Bantam Bagels
DEAL
EPISODE SUMMARY
🕓 Air Date: January 9, 2015
Asking For:
$275,000 for 11%
Investor:
Lori Greiner
Deal:
$275,000 for 25%
PRODUCT SUMMARY
Bantam Bagels offers mini-bagel balls filled with unique cream cheeses, aiming to revolutionize the way people enjoy New York-style bagels.
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Background Story
Nick and Elyse Oleksak, both Columbia University graduates and residents of New York City for over a decade, embarked on the entrepreneurial journey that led to the creation of Bantam Bagels. The idea was sparked by a common dilemma faced by bagel enthusiasts in the city — the commitment required to indulge in traditional, large, and calorie-laden bagels. About two years ago, Nick was awakened by a visionary dream in the middle of the night, presenting a revolutionary concept – mini bagel balls filled with cream cheese.
Passionate about authentic New York-style bagels and armed with the belief that their creation could be more than just a fleeting food trend, the couple decided to bring their dream to life. They transitioned from their apartment kitchen to a small shop on the iconic Bleecker Street, a move that proved fortuitous. In less than a year, Bantam Bagels gained significant recognition, being voted one of the top three best bagels in New York by the esteemed New York Daily News. Nick, with a background in asset management at Morgan Stanley, and Elyse, currently working as a credit broker at GFI Group, combined their financial acumen and entrepreneurial spirit to establish Bantam Bagels.
Their unique concept and dedication to quality bagels earned them a reputation that extended beyond their local shop. The founders’ journey reflects their commitment to introducing a novel and convenient way of savoring the beloved New York bagel. The success of Bantam Bagels is not only rooted in their passion for the product but also in their strategic approach to establishing a brand that captures the essence of their dream.
The Product
Bantam Bagels offers a delightful twist to the traditional New York bagel experience with their innovative product – mini bagel balls filled with unique cream cheeses. Each Bantam Bagel is a bite-sized burst of flavor, featuring a diverse range of approximately 18 enticing varieties.
The product stands out not only for its compact size but also for the ingenious way it is enjoyed. Customers are encouraged to find the hole in the mini bagel ball and bite into it, ensuring that the creamy goodness on the inside remains intact. This interactive consumption method adds an element of fun to the eating experience.
The variety of flavors includes unique options like French Toast and Cheddar Egg with Bacon Cheddar Cream Cheese, catering to diverse tastes. Bantam Bagels has become particularly popular among moms and kids, with its convenient size and exciting flavor combinations.
The product’s popularity is further demonstrated by its success on QVC, where it sold out in just five minutes during its debut appearance. With a focus on quality ingredients and a playful approach to bagel enjoyment, Bantam Bagels has carved a niche in the market, offering a novel and delicious alternative to traditional bagels.
How It Went
The company’s position before Shark Tank
Bantam Bagels has demonstrated a robust performance since its inception, reflecting a strategic approach to market penetration and a commitment to quality. The company’s primary retail location on Bleecker Street in New York City has generated $200,000 in revenue since its establishment. Founded by Nick and Elyse Oleksak, both with financial backgrounds in asset management and credit brokering on Wall Street, the company reflects a fusion of entrepreneurial spirit and financial acumen. In terms of funding, the founders invested $50,000 of their own money and successfully raised just under $600,000 from other investors, resulting in a 23% allocation of the company to external stakeholders. This financial support has facilitated the company’s growth and expansion beyond its initial establishment.
Bantam Bagels strategically diversified its distribution channels, initially focusing on retail and subsequently venturing into significant wholesale avenues. The company successfully secured partnerships with major wholesalers, including QVC, where they achieved remarkable sales by selling out in just five minutes during their first appearance. QVC’s impact is evident in the high demand for Bantam Bagels, showcasing the brand’s appeal to a wide audience. The company’s financial health is characterized by a focus on improving margins and addressing seasonality challenges in the retail sector. Bantam Bagels aims to build a commercial commissary baking facility to enhance production efficiency and scalability.
The founders recognize the limitations of their current retail-centric model and seek to expand their capacity by exploring new avenues. However, the company’s emphasis on building a commissary facility indicates a strategic move to address operational challenges and potentially improve profitability. Currently structured as a privately held company, Bantam Bagels operates with an ownership structure that involves both the founders and external investors. The company’s readiness to accept external investment suggests a willingness to collaborate with strategic partners who can contribute to its growth and success.
The Negotiations:
The negotiation phase for Bantam Bagels on Shark Tank saw a series of compelling offers from the Sharks. Seeking $275,000 for an 11% equity stake, Nick and Elyse Oleksak faced diverse proposals. Barbara Corcoran kicked off the offers, suggesting $275,000 for a commanding 51% controlling interest in the mini bagel ball business. She stressed her valuable experience and asserted that Bantam Bagels needed her guidance for success.
Following this, Kevin O’Leary entered with an offer of $275,000 for a 50% stake but with stringent conditions, including both founders leaving their jobs and focusing solely on direct-to-consumer sales using existing commercial kitchens. However, the pivotal moment occurred when Lori Greiner stepped in with a solo offer. She extended $275,000 for a 25% stake, emphasizing her expertise and willingness to collaborate. This offer diverged from the joint proposal with Mark Cuban and showcased Lori’s confidence in Bantam Bagels’ potential. In a strategic decision, Nick and Elyse chose to accept Lori Greiner’s offer.
This choice indicated a belief that Lori, as a single partner, brought the right mix of expertise and support to help propel Bantam Bagels forward. The negotiation process highlighted the founders’ careful consideration of each offer and their ultimate focus on securing a partner who aligned with their vision for the company. The acceptance of Lori’s offer at $275,000 for 30% marked a significant milestone for Bantam Bagels, signifying a strategic partnership that went beyond just financial backing.
