Gatsby Chocolate, founded by brothers Doug and Ryan Bouton, entered Shark Tank with a mission to shake up the chocolate industry. They wanted to offer a healthier option, low-calorie, low-sugar chocolate that still tasted indulgent.
As the successful founder of Halo Top Ice Cream, Doug was confident they could make Gatsby Chocolate the sweets market leader. With Doug Bouton, co-founder of Halo Top, leading the way, Gatsby Chocolate set out to revolutionize the chocolate market.
But the big question is, what happened after their Shark Tank appearance? Did the low-calorie, guilt-free chocolate take off as Halo Top did in the ice cream world? Or did the business hit bumps along the way?
Healthier Chocolate Without Compromise
When Doug and Ryan stepped into the Shark Tank, they immediately highlighted Gatsby Chocolate’s appeal. “We created a chocolate that has about half the calories and up to 75% less sugar than most of the other chocolates out there,” Doug explained. More than that Gatsby doesn’t have a bad aftertaste even though they use artificial sweeteners.
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They wanted Gatsby to become the “Halo Top of Chocolate,” targeting health-conscious consumers who still craved a sweet treat.
“This Fudge brownie is really good wow – Lori Grenier”
At the time, Gatsby Chocolate was already being sold in major retailers like Walmart, Safeway, Albertsons, and Sprouts, with over 6,000 distribution points.
However, Doug and Ryan admitted that brand recognition was lagging while their distribution was strong. As Doug put it, “We have national distribution without national awareness—that’s the problem.”
Numbers Change the Shark’s Minds
Gatsby Chocolate had sold $2.5 million worth of products in the previous year, with most of those sales coming in the fourth quarter. Their product retailed for $3.99, wholesaled for $2.70, and cost $1.90 to make.
This left them with a 35%-40% profit margin, but they were aiming to push that margin past 50%. However, the company was still facing financial challenges, having lost $3.5 million in the previous year and lacking cash flow.
The Sharks raised concerns about their financial situation. Kevin O’Leary questioned the company’s valuation of $10 million, considering the lack of profit.
“So $500,000 for 5% PES a $10 million valuation sales are 2 million correct with no free cash flow you see any problem with that uh in context”
While Daymond John was impressed by the product, he ultimately declined to invest, stating, “I’d be calling you for advice, not the other way around.”
Lori and Mark Joins to make an offer
Lori Greiner saw potential in Gatsby Chocolate and was the first to make an offer. She proposed $250,000 for 20% equity, along with a $250,000 loan at 6% interest. She also promised to help redesign their packaging and guide them through their marketing efforts, stating, “I’ll be in it to win it with you.”
Kevin O’Leary also made an offer, proposing $500,000 in venture debt for 12% equity. Candace Nelson, the guest Shark, praised the taste but didn’t feel connected to the brand and ultimately passed on the opportunity.
Before exiting, she suggested the brothers consider partnering with Lori to strengthen their brand.
@candacenelson I can’t wait to see what @Lori Greiner does with @Gatsby Chocolate ✨🍫 #sharktank #gatsbychocolate #lorigreiner #entrepreneur #femalefounder #femaleinvestor #candacenelson ♬ Paint The Town Red (Instrumental) – Doja Cat
After some discussion, Lori and Mark Cuban teamed up to offer $500,000, split equally between equity and a loan, for 20% of the company. They also added a bonus: if Gatsby Chocolate hit $10 million in sales, their equity would increase to 30%, and if they reached $20 million, it would jump to 40%.
Doug negotiated to delay the final increase in equity to 40% until sales hit $50 million, and the Sharks agreed.
After the Shark Tank
Following their appearance on Shark Tank, Gatsby Chocolate saw a surge in interest, especially on social media. Although they do not sell their products online, their website and social media traffic spiked in the days after the episode aired. As Ryan shared in an interview, “We got a large surge in web and social media traffic that lasted for about 3 days.”
Ryan also mentioned that while the deal with Lori and Mark had not been finalized, it was moving in a positive direction. “We’ve had weekly conversations with Mark and Lori, and the deal is almost done now,” he explained.
Mark had already mentioned Gatsby Chocolate on TV and social media, helping to increase awareness. Both Sharks were actively providing input on branding and marketing.
Today, Gatsby Chocolate is available in Walmart stores nationwide and several Sprouts locations. They have also introduced promotions like “buy 2, get 1 free” at Walmart, encouraging more consumers to try their product.
The Future of Gatsby Chocolate
With two experienced Sharks backing them, Gatsby Chocolate is on track to becoming a major player in the healthier sweets market. Doug and Ryan’s goal of making Gatsby the “Halo Top of Chocolate” seems closer to reality.
The deal with Lori and Mark provided the support they needed to overcome their challenges with brand awareness and growth. As of 2024, Gatsby Chocolate has a net worth of $3 million.
“Without this deal, I don’t know if Gatsby Chocolate would have existed beyond this year.”
With strong retail partnerships and the guidance of its new investors, Gatsby Chocolate’s future looks bright as it continues to grow.
Featured Image Credit @ CNBC