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Shark Tank Success- Still Hard Work Ahead
In October 2012 Taya Geiger was fed up after 12 years as a financial consultant at just the time her neighbor, Leah Tutin, came up with an idea for an baking kit. Putting their heads together they launched their product and today Scratch and Grain Baking Company has its products in over 5,000 stores, and sales are growing 500% per year. On the way the inventors landed on Shark Tank, landed Barbara Corcoran as a mentor, put together an automated production process and survived the loss of a partner, Leah Tutin, who bowed out after four years.
The Concept
Tutin wanted to make cookies with her daughters from scratch, but found it was not much fun and a lot of work. Her solution was a baking kit, with all the ingredients, with just the right amount, packaged in individual color coded bags. At first Geiger was apprehensive “I thought this concept had to be on the market. But I did research and couldn’t find any. But I wasn’t sure about the product.” Geiger was all in though once she tried the kit. “I totally got the concept. It was about making delicious bake goods, but also making it fun and easy. No more baking soda, brown sugar, flour and other ingredients sitting in my cabinets until I was ready to bake, no more measuring cups, measuring spoons and most importantly no more major messes in the kitchen. Quick, fast fun and easy was what the product was all about.”
Starting Efforts
Goal one was to finalize ingredients for four cookie kits, Chocolate Chip, Oatmeal Raisin, Gluten-Free Chocolate Truffle, and Gluten-Free Chewy Peanut Butter. On March 1 2017 the founders started putting kits together in 100 sf of a shared commercial kitchen. They packed and sealed the bags themselves, and on March 17th they had 40 cases ready. “Our original intent was to sell online and develop consumer demand” Geiger explains, “but then on a whim we decided to ask a store cashier what she thought of the product. She loved it, brought in the store manager, and he bought it.” The store manager said he needed a 35% margin and he felt it would sell at $7.99. The resulting wholesale price of $4.50 was exactly the cost of the product. But the founders went with the price, knowing they could get the cost down when they automated their equipment.
Sales Growth – Number of Stores
March 13, 2013 1
September 2014 400
January 2015 600
July 2015 1,300
November 2015 2,400
September 2017 5,000
Geiger and Tutin called on the stores in their hometown area, Portland Oregon, and all they called on took the product. This included chains like Albertsons and Whole Foods. Most grocery stores, and mass merchants, allow local managers to buy and stock local products to see how they do. As organic products were starting to take off, local managers were happy to stock a local organic product to help fill up their organic sections.
With the Portland market saturated, Geiger and Tutin focused on the next big market, Seattle. Geiger explains their big break, “we had success in Seattle with the grocers but our big sale was to Sur La Table, a high end kitchen housewares retailer who also carried a large number of cooking kits. This gave us our first national account.” But Geiger and Tutin were not making any money packaging the kits by hand – they needed to bring in more automated equipment.
The Shark Tank Experience
In August of 2013 Geiger and Tutin decided to email Shark Tank. (see http://abc.go.com/shows/shark-tank/apply for more information about applying). Shark Tank only allows a photo and a few lines to describe the product. Geiger relates that “we sent in a really crazy photo of us breaking up our spatulas with a straight forward sentence explain that we were a kit for people wanting to cook from scratch while having fun, no mess, and no measuring.” They received a call from Shark Tank that the show wanted the product. Shark Tank actually only films in June and September for the next year’s shows and time was tight. Geiger and Tutin filled out all the forms, answered the phone questions and prepared a video audition pitch. Then they received a bombshell, the show was going in a different direction that year.
They put the show aside and kept selling. Then they were contacted again about possibly taping for 2015 shows in 2014 and the producer was very excited. Geiger learned what happened the previous year. “You need to go through many layers to get on Shark Tank, first a lower level scout, then an Associate Producer, a higher level producer and finally the Executive Producer. One Executive Producer didn’t understand our product. She didn’t understand our kit concept, and thought the product was a mix, and not a kit. One of Scratch and Grain Baking Company’s supporters, another Executive Producer at Shark Tank, purchased a sample of the product for their colleague, who loved it and gave the product the green light.
The show was filmed in June of 2014 for airing in January 2015. (See the video at https://youtu.be/mT6rbPsZp98) Barbara Corcoran agreed to be their mentor and offered a $120,000 line of credit in return for 20 % of the equity. A line of credit is a source you can borrow money from when needed, though you typically need to provide details about how you will spend the money. This was straight forward for Geiger and Tutin as they used the money to buy equipment and could document their cash needs. Not all the money was required, and Corcoran’s share of equity was adjusted downward to match the line of credit. In February 2015 Good Morning featured their products on the show. And they were featured again on ABC’s Beyond the Tank in March of 2016 (you can watch it! https://vimeo.com/164346058).
Moving Up
With equipment in place to increase production, as well as make some money, Geiger and Tutin were ready to expand sales. The founders started to court Target, and in July 2015 they started a three SKU test in 500 stores. (Today Scratch and Grain Baking Products are in 1500 Target stores). They had continued to expand grocery stores sales, which now included Hy-Vee, Safeway/Albertsons, Publix, Ralph’s, Fry’s, and select regions of Whole Foods. Geiger and Tutin kept adding to the company’s momentum. A big move in December 2015 came from direct input from their Target buyer. According to Geiger “we stepped outside of the cookie world as we knew it and expanded into other areas of the baking category. We launched three new products: Gluten-Free Honey Cornbread Kit (exclusively for Target), Gluten-Free Cheesecake Brownie Kit and Coffee Cake & Muffin Kit.” Today two out of those three products are the company’s biggest sellers. . In July 2016 the Scratch and Grain Baking Company’s facility and all non-gluten free products received their USDA Organic Certification. The company kept expanding its product line in September 2016 –with the launch of our first CupCake Kit – The Confetti CupCake Kit as well as another exclusive product for Target – an Organic Pumpkin Bar Kit, which launched in their stores nationwide.
Retooling
In December founder Leah Tutin decided to back away from the company. Geiger responded by spending two weeks of every month flying around the country meeting with her customers to kick sales into high gear. Geiger and Tutin had decided early on to do all their sales themselves, bypassing brokers and distributors. As Geiger explains: “we just didn’t feel the brokers could give the same enthusiastic presentation that we give. They carried 20 or more products while we carried just one.” Geiger’s first move was to launch three out of their four current gluten-free SKUs as Certified Organic! Geiger followed that up in June of 2017 – based on the success of the Confetti CupCake Kit, which was the company’s No. 1 seller in a mere three weeks, with a launch of a full line of CupCake Kits: Salted Caramel CupCake, Chocolate CupCake, and a several seasonal varieties including Valentines, Fourth of July, Autumn, and Holiday. For the holiday products Geiger just signed an agreement with Elf on the Shelf to co-brand on select Christmas products. All of these moves are positioning the product line to stand on its, without the intense sales efforts from Geiger. The moves are paying off. The company currently has 12 production and three office workers and sales are growing every day.
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