The exchange for a 15% stake in the company for the funds is higher than the duo’s original pitch of $200,000 for 10%, and is a bit of a double-edged sword as a convertible note that will convert to equity only if the company hits $1.8m in online sales – otherwise it will stay as debt against the business.
By making the offer, Rodriguez validated the team’s idea that consumers who are fed up with soggy sandwiches will flock to its novel dehydrated “slices” of ketchup, sriracha and other condiments made with all natural, clean-label ingredients as a way to pack flavor without excess moisture. But by conditioning the offer as a convertible note he also hedges against warnings from other sharks on the segment who said they doubted the company could sell $1.8m in sales in an online environment where consumers could not easily sample the product before purchasing it.
Despite the offer’s contingencies and that it was more dilutive than the Williams’ opening ask, Emily Williams said on the show that she has no regrets. She added to FoodNavigator-USA that the deal was “great,” and she and Cole are eager to work with Rodriguez, who she described as “kind,” “really excited about the product,” and having lit up when he heard their pitch.
Ramping up for production
Rodriguez’s $200,000 investment will allow the Williams’ to invest in a new manufacturing process that will automate production of its dehydrated ‘slices’ of condiments – allowing the company, which officially launched Jan. 15, to “make more slices and more consistent, better slices as we grow,” Emily Williams said.
Being able to quickly produce slices and fill online orders also will allow the company to fully leverage the brand building potential of appearing on a national primetime television show that consumers trust to help them discover new brands and products.
“Part of our Shark Tank strategy, quite honestly, was to be able to tell our story in an authentic way and to a large audience, which I think will really help drive exposure,” Emily Williams said. “From there, we’ll continue with paid advertising, digital ads, Facebook and Instagram, the usual suspects to drive interest.”
The real powerhouse in driving long-term consumer engagement, however, will be the company’s website, where Emily Williams says the brand can tell its story, she and Cole can position themselves as the face of the brand and they can help consumers better understand what they offer through direct sales.
“We will start direct-to-consumer on our website for the first probably 12 months, which while the margins for direct-to-consumer aren’t great, it really allows us to develop a relationship with our consumer and build those superfans,” Cole Williams said. “We can also collect consumer data that we can later take to retail partners, like Thrive Market or other regional retailers and show them we have a cluster of followers who will come in and buy the product from their neighborhood stores.”
While some sharks doubted the company’s ability to gain traction on their slices online alone, Cole Williams is confident that consumers will take a chance on the idea and brand, as illustrated by how they have embraced online shopping during the pandemic.
“So many people have adopted shopping online, and specifically shopping for food and beverage online in a way that has never been seen before. So, we feel like we’re primed to really ride that new trend,” he added.
Unsure what kind of demand Slice of Sauce’s appearance on Shark Tank would initially generate and worried about limited inventory, the company currently only is taking pre-orders – a move that allows consumers to hold their spot in line while the young brand ramps up production. This helps minimize the risk of running out of stock and disappointing or frustrating first-time buyers.
Partnering with heritage brands add trust
As the company grows, it also will build brand awareness by leaning heavily on licensing partnerships with well-established and -loved heritage condiment brands, including Secret Aardvark and Frank’s Redhot, both of which have near cult-like followings, said Emily Williams.
“By partnering with us, they are sort of validating and introducing to their fans our new form factor,” she explained, adding that she hopes their superfans will become Slice of Sauce’s superfans, too.
Even though Slice of Sauce is partnering with heritage brands, it is bringing its own unique twist to the condiment aisle. Of course its unique ‘slice’ form, but but also its ingredient deck. The company touts on its website that it uses less than 10 high-quality ingredients, including ripe California tomatoes, and avoids high fructose corn syrup – a position that it argues helps justify its high price point.
The company further justifies its $5.99 for eight slices versus less than $3 for a bottle of competing condiments by noting that Slice of Sauce isn’t meant to replace bottled condiments, but can go where they can’t, like in kids’ sandwiches in the back of the car on a road trip or where there is limited refrigeration.
“There are just times when a Slice is a deliciously convenient option,” the company notes on its website.
Ultimately, Emily Williams said, Slice of Sauce is “really fun, great tasting, flavorful and awesome. It will transform sandwiches.”