Family-Run Spaghetti Operation May Need To Split | Shark Tank AUS

first to face the Sharks denied a pair of Perth boys with a saucy proposition we are so excited about going out there we want to see Tommy Hsu go on every street corner in Australia all we need is the right shark to take us down hi guys I'm Nathan and this is my brother-in-law Joel hello we own Tommy Sugo spaghetti in espresso we're asking for an investment of three hundred and fifty thousand for 15% share equity Joel's gonna get started cook up a quick meal sample for you guys to try at the end Tommy so ago we have a fairly simple strategy for our customers they come in they'll order a pasta they pick a sauce and then they choose their sides we set up our first store in Western Australia so we've been operational for eight months now and we are on target to turn over seven hundred and twelve thousand in our first twelve months and we're servicing about 250 customers a day I guess our major point of difference with our product apart from the fact that it absolutely tastes fantastic is the fact that we can control the supply chain our father-in-law is Italian and he's been making pasta for a long time he produces all of the food in a automated commercial kitchen the big picture we would like to try and achieve a hundred stores in the next five years and look at a potential sale at the end of that to a major food group the other thing about our business is we are incredibly fast we can produce from order a meal within one to six minutes and that way because we cook it fresh we maintain the integrity of the product so I'm gonna hand over to Joel and he's gonna give you some taste of what we do what I've actually cooked up is our fresh egg linguine pasta I'm just serving it without Tommy's Sugo pesto and we've also got our arancini balls which is a traditional Sicilian Street food a lot of people call them out the amazeballs that's how amazing they are so these are ready to go now as well I'll serve these guys up and I'll bring them over for you guys to have a try then I hope you enjoy while you're serving can I ask where where your name came from yes yeah we deliberated on that for a very long time Tommy is slang for tomato and so you go an Italian this sauce so it kind of reflects what we do it's its tomato sauce yeah we do that's my sauce in an Italian Australian sort of way of saying it so you give us a top line for one store seven hundred four thousand bucks what's the bottom line bottom line is we're netting about a hundred thousand fourteen percent [Music] tasty delicious by the way arancini balls amazing they are out there very nice but one love it hot tastes pretty good I think the pastor was particularly good how much capital have you put into the business yourselves how much cash have you put into the business at one hundred and twenty thousand five hundred and twenty thousand dollars and some of that was in the acquisition inside can I ask that 712 revenue number and the hundred thousand dollar profit you must have extrapolated that number you that's just a so is that is that a mature number is that a hopeful number or a so that's quite realistic realistic it's actually we've been a bit conservative you know in with those numbers you think a store could do more than that if it was optimized and we've got a growth rate of about twelve percent per month currently so this is this for the worldwide rights or Australian right so we're talking about Australia I say you hate something overseas then do you not at the moment that we're working on it but we're not being offered that what we would suggest is that we would start off with Australia yes I would just do the whole thing you don't spit it up because it's but focus it's just you just wouldn't even do that let's do it that way then yeah for the valuation you got a 2.1 million dollar valuation look way 303 sorry yeah that's right what are the investors getting for that what's what are they buying into getting us yeah and you're getting a part of the 15% share of the existing business and the cash flow tell us about your father-in-law so he owns runs the the main kitchen correct yeah is that a part of the offering the deal is that separate and that's separate we I guess we get the all the benefits of that without having to invest into it he's got a very good commercial setup which means that he supplies quite large customers which means that as we roll the stores out we'll have a very good supply chain what does that do to your costs well yeah other in law probably drives a very hard bargain so we believe we're getting a good deal and I think that reflects in our net profit right does he I only make pasture for you or for others yeah he has other commercial customers as I said how much of your business is his business so to speak would be a small component of that what small can be 50% or small can be 1% it would at this stage would say we're close to the 1% okay so he's got a big business yes unreasonably scared this is a fairly nepotistic business lots of family involved I mean to me there's a family contract that's that's a mild warning sign to be honest at this stage that's working really well say can you break that agreement if need be so if he starts supplying bad bad produce what happens first of all he's Sicilian and that's against the grain but should sure that scenario ever happened we I mean we're fairly involved in the you can you can go to another provider we another supply director we could yet the concern and the risk is relying on one supplier without having the ability to go sorry you're not working and still having a Christmas dinner that actually is not uncomfortable have you given that some thought with regard to you know never do business with a family they say yeah it certainly has it's a double set double-edged sword so look I think there's there's always ways to handle that Nathan Joe I'm ready to make a decision so I'll pile in here the food's great and your enthusiasm and your innovation is is great and you know I get the originality of the supply chain but I don't see the right barriers to entry for me as an investor I'm not even gonna get into valuation but for that reason I'm out on that I'll pick up and day away so if you want you're after 23 times profit projected profit 23 times the projected profit well you wrote a 2.3 million dollar valuation on a hundred and something thousand in profit right hundred thousand that's about 23 times okay when you say that out loud it's it's an interesting statement right I'm actually deeply concerned about the family connection I think that can be limiting I love the food but at this point of time I'm gonna on a jump out but good luck it is a very clouded market at the drop of the Hat anything can happen as a result I'm out my first girlfriend after school was Sicilian I understand what having a Sicilian father and although we weren't married I understand what that's like what if for some strange reason your two beautiful wives decided that they wanted to upgrade and all of a sudden you two guys are no longer the sons-in-law you're the ex sons-in-law you've got a lot of eggs in a very important basket there and there's definitely a risk involved there so for that reason only uh now [Music] the the valuation is is just too high you know 2.3 million dollars you're dreaming um gotta say that dreams hard oh oh you do you do but the thing I do like about you guys I truly believe because I'm sitting here and coached you that you're coachable we're a long way away from the $350,000 for this phenomenal business but I do want to play with you I tell you what I do you deal I'm going to give you your 350,000 and I'm gonna break it into one hundred fifty thousand dollars in equity and a two hundred thousand dollar line which will give us five more stores where you'll put on the ground like that for that I want 51% you know what I can bring to this business so you're valuing the business at 300,000 or less because you've got control but that's what it's worth that's all it's worth right now actually in genuinely we're only talking let's put in perspective you're valuing it on big plans but the reality is you're one store that hasn't even had 12 months with a tray and in fact that's all you've got why I think that I'd like to do it with you is because I think I could work with you now you know why this is called the shark tank yeah I know you may not think it but it is a very very generous deal you know to us it's it is about the person we're working with more than more than so much the money as well would you and obviously that's a large jump from from our initial conversation but saying that I think what what about if we we went into it together side by side and we would have a completely even split 50% we would still learn from you and be open to what you say so I don't think there would be an issue with if you think one thing that we would want to go the opposite way but I think we'd probably can consider and be quite happy with a 50% 50/50 share you [Music] congratulations by wrecking that hundred stores maybe a bit of an under estimate perfect partner that's that's a great deal you've done right do we get free iron training bullets just where maybe a friends [Music] [Music] [Music]

Channel: Shark Tank Australia

Views: 563,128

Keywords: best shark tank ideas, business, mark cuban, millionaire, most successful shark tank pitches, rejected shark tank pitches that became successful, rejected shark tank, shark tank pitches, shark tank show, shark tank success, shark tank, watchmojo, worst shark tank pitches, most successful shark tank businesses, best shark tank pitches, full episode, shark tank full episode, shark tank 2020, tommy sugo, authentic sicilian recipes, authentic sicilian pizza, pasta shark tank

Id: 3i6CNSMfVSg

Length: 13min 15sec (795 seconds)

Published: Wed Jul 15 2020