Elizabeth Blau returns to Restaurant Startup and joins Tim Love with the goal of finding the next great restaurant that serves late night food.
Brad Barzloski and Michael Tumlin are pitching their vision for a restaurant based on their unique deep-fried egg rolls that are filled and breaded with foods like Doritos, Captain Crunch, nacho cheese, buffalo chicken, and a wide variety of ingredients that appeal to those hungry at two in the morning. With a food truck in Jacksonville, Florida, and a popup location in Richmond, Virginia, Brad and Michael have been financially successful in both locations. Given their exponential growth and the ease at which their products can be replicated, Michael and Brad ask the investors for $300k in exchange for 30% equity in their future brick and mortar restaurant in Louisville, Kentucky.
Tom and Elizabeth enjoy the food Rolz made. Commenting on how she’d like a beer with her meal, Brad and Michael state that they plan on developing a craft beer menu to compliment their food. Discussing the ingredients further, Rolz’s owners explain that besides the mass produced elements – such as Doritos and cereal – they do use all organic products and can create vegetarian rolls. Diving into the finances of the business reveals that they have a 21% food cost and that they are predicting that their restaurant will bring in $900k a year with a 37% profit margin. Elizabeth points out that this is a profit margin about three to four times higher than industry average. Though they are confident in their numbers a minor joke about how it might collapse causes Tim to become visibly concerned.
I Got Balls
Ralphie Grotto and Chris Salmonese pitch their business, I Got Balls. Based on a recipe from Ralphie’s grandfather, I Got Balls is centered on arancini – an Italian meal in which fried rice balls are stuffed with meat sauce, cheese, and peas. Ralphie learned how to make these rice balls from this grandfather and over the years began creating variations of his grandfather’s rice balls. In addition to providing catering services, I Got Balls has been featured in high end supermarkets all over the New York and New Jersey region. Ralphie and Chris are so confident in their business that they asking for $200k for 15% equity in their business so that they can open up a brick and mortar restaurant in Staten Island.
While Elizabeth believes that I Got Balls is perfect for Las Vegas she is worried that it would not be a good name for restaurant in other parts of the country. Tim is okay with their name, but he doesn’t like their logo. Both Tim and Elizabeth believe that the logo should be humorous.
Trying the food, Elizabeth and Tim feel that the food has some room for improvement. Learning about the restaurant, Ralphie shares that they are willing to include items other than rice balls. Additionally, they want to set up the restaurant so that it has quick turnarounds which will allow them to serve a large number of customers. On top of their restaurant projects, I Got Balls is already successful because of the standing orders it has from supermarkets. Overall, Ralphie and Chris leave Elizabeth and Tim impressed at how well they have developed their business.
Meeting with both teams Tim shares that he likes Rolz’s creative food and their ambitious projections, but has a hard time believing their financial claims. Elizabeth explains to I Got Balls that she likes their concept for a restaurant and that they could market their rice balls to any store in the world. However, she feels that they might be limited since they have only focused on rice balls and a real restaurant needs more on the menu.
In the end, Tim and Elizabeth pick I Got Balls. Elizabeth wants Ralphie to think back to other dishes created by his family to include so that I Got Balls has more than just rice balls on their menu. She also wants Ralphie to meet with product development people while in L.A. to work on standardizing the rice balls so that they can be more easily reproduced.
Chris and Ralphie begin the next day getting ready for the launch. Meeting with them, Antonia Lofaso explains that she is there to help them develop the quick service restaurant in conjunction with a system that produces their rice balls for supermarkets. Focusing on the restaurant, Ralphie shares with Antonia the other dishes they will offer. One is called ambrosia and it is a creamy fruit salad made with coconut and marshmallows that Ralphie’s mother will help make. Ralphie even contacts his grandfather for advice on how to make his family’s orange salad.
Speaking to Roy Rede, Ralphie explains that he wants the space to have family photos and feel like an extension of his grandfather’s garage since that is where he started the business. Ralphie also tells Roy that they are changing the logo and that it will still center on his grandfather.
Preparing sample meals for Antonia reveals that Ralphie and Chris have fourteen different items for their menu. Going dish by dish Antonia enjoys most of their food but finds that many of them could be improved on by either balancing the flavors or keeping better track of how long a rice ball needs to fry. Though Ralphie doesn’t become upset with Antonia, he does become frustrated with himself. Antonia stresses that they need get the ratios correct for launch. Given that they pitched themselves as a brand that could work as a restaurant and a retail product, they need to show that they can standardize their menu or the launch might be seen as a failure.
That night Antonia introduces Ralphie and Chris to Andrew Hunter, an expert in the field of co-packing. Co-packing is when a client, such as I Got Balls could become, wants to mass produce a food product but lacks the equipment to do so. This client will contract the work to a co-packer and they will mass produce the goods. Andrew explains that for co-packing they need to think in terms of formulas and not recipes, because this type of perspective will allow them to better scale their production. Examining their rice balls further, Andrew determines that they will have to sell a pack of two for $8.95 in order to make a profit. In contrast, Ralphie is currently only selling his rice balls for $2.25. It is a number that scares Andrew because they can’t profit off of a cost that low.
The day of the launch comes and they like the work that Roy accomplished over the night. Ralphie’s mother, Rosemarie Grotto, shows up to help out and is also impressed by the layout of the restaurant. Sadly, Ralphie reveals that he forgot to let the ingredients for the Ambrosia drain overnight. This mistake means that Rosemarie needs to spend crucial time squeezing excess fluids out of the fruit.
Antonia arrives on launch day to discuss the projections for I Got Balls. Ralphie projects a check average of $15 and a ticket time of 5 to 6 minutes. Elizabeth and Tim arrive to check out the restaurant before launch. Though Elizabeth is still on the fence about the name, she does think it would make an excellent late night college location. Entering the space, Tim and Elizabeth feel that the look matches the feel that I Got Balls was going for. Talking to Ralphie, Chris, and Rosemarie before the launch, Tim and Elizabeth learn that I Got Balls doesn’t have everything ready yet.
The launch begins with I Got Balls rushing to complete all the rice balls they plan on serving. With Rosemarie welcoming the customers to the restaurant, things seem to be going well at first. The guests even share with Elizabeth that they are enjoying the restaurant so far. Unfortunately, a long line quickly forms and they start getting backed up in the kitchen. Ralphie projected quick service but they soon find themselves with ticket times of fourteen minutes and higher.
Andrew Hunter is in the restaurant as one of the guests and talks to Elizabeth. He finds the food to be delicious and shares that he thinks the idea of I Got Balls could do well in the retail sector. Back in the kitchen they find that they are quickly running out of dishes. It becomes such a problem that Tim Love takes charge and starts cleaning the dishes. Despite the problems the launch is facing, Tim does like the buzz of excitement in the restaurant.
Sitting down to taste the food, Elizabeth and Tim enjoy the rice balls. However, they are disappointed by the orange salad and they are divided over the ambrosia – Tim hates it and Elizabeth loves it. They find the food to be mostly good but Tim is worried about their ticket times and lack of experience while Elizabeth thinks that those problems can be solved.
The Deal Table
With everyone at the deal table Elizabeth shares that 95% of the diners liked the food. When Tim criticizes the ambrosia salad Ralphie takes responsibility for it since he neglected to let it drain over night. Discussing the survey further, Elizabeth states that 83% of the diners would buy the rice balls in a supermarket. Comparing the projections to the reality of the launch, Tim lets Ralphie and Chris know that the check average was $19 a person, but that their ticket time was 14 to 15 minutes.
Reiterating that they are asking for $200k for 15%, Tim offers $200k for 80% of the equity in the restaurant while leaving the wholesale aspect of the deal open for negotiation. Though Ralphie is shocked by this offer Tim explains that this is common for his restaurants and that he has the experience needed to build I Got Balls. In contrast, Elizabeth doesn’t offer an investment upfront. Instead, she explains how she is going to guide them through the process of getting a co-packer and other aspect of the industry in order to help them grow the company. And then they can talk about equity in the company.
While Ralphie knows the company could benefit from Tim’s $200k, he isn’t willing to give up 80% of the business. Disappointed that they won’t get the restaurant that they dreamed of, Ralphie and Chris decide to work with Elizabeth.
Since the taping of this episode, Elizabeth has helped I Got Balls get a deal with co-packing company that plans to get their rice balls into Whole Foods, Costco, and other national retailers.