Maven’s Creamery: How a Passionate Work-Ethic can result in Sweet Success
Every now and then in the Tank, there are background stories that tug at our heartstrings. In Episode 20 of Season 10, we were able to experience this as well as develop an admiration towards the hard work and struggle that surrounds the immigrants of this country. Sisters, Gwen and Christine of maven’s creamery, showed us how a father’s struggle can inspire a work ethic that leads to success in the Tank and inspiration to all that witness.
The sisters entered the Tank asking for $400,000 for 10% stake in their premium macaron ice cream sandwich company, maven’s creamery.
The Heartwarming Background
Inspired by their immigrant father, the sisters left their careers to begin an entrepreneurial journey. Fleeing from communism in Vietnam, their father landed in San Jose, CA where he taught himself English, put himself through college and worked two jobs, 7 days a week, as an electrical engineer to support his family. The sisters learned of their father’s dream to be an entrepreneur that was put on hold and became motivated to quit their careers and become business owners in his honor. The pair went to Youtube and Google to learn how to combine macarons with ice cream using natural ingredients from scratch. Today, this family-business owns their own factory where they handmake 30 different flavors of their macaron ice cream sandwiches.
With no storefront, maven’s is almost at capacity at their factory and is seeking assistance from the Sharks to invest in automated machines to help in streamlining their production process. Although automation is the key to continuing the company’s success, a machine that would do so costs around $200,000. Their labor costs are high and are only going to get higher due to the ‘handmade’ aspect of their business and adding machines would help to drive those costs down. The sisters hope that automating their process will help them produce more product, increase efficiency and scale their wholesale arm.
Each sandwich is about 150 calories and ranges up to 30 different flavors. As the Sharks begin tasting the product, Barbara mentions that it reminds her of cotton candy as the product feels heavy but becomes soft as it enters your mouth. Kevin, the Tank’s resident historian, begins giving a brief history lesson of the macaron’s origins in France and mentions the inclusion of the egg in its recipe and asks the two about the shelf life of the product. Each sandwich lasts up to 6 months when frozen which allows the pairing to mention the freezers that they supply to the independent locations that sell their product.
Maven’s was proud to share their $1.2 million year-to-date (YTD) sales along with the $2.1 million that they will make by end of the year and $167,000 that they will profit. Currently, maven’s places all of their sandwiches in a freezer post-production and sends that to independent retailers to sell. The costs that the sisters incur per sandwich are $1.08 and sell $2.24 at the wholesale level and between $3-4 at the retail level. The freezers that the sisters supply cost them $1400 on top of a $0.15 royalty that they pay to a freezer manufacturer. Though their operations are solely dependent on independent retailers (fast-casual restaurants, grocery chains, etc), the company recently revamped its website where they plan on shipping their products in styrofoam boxes with dry ice directly to the consumer.
The Sharks seem to be in agreement that the product is phenomenal. After the presentation, Mark leads the conversation by congratulating the sisters on all that they have accomplished but brings up the challenges that the company will face due to their low margins. As the company scales, the likelihood of sales hitting a decline is imminent and the retailers that have given them shelf-space will not be making enough money to carry their product. The risk is too great for Cuban so he is the first to go out. Lori and Daymond also praise the sandwiches but both cant see the value that the could add and don't believe the company is investable for them; they both go out. Kevin goes back to his roots and mentions how the sisters came in with a $4 million valuation that is 30X what the company is profiting now. Even though Gwen mentions the $2 million the company will make this year, Kevin can't seem to picture the return he could make and goes out.
Barbara is now maven’s last hope in scoring a deal. She begins by stating that she can definitely add the value that the company needs but is hesitant at first to give an offer. After asking about e-commerce, the sisters mention their revamped website and their strategy in taking the Direct-to-Consumer (DTC) method. Barbara then begins by reflecting on how one of her fondest memories was when she turned her first profit in her Real Estate business and bought her parents a brand new car. Seeing the joy that this brought her parents, Barbara related to the sisters in wanting to give back to their family. She offers $400,000 for 33.33% of maven’s with $200,000 in cash to be used on the factory and the rest as a credit line. The sisters begin the negotiation by counter-offering the same deal for 20%. Barbara responds by settling in the middle with a 25% equity stake which the sisters accept.
The company utilizes a different selling strategy than what is usually seen in the specialty food space. It is easy to look at a company like, Baked by Melissa, which uses its own kiosks in malls and storefronts in NY to sell their specialty ‘mini’ products. I can picture walking through a shopping area and seeing a maven’s creamery kiosk where consumers can buy sandwiches on the spot and maybe even see how one is created. In the specialty market, it is important to explain to consumers why the product is different and what makes it so special. Through the exposure on Shark Tank, consumers now have a surface-level idea of why this company is great. To continue this, the company should get out in front of the consumers and show them first-hand all of the work and effort that goes into every single sandwich. Combining a specialty product with the backing of an investor with an immense background in the food industry gives us all the notion that maven’s is only going to grow from here.
Maven’s creamery is a reminder to all of us that it does not matter where you come from or what you look like, if you have the determination to make something work then it is more likely to happen. What we can especially see in immigrants is the ability to work tirelessly to accomplish a goal. This kind of spirit reminds us all of what makes Shark Tank so special in giving the spotlight to entrepreneurs that hold this mindset in all that they do.