurant industry. Not nearly as bizarre as the press apparently loves to paint it. This is borderline link bait.

erik_landerholm 15y ago

I go to restaurants to get things I can't make well or easily myself...grilled cheese is neither of these things.

hugh3 15y ago
For dinner, yes. For lunch, I go to whatever's convenient and sounds tasty. Heck, I'll pay six bucks for a ham and cheese sandwich I could have just as easily brought from home, because I'm lazy. A grilled cheese sandwich I couldn't bring from home (well, not if I wanted it hot) so it's even better! PS. I'm surprised the paleo-diet nuts haven't shown up in these grilled cheese threads yet...
- jlees 15y ago
  Nuts? Some people who follow paleo style eating are definitely more... evangelist than others, but let's not tar all cavemen with the same brush. I don't eat grilled cheese, but I never thought it was particularly healthy before reading up on nutrition and experimenting with a more paleolithic style of eating, and I certainly don't now; but neither are many other restaurant chains' signature offerings. You can eat them if you like, it's your own body after all. (Aside: My impartiality to grilled cheese is possibly also because I'm British, and you can't get a decent cheese-and-beans toastie here for love nor money; it's nothing without the beans, I say. Nothing!)
  - hugh3 15y ago
    Dammit, I shouldn't have cast that summon-paleo-nut spell. Actually I used to make fun of the paleo diet, then I tried it and discovered it really is a good way to lose weight (if nothing else) without feeling hungry. On the other hand I regained the weight as soon as I came off the paleo diet, and I find it too hard to maintain -- there's very few places you can actually buy a paleo-compliant meal, and I was getting pretty darn sick of eating the same few meals over and over again. Also, there's grilled cheese.
    - sixtofour 15y ago

vessenes 15y ago

I think the interesting thing here is the tech development angle; online / mobile ordering and delivery service. I'm sure that it's agreed at Sequoia that the restaurant chain idea is just a hard testing ground for the technology. The tech is what will be worth the money; the rest of this is just sort of the press being slow. That said, I do really like the idea of a mobile-integrated ordering and delivery system for the restaurant industry, and of course, fast-concept food is the right place to test it.

hugh3 15y ago
the rest of this is just sort of the press being slow. Or just the press doing exactly what Sequoia wants 'em to. "Sequoia invests in yet another startup doing mobile payments for restaurants" = boring story. "Sequouia invests in grilled cheese" = exciting story. And here we are, we're part of it, helping out by talking about it. But I don't mind, as long as the grilled cheeses are good.
- vessenes 15y ago
  You're right. I can imagine the press release now.
- SeoxyS 15y ago
  Building 500 restaurants sure is an expensive way to get a cool press release, if it's just a PR play.
  - hugh3 15y ago
    Yeah, the 500 restaurants in the next couple of years is believe-it-when-I-see-it territory. I can't see where the money's going to come from.
    - vessenes 15y ago
      That's plenty of funding to set up a franchise system. Franchises are typically how fast food companies get funding; they pull it from want-to-be owners.

onesweetworld 15y ago

You have to wonder if this company will succeed when on America's next great restaurant, the restaurant veterans passed on a similar idea.

michaelbuckbee 15y ago
IIRC the reason that Meltworks (the ANGR concept) got rejected was that they felt that the guy who was running it wasn't flexible enough and that they felt he wouldn't be a good partner. Like many investments, it is the team as much as the actual concept.
jasonwilk 15y ago
That's like saying an idea won't work because the shark tank turned it down.

clistctrl 15y ago

I wish someone would do a fast food chain that dishes out the croque monsieur. It was my favorite part of france :D

jasonkolb 15y ago

While I have no problem with investing in restaurants I have two problems with this particular investment: A) $10 mil is a hell of a lot for any restaurant B) Pizza hut already does online ordering for cheesy treats

rokhayakebe 15y ago
It isn't one restaurant. It is a chain.

imjk 15y ago

Disregarding the potential of Jonathan Kaplan or the driving technology, this title is almost a satirical representation of the current tech bubble/abundance of funding out there right now. I swear this would be a great title for an Onion article.

localhost3000 15y ago

Is it April 1 already?

stevenj 15y ago

I bet this works out well. I'm bullish on the fast-casual market; especially when a restaurant's menu is focused and provides quality food at a fair price. Maybe grilled cheese and tomato soup isn't the right product mix, but I'm pretty sure this market is ripe for disruption. The place I eat at most frequently is Whole Foods' self-serve deli. It's $8.99 a pound and always has fresh, quality food. Whole Foods is a grocery store. But I don't buy groceries there, I just go there to eat. And I'm willing to drive 3 - 7 miles to get to one. Just think if you only had to drive a couple blocks to get a decent cup of coffee or an espresso-based drink.

lurker19 15y ago
I'd think you were in Seattle and were very picky about your coffee. I don't get the bit about "drive", though. :-)

T_S_ 15y ago

I order my sandwich at Specialty's in Mountain View using an mobile web app they offer. Even if I eat it there, it saves the time spent in line. It's no different than just-in-time inventory management, which is an old idea now. Mobile just makes it possible to handle lots of orders with nobody on the phone. There's no need to open a chain, though. Just build and sell a system to lunch cafes. I think we all have learned from restaurant web sites that they shouldn't build technology, they should buy it. Except Sequoia's of course.

cube13 15y ago
>There's no need to open a chain, though. Just build and sell a system to lunch cafes. I think that this technology might be the end result from this venture, more than the restaurants themselves. Making yourself the client can remove a lot of potential feature creep, especially with non-technical restaurant owners who may not know exactly what they want at the beginning. Starting their own small chain lets them work out the kinks of the system in a much more controlled environment than putting it into production with established places.
- fleitz 15y ago
  Yup, once it's perfected they will probably roll out to the test locations at McDonalds, and then eventually nationwide. One of the benefits of the McDonalds system is they'll be able to have all their employees fully trained on the new system in 6 months (once all the staff from the existing system turn over)

schnaars 15y ago

What bubble?

latj 15y ago

After reading this I made a joke to a friend that someone should make a parody site claiming to be the airbnb for grilled cheeses. You request a grilled cheese via mobile app and are directed to the nearest house who has marked themselves available to make grilled cheese sandwiches. Then I saw the Google suggest for "airbnb for ".

deleted 15y ago

[deleted]

zackattack 15y ago

They're going for the smartphone crowd with those annoying QR codes. Geeks. Grilled cheese sure was popular at SXSW this year.

deleted 15y ago

[deleted]

tomkarlo 15y ago

Why make the success of the technology so dependent on the success of the food operation? Grill cheese / retro comfort food is hot right now in hipster places (I'm thinking of the new "meatball" shop on the Lower East Side in New York, too) but it might not be in a while. And it might not have the wide appeal nationally, either.

raldi 15y ago
And don't forget S'mac.