- Company: Cinnaholic
- Owners: Shannon and Florian Radke
- Product: Gourmet vegan cinnamon rolls
- Asking Price: $200,000 for 20% equity
- Final Deal: $200,000 for 40% equity
- Sharks Who Took the Bait: Robert Herjavec
- Season/Episode: Season 5, Episode 28
Shannon and Florian Radke knew two heads were better than one, so they pooled their collective talents and came up with a truly sweet idea: gourmet vegan cinnamon rolls, 100% free of dairy, lactose, and eggs. Florian’s background in branding and marketing, combined with Shannon’s background as a gourmet baker, made for a natural collaboration. The company offers a dazzling menu of delectable desserts, with scrumptious flavor combinations like almond-and-raspberry, banana cream pie, and strawberries with cream.
With dreams of franchise expansion on the horizon, they decided to try their luck on Shark Tank back in 2014.
Cinnaholic on Shark Tank: A Quick Recap
Robert’s face looks like a kid in a candy shop in this episode, thanks to Florian and Shannons’ mouth-watering display of custom cinnamon rolls and toppings laid out on display. “You can choose from over 30 different toppings,” says Florian. They’ve prepared a tray of cinnamon rolls for the sharks, each one customized to showcase the brand’s versatile menu. First up, they’ve chosen a caramel banana cream pie for Robert. For Barb Shark, it’s a mocha almond roll. Then Kevin, with a classic old-school roll and strawberries. A coffee cookie dough roll goes to Daymond, and last but not least, an almond raspberry roll goes to Mark.
“Shannon, it’s…incredible,” says Robert, before they can even finish handing out samples.
As you can imagine, these aren’t diet snacks. The typical old school roll contains a whopping 485-500 calories, depending on the size of the roll. But amazingly, Shannon says, that’s half the calories of their competitor. Mark is seen losing himself in a bite of his almond raspberry roll while Shannon and Florian continue pitching their delicious bakery brand.
“We’re here because we need your investment to open a second location and start our cinnamon roll empire,” says Florian.
Their current location, they clarify, is in Berkeley, California, in a cute little brick-and-mortar store that measures just 650 square feet.
Running The Numbers
As the sharks chow down, they question the Cinnaholic team and dig into the burgeoning business’s financial details.
- Total sales at Berkeley location: $260,000
- Net sales: $45,000 or 17%
- Cost of single roll: $5.50
- Revenue streams: Berkeley location, plus a tiny online store to accommodate demand
The sharks can’t quite believe the cinnamon rolls are vegan. They’re too delicious, it seems, to be dairy-free, gluten-free, egg-free and 100% vegan. But somehow, miraculously, they are.
“There’s 50 million people in America with a dairy intolerance,” says Florian. “And another 5 million people with severe food allergies. Most of those people are kids. So we get a lot of moms coming in with special requests for their kids.”
Sharks are curious if they have a long-term plan for bigger sales that involves more than just brick-and-mortar locations, or if multiplying stores is their whole end-game.
“What do I get for $200,000?” Robert wants to know.
“For $200,000 you get another store in San Francisco, and from there we go into franchising.”
Robert notes that the team valued Cinnaholic at $1 million, but can only $45,000 in profit to an investor – which means they’re asking 22 times their pre-tax profit.
“For a cinnamon roll store,” he adds at the end, just to be mean.
Barbara says she’s been spoiled rotten by the success of one of her other food investment ventures, a food truck business called Cousins Lobster that does over $800,000 a year in sales. “Because of that, I’m out,” she says.
Daymond John is up next, and he says that although he’d love to be in this space – and although he’s insanely jealous of Barb Shark’s food truck success – he just doesn’t feel comfortable with their numbers. He’s the second shark to drop out.
“This is so much like Wicked Good Cupcakes in Boston,” says Kevin, spying his opportunity.
“Here comes a bloodsucking offer,” says Daymond.
“A cupcake business very similar to yours decided to change their model from brick-and-mortar to shipping,” says Kevin. And what happened? Their sales skyrocketed from $15,000 to $300,000.
Kevin suggests a similar change to their business model which could allow them to ship packages of six rolls overnight.
Robert is skeptical of the numbers because a $200,000 investment gets poured directly into a second brick-and-mortar location, and then that money’s gone. If it succeeds and you need to expand, you still need to pour more money into the venture. It’s a very expensive proposition, especially with a $1 million valuation that he frankly doesn’t see coming to fruition.
He offers $200,000 but for twice their original equity offer – he wants 40% – and he doesn’t want to open a second location. Instead, he wants to box ’em up real nice and pretty-like, and ship ’em out to hungry cinnaholics all over the country.
Kevin then counter offers with a fairly impressive deal: he’ll give them $200,000 for no equity at all, but he wants $1.20 per unit in royalties, and then down to $0.60 cents after his investment is recouped. These royalties would be collected in perpetuity.
“In perpetuity means forever,” says Robert, eyes gleaming as if to say please don’t take Kevin’s horrible, awful, no-good, very-bad deal.
After a moment to discuss in private, Shannon and Florian return to the stage and accept Robert’s deal.
Final Deal: $200,000 for 40% stake in Cinnaholics.
Where Are They Now?
For Cinnaholic in 2020, business is booming. Cinnaholic has expanded to dozens of locations across the entire United States, with an especially strong presence in the South and along the East Coast. Their headquarters have moved from Berkeley, CA to Atlanta, GA.
The Cinnaholic website offers a dizzying array of frostings, toppings and sweet treat bakery options.
As their website proudly states:
In addition to our signature, fresh-baked cinnamon rolls, our menu features bite-sized Baby Buns, cookies, brownies and raw, edible cookie dough. We proudly serve locally sourced coffee (at most locations), and offer many customizable catering options.
In addition to the standard menu items, Cinnaholic now offers Party Trays, Cinnamon Roll 4-Packs, and Gift Cards. Their entire menu is available to purchase online or at any on of their franchise locations.
In the long and heartbreaking history of Shark Tank, Cinnaholic is one of those truly sweet delicacies – a success story.
Disclaimer: The information provided in this article is strictly informational; INSIGNIA SEO is not affiliated with Cinnaholics, SharkTank, or any of its subsidiaries.