Nuchas Empanada
NO DEAL
EPISODE SUMMARY
🕓 Air Date: April 7, 2019
Asking For:
$2,000,000 for 8%
Investor:
No Deal
Deal:
No Deal
PRODUCT SUMMARY
Nuchas transforms traditional Argentinean empanadas into gourmet handheld meals with various global flavors.
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Background Story
Ariel Barbouth, an entrepreneur with roots in Argentina, embarked on a culinary journey in the heart of New York City, where he founded Nuchas nine years ago. Originally hailing from Argentina, Ariel brought with him a vision to reimagine the traditional empanada, a staple of his culture, and transform it into a gourmet, handheld delight that would appeal to the American masses. Arriving in New York with his wife Leni, a mere $9,000, and a cricket on his shoulder, Ariel’s dream was to bridge diverse culinary traditions from around the world within the comforting embrace of an edible pocket.
Nuchas was conceived with the belief that handheld foods hold universal appeal – no plates, no forks, just a convenient and delicious experience. The product line boasts an array of flavors, ranging from slow-braised short rib to shrimp jambalaya and vegan shiitake curry, reflecting Ariel’s passion for celebrating global tastes. The journey started in Times Square, where Nuchas opened its first kiosk – a pioneering move that marked the beginning of an extraordinary venture. As the business expanded, Ariel’s commitment to showcasing the world’s diverse culinary traditions remained unwavering. Nuchas continued to evolve, establishing three locations in iconic settings.
Ariel’s background as a manufacturing engineer adds a unique dimension to the Nuchas story. His love for the intricacies of production and the desire to control every aspect of the business led him to invest in an 8,000-square-foot facility three years ago. The initial focus was on crafting raw products, but the burgeoning success prompted a need to enhance production capacity, setting the stage for the challenges and opportunities that Nuchas faces in the competitive culinary landscape of New York City and beyond.
The Product
Nuchas, the brainchild of Ariel Barbouth, offers a diverse range of gourmet empanadas designed to bring unique global flavors to consumers in a convenient, handheld form. These delectable creations represent a fusion of traditional Argentinean empanadas with culinary influences from around the world. The product line includes enticing options such as slow-braised short rib, shrimp jambalaya, and vegan shiitake curry, providing a rich tapestry of tastes for discerning palates.
The empanadas are crafted to perfection, encased in a flaky, golden-brown pastry shell that encapsulates the savory fillings. Designed for on-the-go consumption, Nuchas eliminates the need for plates or utensils, emphasizing portability and simplicity. Priced at $4 for standard varieties and $5 for premium options like the short rib, the empanadas cater to both affordability and gourmet quality.
Nuchas is accessible through various channels, including retail and wholesale. The retail segment operates from iconic locations such as Times Square, offering a grab-and-go experience for passersby. The popularity is evident in the long lines, with retail contributing $800,000 to the annual sales. Additionally, Nuchas engages in wholesale partnerships, supplying its gourmet empanadas to stores like Whole Foods and Gourmet Garage.
The product’s appeal lies not just in its diverse flavors but also in the commitment to quality ingredients and culinary innovation. As Nuchas plans for future growth, the empanadas remain a symbol of cultural celebration and a testament to Ariel’s vision of bringing the world together through the shared joy of unique and flavorful culinary experiences.
How It Went
The company’s position before Shark Tank
Nuchas, under the leadership of Ariel Barbouth, showcases robust performance in the culinary landscape. With annual sales reaching $5 million, the company has established a strong foothold, operating both in retail and wholesale markets. The retail segment, initiated with a groundbreaking kiosk in Times Square, contributes significantly, generating $800,000 annually. Nuchas has expanded to three iconic locations, leveraging the brand’s appeal and drawing in customers with long queues, indicating a high demand for their gourmet empanadas.
The wholesale arm of the business plays a pivotal role, accounting for $3 million in sales. Nuchas has strategically partnered with renowned retailers such as Whole Foods and Gourmet Garage, demonstrating its ability to penetrate diverse markets and reach a broad consumer base. The wholesale business is a key driver of growth, and plans to increase production capacity underline the company’s commitment to meeting rising demand. Financially, Nuchas demonstrates a healthy profit margin, with a projected profit of $750,000 for the current year. The cost per empanada is $0.84, sold at $1.52, reflecting a sound financial model. Looking ahead, Ariel envisions a substantial growth trajectory, with a projected $12 million in sales and $3 million in profit for the upcoming year.
The company’s structure involves ownership of an 8,000-square-foot facility acquired three years ago, showcasing a commitment to quality control and production efficiency. However, challenges arise as Nuchas faces capacity constraints, necessitating a $2 million investment for kitchen improvements. While the retail locations serve as a direct-to-consumer channel, the wholesale partnerships extend Nuchas’ reach into diverse retail outlets. The brand is positioned as a premium, gourmet offering, emphasizing unique global flavors and culinary excellence. Nuchas’ success lies not only in its delectable products but also in strategic market positioning, forging partnerships, and responding to the growing demand for their handheld culinary delights.
The Negotiations:
In the “Shark Tank” negotiation for Nuchas, Ariel Barbouth presented a compelling case for his gourmet empanada business. Seeking a $2 million investment for 8% equity, Ariel faced tough scrutiny from the Sharks, each bringing their unique perspectives to the table. Daymond John, intrigued by the business, offered the full amount but for a substantial 25% equity stake. Lori Greiner proposed a different approach, suggesting $1 million for the cart business and a $1 million loan against Nuchas’ real estate, while keeping 100% ownership of the wholesale business.
Barbara Corcoran expressed interest but emphasized the need for branding and consumer packaged goods. However, the Sharks raised concerns about the $2 million capital expenditure for kitchen improvements, suggesting that such investments often lead to challenges. Kevin O’Leary and Mark Cuban opted out for various reasons, with O’Leary highlighting the expensive bet on scaling the wholesale business and Cuban cautioning against burning $2 million in capital expenditure.
Ultimately, Ariel declined Daymond John’s offer, and Barbara’s proposal was turned down. Despite the Sharks seeing potential in Nuchas and praising its success, the negotiation underscored the challenge of finding a suitable deal that aligns with Ariel’s vision for the business. The negotiation highlighted the delicate balance between scaling operations, maintaining quality control, and addressing the evolving demands of the market. While Ariel did not secure a deal in the Tank, the exposure and feedback from the Sharks provided valuable insights as Nuchas continues its journey in the competitive culinary landscape.
