Plated before Shark Tank
Plated is a food delivery service founded by Harvard alumni Nick Taranto and Josh Hix that allows the customer to cook their own healthy meal. They came up with the idea at Harvard Business School as they wanted to eat healthy and fit cooking into their lifestyle, but had little free time. Knowing that others had the same problem, their goal was to get as many people cooking as possible so they started the business in Nick’s kitchen.
They began the idea by offering easy to make recipes from well-known chefs. With a business background, they knew marketing was essential for brand awareness and used social media to gain followers. Plated expanded quickly in the first couple months and Nick and Josh decided to open warehouses in the east-coast to keep up with demand. Their rapid growth and proven business model allowed them to raise capital from investors at a fairly high valuation for a new company. Needing more capital to continue expansion and looking for strategic help, they applied to be on Shark Tank and were invited for Season Five.
Plated on Shark Tank
Nick and Josh entered the Tank seeking $500,000 for 4% of their company. They gave a background of how people love to eat healthy, but they learned getting good food on the table was expensive, time-consuming, and difficult. They gave a background about how their service, Plated, delivers the ingredients straight to the customer along with recipe cards so consumers can cook a healthy dish themselves.
Lori was quick to question the concept because a person could hire someone to go buy food from the grocery store and deliver it to their home. Plated pointed out that the consumer would still have to find the recipe and figure out what they want to eat. Although concerned, the Sharks wanted to know the numbers and Nick pointed out that a plate costs $10 and that a customer has to order a minimum of $40. Robert was wondering what the margins were because he knew grocery stores had awful margins. Plated discussed that spoilage and overhead is why grocery stores face problems, but how their business model avoids this because they only buy what they need and throw away less than 1% of food.
Robert was now interested in how the business would expand and Josh stated they would have warehouses across the U.S. and they had two active right now. Plated then discussed how they are growing rapidly every month as their brand is becoming well-known and to date they had raised $3,000,000 at a $9,500,000 post-money valuation. Although all the Sharks saw the potential, Robert went back to questioning the idea and felt people would not order something they have to cook. Josh and Nick did a good job at backing their business model, however, stating “cooking is believing” and when customers use the service, they come back. However, Robert did not see himself using the product and went out. Lori had the same concern as Robert and felt people who cook did not need this service, but Barbara and Mark pointed out that they are not aiming to sell to someone who already cooks, they are aiming towards people who want to eat healthy, but don’t know how. However, Lori did not see how their customers would have the time to cook and went out as well.
Kevin discussed the valuation and felt that he could do the whole thing for $2,000,000. Nick and Josh told Kevin that they would beat him to it if he tried and that Kevin would never find someone like them. Despite this, Kevin went out. Barbara asked who their biggest competitor was and Nick mentioned take-out. This concerned Barbara because take-out has the advantage of getting food to customers immediately whereas consumers would have to wait for Plated to deliver their food. Because of this, Barbara went out. Mark was left and stated that he would not be a customer. However, he was interested in investing, but wanted to know how they would grow the business. Josh stated they had a subscription service that was increasing and that because customers continue to use the product, they did not need a lot of customers to make this a giant business. Impressed in Nick and Josh, Mark offered them the $500,000 for 5.6%, but wanted advisory shares. Nick and Josh thought about going outside to discuss the deal. Mark pointed out, however, they he was basically offering them what they wanted and so there was nothing to discuss. After a brief conversation inside, Josh and Nick accepted the deal and Mark stated he knew he invested in some smart people with a decent idea.
Plated Now in 2018 – After Shark Tank Update
Plated has had a unique post Shark Tank experience. Originally, the deal with Mark did not close because Plated felt the value of their company went up after Shark Tank and wanted a higher valuation then what Mark offered. Mark, however, was not interested in changing his deal. Despite the deal not closing, Plated continued to expand just as they mentioned on Shark Tank and opened multiple new locations across the United States. However, to continue this growth, they chose to invest all their profits back into the business and because of this, they needed an investment.
Nick ran into Kevin and told him how the deal with Mark did not close. However, he also impressed Kevin by showing him the growth they had since airing on Shark Tank and how their business model was successful. He then asked Kevin if he wanted to invest now. After thinking about it for a few days, Kevin decided to invest although the amount of money and equity was never disclosed. Kevin ended up visiting Nick and Josh at the Plated headquarters where they demonstrated some issues they were facing with expansion such as someone coming in and stealing $100,000 worth of food. They were also opening up a new warehouse. Kevin felt Nick and Josh had not done a good job at executing the logistics which was essential to their business model and recommended that Nick and Josh fly down to the new Chicago Warehouse opening to assure everything goes well.
With a little advice from Kevin and Plated’s hard-work, they were able to successfully open their new warehouse. Since then, Kevin mentioned they also faced other logistic issues that he wish they knew about before they made decisions, but that they got through those as well and were going to do nearly $100 million in sales in the upcoming year! Plated now has over 200,000 followers on Facebook and constantly posts the upcoming new dishes to keep their customers interested. The only concerns Plated has encountered include some competitors with a similar business model who have grown larger than them and all of these businesses have some issues with customer service. Despite this, Plated has shown that you do not need a unique idea with a patent to create a $100 million business if you have the skills and dedication behind it. There is no doubt that Kevin is happy with the investment decision he made after the show as Plated continues to expand.