Scratch & Grain Baking Kits
DEAL
EPISODE SUMMARY
đź•“ Air Date: January 13, 2015
Asking For:
$150,000 for 20%
Investor:
Barbara Corcoran
Deal:
$150,000 for 20%
PRODUCT SUMMARY
Scratch & Grain Baking Company offers convenient cookie kits designed to simplify homemade baking.
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Background Story
Leah and Taya, the dynamic duo behind Scratch & Grain Baking Company, hail from the vibrant city of Portland, Oregon. Two mothers with a shared passion for baking, they embarked on a journey to revolutionize the home baking experience. Leah, the driving force behind the venture, had a pivotal moment when her daughter expressed a desire to bake homemade cookies. The traditional options on the market, either mysterious bag-o’-mixes or questionable tubes of dough, didn’t align with Leah’s values. Determined to provide a better alternative, she embarked on a mission to make homemade baking more accessible, enjoyable, and mindful.
The spark for Scratch & Grain Baking Company was ignited when Leah reached out to her neighbor, Taya, a go-getter with a background in the securities finance industry. The two joined forces, leveraging Leah’s passion for baking and Taya’s business acumen. Their collaboration resulted in the creation of the Cookie Kit – a product designed to simplify the often cumbersome process of homemade baking. Frustrated by the time-consuming and wasteful aspects of traditional baking, Leah envisioned a kit that contained precisely measured, labeled, and color-coded ingredients, eliminating guesswork and reducing waste. This concept laid the foundation for the innovative Cookie Kit, which aimed to make baking foolproof and enjoyable for everyone, regardless of their baking expertise.
The duo’s commitment to transparency and quality ingredients led to the development of kits that intentionally produced one large cookie sheet of 9 to 12 cookies, a departure from the typical 40. Their emphasis on health-conscious choices, including whole wheat flour and organic sugar, aligned with a growing demand for healthier baked goods. Located in the heart of Portland, Scratch & Grain Baking Company emerged from a desire to make homemade baking a delightful and stress-free experience. The founders’ backgrounds, skills, and shared dedication to their families fueled the creation of a product that not only simplifies baking but also aligns with a conscious approach to ingredients and waste reduction.
The Product
Scratch & Grain Baking Company’s flagship product, the Cookie Kit, is a game-changer in the world of homemade baking. Designed to make the baking experience easy, fun, and delicious, the Cookie Kit is a comprehensive solution for cookie enthusiasts of all skill levels.
Each Cookie Kit is thoughtfully crafted, containing individually packaged, labeled, numbered, and color-coded ingredients. This meticulous organization ensures foolproof baking—users only need to supply butter and eggs, while the kit provides the rest. The intentional packaging simplifies the process, eliminating the need to decipher complex recipes or purchase an array of ingredients.
The benefits of the Cookie Kit extend beyond simplicity. Unlike traditional mixes that yield numerous small cookies, Scratch & Grain’s kits intentionally produce one large cookie sheet of 9 to 12 substantial cookies. This not only saves time but also aligns with the growing preference for quality over quantity.
The product features a variety of flavors, including gluten-free options such as chocolate chip, oatmeal raisin, and classic sugar. With a focus on health-conscious choices like whole wheat flour, flax seeds, and organic sugar, Scratch & Grain ensures a superior cookie that not only tastes amazing but also meets modern dietary preferences.
How It Went
The company’s position before Shark Tank
Scratch & Grain Baking Company has shown promise, although facing some challenges that indicate potential areas for growth and improvement. The company’s total sales during this period amounted to $52,000. While this demonstrates initial traction, the founders acknowledged experiencing production problems, emphasizing the need for streamlining their processes. Scratch & Grain has strategically positioned itself in the market by securing partnerships with reputable retailers. Notably, the company’s products are available in approximately 220 locations, including major outlets like Whole Foods and Sur La Table. This suggests a strong presence in both specialty and mainstream retail channels, showcasing the product’s appeal to diverse customer segments.
The customer base primarily includes individuals who value the convenience of homemade baking without compromising on the quality of ingredients. The Cookie Kits cater to health-conscious consumers seeking alternatives with features like whole wheat flour, flax seeds, and organic sugar. Funding for the company’s operations has primarily come from their sales revenue. However, the founders expressed the need for additional funding to address production challenges and enhance scalability. As of now, there is no information on external investments or debt financing.
While Scratch & Grain Baking Company has made strides in its retail distribution, the founders acknowledged the necessity to automate their production processes to improve efficiency. This indicates a focus on operational optimization to meet increasing demand and enhance profit margins. The company’s financial health is reflected in its reported cost structure, with an all-in cost of $3.89 for each Cookie Kit. This includes overhead and production expenses, emphasizing the need for operational improvements to reduce costs and enhance profitability. The company may be exploring options for additional funding and operational enhancements to support its expansion plans.
The Negotiations:
The negotiation process for Scratch & Grain Baking Company on Shark Tank resulted in a strategic deal with Barbara Corcoran. Initially seeking $150,000 for a 20% equity stake, Leah and Taya garnered interest from multiple Sharks. Robert Herjavec offered the requested amount for a higher equity share of 40%, and Kevin O’Leary suggested an alternative offer with a line of credit, excluding Robert. As the negotiation unfolded, concerns about scalability and competitiveness led Barbara, Mark Cuban, and Lori Greiner to bow out.
Robert, adapting to the changing dynamics, adjusted his offer to include Barbara, proposing $150,000 for 40% equity. However, Barbara introduced a unique proposition—a $150,000 line of credit while retaining the original 20% equity stake. The discussion among the Sharks became lively, with differing opinions on the optimal offer. In a surprising turn, Robert, despite his initial offer, supported Daymond’s proposal. Ultimately, Leah and Taya decided to accept Barbara’s offer, securing a $150,000 line of credit with a 20% equity stake.
This negotiation showcased the entrepreneurs’ ability to navigate a dynamic environment, considering various offers before strategically aligning with Barbara’s funding model. The final deal not only provided the necessary capital through a line of credit but also established a valuable partnership with Barbara Corcoran, bringing her expertise into the fold for the continued success of Scratch & Grain Baking Company.
