It may have only been a few years ago that the founders of Kodiak Cakes walked into the Shark Tank to pitch their product, but the company has been building for quite some time. The cake mix is based on a family recipe, using all whole grains, unlike many competitors on the market.
The Red Wagon has become an iconic image in the Kodiak family. This is because Penny Clark, the creator of the Kodiak Cakes mix, sent her 8-year-old son out in 1982 around the neighborhood to sell some of her mix to neighbors. He loaded up his red wagon full of bags of her mix and embarked on his sales mission. When he returned with an empty wagon, the family knew it meant something. This is where the company was truly born.
The company has grown significantly over the years, but it remains family-owned. Their small business vibe has allowed them to stay competitive and continue achieving success. They may be making products for people all across the country, but they still retain the same attitude toward quality and care as when they were just selling to neighbors. That attitude is what brought them success in the first place, so they’d rather not mess with it.
On the ‘Our Story’ page of their website, Joel Clark describes that his mom was pretty ahead of the curve in terms of wanting to provide healthy, whole-food ingredients. Where many pancakes are made from white flour and sugar, Kodiak Cakes offer some health benefits thanks to the whole grains and whole oats. It’s a health-conscious way to enjoy a treat like a waffle or a pancake.
Many of their customers are millennials who love Kodiak Cake’s hugely popular Protein Mix. Their Protein Mix offers more protein than the standard mix, and it is their best-selling product. People want more protein in their diets and to have better diets overall. However, people don’t want to completely sacrifice everything they like to eat in the name of a diet. What Kodiak offers is an excellent solution to that problem.
Kodiak Cakes on Shark Tank
Shark Tank Season 5 Episode 22
Joel Clark and Cameron Smith approached the Sharks with a nicely executed pitch, describing the back story behind Kodiak Cakes and why they thought it could be such a competitive product and a household name.
The business owners were seeking a $500,000 investment for a 10% stake in the company. They described the appeal of the product and why it would be worth the investment. The whole grains and no added fats or sugars combined with people being more health-conscious is a great selling point. People are looking for ways to enjoy treats without feeling too guilty about what is going into their bodies.
The company also offers a line of fruit syrups. When the Sharks are given some samples, they all love the pancakes and syrups.
The company, as they stood before the Sharks, were on track to do $5 million in sales that year. The pancake mix costs about $1.50 to make, and they sell the boxes of the mix for about $3. The $3 price tag makes it a lot more expensive than the competitors, but Joel and Cameron explain that people are willing to pay for quality and health.
They need the $500,000 to pay slotting fees. They want to invest the money to get their product on more shelves in even more supermarkets.
Kevin starts by saying that he believes they are overvaluing themselves. He says that he isn’t going to be making an offer, but his hypothetical offer would be something like $500k for 50% equity in the company. The same amount they were seeking but for an additional 40% more stake in the company that they are willing to give. Robert steps in and makes a $500k deal for 35% equity.
The Kodiak owners consider the offers but don’t like what they are hearing. Barbara then makes her offer: half of what they wanted, $250k for 20% in the company, and she wants another Shark to come on board with her. Surprisingly, Kevin agrees to be part of the deal.
Joel and Cameron consider it, but they ultimately decide to leave the deal on the table. The only $500k offer was going to mean giving up way too much equity. The other offer was only half of what they were looking for while still giving up double the equity they had in mind. They end up thanking the Sharks for their time and leaving without a deal.
Life After Shark Tank
Companies that don’t get a deal on Shark Tank typically still see a massive boom in profits. Kodiak Cakes is no exception. They saw their sales double within a year after their appearance on the show.
If you are interested in seeing how the company is doing today, just go to your local supermarket and walk through the pancake aisle. It is almost a guarantee that you’ll see Kodiak Cakes. It seems like all they needed was the exposure. The product is good enough that people will continue to go back and buy it when they run out. The added protein makes this product unique compared to any of its competitors.
Joel and Cameron have a great product on their hands. The sales have continued to improve during the years after Shark Tank. Naturally, things have plateaued to an extent, but they are several times more valuable than when they appeared on the show. The product is available at most supermarkets nationwide.
Disclaimer: The information provided in this article is strictly informational; INSIGNIA SEO is not affiliated with Kodiak Cakes, SharkTank, or any of its subsidiaries.