Press Waffle Co: A Mouth Watering Pitch
Episode 17 of Season 10 of Shark Tank opens with an attention-grabbing pitch for European style waffles. Press Waffle Co. has perfected the recipe for a mouthwatering pitch that leaves the sharks oohing and aahing.
Founders Bryan and Caleb Lewis proudly decline to calorie count, because their waffles are indulgent by design. They start with a dense, buttery brioche style dough that produces a golden, light and chewy waffle. Crafting the perfect waffle began as a hobby for Bryan. He experimented with recipes after an unforgettable trip to Belgium. Then his passion was converted into entrepreneurship, and they opened their first restaurant in north Texas.
Partners Bryan and Caleb have built a successful business, producing a 14% profit margin, but how did they do it? First, they perfected their product. Their waffles can be customized to suit any palette. Customers can design their waffles or choose from sweet and savory varieties. The Sharks’ waffles were dripping with fruit and fresh whipped cream, but you could also indulge in a Montecristo or soul food inspired chicken and waffles. Press Waffle Co. appeals to their customers’ epicurean sensibilities and their wallets.
These entrepreneurs have a keen sense of their market, and the market is "exploding," according to Bryan. You can find Press Waffle Co. in a European-style food hall. The commercial real estate services company, Cushman & Wakefield has been tracking the growth of food culture in America and beyond, and they report that the rise of food halls and restaurants is the biggest trend in retail. Food entices customers to shop, so retailers welcome food hall partnerships. According to Vox writer Bethany Biron, food halls appeal to younger consumers who crave authenticity, because these halls indulge culinary curiosity with a smorgasbord of options. Cushman & Wakefield project there will be 300 food halls in America by the end of 2020, and Press Waffle Co. is riding the foodie trend.
Their flagship store averages $5,000 per square foot, and Press Waffle Co. has a 14% profit margin. The Sharks recognized a business on the eve of expansion. Furthermore, the terms of Press Waffle Co.’s food hall lease insulates them from risk. They can open more locations, because the business is only charged rent when making a profit. They signed on for 7 more locations with similar leases; Press Waffle Co. is positioning itself to become a long term player in the Food and Beverage sector.
The Sharks reacted to the opportunity and sought to outbid each other. Mark Cuban offered $350,000 for 20% of the company. Barbara offered Bryan and Caleb partnership at $200,000 for 15% of the company or $400,000 for 30% equity. Kevin countered with a structured debt offer proposing a $200K loan at 7 to 11% interest for each store opening. In exchange, he asked for a 3% stake. Lorie bowed out, but not for a lack of interest. She praised Kevin’s offer and admitted she couldn’t top it. Then Robert turned the tables on the rising entrepreneurs by offering $600,000 for six locations and for equity he insisted, “Make me an offer.” After negotiation, Robert countered with $400,000 for 20% equity.
Barbara, Kevin and Robert competed for the deal, but would Press Waffle Co. choose structured debt or a partnership? Bryan and Caleb favored Barbara’s industry know-how. They came looking for a partner, but they hesitated. If the business is going to be a long-term success, they need to safeguard their percentage of the company. The company has a $2 million valuation, so they countered and asked Barbara to sweeten the deal. She won them over by offering $300,000 for a 15% stake and her ability in the field. Barbara asserts she has the infrastructure and know-how to build food businesses. Bryan and Caleb believe her.
Bryan and Caleb came on Shark Tank in the hopes of partnering with Barbara, and now they brimmed with excitement. Press Waffle Co.’s expansion was in good hands. Caleb declared, “That is the American dream. It’s incredible.”