Fried Green Tomatoes
DEAL
EPISODE SUMMARY
🕓 Air Date: May 1, 2020
Asking For:
$200,000 for 15%
Investor:
Barbara Corcoran
Deal:
$200,000 for 30%
PRODUCT SUMMARY
Fried Green Tomatoes operates a food truck that offers fresh, hand-battered fried green tomatoes and other Southern delicacies.
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Background Story
Holly Cooper, the founder of Fried Green Tomatoes, hails from Nashville, Tennessee. She spent 18 years in the restaurant business, owning a small café before transitioning into commercial sales, specializing in areas like fuel, plumbing, HVAC, and electrical business.
Unfortunately, she lost her job despite being a top sales representative, prompting her to start Fried Green Tomatoes to regain control of her destiny. The business primarily operates a 16-foot trailer food truck, famous for its hand-battered fried green tomatoes and other Southern dishes. Holly, driven by the desire for independence and success, aspires to franchise the food truck.
The Product
Fried Green Tomatoes operates a food truck that serves a variety of freshly prepared items, with the standout being the bacon, lettuce, and fried green tomato sandwich. Other popular items include a grouper sandwich, a shrimp po’boy, and a catfish sandwich.
The food truck, a 16-foot trailer, experiences high demand at special events, with hourly sales ranging from $600 to $800. Holly recently purchased a new truck to expand into more lunch events. Additionally, the company sells a batter mix product to retailers nationwide, introduced in 2016 and available in 42 states and around 600 stores, aiming to expand into big-box stores.
The batter mix, the secret behind their signature dishes, is priced at $8.99 retail while costing $1.28 to produce. In terms of financial performance, Fried Green Tomatoes achieved $268,000 in sales the previous year.
Holly emphasizes the seasonal nature of the business, focusing on special events, but plans to increase revenue by participating in more lunch events with the new truck. The business is a family affair as Holly recently brought her daughter on board to help manage operations.
How It Went
The company’s position before Shark Tank
Fried Green Tomatoes has achieved sales of $268,000, with a combination of revenue from the food truck and the retail product. The company has a presence in 42 states, with the batter mix product sold in approximately 600 stores, mainly boutique outlets. Holly’s recent purchase of a new truck signals an expansion strategy, targeting more lunch events to enhance revenue streams.
With high demand, customers are willing to wait over an hour for their favorite items, showcasing the popularity of Fried Green Tomatoes’ offerings. While the business is currently seasonal, specializing in special events, Holly envisions franchising the food truck to create a broader market presence. The desire to franchise has already garnered interest from potential buyers, but Holly seeks guidance on how to navigate this expansion.
Holly’s background in sales, coupled with her entrepreneurial spirit, has driven the success of Fried Green Tomatoes, emphasizing her resilience after losing her job and creating a business to control her destiny. Funding-wise, the company has not disclosed additional funding sources, and its financial health appears promising with a solid sales performance. Holly’s decision to seek investment in “Shark Tank” reflects a strategic move to secure expertise and capital for scaling the business further.
The Negotiations:
The negotiations began with Holly seeking $200,000 for 15% equity in Fried Green Tomatoes. Barbara Corcoran, Mark Cuban, and Kevin O’Leary expressed interest. Barbara and Mark sampled the food, praising its quality. However, Kevin raised concerns about the valuation, stating that $200,000 for 15% values the company at $1.3 million, making it challenging for him to invest.
As negotiations progressed, Kevin, known for his pragmatic approach, decided to exit the deal, expressing that the business was too small and not investable in its current state. Barbara and Daymond, both impressed by the taste and potential of Fried Green Tomatoes, engaged in a bidding war. Barbara offered $200,000 for 30% equity, emphasizing her experience and ability to help Holly build an empire of franchises.
Daymond countered with $200,000 for 25%, highlighting his belief in the business’s potential and his prowess in the franchise business. After considering both offers, Holly chose Barbara’s deal, appreciating the expertise and experience she brought to the table. Despite Barbara’s higher equity ask, Holly valued the potential partnership and the strategic guidance Barbara could provide in franchising Fried Green Tomatoes. The deal was sealed at $200,000 for 30% equity with Barbara Corcoran as the chosen Shark.
In the aftermath, Kevin expressed surprise at Barbara’s higher equity ask, while Barbara and Holly celebrated their partnership, viewing it as a strategic move to propel Fried Green Tomatoes to new heights. The negotiation showcased the balance between equity and expertise that entrepreneurs weigh when choosing a Shark partner on “Shark Tank.”
