'Shark Tank' Season 14: Did Mark Cuban trick Lori Greiner to settle for less equity with Boarderie?
'I like the way Mark just made Lori come down on the equity,' a fan wrote on Twitter
LOS ANGELES, CALIFORNIA: Rachel Solomon and Aaron Menitoff of Palm Beach, Florida, were on the most recent episode of 'Shark Tank', seeking $300,000 for 5% of their business. Even with such a high valuation of their company, they were able to get many Sharks to compete for a deal, although fans believe Shark Mark Cuban was only in it to trick Shark Lori Greiner into going in for lower equity.
On the November 18 episode, the pair began by pulling out old gift baskets, only to discard them later. With Boarderie, Rachel and Aaron unveiled their approach to transforming the edible online giving sector. Boarderie claims to be the world's first totally pre-assembled catering grade, cheese, and charcuterie board countrywide. Their "edible works of art" are sent pre-assembled; all you have to do is remove the carefully sealed packing and pour them out on the areas where you find them to create a gorgeous chef-quality display in minutes.
The Sharks were immediately impressed with the entrepreneurs' shark-cuterie boards. They inform the Sharks that the items are not custom-made, but rather produced on an assembly line that permits them to produce 3,000 of these every day. Shark Robert Herjavec appeared taken aback by how fresh the food was, so Aaron explains to him that if an order is placed at midnight, it is prepared fully fresh the next day. The shipping is completed on the same day as the packaging, and the buyer is expected to receive it the next day. All of this takes place in a 15,000-square-foot manufacturing kitchen in Florida.
Shark Lori Greiner inquires about the price, and Rachel responds that the one in front of the Sharks cost them $91 to make. They sell it wholesale to their suppliers, largely through online stores, for $154 and retail for $290, including delivery. Aaron describes how he has always worked in the hospitality sector and how, while in culinary school, he started a catering business to supplement his income. Over the following 15 years, Steve and his wife Julie built one of South Florida's largest high-end catering companies for some huge names. However, when the pandemic struck, their business came to a standstill. They decided to pivot and concentrate on e-commerce. Everything changed when they signed a 9-month contract with a well-known retailer. Following the online retailer, they started with Williams Sonoma and, later, Doordash. Last year, they made $1.8 million in sales, which utterly astounded the Sharks. They subsequently debut with Costco in the third quarter of 2022. Rachel informs Shark Kevin O'Leary that this year's sales are expected to be $4 million. They claim to be profitable, with $400,000 in revenue this year.
When Kevin inquires about direct-to-consumer sales, Rachel informs him that they had just launched their website, which resulted in $30,000 in sales in the first month alone. When questioned about the cost of customer acquisition, she says it is between $40 and $60 during the first few weeks of product testing. Their main annoyance is that they must continue to sell through third-party vendors, something they would want to avoid entirely. They don't control any of their client data, so they have a tremendous surge of sales in the fourth quarter and then fail to remarket to those consumers.
Another aspect that blew the Sharks' minds, but not in a good way, was when Rachel revealed that she and Aaron are 75% partners in the firm, with one outside investor who has invested $750,000. This money aided in the construction of the complete manufacturing complex. Kevin then inquires about the five major competitors Boarderie has and whether they can replicate the concept. Rachel tells him and the rest of the Sharks that their facility was designed expressly for the type of production they've been doing, which would be difficult to reproduce. They refer to it as their "secret sauce."
Aaron and his wife took up a $300,000 home equity line of credit, followed by a $150,000 line of credit and a $100,000 line of credit against the catering business. Rachel has also invested $750,000 towards the facility's construction, bringing their total investment in the firm to close to $2 million. Aaron believes that they can generate $70 million from this single facility. As impressed as Shark Robert Herjavec appeared to be with the company, he couldn't seem to get his mind around the equity. He does not want to own such a little percentage of the firm, so he opts out.
Shark Mark Cuban believes the concept can be readily copied and has chosen not to invest. Kevin is well aware of the space and the competition he has faced over the years, but he is confident that if he joins, he would bring his brand "Chef Wonderful" to the table. He is prepared to offer them $300,000 in exchange for 17.5%. Shark Lori Greiner inquires as to why the entrepreneurs want the funds, to which Rachel responds that they will require $2 million by December to invest in inventory and enter the direct-to-consumer arena.
Shark Barbara Corcoran believes that the firm needs a robust credit line more than a partner, which she is happy to provide. She offers $300,000 in cash and a $300,000 credit line in exchange for 15% ownership of the company. Lori enters the fray by offering $300,000 for 13%. Aaron adds they would need help with their direct-to-consumer strategy and would like to bring on board whoever has the best competence among the panel of investors. Kevin believes he is the best candidate for the job, although Lori believes she has sold over 2000 direct-to-consumer items and would be a good fit for Rachel and Aaron's company.
Lori's offer is countered by Rachel, who requests that the sale be sealed at 8%. When Lori rejects, Rachel counters with a 10% offer, to which Lori responds that she may accept 12%. Mark adds interest to the deal by stating that he would do it at 10%. Lori responds by saying she would go down for 9%, which Rachel and Aaron immediately jump on.
Fans quickly took to social media to shed some light on the pricing of the product as one wrote, "Wow I googled Boarderie and those prices are a bit out of my price range!" Others were too fascinated to see how Mark's last-minute war bid made Lori come down on her offer, "I like the way Mark just made Lori come down on the equity." Another fan quipped, "Mark got Lori to go down to 9%." Some fans were also worried how desperately they needed the offer as, "These entrepreneurs have put in a lot of capital to this point!"
Wow I googled Boarderie and those prices are a bit out of my price range! #SharkTank— TV Shows Ace (@TVShowsAce) November 19, 2022
Some fans also pointed out the fact that this particular product was not solving any major issue to have a price like that, "Again, not solving any problem! You can already get a prearranged meat and cheese tray from @cubfoods @HyVee @LundsandByerlys @Walmart @Target! I thought #SharkTank was about solving problems and innovation, not redoing what's already working!" Another fan added, "Boarderie is one of Oprah's Favorite Things so they are getting a ton of exposure now that they area featured on #SharkTank. $129 for a small spread of a charcuterie board makes me want to head to the deli section of the grocery store and do it myself."
Again, not solving any problem! You can already get a prearranged meat and cheese tray from @cubfoods @HyVee @LundsandByerlys @Walmart @Target! I thought #SharkTank was about solving problems and innovation, not redoing what's already working!— John Crane (@TheeJohnCrane) November 19, 2022
Boarderie is one of Oprah's Favorite Things so they are getting a ton of exposure now that they area featured on #SharkTank. $129 for a small spread of a charcuterie board makes me want to head to the deli section of the grocery store and do it myself.— Claire Collins (@clairec345) November 19, 2022
'Shark Tank' Season 14 airs every Friday at 8/7c on ABC. Missed an episode? Been wanting to catch up? Episodes can also be viewed the next day on demand and on Hulu. Not just that, you can also watch old seasons and episodes on Amazon Prime Video and iTunes.
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