Tia Lupita Foods
DEAL
EPISODE SUMMARY
🕓 Air Date: April 14, 2023
Asking For:
$500,000 for 5%
Investor:
Kevin O'Leary
Deal:
$500,000 for 5%
PRODUCT SUMMARY
Tia Lupita is a Mexican-inspired food brand offering grain-free tortilla chips and tortillas made with clean, simple ingredients, including the superfood cactus.
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Background Story
Hector Saldivar, originally from Monterrey, Mexico, moved to the United States and was inspired by his mom’s family recipe for hot sauce. He decided to commercialize it and created Tia Lupita, a brand that goes beyond hot sauce, offering grain-free tortilla chips and tortillas. Hector’s goal was to bring innovation to Mexican food in the United States while preserving authenticity and using clean, simple ingredients. The company is named after his mother, Lupita.
The Product
Tia Lupita’s product line includes grain-free tortilla chips, corn and cactus tortillas, and hot sauces in various flavors like Habanero, Chipotle, Salsa Verde, and Hot Sauce.
The standout ingredient is cactus (nopales), a low-glycemic superfood, used in tortilla chips and tortillas. The products are known for their great taste, crunch, and high fiber content. The grain-free tortilla chips come in five flavors and are priced between $3.99 and $4.99 per bag.
The tortillas are also available in grain-free and corn varieties. The products are positioned as healthier alternatives to traditional Mexican foods, using simple, natural ingredients.
How It Went
The company’s position before Shark Tank
Tia Lupita has shown impressive growth over the past few years. In 2020, they achieved $900,000 in revenue, which increased to $1.5 million in 2021, and they were projected to reach $4 million in revenue in the current year. While their first profitable month was recently achieved, the company has faced financial challenges, including losses of $700,000 in 2020 and $1.2 million in 2021.
They have raised a total of $1.9 million in funding, with Hector owning approximately 65% of the company, having invested around $700,000 of his own money, including taking a line of credit against his home. Tia Lupita’s products are available in national retailers such as Sprouts and five regions of Whole Foods, as well as key regional accounts like Wegmans, Walmart, Target, and Publix. However, they’ve faced significant costs related to slotting fees to secure these listings, resulting in financial strain.
The Negotiations:
Hector Saldivar initially sought $500,000 for 5% equity in Tia Lupita. The Sharks raised concerns about the high debt and dilution. After Daymond John, Barbara Corcoran, and Lori Greiner opted out of the deal, Kevin O’Leary made an offer: $500,000 as a line of credit at 12.5% interest for 10% equity. Hector was hesitant about the 10% equity and negotiated to keep the equity non-dilutable.
O’Leary agreed to the non-dilutable 5% equity for the $500,000 line of credit, and Hector accepted the deal. Kevin’s offer was seen as a good opportunity despite the high-interest rate, and the deal was made, marking the end of the negotiation.
