The second entrepreneur into the Shark Tank this week was presenting his business Parker’s Maple. He was looking for $200k in exchange for 20% of the business. He has developed a line of maple products that include syrup, cotton candy, and butter. The Sharks were amazed by how delicious they were and seemed excited until he started giving them the numbers.
They didn’t give a timeline in the episodes, but since starting, he has seen $360k in sales. He estimates that he could see $1.5Mill this year, which we will talk about in just a minute. The maple butter, which is the product they focused on for most of the presentation, sells for $11.99 at a cost of $8.46. Now, obviously these are terrible margins. It is a high-end food product, but it’s still going to be tough to turn a profit with margins like that. As well, he currently has $300k in debt on the business.
When asked about his insane estimate of $1.5Mill in sales this year, he explained that it was based on an optimistic outlook on his potential deal with Costco. He currently has a $100k order from them, but he is looking to keep selling with them and end up in more of their stores. The problem is that this is impossible to predict. He very well could end up in every Costco in America, but that’s too far down the line and too risky for the Sharks to put their trust in. These kinds of stores often roll out new product slowly so they don’t get stuck with inventory that doesn’t sell. In all reality, he is so new in that space that he can’t be certain that his product will sell in that kind of environment. It’s great to be optimistic, but investors are never going to share that optimism. They want hard numbers and facts.
All the Sharks dropped out, but some had words of encouragement that he should stick with it. He just isn’t to a point yet where the business is investible. There is too much risk and not enough reward. This kid is going to do well. He obviously has a handle on his product and has made some great strides in getting it in front of the right people. If he were to have waited and come to the Tank next season, after being in Costco for a bit and refining the brand more and more for big box retail, I think we would be looking at a completely different outcome.