Shark Tank Gatsby Chocolate Bars: a Sweet Investment for Indulging Results
Gatsby Chocolate sweetened Season 15 episode 1 of Shark Tank straight from the world of confectionery. The tempting Shark Tank Gatsby Chocolate bars are a treat for those who don’t like compromises. This innovative company promised guilt-less indulging in chocolate without the guilt associated with high-calorie sweets. Their pitch emphasized a unique selling point: chocolate with significantly reduced sugar and calories compared to traditional alternatives.
Gatsby Chocolate – Investment Summary:
Amount and equity asked: $500,000 for 5%
Amount and equity received: $250,000 for 20% plus $250,000 loan at 6%
Shark(s) in the deal: Lori Greiner and Mark Cuban
Valuation of the deal: $1,250,000
Season, Episode: 15,1
Table of Contents
The brothers Ryan and Doug Bouton pitched Gatsby Chocolate to the Sharks, hoping to land a delicious deal. Their chocolate is a healthier twist for chocolate lovers. But Gatsby Chocolate isn’t just healthy, it’s delicious too! They focus on high quality and great taste, without sacrificing the healthy benefits that make their chocolate a win for your body.
Gatsby Chocolate Pitch Recap and Insights
The two brothers started their Shark Tank pitch by tempting Mark Cuban, Lori Greiner, Daymond John, Kevin O’Leary, and Candance Nelson with a mouthful of benefits coming from their chocolate.
To be exact, here’s how it started:
Don’t we all love to indulge ourselves in the rich and satisfactory taste of delicious chocolate? But most of these other chocolates out there are loaded with calories, sugar, fat… Well, what if we told you that we created a chocolate that has about half of the calories and up to 75% less sugar than most of the other chocolates out there? Gatsby chocolate!
Ryan and Doug – Shark Tank pitch
Sales and Costs of Production
Sales last year were just over $2.5 M, with most of that done in Q4. The chocolate bars retail for $3.99, sell wholesale for $2.70 and costs about $1.90 to make. That leaves them with about a 35%-40% margin. They are, however, working towards a 50% profit margin, and sales for the year are expected to be right below $2 million.
Fun fact: Dough said that he “romanticized the early days of startups play a little too much” in response to Candace’s question on why they need a Shark.
Even with these sales, they still need help with brand awareness, and they admit to having a national presence with about 6,000 points of distribution, without national awareness of the brand.
Gatsby Chocolate still has no free cash flow. Yet, when Kevin asked how much they lost, Doug said that they lost about $3.5 million last year. This did not please Kevin at all, and even if Doug leveraged the credibility they built from HALO TOP, Kevin wasn’t too happy. Mostly that would be because asking for $500,000 for 5% of the business, aka $10 million valuation, is a lot.
What is Free Cash Flow?
Free cash flow is the money left after they cover all costs like rent, salaries, equipment, or other capital expenditures. It shows how much wiggle room a company has to pay back loans, invest in future growth, or give money to shareholders.
Yet, one missing part of the equation is how much initial investment went into launching Gatsby Chocolate, especially with declining sales and a $3.5 million loss.
Negotiation with the Sharks
Image credits to ABC/Christopher Willard
Daymon was out soon after Kevin’s question about free cash flow and losses.
Lori addressed the labeling right away, mentioning that it wasn’t clear what was inside the package, besides that being chocolate. Moreover, the presence of a martini glass in the name, representing the Y in GATSBY, made her think that it was a liquor-based chocolate.
That said, Lori made an offer. That was half as equity, and half as a short-term loan ($250k/$250k) at 6%, for 20% equity. However, after Doug talked about being open to a higher equity deal for situations where the Shark becomes the face of the product, Lori said: “If that’s what you want, then give me 25%!“
At this point, Kevin makes an offer at $500k for 12% equity. Now, you have to remember that Kevin O’Leary has a wine empire, and he also just opened a restaurant. Wine and chocolate go along really well!
Candace jokingly said that they needed Lori because a man clearly designed the label! She also was worried about the 190 calories because Millennials and Gen-Z’ers might even consider that toxic. And with that, she was out.
The Risky Game…
Image credits ABC/Christopher Willard
The conversation got risky right after Doug said that he was ok with 25% equity for having a celebrity as the face of the brand. Instead of accepting Lori’s offer, he turned towards Mark asking if he could help find the face of the brand. This did not sit well with Lori, who then went back to her initial offer of splitting equity and loaning money.
At this point, Kevin was about to summarize his offer, when Lori and Mark came up with a new deal. And it was quite genius.
They kept the $250,000 in loan and $250,000 for 20% equity, but there is a new clause. When they hit the first $10 million in sales, Lori and Mark get an extra 5% each, and if they get to $20 million in sales, then there is another 5% each. Doug cleverly says that the issue is not at the first $10 million but at the $20 million mark. He prefers that the second trigger is at $50 million to facilitate an exit downstream.
And with that, Mark Cuban and Lori Greiner accept the counter, and Gatsby Chocolate makes a deal with the Sharks.
Who are the Gatsby Chocolate Founders?
Founders’ Story
Doug Bouton is an entrepreneur and co-founder of Halo Top Creamery. He served as the President and COO of HALO TOP, which became one of the best-selling ice creams in the United States. At some point, it even competed and passed Ben & Jerry’s and Haagen-Dazs.
After selling HALO TOP in September 2019, Doug stayed as CEO of Halo Top International and later founded Gatsby Chocolate.
Fun fact: Ryan Bouton and Doug Bouton are the HALO TOP brothers. In 2011, they started an ice cream company that sold in 2019 to Wells Enterprise for a guesstimated $2 billion. Yes, with a B.
Ryan Bouton has also been involved in the food industry, serving as CMO for HALO TOP. Additionally, he has an acting career with credits in “Acts of Revenge”, a movie that came out in 2020.
Given their success, Candace did ask why they went back in after such a successful exit with HALO TOP. Mark Cuban also mentioned how it is easy to become arrogant after one big success, where you think you are invincible.
Doug did mention that startups do have an appealing aura, but I believe that they aimed to replicate a similar disruption of the market within the chocolate industry.
Gatsby Chocolate Bars Product Line
Gatsby Chocolate has successfully introduced a range of chocolates that focus on low-calorie content and diverse flavors. Their variety and specialty items cater to those seeking indulgent yet health-conscious chocolate experiences.
Chocolate Bars and Varieties
Gatsby Chocolate’s product line features an impressive selection of chocolate bars. Each variety aims to provide a satisfying chocolate experience with fewer calories, catering to the health-conscious consumer.
Almond Dark Chocolate: For devotees of rich, intense chocolate
Sea Salt Extra Dark delivers robust flavors.
Cookies and Cream adds variety to their array of flavors.
Fudge Brownie to classic milk chocolate, pioneering a flavor revolution in the low-calorie chocolate market.
And of course, they are all:
Low-Calorie Chocolate: Their chocolate bars are designed to have reduced calorie counts, making them a guilt-free option for chocolate lovers.
Vegan Options: Some bars are vegan-friendly, ensuring those with dietary restrictions also have access to delicious chocolates.
Health and Nutritional Information
Gatsby Chocolate has positioned itself in the market as a health-conscious alternative to traditional chocolate offerings. With a focus on low-calorie and low-sugar options, they cater to consumers looking for indulgence without compromising on health benefits.
Caloric Comparison with Competitors
Gatsby Chocolate offers products that are approximately half the calories of traditional chocolate bars. For instance, their products contain only about 70 calories per serving, which is significantly lower compared to average chocolate bars. Competing brands like Lily’s also offer reduced-calorie chocolates, but Gatsby Chocolate emphasizes their unique formulation that includes ingredients like Allulose and EPG (Epogee), designed to minimize calorie content without sacrificing taste.
Brand
Calories per Serving
Gatsby Chocolate
70
Traditional Chocolate
~200
Sugar and Fat Content Analysis
Gatsby Chocolate’s reduction in sugar content is notable, with up to 75% less sugar than most market offerings. They incorporate Allulose, a low-calorie sweetener, to achieve the sweetness profile expected from chocolate while maintaining a low-sugar product label. Additionally, they use EPG to reduce fat content without altering the mouthfeel of the chocolate. With only 2g of sugar per serving in some of their bars, they provide an option for those monitoring their sugar intake closely. Fiber is also utilized to enhance the nutritional profile and add to the health benefits without compromising taste.
Content Type
Gatsby Chocolate
Traditional Chocolate
Sugar
2-3g per serving
20-25g per serving
Fat
3.5-5g thanks to EPG
Standard amounts
Their approach particularly resonates with health-conscious consumers who are already familiar with products like Halo Top Ice Cream, which similarly revolutionized the ice cream industry by providing low-calorie and low-sugar alternatives. Gatsby Chocolate aims to replicate this success in the chocolate market, delivering an option that indulges taste preferences while being attentive to caloric and sugar consumption.
Market Presence and Sales Channels
Gatsby Chocolate has about 6,000 retail locations across the US. Part of that probably came from the previous success with HALO TOP. Thanks to that, I assume that they were able to leverage current or past contacts and get shelf space.
Retail Partnerships
Walmart: Gatsby Chocolate products are available nationwide in Walmart stores, increasing accessibility to a wide-ranging demographic.
Albertsons, Safeway, and Sprouts: These major grocery chains also feature Gatsby Chocolate, creating a substantial footprint in the grocery sector.
Online Availability
Sales: While Gatsby Chocolate maintains a strong in-store presence, its online sales channels have contributed significantly to its market reach.
Online Stores: Customers can purchase Gatsby Chocolate through various online platforms, ensuring that the product is available even to those who prefer shopping from the comfort of their homes.
Consumer Experience
After appearing on Shark Tank, Gatsby Chocolate received even more attention for providing a guilt-free chocolate experience to health-conscious consumers.
Gatsby Chocolate has quickly become the #1 reviewed chocolate brand in a nationwide retail chain store, indicating significant customer satisfaction and approval. The chocolate bars, which are crafted with 75% less sugar, resonate with health-conscious consumers who seek more mindful chocolate choices. Customer reviews highlight the low-calorie content and the variety of gluten and dairy-free options, which align perfectly with the trending demand for healthier indulgences.
Positive Feedback: Individuals praise the brand for its great taste despite the reduced sugar content, expressing gratification for being able to enjoy chocolate bars without the associated guilt often connected with sugary treats.
Constructive Criticism: Some remarks point towards a desire for even more flavor varieties and accessibility in different retail locations.
Gatsby Chocolate recently (February 2024) signed a sponsorship deal with Haley and Hanna Cavinder. The Cavinder twins are social media and NIL sensations. They are famous as college basketball stars and TikTok influencers.
After one bite, we knew we had to partner with GATSBY Chocolate. This isn’t just a sponsorship to us, but a chance to really partner with and promote a game-changing product that has an opportunity to make a huge difference in people’s lives!
Hanna Cavinder
The Cavinder sisters are the first athletes sign a professional collaboration with Gasby Chocolate. Strategically, this is a great way of showing that the low-sugar, low-calorie Gatsby Chocolate bars are healthier and less sugary than other products on the market.
