The Sharks FIGHT For A Deal With Cupbob! | Shark Tank US | Shark Tank Global

Summary

In this *Shark Tank* episode, entrepreneurs Doc and Chong pitch their innovative business, 'Cup C,' a quick-service Korean BBQ concept. Their model features a fun, energetic dining experience with Korean BBQ served in a cup. Despite initially growing through food trucks, they now have 27 locations and $18.7 million in system-wide sales. The duo shares their humble beginnings, growth story, and commitment to expanding their brand nationwide. After impressive offers and negotiations, they receive a $1 million deal with equity offers, paving the way for further success.

Takeaways

• 😀 The business is a fast-casual Korean BBQ brand called 'Cup C', which offers quick service and customizable spice levels in its dishes.
• 😀 The founders emphasize the growing global popularity of K-pop, K-drama, and K-movies, positioning Korean food as the next big international trend.
• 😀 The business was started using food trucks, which were initially used as a marketing tool, but now they have expanded to 27 brick-and-mortar locations.
• 😀 Despite the challenges posed by COVID-19, the company managed to increase its same-store sales by 9%, largely due to its pivot to takeout and delivery models.
• 😀 The company has grown significantly, from $7 million in sales five years ago to $18.7 million in the trailing 12 months, with expectations for 90% growth this year.
• 😀 The founders have never raised outside capital, instead growing the business organically through cash flow and avoiding external investment offers for years.
• 😀 The founders value the customer experience highly, emphasizing fun, interaction, and a unique, party-like atmosphere in their stores.
• 😀 One of the founders, Doc, has a background in hedge fund investing, which helped him understand business operations and growth potential.
• 😀 The company aims to be the first major Korean national brand in the U.S., with a focus on expanding quickly and gaining national recognition.
• 😀 The Sharks are impressed with the business’s growth, the product’s quality, and the founders' energy and vision, resulting in multiple investment offers, including loans and equity stakes.

Q & A

What is the unique selling proposition of Cup C?

Cup C offers a quick-service Korean BBQ experience, where customers can enjoy Korean BBQ in a convenient cup. The bowls are customizable with varying spice levels and a mix of beef and spicy pork, offering a fun, energetic dining experience.

How did Cup C adapt during the COVID-19 pandemic?

During the pandemic, Cup C pivoted to takeout and delivery only, shutting down dining in its restaurants. Despite the challenges, same-store sales increased by 9%, showing the brand's resilience and ability to adapt to changing circumstances.

What is the current valuation of Cup C, and how much equity is the company offering for $1 million?

Cup C is seeking $1 million for a 3% equity stake, which would value the company at approximately $33.3 million. However, some of the Sharks disagreed with this valuation and offered different terms.

What is the background of the founders, Doc and Chong?

Doc was previously an investor at a major hedge fund before getting involved in Cup C. He is Korean and grew up in the U.S., where he developed a passion for Korean food. Chong, his business partner, is also Korean and has a strong entrepreneurial drive, having come to the U.S. to pursue opportunities.

How many stores does Cup C currently operate?

Cup C operates 27 stores and started as a food truck. The founders plan to expand further, with 10 new stores expected by the end of the year.

What was the revenue growth trajectory for Cup C over the past five years?

Over the past five years, Cup C's revenue has grown steadily, from $7 million to $9 million, with a significant jump to $18.7 million in the last year. The company is expecting to grow by 90% in the current year.

Why did Doc and Chong reject outside investors for 8 years?

Doc and Chong turned down outside investors for eight years because they wanted to grow the business through organic cash flow and believed they could achieve their goal of creating the first national Korean brand without outside capital.

What was the purpose behind the founders’ investment ask of 3% equity for $1 million?

The founders sought $1 million for 3% equity to support the rapid growth of Cup C, which includes opening new stores and expanding their national presence. They believe in the potential of their brand and are focused on scaling effectively.

What are the main reasons the Sharks were interested in investing in Cup C?

The Sharks were drawn to Cup C due to the brand's high growth potential, strong gross margins (75%), and the founders' compelling personal story. The business showed resilience during the pandemic and the product stood out as a fun and innovative take on Korean BBQ.

What offers did the Sharks make, and what deal was ultimately accepted?

The Sharks made various offers, including loans with equity, as well as equity-only deals. Mark Cuban offered $1 million for 7% equity, while Lori Greiner and Barbara Corcoran teamed up to offer a $1 million loan for 5% equity. The founders ultimately accepted the $1 million loan for 5% equity from Lori and Barbara.