avocaderia is a restaurant started in Brooklyn, NY, by an Italian from Moderna, Italy, who really loves avocados and wants to "spread the love." The entrepreneur stated that he is a fan of avocados because he finds that they are the perfect balance between healthy and tasty.
avocaderia, based on the demonstration, appears to specialize in different kinds of avocado toasts, each costing between $6 and $14 per serving.
The entrepreneur is looking for $300,000 of investment in order to expand avocaderia to more locations, with the first being Chelsea.
The first location has been open in Brooklyn for five months and, according to the entrepreneur, has done $75,000 in gross revenue in the last month. Once expanded to Chelsea, the entrepreneur projects bringing in $750,000 by the end of the year. He also projects grossing $4,300,000 with both locations open for a full year.
The entrepreneur has big plans for avocaderia, claiming that he would like to expand to as many as twenty locations within five years starting with New York but then also into Los Angeles, San Diego, Miami, and Texas. He projects that each new location will cost $200,000 to open even though the first cost $75,000 due to the fact that it was opened in a food hall.
In terms of previous investment, the entrepreneur has put $70,000 of his own money into the business and has received a deal for a cookbook "in the six figures" and intends to use that money to open his second location.
This deal aired on Episode 9.22.
Making A Deal
Barbara and Mark teamed up to make a deal with this entrepreneur. They believed that his cost projections were too low and so they offered him $400,000 instead of his requested $300,000 but for 20%, the logic being that he was bringing two sharks on board.
Because of the extra investment amount and despite the larger equity ask, this deal was not as harsh on the valuation is it otherwise could have been and just bit a third off of what the entrepreneur came into the tank with. However, when he accepted, he also added Barbara and Mark as partners to his business.
The year in which this deal aired sure seemed like avocado toasts' year. There were even articles in prominent news sites arguing that Millennials would never be able to buy their own houses because they spent their potential savings on their addiction to avocado toast. But, at the end of the day, no matter how it's dressed up, it's still avocado smeared on a piece of fucking toast. As the Stats Shark has discovered, that is something that can be done at home, even in New York where people are renowned for never cooking.
Additionally, the entrepreneur's numbers just didn't make a lot of sense. In the last month, he had grossed $75,000 which a simple calculator can tell you is only $900,000 a year. Not bad for a green vegetable spread on toasted bread. But even assuming the same at a second location, that still only adds up to $1,800,000. To reach $4,300,000 would require an almost 60% increase in sales at both locations.
New York food halls, including Industry City, Chelsea Market, Chinatown Market, the DeKalb Market, and others have proven to be excellent proving grounds and launching off points for restaurant entrepreneurs trying to bring an innovative new food to to the scene but your humble Stats Shark struggles to imagine any of them estimating that they would increase business by just under 60% in a year. In the case of this deal, the bite off of the valuation was not only understandable but necessary.
- The entrepreneur stated that the first location was in Sunset Park, Brooklyn. Given that Sunset Park is primarily populated by Chinese and Hispanic immigrants, the likelihood is that this location is based in the retail/office complex of Industry City on the New York Harbor and separated from the neighborhood of Sunset Park by the Brooklyn-Queens Expressway.
- As with Sunset Park, the desired Chelsea location is most likely the Chelsea Market, a food hall and office complex similar to that of Industry City.