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Tom Armenti, founder of Fat Shack, found his entrepreneurial spirit in college. While playing online poker, Tom funded his idea of starting a restaurant that would serve everyone’s favorite fattening foods together in one sandwich. Using $5,000 of his winnings and working with his college friend Kevin Gabauer, Tom was able to strike a deal with a bagel shop owner to rent the store from 6 pm – 4 am, including equipment, to create the first Fat Shack.
Fat Shack serves consumer-favorites such as french fries, chicken fingers, mozzarella sticks, onion rings, and jalapeno poppers, all on one sandwich. With a variety of options to choose from on their menu, including their famous triple-stacked burgers, there is a fatty snack for everyone at the Fat Shack. The Sharks love the taste of the products they sample but are concerned with the nutritional value of the product. Tom and Kevin do caution that while their product is delicious, it is intended to be an occasional treat and not eaten for every meal as it is high in calories.
Does this company have what it takes to make a fat deal? #SharkTank #FatShack
— Shark Tank (@ABCSharkTank) May 13, 2019
Fat Shack has grown and expanded to include 11 locations. Nine of those locations are franchise stores. Tom and Kevin would like to partner with a Shark who can help them to grow the franchise. They came to the Shark Tank in hopes of finding that strategic partner who would be willing to invest $250,000 in exchange for a 7.5% equity share. Since inception, their sales are $22 million with $5.7 million of that occurring in the last year. From each franchised store, Tom and Kevin receive, on average, $40,000-$45,000 from royalties.
Although the Sharks are impressed by Fat Shack’s food and business model, they are concerned about the number of franchise stores they would have to open to make money on the deal. Because most of the franchise owners have been people that have worked for Tom in the past, the Sharks think the real growth will come from finding franchisees and owner/operators from the outside. They would make their money back and profit when they exit the deal.
In a rare turn of events, four Sharks are interested in investing. Kevin O’Leary, Robert Herjavec, Daymond John and Mark Cuban all extend offers to Fat Shack. Tom and Kevin decide to counter Mark Cuban and he accepts their counter. Mark agrees to invest$250,000 for a 15% equity share in Fat Shack.
#SharkTank @kevinolearytv pic.twitter.com/kgh5coJ0et
— Shark Tank (@ABCSharkTank) May 13, 2019
Do you think Mark made a wise decision to invest in Fat Shack even though it conflicts with his health food portfolio? Would you dine at Fat Shack? Sound off below to start the conversation!