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Oregon mothers Leah Tutin and Taya Geiger pitched their cookie kit business on Shark Tank season 6 episode 7, seeking $150,000 for 20% equity. Their company, Scratch and Grain Baking Company, reported $52,000 in sales across 14 months with distribution in 200 Whole Foods stores.
The kits retailed between $7-12 and produced 12 cookies each. During the pitch, they revealed production costs of $3.89 per unit. After analyzing these numbers, Kevin O'Leary delivered his assessment.
"Let me make a statement here just. Unless you get the production down to $1.70, you'll go out of business. I'm sorry, we can cry all we want but that's the truth, okay. So you, I'm sure there's a way for you to do that. I don't know what it is right now but you're going to have to get there pretty quickly or you're going to zero. Good luck to you, I'm out," O'Leary stated before exiting.
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The Shark Tank company closed operations in August 2021, making his prediction accurate.
Shark Tank investor Kevin O’Leary turns down Scratch and Grain Baking Company’s $150,000 ask
Scratch and Grain Baking Company created cookie kits with pre-measured ingredients in separate pouches. Their product line featured standard flavors like chocolate chip and oatmeal raisin along with gluten-free options.
Each kit contained organic components where possible and aimed to simplify home baking by eliminating measurement steps. The Shark Tank company founders packaged all ingredients by hand, which significantly raised their production expenses.
The financial breakdown showed production costs at $3.89 per unit. This high cost stemmed from manual ingredient measuring and packaging processes. With retail prices set between $7-12, the margins proved exceptionally tight after factoring in distributor fees and retailer markups. The Shark Tank company needed an approximate 56% reduction in production costs to reach O'Leary's suggested $1.70 target.
The existing cost structure left minimal room for scaling operations or absorbing market fluctuations. Their current sales averaged under $4,000 monthly despite the presence in hundreds of retail locations, indicating serious issues with either product movement or reorder rates.
Sharks' reactions
Each Shark Tank investor expressed distinct concerns about the business model. Mark Cuban quickly declared himself "out" after reviewing the numbers. Lori Greiner followed, citing heavy competition in the baking market as her reason for not investing.
The atmosphere shifted when Robert Herjavec offered $150,000 for 40% equity. This proposal sparked interest from Barbara Corcoran, who countered with a different structure. She offered a $150,000 line of credit while asking for 20% equity. Barbara's deal maintained the founders' preferred equity position.
In the end, the founders chose Barbara's proposal.
Post-show developments
The filming experience proved intense for the founders. Taya went into labor just 20 hours after recording their Shark Tank segment, delivering her baby four weeks early. After the episode aired, Barbara Corcoran actively supported the business by appearing with Leah and Taya at the New York Food Show. Their retail presence expanded and sales climbed to $400,000, marking significant growth from their pre-show performance.
The founders refined their production methods and explored ways to reduce costs while maintaining product quality. Despite initial momentum, operational challenges mounted. The company struggled with increasing cash flow demands as orders grew. Their equipment started showing signs of wear, requiring costly maintenance and repairs.
The manual packaging process continued straining resources and limiting production efficiency. The business attempted various strategies to overcome these obstacles but faced persistent difficulties in reducing production costs to sustainable levels. By August 2021, approximately six years after their Shark Tank appearance, Scratch and Grain Baking Company ceased all operations.
Shark Tank season 16 episode 11 is set to air on February 7, 2025, on ABC network.
