Maven's Creamery
Maven's Creamery is a food company from San Jose, CA, started by two sisters to bring a little ice cream to the macaron. That's right... they've created the macaron ice cream sandwich. And according to the entrepreneurs, they're the only producer of "home made macaron ice cream sandwiches" (at least within the United States) and they can't keep up with demand.
Maven's Creamery offers macaron ice cream sandwiches in cookies and cream, strawberry shortcake, salted caramel, and toasted almond flavors. Barbara described the flavors as "very light" during the demonstration.
Mr. Wonderful, always the expert in everything, says that macarons don't keep well because of their egg content and asks how long the Maven's Creamery cookie will last. The entrepreneurs say it should stay fresh in a freezer for at least six months.
By the numbers, Maven's Creamery is extremely successful. By the time the deal was filmed, the business had booked $1,250,000 in sales and projected $2,100,000 by the end of the year. From that, the entrepreneurs expected to make $167,000 in profit.
Manufacturing one unit costs Maven's Creamery $1.08. Meanwhile, the company sells each unit for $2.24 at wholesale and between $3 and $4 per unit retail. All production is done in the company's own commercial kitchen.
When questioned as to customers, the entrepreneurs state that they see their customers as independent retailers, fast casual restaurants, and regional chain stores. To get into these locations, they provide a freezer with their goods to each place willing to sell. These freezers cost $1,400 per location but this cost is covered by the freezer manufacturer who, in turn, receives a $0.15 per unit royalty on the sales.
Currently, there are no online sales though the website had been recently reworked with the expectation of selling online in 2019.
The entrepreneurs are looking for funding so they can automate part of the process to produce more and reduce their labor costs. Namely, they want to set up an extrusion machine to squeeze out each raw cookie and pack the goods via machine. They predict that this expansion will cost $200,000.
Making A Deal
Mark is the first one to drop out, citing the low margins. Lori states that she loves the product but that she doesn't see it as investible. Daymond also drops out, stating that he doesn't think he can bring any additional value to the company.
Mr. Wonderful, as is his wont, says that he believes the value placed on the company is all out of whack and should only be valued between $600,000 and $800,000 unless the margins on sales double. With this little nugget, Kevin exits the deal.
Barbara comes to the rescue of Maven's Creamery and makes an offer of $400,000 in exchange for 33.3% to become a full partner. $200,000 of this money is to be used to upgrade their production facilities and the other $200,000 as a credit line. The entrepreneurs attempt to counter Barbara at 20% equity but Barbara responds with 25%.
The entrepreneurs accept and gain Barbara Corcoran as a partner.