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The Tom + Chee-ing of America
The business meeting is just a few minutes old, but Corey Ward is already on his cellphone. Unlike other digital addicts, Ward isn’t the least bit subtle—no furtive glances at e-mail for him. He holds his device in front of him, as brazen as possible, in plain view of the aspiring restaurateur who’s traveled nearly 300 miles to meet with
Him and the rest of the Tom+Chee brain trust.
Ward’s breach of digital etiquette isn’t his only quirk, either. The 38-year-old entrepreneur sits with his legs folded underneath him on his chair, like a child in a restaurant booth. And with his scraggly hair, weathered jeans, and tongue piercing, he looks like he ought to be manning the grill at one of his restaurants, not talking demographics, information technology, and site selection with a bunch of squares dressed in business casual.
But this is Ward’s life now. He and his Tom+Chee cofounders—his wife, Jenny Rachford, and another couple, Trew and Jennifer Quackenbush—have come a long way since they started selling grilled cheese sandwiches and tomato soup out of a tent on Fountain Square in 2009. Thanks in no small part to a wave of publicity—culminating with a May 2013 appearance on the ABC capitalism-on-steroids reality show Shark Tank—they’re now spreading their comfort food concept to the rest of the country. “We see this opportunity in the next two, three, four, five years to have literally hundreds and hundreds of Tom+Chees all across the country,” says David Krikorian, the new president of the company.
During this meeting in early January, Ward and his cofounders defer to Krikorian, who joined the company to manage its explosive growth in the aftermath of the Shark Tank surge. A veteran businessman and a former candidate for the U.S. House of Representatives, it is mostly Krikorian who delivers the pitch to the guest of honor—a middle-aged man in a crisp white oxford shirt who’s considering a deal to open several Tom+Chees in Alabama.
“It’s not like frozen yogurt,” Krikorian assures the man. “People have been eating grilled cheese as long as they’ve been grilling things.” A nationwide grilled-cheese restaurant chain should have broad appeal, Krikorian adds. “It’s remarkable that it’s not been done before.”
The businessman is not a novice in the world of franchising; he knows what questions to ask. Such as: “So where do you see this evolving?”
The question gets the attention of Ward, the company’s brand and marketing strategist. Looking up from his cellphone, he points to a chalkboard in the corner of the conference room. Written on it—drawn, actually, complete with colorful chalk illustrations—is a formula that summarizes the Tom+Chee story in simple arithmetic: A Tent + A Grilled Cheese Sandwich + TV = World Domination.
Tom+Chee Worldwide occupies most of the fourth floor of a 129-year-old building on Sycamore Street in Over-the-Rhine. Company leaders are an ambitious lot, as the chain’s official corporate name suggests. They’ve only been in the leased space for about six months, but they’re already talking about moving to bigger quarters on Reedy Street. Someday, they hope to own their own landmark downtown Cincinnati headquarters with a training facility like McDonald’s famous Hamburger University and a giant neon Tom+Chee sign on the roof.
But they’ve still got a ways to go. My first visit, in January, coincides with the arrival of the Polar Vortex. Employees are bundled in scarves, sweatshirts, and sweaters. The building’s boiler broke the day before during a spell of sub-zero temperatures, and even though the heat is back on, it’s still chilly in some parts of the building. I also encounter the company’s unusual restroom security system: A makeshift key—a bent paper clip, in fact—that employees use to control access to the bathroom. I ask Ward if I should put the key in a safe place. “Don’t worry, we can make a new one,” he deadpans.
The atmosphere is fast-paced and unpredictable. A steady stream of visitors, consultants, franchisees, and potential business partners shuttle through, while the corporate staff (30 and counting in early January) fight for cubicle room in a space they’ve already outgrown. “It’s been likened to a political office right before an election,” says Trew Quackenbush, the company’s food and operations guru.
A giant dry-erase board reveals why the place is bursting at the seams. Listed on the board are all the company’s active development deals, which stretch from close to home (Dayton and Toledo) to the Rocky Mountains (Colorado Springs) to the East Coast (Freehold, New Jersey). Over the next few months, the company expects to open new franchises in about a dozen cities, including Nashville, Indianapolis, and Columbus. With contracts in place to establish about 150 new stores over the next few years, Tom+Chee anticipates debuting locations at a rate of one per week by the end of 2014, when they expect to have about 40 new restaurants open.
The growth is even more impressive if you consider the limitations of the concept. Certainly, grilled cheese isn’t the most ridiculous fast-food idea out there. It’s better than, say, cold cereal, peanut butter and jelly, and “artisanal toast” (for real). But the simplicity of the classic, affordable meal poses a challenge for restaurateurs. Sure, grilled cheese is tasty. And sure, it brings back fond memories of Mom, childhood, and parochial school. But do grownups really want to spend their hard-earned money eating out on something so basic? Wouldn’t they prefer a meal they can’t make with relative ease at home?
To solve that riddle, Tom+Chee, like others in the new wave of grilled-cheese specialists, tinkers with the traditional formula (white bread, American cheese, butter or margarine) to create unique variations. Tom+Chee fills a chalkboard with a variety of daily specials on top of the nearly 30 everyday one-of-a-kind options it has already created, such as the Hippy + Chee (hummus, cucumbers, mixed greens, tomato, cheddar on wheat); the Swiss + Shroom (grilled onions, mushrooms, Swiss on rye); the Armagoetta (goetta, cherry peppers, fried onions, sweet hot mustard, pepper jack on sourdough and rye); nine “grilled cheese donuts” (ingredients include brie, mascarpone, and blueberry compote, all served on—yes—glazed doughnuts); and seven sandwiches layered with potato chips.
But the more you spice up the classic grilled cheese, the less it resembles the old standby that inspires such deep taste-bud nostalgia. And who’s to say the fancier version is an improvement? “Perfect foods don’t get better when you change them,” wrote Time food columnist Josh Ozersky in 2011, lamenting the rise of the gourmet grilled cheese.
Tom+Chee’s founders are familiar with those criticisms. They’ve heard them all—often right to their faces. Ward recalls an encounter he had with a woman at the Court Street location in downtown Cincinnati. She was puzzled when she discovered the restaurant specialized in grilled cheese. After reading the menu, she declared, “I can go to Subway and get a six-inch sandwich for $4.”
Ward persuaded her to give his grilled cheese a chance. He helped her choose a sandwich and after one bite, she stood up and started clapping. Then she called her mom on her cellphone, declaring loud enough for the whole restaurant to hear: “You’ve got to come down to this place.”
The idea for Tom+Chee was born at a backyard cookout in the summer of 2009. After meeting through their wives, Quackenbush, then a chef at Pelican’s Reef in Anderson, and Ward, a graphic designer for the Cincinnati novelty playing card company Parody Productions (owned by his future employee Krikorian), bonded over their shared desire to start their own business. As they tossed around ideas over the barbecue, grilled cheese came up.
“I was looking at it from a chef’s point of view,” Quackenbush says. “It’s simple, not a lot of ingredients, very executable. There are lots of things you can do. It’s a carb platform, so you can build lots of stuff inside of it.” The idea was paired with tomato soup, which gave the company its name. Then came their signature creation, the grilled cheese doughnut, which was inspired by the so-called Luther Burger, a cheeseburger served on Krispy Kreme doughnuts and named after its supposed inventor, the late R&B singer Luther Vandross.
Admittedly, the grilled cheese doughnut was a bit of a gimmick. They wanted to come up with something that would get people talking. But once they experimented with different cheeses and glazed doughnuts, they realized they were on to something. “It’s that trinity of all the things that you want: the fat, the sweet, the saltiness,” Quackenbush says. “Then it was just getting it out there and letting people try it.”
That was a tricky proposition. With no access to capital, a restaurant startup was out of the question. In fact, they didn’t even have enough money for a food truck. Instead, they came up with a third option: a tent. In late 2009, Tom+Chee (their name from the start) opened next to the ice rink on Fountain Square during the holidays. The tent was a hit, and Ward, Quackenbush, and their wives (all of whom juggled shifts at the tent while working full-time jobs elsewhere) saved enough money to open their first brick-and-mortar location on Court Street in late 2010. Six months later, they launched their second
restaurant at Newport on the Levee.
In October 2011, Tom+Chee got its first shout-out on national TV. Making a tour of the Cincinnati area, Man v. Food Nation host Adam Richman visited the Newport restaurant and raved about the grilled cheese dougnut and the Armagoetta sandwich. The exposure on Richman’s Travel Channel show provided a lesson in the power of television. “It aired on a Wednesday, and Thursday we came in, and it was triple as busy as it ever was,” Quackenbush recalls. “Then it just multiplied as it got closer to the weekend.” The crowds were so big at one point that Quackenbush actually grabbed a guy out of the line and hired him on the spot to help out in the kitchen.
More publicity followed. The foodie talk show The Chew featured the grilled cheese doughnut, while Today named the sandwich one of the best of 2012. But the biggest break came when the producers of Shark Tank, after months of e-mail pummeling by Ward, agreed to give the Tom+Chee team a shot.
The appearance netted them a deal with two of the “sharks”—real estate investor Barbara Corcoran and Dallas Mavericks owner Mark Cuban. The initial deal called for Corcoran and Cuban together to invest $600,000 for a 30 percent stake, a triumph for the young company. But Cuban ended up dropping out over a disagreement about franchising, and Corcoran eventually cut a smaller deal for 1 percent equity.
More important, however, was the exposure. Not only did the show boost sales at the restaurants, but it generated a flood of inquiries from people interested in opening their own Tom+Chee franchises: about 12,000 since the show aired in May 2013. The interest has come from all 50 states, as well as Canada, Ireland, Dubai, Vietnam, the Philippines, and the Czech Republic. The company is focusing on U.S. growth for now, but the “Worldwide” corporate name is not entirely tongue-in-cheek: Tom+Chee may consider international expansion in a few years.
In early 2013, David Krikorian invested in Tom+Chee, providing a boost of capital to help Ward and his partners grow the business. He also served as a part-time strategic advisor. An ex-|candidate for Ohio’s second congressional district, Krikorian is best known for his bruising campaign battles with former U.S. Representative Jean Schmidt. But he’s also an entrepreneur who has started several businesses, including a 3D printing platform called Fabricon3D, and Parody Productions, the novelty card maker where Ward was a designer for three years.
At first, Krikorian says, he acted as a sounding board and handled a few negotiations with conservative “business-y types” who didn’t always take Ward and Quackenbush seriously. “I saw where I could maybe add a little value to that part of the process,” Krikorian says. Then when Shark Tank hit, Krikorian realized he needed to help Tom+Chee seize the potentially huge opportunity. “While we had an infrastructure in place that could effectively run three local restaurants,” he says, “we didn’t really have a foundation to begin our world domination of grilled cheese.”
Initially, Krikorian thought he could recruit someone with restaurant experience to take the job. But last fall he signed on to be the president of the company himself. He developed a good rapport with Ward, Quackenbush, and their wives, and he was enjoying the work. Now he’s charged with guiding Tom+Chee through its pivotal transition from a quirky little upstart to a big-dog nationwide player.
“We’re creative types,” Quackenbush says. “I know food. I know the industry. But none of us are business people.”
There’s also a lot at stake. A bad menu item or poorly-negotiated vendor contract is a problem when you have three restaurants; it can be a disaster when your name is on 30—or 300. “Mistakes as we scale up are more costly,” Ward says.
Franchising is central to Tom+Chee’s growth plans. For $35,000, a franchisee can buy the rights to open a restaurant in a designated geographical area, such as a smaller state or a large city. The franchisee does most of the heavy lifting (paying for the real estate, hiring the employees) in exchange for the chance to learn the Tom+Chee way, picking up marketing and operations advice and other tidbits the restaurant chain has developed over the past four years. In turn, Tom+Chee collects a 6 percent royalty fee on sales.
The arrangement allows for fast growth. As a low-revenue, quick-service operation, Tom+Chee couldn’t open so many new stores if it had to incur all of the startup costs. Because they don’t make as much money as larger sit-down operations (like a Bob Evans, for instance), selling more franchises is their best option.
The downside, of course, is the franchisor doesn’t get to collect all the sales. But perhaps the biggest risk is the leap of faith. “You need to understand you’re going to be giving up some control over the brand because the franchisees will run it differently than you’re going to run it to some degree,” says Dennis Lombardi, executive vice president with WD Partners, a food and retail design and development firm near Columbus.
To keep their brands strong, franchisors must pick the right people and then give them the tools and training to succeed. It’s also especially important to hit home runs with the first crop of partners. “Prospective franchisees will be calling them and saying, ‘Gee, how happy are you?’” Lombardi says. “What the franchisor hopes they say is, ‘This is great. I’m opening my second store, and I’m looking for a site for my third,’ as opposed to, ‘You want to buy mine? I want out.’”
Tom+Chee appears to be off to a good start with Ron Freeman, the Columbus franchisee. In early January, Freeman—a tall, enthusiastic Toronto native—sits at a conference table with Ward and Marty Boyer, a marketing manager at Tom+Chee, at the company’s corporate office. The trio brainstorm ideas on how to introduce the chain to the Columbus market: social media, radio ads, free giveaways. Freeman’s first Columbus store won’t open until April, but he already seems like a true believer. He’s the one who talked up Tom+Chee to the potential Alabama franchisee—they’re friends, and the two may partner on that development deal. Freeman is also considering bringing Tom+Chee to Pittsburgh. In that deal, he may team with a Steel City athlete—someone who’d give the business a celebrity spokesman.
Ward asks Freeman to look at something he calls an “Equity Triangle.” The graphic, pulled up on Ward’s laptop, outlines the company’s values and characteristics—qualities like “relatable,” “clever,” “surprising,” and “casual.” Near the top of the triangle is “quirkiness.” The oddball charm that Cincinnati’s Tom+Chee fans know so well—the elaborate sandwiches with funky names, the tip jars made from Legos, the pierced-and-tattooed employees—runs counter to the unhip stereotype of a successful franchised restaurant (see O’Charley’s). As more straight-laced people get involved, and restaurants pop up all over the country, will Tom+Chee lose some of that eccentric spirit?
The founders say they’re protecting their unconventionality by choosing franchisees who share their values. Education also plays an important role. After finishing his marketing session, Freeman sits down with Jenny Rachford, Ward’s wife, for some human resources training. Quirkiness is discussed. The friendly, bespectacled Rachford, dressed in a Tom+Chee shirt like most of the longtime employees in the building, suggests a question to ask job candidates: What superhero power would you like to have? “It tells you a lot about someone,” she says. Plus, the unusual query lets applicants know that Tom+Chee is a different kind of workplace. “We’re fun,” she says. “We’re quirky. We don’t always want you to expect what comes out of our mouths.”
Freeman, a middle-aged professional pilot for a private aviation company, has closely cropped ginger hair and a plaid button-down shirt tucked into his jeans. He may not look like a hipster, but he’s down with Tom+Chee’s oddball personality. “I like the quirkiness,” he says. When Rachford tells him there’s no set policy on what music to play in his stores, he asks her and his Tom+Chee trainer, Chris Allen, a youngish guy with a scruffy beard and horn-rims, to suggest some “edgy, quirky, upbeat, happy” songs to play at the stores. “When you walk in, we want you to feel that energy,” Freeman says.
But Tom+Chee isn’t all fun and games. I later learn that while I was observing Freeman being cheerfully schooled in Tom+Chee eccentricity, Ward, Quackenbush, and Krikorian were dealing with a personnel crisis elsewhere in the office. They fired an employee accused of harassing a female coworker. Afterward, I talk with Ward, Quackenbush, and Rachford about the incident. The fired employee was a friend, and I ask them if they’ve had to cut loose good pals before.
“Oh yeah,” Rachford says.
It’s no fun, they say, but they’ll do it every time if someone jeopardizes what they’re trying to build for their employees, customers, and franchisees.
“At the end of the day, Ron Freeman cannot fail because we didn’t want to fire our friend,” Ward says.
Ten days later, Tom+Chee employees gather for a much happier occasion. In late January, the Newport on the Levee location, decked out in streamers and balloons, hosts a viewing party for the company’s latest Shark Tank appearance—an update on how the company is faring. Rachford stands in the back of the room next to a table with cupcakes and a cake made for the occasion, while Ward does a television interview nearby.
Rachford looks at the line of people waiting to place orders. She can’t decide if they’re here just for dinner or the party. “I have no idea how many people will show up,” she says.
A few minutes later, it’s standing room only. About 50 people crowd in the back area of the restaurant, a big change from the 10 or so friends and family members who showed up for the original Shark Tank episode viewing party. This latest group includes fans, vendors, consultants, college students, and aspiring entrepreneurs. As the line grows longer, Quackenbush jumps in to help the counter staff, retrieving blue cheese and chili from the kitchen. “I can’t help myself,” he says.
Next he mans a cash register. After placing an order, a young man leans across the counter and tells Quackenbush, “I hear the owners are going to be here today.”
Quackenbush smiles. “You’re talking to one,” he says, lifting up the baseball cap that was obscuring part of his face.
“I recognize you,” the young man says. “You were on Shark Tank.”
As the crowd waits for the show to come on, various Tom+Chee highlights play on a new flat-screen television on a counter in the back of the restaurant. The montage includes Ward and Quackenbush’s latest national cable television appearance on CNBC’s morning program Squawkbox three days earlier. Finally, the Tom+Chee update comes on at about 9:30 p.m. Quackenbush and Ward talk about their company’s recent growth. “Since we’ve been on Shark Tank, our sales have been insane,” Quackenbush says.
It’s a short segment—maybe a minute and a half. When it’s over, the crowd gives each founder a standing ovation.
One small clip, one giant leap for grilled cheese world domination.
Photography by Anna Jones/OMS Photography. Food styling by Lynne Morris.
Originally published in the March 2014 issue.