Dipping into Success

Dipping into Success

COMPANY by Dave Szymanski | Tampa Bay Editor

Bob Johnston and his brothers turned around The Melting Pot 10 years ago by remaking the restaurants,

fine-tuning the menu and focusing on the customer experience.

The Johnston brothers - Mike, Mark and Bob - had a vision for a national fondue restaurant chain in Tampa, but despite working on it for 10 years, couldn't make it happen.

After starting as franchisees, they bought the company, The Melting Pot, but were only able to get the chain up to 19 locations. Growth stalled.

"We were on the brink of belly up in the mid-'90s," admits Bob Johnston, the COO who left college to start the business. "We went through a lot of introspection."

Searching for a catalyst, they drew up a new growth formula that included redesigning the restaurants, broadening the menu, improving service and revamping recruiting systems and standards to find talented people who and enjoy serving others. In essence, it sharpened operational execution.

The Melting Pot specifically identified "family and belonging," as some of the emotional words customers used when choosing its restaurant. It needed, as a business, to enhance that connection and broaden it. It was a special-occasion restaurant. It could also be a place for business dinners and more casual meetings.

"We came to a clear understanding of our mission," Johnston says. "A decade ago, the locations didn't look this way. Locations are now polished and refined. Service is much more warm."

The new formula worked. The second decade for The Melting Pot saw the store count surge to more than 120 locations nationwide, most of those franchisees. The company owns six locations in Tampa, Tallahassee and North Carolina.

In November, Johnston was on the road as the company was opening a store a week in places like Atlanta, Destin, Fla. and Atlantic City.

And while this was happening, three years ago, the Johnston brothers started a somewhat more traditional restaurant concept in Tampa Bay called GrillSmith.

There are also spinoffs, like a new kiosk in the Citrus Park Mall in northwest Hillsborough County that offers chocolate fondue. It is a way to market the Melting Pot brand.

The first Melting Pot opened in 1975 in Maitland, just outside of Orlando. It was a quaint location and its first menu consisted of just three items: Swiss cheese fondue, beef fondue and a chocolate fondue dessert. As the restaurant's popularity expanded, so did its menu and ambiance.

Mark Johnston, who was working his way through college as a waiter at The Melting Pot, noticed the popularity boost and - with the help of his brothers Mike and Bob - opened The Melting Pot of Tallahassee in 1979. The Tallahassee location grew popular.

In 1980, the Johnston brothers decided to branch out and opened their second location in Tampa. As their business grew, the brothers began to consider franchising even more stores in order to expand.

Then in 1985, the Johnstons bought all rights to The Melting Pot brand and established The Melting Pot Restaurants Inc. - the new franchise company. After a year of research and reorganization, The Melting Pot Restaurants began its franchise offering.

Today it has restaurants in 35 states, with 45 locations under development.

'Casual upscale'

Although its average bill per person averages in the low to mid $40 range, The Melting Pot doesn't call itself upscale. That's because it's not a white-glove restaurant. Instead, it prefers the term, "casual upscale." That means it falls between fine dining and casual.

So walk in and you'll see couples on a date as well as business people meeting. The corporate clientele sparked The Melting Pot to add separate private dining rooms that can seat up to 40 people, a technique some of its competitors also use.

The company is always tweaking the menu and has added up to three new items a year along with new fondue flavors. Since groups make up a large percentage of sales, one new menu item is the "Big night out for four," a four-course meal for four people."

Remodeling the restaurants sometimes prompts address changes. For example, the Clearwater location on U.S. 19 will move later this month to Tampa Road.

The change aimed for a warmer, yet more polished look. The company sought to create the perfect night out for customers, which also included friendlier, more attentive service. The company is always seeking customer comments.

"We love to know why our guest has chosen us," Bob Johnston says. "We want to know the memory we helped create."

It now has 5,000 employees across the United States, from Los Angeles to Long Island. It is looking at a New York City location. "It could be a gateway to the rest of the world and open doors for us to grow," Johnston says.

The company is also trying to take better care of its employees and boost retention. Since the restaurant business typically attracts younger people, college age, working their way through school, The Melting Pot has set up a foundation, funded by the company and employees, to provide financial support to them if needed.

"The restaurant business is run by people who are on their way to something next in their lives," Johnston says. "Typically they are not embraced by the industry. We have family and belonging as one of our values."

Competitors abound

The competitors facing Melting Pot include some industry powerhouses, such as OSI, Tampa parent company of Outback Steakhouse, and Ruth's Chris Steakhouse, based in Heathrow, Fla., near Orlando.

Doug Brown, corporate affairs coordinator for Ruth's Chris, called Melting Pot, "a good, fun experience" for customers. But he said his more direct competitors were Flemings, which OSI owns, and Morton's. OSI, which recently went private, could not be reached for comment. Despite the slower economy, Ruth's Chris has been expanding.

"We've opened seven restaurants in eight weeks and had positive experiences," Brown says. "The industry as a whole, is in a trough now, across the board. There's gas prices, the economy. It hurts everybody. But people always want to reward themselves."

In the next year, the Melting Pot has 45 restaurants in the development pipeline. Some are under construction. The timeframe is beyond a year. Twenty-five of those will open in 2008.

Beyond that, Johnston sees the new store growth rate slowing. The rate will be much slower in five years. Not every market has the population and the income to support a Melting Pot. It is looking internationally, too, in places such as Latin America.

But besides Melting Pot and GrillSmith, the company has been working on a third restaurant concept, which it won't reveal. Originally drawn up literally on a beverage napkin, it is a "complete departure" from The Melting Pot, although some of the investors in Melting Pot may get involved in the new venture, Johnston says. "The franchisees want to grow," he adds.

Like other restaurant executives, the Johnstons are often brainstorming and sketching notes, looking for locations every time they travel to a new town.

They also eat elsewhere and study the competition, looking at everything, especially the menu. "More often than not, we're looking for unique food, something different," Johnston says.

GrillSmith

Besides Melting Pot, the Johnston's are piloting the growth of three-year-old GrillSmith, a casual grill serving "new American cuisine." It has four locations in Tampa, the Countryside area of Pinellas County and Lakeland.

Mark and Bob Johnston and Todd Dzuibek, formerly of Carrabba's Italian Grill, worked on the concept for two years before launching GrillSmith.

The restaurants feature a mission-style decor and an open kitchen where guests can see a cook with a red hat firing up and working the grill, somewhat similar to other restaurants, like OSI's Carrabba's.

Johnston describes its food as something your grandmother would make - such as steaks, seafood, chicken and hamburgers - but with today's culinary twists. They take grandma's meatloaf, for example, and add wild mushrooms and gravy, finishing it on the grill.

One appetizer is cheeseburger empanadas, a flaky pastry stuffed with seasoned sirloin beef and aged cheddar cheese served with tomato sauce.

The company, which employs a chef to develop new offerings, has also collaborated with other restaurant industry companies and even vendors, including one of its cheese suppliers in Wisconsin, to develop menu items.

"We're listening to our guests and making refinements to our concept," Johnston says. "We've hit that perfectly. We have four stores. We want to put another couple in the Tampa Bay area. I can't forecast when."

Like other restaurant chains, The Melting Pot is learning from its lean years and using that to cope with today's slower economy and more discriminating customers. People are still eating out, but they are doing so less often.

"When we originated more than 10 years ago, we had our moments," Johnston says. "There were times will did not pay yourself, so you could pay your team members. Biggest thing we learned was the importance of having a clear vision to easily share with every team member."

All operating costs are up in the industry, including an increase in the minimum wage. Freight costs are driven by fuel prices, which are back up. There is also a freight surcharge from vendors. All this, and more choosy customers.

"People are making their dining decisions a little more carefully," Johnston says. "We want to be the restaurant of first choice."

REVIEW SUMMARY

Company: The Melting Pot

Industry: Restaurants

Key: Remake the chain to spark a national expansion.