Pitched by a married couple from San Jose, CA, Atlas Monroe makes a favorite food in a special way: Fried chicken. Vegan fried chicken.
Based on organic, non-GMO wheat, the chicken is entirely made in-house and is not sourced from any third party. In fact, the entrepreneurs were always cagey about exactly what their recipe was. But it was good enough that the sharks all seemed genuinely surprised when it was revealed that they were eating re-formed wheat and no chicken had been harmed in the enjoyment of their snack.
The entrepreneurs behind Atlas Monroe were inspired to create their fried chicken when one of their father's was diagnosed with Type II Diabetes. He was switched to a vegan diet and found that he could control the disease through diet and the family joined him to encourage him to keep it up. However, not long after, the family found that they were sick of the usual vegan fare and began competing to invent the tastiest new vegan dish. The end result was Atlas Monroe fried chicken. Soon after, they began selling at local food festivals and claim to have been named Best Fried Chick at the National Fried Chicken Festival. They now operate their own commercial kitchen to produce the product.
Getting this chicken is not cheap though. They sell in 6-piece frozen batches for $23. In addition, their average shipping cost is around $21. So, to get 6-pieces of fried vegan chicken, the average consumer is paying $44, which is the most expensive KFC run of all time. Especially since it only costs Atlas Monroe $2.67 to manufacture those same 6-pieces.
Speaking of a national fried chicken chain, the entrepreneurs say that they are in talks with a major chain to sell their "chicken" but that they have not yet shared the recipe with them. And, speaking of not sharing the recipe, they do all of their production out of their own commercial kitchen so as to not have to share the recipe with a co-packer and say that they need the shark's investment in order to expand this facility to keep up with demand.
It gets confusing when it comes to their revenue numbers. The entrepreneurs claim that Atlas Monroe has made $60,000 in sales for the year so far but "net" $73,000 after shipping. The sharks push back on this to find out that the company is making a profit on shipping? The entrepreneurs claim that gross profit is $45,000 but with $31,000 in expenses, turning that profit into around $14,000 with some simple back of the envelope math.
This deal aired on Episode 11.02.
Making A Deal
Needless to say, Mr. Wonderful didn't think the sales numbers and the value being assigned to the company lined up and he exited the deal quickly. Barbara, understandably, finds their numbers confusing, their value "ridiculous" and, likewise, drops out.
Mark, stating that he'd begun eating vegetarian recently, takes a flyer but says the offer requires contingencies (though he never states what those might be). Still, he offers Atlas Monroe $500,000 in credit in return for 30% equity.
Guest shark Rohan Oza says that he wishes the entrepreneurs had more of a game plan and that he thinks they require a lot of heavy lifting to get where they want to go and exits the deal. To this, the entrepreneurs state that they project earning $2,400,000 by the end of the year. The following year, they project to do $2,400,000 in sales every three months! Lori, without saying the words, calls bullshit and drops out.
Mark and Rohan, however, come together to offer the entrepreneurs a $1,000,000 buyout of Atlas Monroe and an ongoing 10% royalty if the orders are real. This means that Mark and Rohan would take over the entire company and set up all of the infrastructure necessary for it to grow.
The entrepreneurs, stating that they don't want to be employees and that the sharks clearly think the company is worth even more if they're willing to buy them out, reject the buyout offer and try to get Mark to go back to his original offer. Mark tells them that it's off the table and the entrepreneurs decline to be bought out.
Atlas Monroe left the tank without a deal.
Dear readers, if your humble Stats Shark has one piece of advice, it's this... fucking sell your stupid company. Especially if it's a rich person who wants to give you a million dollars and 10% of every sale moving forward. It's not rocket science. It's pretty much the best deal you will ever get in your life and saying no will make you the kind of person who wakes up a night, sweating, and wishing they had made a different choice in life.
Depending on how the deal had gone down, this very well could have been $1,000,000 just sitting in a bank account, taxes deferred to some point in the future. By this I mean, the entrepreneurs could have created a new corporation (call it Atlas Madison), sold Atlas Monroe to this corporation for like a dollar or something and then Atlas Madison could have sold Atlas Monroe to Rohan and Mark and the money now sits in a corporate bank account. Then, all future payments from the Oza-Cuban Corp get paid into this same account and the entrepreneurs can draw it as regular income or pay out as equity draws. Either way, this could have been a real million dollars just sitting in their accounts.
Then, while Rohan and Mark have to put a team together and may or may not make a profit for several years, off of every dollar in sales, this couple would get their ten cents while kicking back in Tahiti, sipping drinks out of coconuts, probably trying to figure out how to make grass taste like pepper steak.
One of the great things about Shark Tank is that it really shows how stupid most ideas are. Not that that's a bad thing. Some of the greatest pitches have begun with, "Sharks, have you ever...?" Most people just go, "Well, yeah, but whatever..." But these entrepreneurs went and did something about it. It probably didn't need to be done but they think they've solved a problem and I wish them success. But they're still usually stupid ideas.
If a shark is going to give you a million dollars for your stupid idea, just take the money. Then, as you're lying in bed, feeling what a million dollars in cash feels like against your naked body, you can come up with another dumb idea. Except now you're the person who's already sold the first idea so now you can get in a room with people with money without having to go on TV and sell them that dumb idea for even more.
Ideas are cheap. You can always come up with a new one. It's just better with a million bucks in the bank.
- It's not written anywhere that companies have to offer free shipping or lose money with shipping but actually using it as part of the company's revenue, especially when the margins between the manufacturing cost and the retail price are so wide, seems a little... unfair?