Entrepreneur and third-generation butcher, Dave Alwan sells gourmet meat products. Will he earn a deal on
Shark Tank Echo Valley Meats Update
- Entrepreneur: Dave Alwan
- Business: Gourmet meats
- Ask: $300,000 for 20% equity
- Result: No deal
- Shark: None
Dave presented the sharks with a plate of beef tenderloin, hickory smoked brisket, ham, and an award-winning summer sausage made by his company, Echo Valley Meats. The sharks found the samples delicious, but it wouldn’t be long before Mark Cuban asked to dive into the business figures.
The company had sold $1.25 million the previous year, which impressed the sharks. Dave’s sales came via his retail shop, catering, and a mail order business which he was seeking to expand. Robert Herjavec asked how Dave was bringing in new customers, and Dave said it was all word-of-mouth.
Robert then asked how Echo Valley Meats stacked up in terms of price point and quality. Dave said his product was of better quality, and sold 42% cheaper than his immediate competitors. Daymond John asked, if that’s the case, what are his margins like. Dave said they range from 26% to 28%, across the board.
Kevin O’Leary asked how much profit Dave saw from the $1.25 gross sales, learning that Dave netted a meager $20,000 after all expenses were paid, including a salary for himself. Robert wondered why. Dave explained that he poured a lot of money into one-time purchases, like his sausage stuffer machine and smokehouse.
Robert then asked Dave to ignore the one-time upfront costs, and assume he sold $1.25 million again in the current year. How much would his profit be then? Dave estimated a paltry $50,000, claiming that he wouldn’t enjoy heftier profits until surpassing the $3 million sales mark.
Robert asked what Dave planned to use the investment for, and Dave said he would spend it on marketing and expanding e-commerce operations. Kevin asked Dave if he knew what his customer acquisition cost was, but Dave had no clue.
This rubbed Mr. Wonderful the wrong way. He accused Dave of asking for an investment so he could experiment with e-commerce, using someone else’s money. Dave argued that he had large orders from repeat customers, so he didn’t feel there was a lot of risk to his approach.
Robert disagreed, and pointed out that another challenge was that Echo Valley Meats was not widely known in the industry. He said that he regularly purchased packages as corporate gifts. He became aware of other players in the space because they hustled to get their information to Robert. Dave had not done that, leaving him unknown outside of his humble hometown of Peoria, Illinois.
Daymond agreed that it seemed like Dave was asking to use someone else’s money to go up against the “big boys.” Lori Greiner said that the established companies all charged slightly more than Echo Valley Meats, but perhaps there was a reason.
Dave said his competitors offered less product at higher prices, which Robert pointed out may be his main advantage. However, Mark jumped in to disagree, stating it didn’t matter because Echo Valley Meats was barely profitable following the current model.
Kevin then concluded that the reason for his competitors selling the same, or less, product at a higher price was to absorb the customer acquisition cost. Dave disagreed and posed a hypothetical, stating if he were to sell $5 million worth of product at his current 28% margin, the sharks would see a 100% return on investment just like that. Robert and Mark simultaneously dismissed the hypothetical, as suddenly selling $5 million was a massive spike compared to Dave’s current figures.
Well-fed but fed up, Mark decided it was time to be done. He applauded Dave for having a great product and acknowledged the upside of the plan he had in mind. However, Mark found Dave unprepared, as he didn’t have answers for important questions. For this reason, he was out.
Robert too found Dave unprepared, and also felt he was assuming his customers would continue to show loyalty year after year without a sound plan for reliable growth in place. He also took issue with Dave’s plan, so for this reason he went out.
Kevin agreed with Robert. He felt the product was “spectacular,” but he couldn’t call Dave’s plan “a bad plan” because there was “no plan.” Kevin saw no strategy, no opportunity, and was out.
Daymond kept it short and sweet. He said he was avoiding red meat, and that his kids were vegan. For these reasons, he didn’t want to be in the red meat business, and so he was out.
Lori, last in the tank, said she found the product amazing, but she felt that Dave was undertaking an exceedingly difficult task. With that, she was out. Did Dave succeed in spite of the shark’s passing on his pitch? Keep reading our Echo Valley Meats update to find out!
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Andrew Smith is the founder and owner of Shark Tank Recap. He is a longtime Shark Tank fan that has been watching it for years and has seen every episode multiple times. His friends know him as the Shark Tank expert, because he can answer any question about the show! His favorite Shark Tank products are Bertello's pizza oven and Bug Bite Thing!