Is The Pizza Cupcake BETTER Than Pizza? | Shark Tank US | Shark Tank Global

Summary

In this Shark Tank episode, Michelle Jimenez and Andrea Machado pitch their innovative pizza snack, the 'Pizza Cupcake,' seeking a $125,000 investment for 5% equity. The New York-based couple aims to revolutionize the frozen pizza market with their gourmet, bite-sized pizzas made from a unique dough recipe. Despite initial skepticism, their product impresses the sharks with its taste and quality. After negotiations, they secure a deal with Lori Greiner for $125,000 in exchange for 12.5% equity and 2.5% in advisory shares, promising a potential partnership with Bantam Bagels and national distribution opportunities.

Takeaways

• 🍕 Michelle Jimenez and Andrea Machado, a married couple from New York City, are seeking a $125,000 investment for 5% of their company, which specializes in pizza cupcakes.
• 🎂 They introduce a new snack concept: pizza cupcakes, which are high-quality gourmet snacks that are easy to serve and made with a unique dough recipe, aiming to revolutionize the frozen pizza snack category.
• 🎈 The pizza cupcakes come in various flavors, with the margarita and pepperoni being their best sellers, and are designed to be enjoyed in more ways and places than traditional pizza slices.
• 👨‍🍳 Andrea, originally from Venice, Italy, has a background as a chef and has worked in renowned kitchens, including Soho House, before moving to New York City.
• 🤝 The couple met through a mutual friend, and their shared passion for pizza led to the creation of their business.
• 📈 They have a clear business plan and have already achieved $344,000 in revenue the previous year, projecting $100,000 in sales for the current year.
• 🛒 Their sales strategy includes direct-to-consumer sales, catering, participation in Smorgasburg (a popular New York City market), and stadium sales, with their first partnership being with Citi Field, home of the New York Mets.
• 🏭 The pizza cupcakes are currently made by hand in a commercial kitchen, but they have a co-packer in place to help scale production and reduce the cost per cupcake from 95 cents to 48 cents.
• 📦 The product is sold in packs, with a 12-pack priced at $24.99 and a shipping cost of $9.99, aiming to find fulfillment centers across the U.S. to improve distribution.
• 💰 Lori Greiner, a shark known for her experience with Bantam Bagels, offers $125,000 for 20% equity, recognizing the potential synergy between her company and the pizza cupcakes business.
• 🔄 After negotiations, the couple counters with a request for $125,000 for 10% equity, highlighting their strategic investors and ongoing discussions with a large distributor for a potential incubator program.

Q & A

Who are Michelle Jimenez and Andrea Machado?

Michelle Jimenez and Andrea Machado are a married couple from New York City who appeared on the show seeking investment for their company.

What are they seeking from the sharks?

They are seeking a $125,000 investment for 5% equity in their company.

What product are they pitching on the show?

They are pitching a product called 'Pizza Cupcakes,' a gourmet, high-quality snack that is a new take on frozen pizza.

What is unique about their Pizza Cupcakes?

The Pizza Cupcakes have a unique cupcake shape and size, making them easy to serve and eat on the go. They also have a trade secret dough recipe that delivers a fluffy texture.

What is the calorie count for one Pizza Cupcake?

The Margarita Pizza Cupcake has 160 calories per cupcake, and the Pepperoni has 170 calories.

What is Andrea's background in relation to the food industry?

Andrea was born and raised in Venice, Italy, and has been working as a chef since he was 16. He also worked in London at a fine Italian restaurant owned by Soho House before moving to New York in 2006.

How did Michelle and Andrea meet?

Michelle and Andrea met through a mutual friend, and their first date was a pizza-making session.

What was the initial reaction to the Pizza Cupcakes from their target demographic?

The initial reaction was very positive, especially from a group of Italian people at an event, who are known to be picky about pizza.

What are their current sales channels?

Their current sales channels include direct-to-consumer sales, catering, Smorgasburg (a popular market in New York City), and stadium sales, specifically at Citi Field, home of the New York Mets.

What is the cost breakdown for one Pizza Cupcake?

The cost to make one Pizza Cupcake is currently $0.95, but they believe they can reduce this cost to $0.48 per cupcake with the help of an investment to start production with a co-packer.

What offer did Lori make to Michelle and Andrea, and what was the final agreement?

Lori initially offered $125,000 for 20% equity. After negotiations, the final agreement was $125,000 for 12.5% equity plus 2.5% in advisory shares.

Outlines

00:00

🍕 Pitching the Pizza Cupcake Innovation

Michelle Jimenez and her husband Andrea Machado introduce themselves as the creators of the pizza cupcake, a gourmet snack aiming to revolutionize the frozen pizza category. They seek a $125,000 investment for 5% of their company. The pizza cupcake is presented as a portable, high-quality alternative to traditional pizza, featuring a unique dough recipe that results in a fluffy texture. The couple shares their personal story, including their backgrounds in the food industry and how their product was well-received by a discerning Italian audience, hinting at the potential for broader success.

05:01

📈 Business Growth and Challenges

The entrepreneurs discuss their business's growth, having made $344,000 in revenue the previous year and projecting $100,000 in sales for the current year. They explain their transition from a restaurant business to an e-commerce model due to COVID-19 and the importance of direct-to-consumer sales. The script highlights the challenges of shipping frozen products and the high cost of production, which they aim to reduce with an investment to scale up production with a co-packer. The entrepreneurs also reveal their current sales channels, including catering, a popular market, and a partnership with Citi Field.

10:03

🤝 Negotiating the Shark Tank Deal

The pitch continues with the entrepreneurs facing the Sharks' scrutiny over their valuation and the practicality of their business model. Lori Greiner sees potential synergy with her Bantam Bagels company and offers $125,000 for a 20% stake, which the founders find too high. After a series of counteroffers and negotiations, they reach an agreement with Lori for $125,000 for 12.5% equity and an additional 2.5% in advisory shares. This deal is sealed with the promise of leveraging Lori's experience and distribution channels to grow the pizza cupcake business.

Keywords

💡Investment

Investment refers to the act of committing money or capital to a business, project, or asset with the expectation of generating income or profit. In the context of the video, Michelle and Andrea are seeking an investment of $125,000 for a 5% stake in their company, which produces pizza cupcakes. This investment would be critical for scaling their business and moving from handmade production to a more efficient co-packing arrangement.

💡Shark Tank

Shark Tank is a reality television show where entrepreneurs pitch their business ideas to a panel of investors, known as 'sharks', in hopes of securing funding for their ventures. The term is used in the script to describe the setting where Michelle and Andrea are presenting their pizza cupcake business to potential investors, aiming to receive financial backing and business mentorship.

💡Pizza Cupcakes

Pizza Cupcakes are a novel take on traditional pizza, presented in a smaller, cupcake-sized format. They are designed to be a gourmet snack that is easy to serve and can be enjoyed in various settings, unlike standard frozen pizzas. In the script, the pizza cupcakes are the main product of the business being pitched to the sharks, with a unique dough recipe and a focus on high-quality ingredients.

💡Valuation

Valuation is the process of determining the economic value of a business or an asset. In the video, the valuation is relevant when discussing the percentage of the company that the entrepreneurs are willing to give up in exchange for the investment they are seeking. The sharks may have different opinions on whether the requested 5% for $125,000 is a fair valuation.

💡Co-packer

A co-packer is a company that manufactures products for other businesses that lack the resources to produce them in-house. In the script, the entrepreneurs mention that they have been working with a co-packer for the last nine months to produce their pizza cupcakes, which allows them to scale up production beyond what they can achieve in their own commercial kitchen.

💡Distribution Channels

Distribution channels refer to the various paths through which products reach consumers. In the video, the pizza cupcake business has three main distribution channels: catering, Smorgasburg (a popular market in New York City), and stadium sales, specifically at Citi Field, home of the New York Mets. These channels are crucial for the business to gain visibility and sales.

💡E-commerce

E-commerce involves conducting business transactions electronically, typically online. The script mentions that the entrepreneurs knew they needed to launch an e-commerce platform to sell their product directly to customers, which is particularly important given the seasonality of their business and the need to reach customers beyond New York City.

💡Calories

Calories are a measure of the energy content of food and are an important consideration for health-conscious consumers. In the video, the entrepreneurs highlight that their pizza cupcakes have a relatively low calorie count, with the margarita flavor containing 160 calories and the pepperoni 170 calories per cupcake, making them an appealing snack option.

💡Brioche

Brioche is a type of bread that is rich and tender, made with a high egg and butter content. In the script, the unique dough recipe for the pizza cupcakes is described as a hybrid between brioche and sourdough, which gives the pizza cupcakes their fluffy texture while maintaining a certain level of crunch.

💡Sourdough

Sourdough is a type of bread made by the fermentation of dough using naturally occurring lactobacilli and yeast. It is characterized by its tangy flavor and chewy texture. The script mentions that the pizza cupcake dough has elements of sourdough, contributing to the unique texture of the product.

💡Advisory Shares

Advisory shares are a form of equity that may come with certain advisory or consulting rights but typically do not include voting rights or dividends. In the negotiation process in the script, the entrepreneurs offer advisory shares in addition to a reduced equity stake to sweeten the deal for the potential investor, Lori.

Highlights

Michelle Jimenez and Andrea Machado pitch their pizza cupcake innovation to the sharks.

They seek a $125,000 investment for 5% equity in their company.

The idea of pizza cupcakes aims to revolutionize the frozen pizza snack category.

Pizza cupcakes are designed to be a gourmet snack that's easy to serve and made with high-quality ingredients.

The cupcake shape and size make them perfect for various occasions and places.

The secret dough recipe delivers a unique fluffy texture.

The Margarita and Pepperoni flavors are highlighted as best-sellers.

The dough is a hybrid between brioche and sourdough, with no butter, only olive oil.

The product is currently sold direct to consumer with plans for e-commerce.

They have partnerships with Citi Field, home of the New York Mets.

The cost to make one cupcake is currently $0.95, aiming to reduce it with investment.

They have a co-packer in place and a plan to scale production.

Sales projections for the year are $100,000 with $77,000 made year to date.

Lori Greiner offers $125,000 for a 20% stake, citing potential synergy with her Bantam Bagels company.

The founders counter with a request for $125,000 for 10%, highlighting their strategic investors and retail opportunities.

Lori agrees to invest $125,000 for 12.5% with an additional 2.5% in advisory shares.

The founders express excitement about scaling their business with Lori as their 'shark'.

Transcripts

next up is an innovation of a favorite

food

[Music]

hi sharks my name is Michelle Jimenez

and this is my husband Andrea Machado

and we're here from New York City we are

seeking 125 000 investment for five

percent of our company whoa sharks who

doesn't love pizza as we all know there

are Pizza Lovers all over the world

Pizza is delicious but when you think of

frozen pizza you don't think of it as an

appetizer or a high quality Gourmet

snack and let's be honest it can be hard

to eat those delicious slices on the go

plus the frozen pizza snacks category

has gone a bit stale but that is until

now sharks meet the pizza cupcakes

it's your birthday

[Music]

that's it get the hell out of here

the pizza cupcake is the next level of

pizza that belongs anywhere and

everywhere a fine Gourmet snack that's

easy to serve and made with high quality

ingredients plus our trade secret dough

recipe delivers a fluffy texture that's

unlike any pizza you've ever had and

because of its cupcake shape and size

the pizza cupcake is perfect for any

occasion and can be enjoyed in even more

ways and places than your traditional

slice so sharks who's ready to take a

bite of the pizza Cupcake Stop talking

let's eat yes if we dig in which one

should we try so those are our two best

sellers the margarita and the pepperoni

so the margarita is the vegetarian

pepperoni as you know it's one of the

wow Americans favorites and the sauce is

yours the sauces our sauce is the

marinara sauce that we made just before

we came in it's really delicious really

good thank you I hate you because I want

to eat these oh is now your regular

pizza dough it's a it's a hybrid it's so

good so like flaky paste there's got to

be a lot of butter in this exactly no

there is no butter what only olive oil

it's a hybrid between a brioche and a

Sourdough so you get the fluffiness of

the brioche and then you get the crunchy

how old is this like it tastes like you

made it this morning that's a frozen

product

New York City yeah

marinara sauce is our favorite really

good Kevin to be silent and just be

eating is amazing good and it's 160

calories for the margarita for one right

yes for one and 170 for the pepperoni

Andrea tell us your background how did

you come up with this magic so um born

and raised in Venice Italy and I work in

the kitchen as a chef since I was 16 and

I moved to London to learn English when

it was 19 years old and in London I

worked for one of the fine Italian

restaurants that is owned by one of the

largest private members Club in the in

the world Soho Soho House yeah and they

gave me the opportunity to move to New

York in 2006 to open one of their

members club and I spent 10 years doing

that until I met Michelle how did you

meet Michelle so we met through a mutual

friend and it was really funny because

he asked me out on a pizza date and I

said Pizza day no man has ever asked me

out for a pizza but the twist was he

wanted to teach me how to make pizza I'm

sure he did and I had to show off yeah

he had to show off and we've been

married for almost two years now and

this is our first baby congratulations

you know I was an event producer and

then I worked with social media

influencers and how did you go from this

incredible product you're making to

actually launching the business walk us

through that actually there was one

event that we did that it was for our

best friends that it was all a group of

Italian people and everybody loved it

and you know Italians are picky so I was

like sort of afraid but they all loved

it and she with her you know background

she was like we need to bring this to my

events and see what the reaction is and

that's how we started how do you sell it

yeah so so right now we sell direct to

consumer but last year our three

distribution channels were catering

Smorgasburg which is New York City's

most popular Market that gave us the

street cred you know to really have that

proof of concept and then we also did

stadium so our first partnership was

with Citi Field home of the New York

Mets and they actually approached us did

you get a commercial kitchen involved

yes we produced in a commercial kitchen

and we also have a co-packer who we've

been working with for the last nine

months Laura you might be familiar with

her co-packer we definitely sought them

out because their biggest client is

Bantam Bagel yes but what will sales be

this year so this year we're projecting

a hundred thousand dollars in sales oh

very nice we did 344 000 in Revenue last

year year to date we've done seventy

seven thousand dollars but we have a

plan and we know how to execute our plan

so prior to covid we were really a

restaurant business and so because of

the seasonality of our business we knew

that we had to launch e-commerce direct

to customer Frozen frog correct yes

direct to customer we we knew that was

in the road map because currently we're

New York City Base our customers are

from all around the country and they

wanted to know where they could find us

I learned something with Wicked Good

Cupcakes yes the first royalty deal in

Shark Tank history just paid its

millionth dollar to me in royalties wow

fantastic but the shipping Journey we

took in the cost of the weight of

cupcake jars made of glass we learned we

had to sell six not three then we went

to a dozen our goal right now is to find

a different fulfillment center who can

service one in the midwest one in the

Northeast and one in the South but what

do you charge Michelle what is this

12-pack is 24.99 and how much is

shipping 9.99 so it's three bucks five

dollars to get 12 credits three bucks a

cupcake what does it cost you to make

these one cupcake is 95 cents at the

moment that's expensive yeah that's

expensive it is expensive because we're

making it by hand in our commercial

kitchens the recipe that we have

allow us to go to 48 cents per cupcake

and that's why we're here for your

investment so we can start production

with our co-packers you're starting up

you haven't even figured out yet you

know how it's all going to come together

in terms of shipping a frozen product I

think you're going to have some

significant challenges there's no

question about it good luck to you I'm

out thank you thank you here's where I'm

at guys um

I'm not even going to get into the

valuation because you could be

optimistic really I just think that

I don't know if I'd be the greatest

partner as soon as I saw this I was like

this is Bantam Bagels in another

category I know other people up here who

have stadiums and a bunch of buddies

with stadiums so yeah with no one

showing up right now but they will

sooner or later right eventually yes so

uh I really wish you all the best but in

the best interest of being a good shark

for you I'm not the best partner up here

I'm out

thank you thank you Damon look I'm

really torn I think you're going to get

a better offer than I probably would

have made you but man you guys are the

real deal I'm out thank you thank you

first off um I think it's amazingly

delicious I mean listen you're from

Venice and you're from New York you guys

know what you're doing when it comes to

Pizza

um

I'm gonna make you an offer

because I think there's really great

Synergy with my Bantam Bagels company so

Banning Bagels as you know uh started

with a stuffed Bagel ball and we got

into Starbucks Nationwide and then we

got into all the major grocery stores

freezer sections so that might be fun

for them to also be involved I'm going

to make you an offer I'm going to offer

you 125

000 but for 20 percent

Mamma Mia

[Music]

three sharks are out Michelle and Andrea

have an offer on the table from Lori for

their business the pizza cupcake but she

wants a bigger slice of the pie than the

five percent they came in offering I'm

gonna offer you 125

000 but for twenty percent

Oh Mamma Mia what we can bring to the

table is worth it I think that we can

help you to Skyrocket

I'll be and no it's not at all it's a

great offer I could have gone higher

actually

I mean you have an offer that's pretty

interesting yes you can travel in our

footsteps of every single distribution

channel that we have

Mark yeah guys I mean look if you want

to stay frozen

working with Bantam is the way to go

here's the thing right

selling Frozen is hard as Lori will tell

you as we've all done getting into space

is really hard getting it to deliver at

a reasonable price is really hard and so

for those Reasons I'm out but

congratulations guys thank you thank you

so much you're left with Lori and yes no

Lori 20 is too high for us I feel like

we've already

um gone through a lot of challenges we

found the co-packer which I think is the

most difficult part would you be willing

to do 125 000 for 10 percent

we we work really hard you really

wouldn't have to a lot of heavy lifting

we have investors on board who are also

really strategic we've been in

conversations with one of the largest

Distributors right now who wants us to

participate in their incubator program

to get us into retail I know the time

and effort and all of that that we will

put in I know you're going to do the

heavy lifting but I know that I will

also be opening so many doors for you if

I can get you into Starbucks Nationwide

that's 9 000 locations and then getting

into Kroger Albertsons it will be so

worth it to you I will not go to 10

percent

um my bottom line my bottom line would

be 15.

[Music]

would you do 125 000 for 12 and a half

percent Lori please you know what I love

you but listen you will love me 15.

I got it you want me to be invested in

you would you be willing to go up to a

hundred fifty thousand dollars for 15

percent

125 15

and I promise you you will not regret it

so Bantam Bagel you invested at a 1.1

million dollar valuation when they were

on the show and we have higher Revenue

than them we've also have figured out

our co-packer situation we also have you

know we're shipping through go Michelle

it's okay to stick to your girl I know

what you guys I completely I completely

understand it but here's something you

don't know you said you were learning

the road right what I know is is that

there's so much more for you to learn

the thing that is invaluable is learning

experience I had no Mentor I had to

figure out everything for myself but I

do know that somebody could come and sit

with me for just one day and I could

save them two years worth of time of

mistakes guys you sound like Shark Tank

you know your numbers I got that but you

also know something else about Shark

Tank when you only have one offer yes

you're skating on really thin ice yes

and now you have to make a decision

no I know

um

can I make one more counter offer you

can do whatever you like would you be

willing to do 125 000 for 12 and a half

percent and then two and a half in

advisory shares

Lori what do you say

you got it yeah

congratulations guys shark hug

congratulations thank you thank you very

much thank you so much make sure my

pizza is at my house by this weekend

Arriva their cheek Pizza Guys

we're living that American dream where

we have our family business we have our

Dream shark on our team and we can just

really start scaling and you know having

pizza cupcakes as a household brand

wait you're not subscribed to the Shark

Tank Youtube channel well then for that

reason I'm out