Beyond Sushi: This Plant-Based Alternative Goes Above and Beyond

Authored by: Ian Gyan

In America, the foods that we love aren’t always the healthiest options. However, that’s slowly changing as people become increasingly aware of their diets.  

Still, finding a balance between food that’s good for you and food that tastes good has always been difficult. Fortunately, Guy Vaknin’s company, Beyond Sushi, presents a solution tastier than you can imagine.

On Episode 3 of Season 10, Guy calmly requested $1.5 million to help grow his New York-based company in Los Angeles, offering 25% of his west coast profits and 5% of his already established east coast profits.

His hefty ask drew a few odd looks from the Sharks, so Guy kept his puns to a minimum and delivered his pitch without much flair. A smart choice, as the Sharks grew less apprehensive as he went through his talking points.

Beyond Sushi is a multi-unit vegan restaurant chain. It makes use of veggies, fruits, and whole grains to create unique flavors, all without the use of artificial meat. The “extensive” menu includes salads, wraps, dumplings, and (sushi) rolls.

This modern approach to traditional food manages to maintain that delicate balance between flavor and nutrition. It’s what distinguishes Beyond Sushi as one of the “pioneers” of the vegan movement and shows its commitment to creating more sustainable ways of eating.

Thanks to Guy’s best-selling “Mighty Mushroom” and “Sunny-Side Up” rolls, the Sharks could clearly see that… or taste it, rather. His “amazing” sample platter included sushi made with robust ingredients like braised fennel, micro arugula, truffle shiitake sauce, 4-grain rice, and sun-dried tomatoes.

Despite the good food, these Sharks would only be satisfied with profitable numbers, and in that regard, Guy did not disappoint. It only costs Guy $1.50 to make one 280 calorie roll (8 pieces), which he then sells for $7.50. Guest Shark, Matt Higgins, absolutely loved the sound of an 80% margin but that wasn’t Guy’s only advantage, there was also his scale of operations.

Guy opened his first restaurant using the last $70K from his life savings in July 2012. Back then he only had 12 seats and 1 employee. Since then, he opened 6 locations throughout New York City.

So, how does one man handle so many restaurants?

It’s because Beyond Sushi is a commissary-based business, meaning all the food is cooked by a single distributor. This is a perfect example of working smart instead of working hard. Having one entity produce the food keeps his margin stable, cuts the hassle of keeping ingredients in stock, and allows him to focus on the macro aspects of expanding a business.

Guy owned restaurants ranging from as small as 180 sq. ft. to as large as 2,500 sq. ft., but regardless of size, each location pulled its weight. He confidently reported that last year, his east coast operations grossed $4 million in sales!

“Mr. Wonderful” leered suspiciously, as the other Sharks nodded in approval, he sensed the devil hiding in the details

Before Guy announced his sales, he revealed his resourceful partnership with Sandy Beall, the founder of Ruby Tuesday. Together, they planned to change Beyond Sushi’s grab-n-go structure to a more open-seated arrangement using Guy’s largest restaurant. When Kevin asked how much he netted out of last year’s $4 million gross, he sadly revealed that he was down $272K. Evidently, his expansion placed a lot of pressure on the entrepreneur to keep his business afloat. He assured the Sharks that this was not the norm and mentioned that the year before his deficit, he pocketed $600K out of his $2.4 million gross.

At Guy’s current pace, Beyond Sushi’s projected sales rested comfortably at $5.6 million, but to Mr. O’ Leary’s disappointment, he only expected to net $300K next year. Although, this letdown didn’t weigh too heavily on the other Sharks.

Being the food aficionado of the tank, Matt began asking about his unit economics, specifically Guy’s QSR (Quick Service Restaurant) percentage. He answered questions as quickly as Matt asked them but this eventually wore down the interest of some of the other Sharks.

Daymond cut into their conversation simply because he couldn’t understand any of the food industry-specific jargon. Since he also wasn’t familiar with the back-end of the restaurant industry, he decided that it was best for him to back out.  Daymond’s loss of appetite was echoed by a few others. Kevin also took the chance to expand on his issues with the business. Since Guy only expected to net $300K out of his projected $5.6 million in sales next year, fronting the requested $1.5 million for 25% of an expansion that hadn’t begun yet would be akin to him paying twenty times Guy’s pre-tax earnings. A valuation like that was “insane” according to Kevin, so he backed out as well.

Things didn’t get better from there, Mark correctly pointed out the already immense workload that Guy’s east coast operations placed on him. Given that Beyond Sushi wasn’t the only restaurant selling plant-based foods, Mark decided to go with his “gut” on the matter and pulled his hand away from the table. Perhaps Mark thought Guy wouldn’t be able to handle the financial burden of expanding again so soon.

This was more than likely a reaction to the entrepreneur's last year of sales. His expenses sank him so low into the red that he had to invest $160K in personal funds just to stay in business. For a seasoned money maker like Mark Cuban, a fluctuation like that raises a big red flag.

With 3 Sharks now out of the water, Guy’s eyes were left wide and nervous. At the same time, Matt and the ever-patient Lori Greiner settled in for a deal, but not before making Guy sweat a little...

“Here’s what I don’t like,” Matt said, explaining that he didn’t like that Guy’s offer would have him paying $1.5 million for 25% of operations that hadn’t begun yet, but only gave him 5% of his east coast operations, which were already profitable. Considering his losses, Guy’s initial offer now looked more like an investment to be made on faith alone.

However, these Sharks don’t deal in faith, they deal in fact. And the fact was that between east and west coast operations, the potential for a “misalignment of interests” between them was too great to ignore. With how hard he worked to counteract his deficit, it was very possible for Guy to end up too focused on east coast maintenance instead of west coast expansion like Matt wanted.

So, Matt requested more east coast equity as an incentive to ensure that guaranteed profits would come his way. Even though Guy looked terrified at the thought of giving up equity, he still offered to raise the east coast stake up to 10%. Clearly, it wasn’t enough because during the time it took Guy to respond, Lori had whispered what seemed like a fruitful agreement into Matt’s ear. They both turned their mischievous eyes back onto the now silent entrepreneur.

Matt announced that he and Lori were coming into the deal together, as Beyond Sushi was also right up her alley. Lori believed that the company would do better on the west coast, as the health-conscious movement over there was very strong. Their plan was to cross-market, get Guy into major airports and stadiums and change his life. And at first, the entrepreneur smiled, only to stop once he heard their new offer of $1.5 million for 30% of west coast operations & 15% of east coast operations.

At this point, Guy could only say “yes”, “no”, or make a counteroffer.

He chose to counter with a similar offer of $1.5 million for 30% of the west and 12% of the east. But that wasn’t enough, Lori and Matt’s offer was final. So, Guy looked to the ceiling as he pondered the deal, as though saying a prayer, and finally said, “ok, let’s do it.”

Lori and Matt sprang from their seats, rushing to congratulate him. The other Sharks congratulated him too, although Kevin didn’t hide his disapproval. He just scowled and shook his head. Maybe he saw the signs of a bad deal, but based on the way both he and Daymond started clearing out the rest of the sushi samples, Beyond Sushi would be just fine.

Ultimately, giving up equity was the best move, as it would translate to faster growth. With two Sharks worth of resources behind it, Beyond Sushi would start growing practically at "lightspeed."

Lori Greiner's Secrets to Her Entrepreneurial Success

By: Sage Lazzaro, @SageLazzaro
Observer.com, @Observer

Read the original article here.

Are you always coming up with great ideas only to stumble upon them on shelves soon after? If yes, you might have the entrepreneurial spirit deep inside you, according to Lori Greiner.

The retail expert and fierce investor on ABC’s Shark Tank dished on her tips to entrepreneurial success this morning during a Q&A at Staples on 5th Ave.

Ms. Greiner—often referred to as “The Queen of QVC” because of her show’s successful six-year run on the shopping network—has launched over 400 products and holds 120 patents in the U.S. and internationally. She has an astounding 90 percent success rate in launching new ventures, and she knows a thing or two about creating multi-million dollar businesses. These are her best tips for entrepreneurs:

Evaluate Your Idea

Is it for a mass audience or a select few? Can it be made inexpensively? Is it unique?

It’s important to understand how your product compares to what’s already out there. Unique products that solve problems do best. If your idea is brand new, you can corner the market.

“If something has a hold on the market already, you’re not going to have an easy time,” Ms. Greiner said.

Do Your Own Market Research

When Ms. Greiner was creating her first product, an earring organizer that she eventually licensed to JCPenny, she showed a prototype to women on the street to gauge their interest and see if the idea was worth pursuing.

She stresses “pounding the pavement” to see if people would buy your product and how much they’d pay for it before investing a ton of cash into the business. And definitely do not do this over the Internet, she warns, or else your idea could easily spread like wildfire and get knocked off while you’re only in stage one.

“Everyone thinks they have the best idea and that everyone will buy it,” Ms. Greiner said. “I think you have to think of your business idea or product idea, ‘Is it something people need and want, something people truly need and want?'”

Packaging, Packaging, Packaging

If your idea is a product with a future in retail, packaging is key. Consumers need to instantly gravitate to it, pick it up and be able to tell what it is and why they should buy it.

“My entrepreneurs know,” she said. “We go through a lot of packaging until it’s perfect.”

Don’t Overspend and Do All of the Hard Work Yourself

Ms. Greiner says to “stay lean and mean.”

Don’t rent out a fancy office. Don’t fill up a warehouse with inventory you can’t sell. And definitely don’t hire employees until you absolutely need them to keep up with business. Doing so will eat up your capital, and employees won’t be running as quickly as they should to get your business off the ground.

“No one will run your business like you do,” she said.

Hold On to That Equity In the Beginning

Desperate for cash, too many entrepreneurs make the mistake of giving up 40 percent of their business to their uncle for $10,000 a month in. Ms. Greiner’s advice is to hold out and figure out another way.

“You will regret it down the road,” she said.

It’s not worth it even for that small amount of cash you think you need, and be especially wary when borrowing from friends and family. They usually want their money back, and when you’re risking it all in a business venture, you can’t be sure it will survive.

Flashback: Mango Mango Mango

By: Michael Barbera
Strategy Consultant
@mbarberausa

The ladies of Mango Mango Mango entered the tank with a well-rehearsed pitch (full of dancing and synchronized jingles) and more importantly, a tasty product. All five Sharks loved the taste of the mango preserves - a sure bet that once tasted, a consumer will make a purchase. However, the only problem the product seemed to solve was a satisfaction of the taste bud. 

One of the key reasons for any company to be denied private equity funding is the lack of solving a problem in the consumer’s life. Yet although it's not a requirement, Mango’s handicap doesn't improve with their industry, as the food service industry is notorious for offering extremely low profit margins. And as any avid Shark Tank watcher can tell you, the higher the profit margins, the higher chance of getting an investment. But even though there were two serious handicaps at this point, all Sharks were still in and the business had a chance of receiving capital. Why? Because the product was that good!

The final remaining variable that could help secure an angel was the cash flow of the business. Mango’s COGS (cost of goods sold) were quite high, at nearly $3.00 per jar. With a sale price of $6.00, this leaves Mango with a 50% profit margin before operating expenses and distribution. The motivated ladies of Mango were not receptive to third-party manufacturing and distribution, which would eventually lead to less production, less sales, and exhaustion. This naturally caused Kevin O’Leary to utter his infamous words, “you made a hobby”, which is true for all businesses that don't generate profit. make any money.

In the end, Mango Mango Mango didn't receive any offers from the Sharks, which was ultimately for the best. They are better off using their own capital for growth, rather than seeking equity-based capital in the food service industry.

@ Biaggi

Stephen Hersh entered the Shark Tank with foldable luggage asking for $500,000 for a 30% stake in his company. Having already invested $3.5 million into the business, and already showing revenue of $2.5 million in two years, he is ready for a Shark to jump in and help grow his business.

Biaggi luggage folds up for easy storage taking much less space than conventional luggage. But is that enough of a differentiator in the market place? Mark, Robert and Kevin did not think so, and were out almost immediately. As Stephen graciously acknowledged each of the three Sharks for their time, it seemed pretty likely that the remaining Sharks would feel the same way.

Daymond surprised us by making an offer to offer the $500,000 for 33% of the company. He had just done a luggage deal with HSN and felt this would be a great add on. Stephen thanked him for his offer and cast his eyes at Lori to see if she was willing to bite. That’s when the tension began.

Daymond wanted to force Stephen’s hand and have him make a decision on the spot. Well, actually he said he could have 20 seconds to think about it. Lori started talking about the product and how it solved a problem. She was calm, cool, and collected as usual, and totally unmoved and uninfluenced by Daymond’s 20 second time limit.

Daymond gave Stephen the 5 second warning, and then, rather than asking Stephen for a decision, asked Lori if she was going to be making an offer. This was certainly a weak moment for Daymond. Lori said she would make an offer, and proceeded to offer Stephen the same package as Daymond did, saying they would be live on QVC within 4 months.

What does Stephen do? He calls a friend. We all get to listen in on the call where his partner tells him to “gauge which one of them will be most interested but beyond HSN and QVC”. Interesting advice as it speaks to a long term strategy rather than just a short tactical approach to selling the product.

Coming back to the Shark Tank, Kevin reviews the offers calling this a beauty contest (no comment). But before Stephen gets to speak, Daymond says he needs to know which marketing strategy Stephen thinks is his best next step: getting the product into stores or having a demonstrable sales strategy. Stephen of course says “demonstrable” (isn't that what they were both talking about?) and surprisingly, Daymond backs out saying that Lori is the better Shark for Stephen to partner with. Lori is shocked and her expression says it all!

With no decision left to make, Stephen takes Lori’s offer without even asking about plans beyond an initial QVC run. In the end, a conversation with Stephen’s business partner caused him to lose Daymond as a possible business partner. And Daymond may have been too sheepish in saying that Lori was the better Shark. It almost seemed as though Daymond had second thoughts about how his expertise could help Biaggi. But only time will tell us what Lori ultimately brings to the table other than an initial run on QVC.

Did you see Lori’s face?! That’s what happens when one Shark compliments another Shark! Be careful Lori, he may be setting you up for something down the road. After all, he is a Shark too!

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@ Kitchen Safe - Controlling Bad Habits

Ryan and David, owners of Kitchen Safe, approached the Sharks requesting $100,000 for a 5% stake in their company. David came across like a used car salesman yelling the words KITCHEN SAFE over and over. One would have expected the Sharks to be annoyed, but interestingly enough they found it humorous. We couldn't be sure if they were laughing at or with David and Ryan but based on the offers made it certainly appears like the Sharks enjoyed the commercial approach to selling this bizarre product.

The Kitchen Safe is a plastic container with a lid that locks on to the container with a timed mechanism that does not allow the lid to be opened until the countdown timer reaches zero. Its intended use is for people to lock away their junk food so that they are not able to yield to their temptation to snack on the junk food at will. Instead, they will be frustrated by not being able to open the container where they themselves stored the junk food and set the timer at a point during the day when their temptations were not as strong.

David tells us that the Kitchen Safe functions as what psychologists term a commitment device. His claim is that this is a scientifically proven method to fight temptation. The idea is that you create a larger obstacle to the temptation in order to increase the cost of yielding to the temptation. As there are no overrides that would allow the device to be opened the only way to bypass the commitment device is to break it. And the cost for doing so is a whopping $49.00 which is the retail price for the container.

But, therein lies the dilemma. On the one hand, all of the sharks agreed that the device (which according to Kevin O’Leary is a piece of crap) is way overpriced at $49.00. Of course it is when you are looking at it as a kitchen container. However, if the price were significantly reduced, then the question would be whether it would still function well as a commitment device.


[TV Note: After calling the item a piece of crap, David is brought to tears and tells of his own prior challenges of trying to resist junk food and being overweight. A chord is struck and David is brought to tears soliciting Kevin to profer: “Don’t start crying, be a man”. David is on a roll and tells Kevin off after which Lori chimes in and tells Kevin to shut up. Great TV!]

So, what about the financials? In the 11 months since the product has been available on line, they have sold 300,000 units. The cost to manufacture these containers is $14.50 and as mentioned the retail cost is $49.00. If those numbers are accurate that would mean that Kitchen Safe has had a gross profit of over $10 million. One has to assume that these entrepreneurs were not on the show to ask for money. They wanted a Shark (or Sharks) to join their team and propel them to the next level.

Several offers were placed on the table, and Mark Cuban was never even able to make his own offer before Daymond John forced everyone's hand and asked for a decision to be made. At that point two offers were available: The first was from Daymond who offered $100,000 for a 20% stake in the company. The second was a joint offer from Lori and Nick Woodman (the Guest-Shark) for the same $1000,000 for a 20% stake. There were two differences though in the offers being made. David and Ryan already had a deal with HSN to sell their products. But Lori and Nick's offer came with the contingency that the deal with HSN needed to be dropped and that a deal with QVC would be put in its place. This did not sit well with David and Ryan as they appear to be men of integrity.

But, business is business, and what the men really wanted was to partner with a Shark. And given the choice of partnering with one Shark (Daymond) vs two Sharks (Lori and Nick), the choice was easy. Goodbye HSN and hello QVC!

Congratulations to Ryan and David on a job well done. There is no doubt that thousands of people in middle America will be purchasing this 'piece of crap', and even Mr. Wonderful would be willing to sell this 'piece of crap' to make money.

Angel Lift: Raising the Upper Lip

Aaron Bruce and his wife entered the Shark Tank with their revolutionary product, Angel Lift. Angel Lift is a way to dramatically decrease face wrinkles without needing any injections or surgery. The piece is simply inserted under one's lips and within 30 days, most of the wrinkles are gone. Aaron was seeking a $500,000 investment in exchange for 10% of his company. But he didn't have an easy time getting it.

Although the product was not yet available to the masses when it appeared on Shark Tank, Aaron claimed that Angel Lift did $3 million in sales and generated $1.2 million in profit, in the smallest live shopping channel in the country. At that point, he pulled out the patent-pending product to perfect the product and build out the brand.

Huh?!

@ Velocity Signs: Sometimes Quality Trumps Quantity

By: Pete Troshak
Twitter: @Shak74
Website: www.Shak74.com

Have you ever seen one of those guys standing on the side of the road holding an ad for a business and felt sorry for them? It's a miserable job, and frankly the sight of a disheveled, sweaty employee tiredly waving a sign in the heat is neither professional nor likely to draw a lot of customers. Scott Adams and Josh Faherty came into the Shark Tank with a solution for this advertising dilemma. Their company is Velocity Signs, and their products are large rechargeable waving signs that are placed in the ground or on sidewalks outside of businesses. The signs have a heavy base that sits on the lawn, and consist of a directional arrow front-piece that bobs and weaves creating a dynamic and eye-catching 3D form of advertising that points customers in the direction of the business. Scott and Josh were asking for $225,000 for 15% of their company. The company made a quarter of a million dollars last year, and is projecting to grow to $2.5 million next year.

The Cycloramic Feeding Frenzy

By: Elizabeth Francois, Writer & Designer
Twitter: @elizfrancois
Facebook: Elizabeth's Note Book

When this episode was first filmed in June 2013, the number of downloads of the Cycloramic app was 660,000. Now, it is over 8 million. Ladies and gentlemen...I bring you the Power of the Shark Tank!

Bruno François is the co-founder and CEO of Egos Ventures, an innovation lab with projects in mobile application and accessories, as well as the developers of Cycloramic. Bruno came into the Tank seeking $90,000 for a 5% stake in the company.

InvisiPlug Unplugged

By: Pete Troshak
Twitter @Shak74
Website: www.Shak74.com

If you have ever looked at the white power strip your computer is plugged into and wished it wasn't so unsightly, Michael Barzman and Bryan O’Connell have an answer for you. The two entrepreneurs have created InvisiPlug, a line of fashionable power strips that come in three different faux woodgrain patterns designed to be less of an eyesore while meshing better with your wood furniture and hardwood flooring. The strips are priced at $14.99 for the standard model and $24.99 for the deluxe model. The standard item is priced slightly more than the standard white power strip, but is still reasonably competitive. Although the deluxe models were not prominent on the TV broadcast, they might be more in demand and useful due to the addition of two USB ports which can be used to charge most handheld electronics. As discussed by the Sharks, while InvisiPlug is patented, the patent would seemingly be hard to enforce given that their improvement to the original idea of the power strip is mainly aesthetic and not technological.

This pitch is interesting to recap because although Barzman and O’Connell delivered a smooth, competent pitch and made a deal with one of the Sharks, they failed to defend their valuation while leaving out a costly piece of information until late in their pitch.

@ The Wall Doctor

By: Pete Troshak
Twitter: @shak74
Website: www.shak74.com

Entrepreneur Jim Lewis arrived in the Shark Tank wearing a white doctor’s coat, fitting for a man who is a Forensic Pathologist by day and a self-prescribed “Wall-ologist” by night. Lewis brought with him his invention - Wall RX. Wall RX is an innovative solution to the costly and common problem of how to inexpensively and quickly patch a hole in a drywall. After leaving the Shark Tank, Lewis probably realized the one problem he didn't have seem to have a solution for, which was how to navigate a tank full of hungry Sharks and make the most sensible and profitable deal for his invention.