From a Single Food Truck Business to a Multi-Million Dollar Franchise
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Jim Tselikis and Sabin Lomac, Founders of Cousins Maine Lobster and uber success story from Shark Tank, join me on Entrepreneur Hour to talk about their journey in the food truck business and how they grew their efforts to a multi-million dollar venture with a family recipe.
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Cousins Maine Lobster: How One Food Truck Became a Multimillion-Dollar Business
A Multi-Million Dollar Idea Spawned From A Drunken Night Out
The early days of Cousins Maine Lobster are very similar to those of Apple or Facebook, in that they were founded by men in California. In 2011, as Father Winter vomited snow on Boston, Jim made the trek out to Los Angeles to visit Sabin, for some vitamin D and to reconnect with Sabin. Over an afternoon of playing NHL ‘94, a game they began playing in Maine when it was released and still played on a daily basis in the CML offices 20 years later, the Cousins discussed business opportunities.
They talked childhood, huge pots boiling in the backyard, running around with buttery ears of corn (pronounced “Kahn”) and picnic tables built for 8 seating 10 messy, bibbed kids elbows deep in a steaming hot lobster. They talked about the burgeoning Food Truck industry that was taking over the LA food scene, bringing delicious, unconventional cuisines to the masses cheaply and efficiently. After surveying the landscape, they realized that LA was missing those tasty Maine traditions they fawned over. They decided to pool their savings and launch a food truck that celebrated Maine and served the bounty of their state the only way they knew it: fresh.
Shark Tank Success...But Only After Turn THEM Down!
In this episode, we talk about how Cousin's Maine Lobster utilized the food truck model to eliminate the traditional overhead and financial pressures that a stand alone restaurant presents. Sabin and Jim have some incredible stories as to how fast their business grew but it all stemmed from their ability to find the flexibility that the food truck model provided.
We chat about their appearance on Shark Tank, how they actually turned down going on two prior occasions and what the exposure and resources did to further stimulate their revenue growth.
We wrap up talking about how important it is to take a proactive approach to doing business with family. Jim and Sabin take on a very deliberate strategy in maximizing their individual skills instead of having a tradition "decision maker" role carved out, which I found fascinating.
Taking Industry Standards and Flushing Them Right Down the Toilet
Restaurants are run in stores with chairs, bathrooms, cool A/C and an endless Coke Dispenser...Right!?
Sure, your global chains aren't going to pack up shop and hit the streets for a capable van that can easily be retrofitted as a meals on wheels, food truck, but that doesn't mean you have to jump into taking on that kind of crazy overhead, either!
What I love about this story is it shows not all emerging business models have to be built around the latest and greatest techno app that's going to solve all of our problems when Flappy Bird at a time (I kid, technology is awesome).
But seriously, as a startup your job is to keep your overhead as limited as possible.
In my first business, we did the EXACT same thing. Our moving company grew from launch to $1.2MM in annual revenues in just under 36 months. Guess what? We didn't own one single truck of our own.
We opted to push the rental cost of a Budget Truck or a UHaul onto our customers until it made more fiscal sense for us to make the switch and have our own fleet.
Same song, different dance.
Cousin's Maine realized for where they were in life and in business, it made far more sense to ditch the multi-million cost of putting up a store front and hit the streets!
What's more is this also gives them the flexibility to go directly to their target consumer.
Finding out your target/ideal audience is hanging out in a certain region of your town?
Amazing, keys in the ignition and off you go to find a place and setup shop. I recognize it's not THAT easy but imagine sinking your life savings as well as the life savings of several key family members and taking a sizable personal loan to fund a store to then realize the spot you picked out was a total bust?
Little bit more complicated issue, no?
I've said it before and I'll say it a bajillion times over...
You have to give yourself room to fail and grow in business.
A buffer, if you will.
Doubling down and betting the mortgage on an investment that may or may not pay off has long-term and dangerous consequences.
That's WHY Investors are Far More Intrigued by the Latest Tech Company.
You can work from your laptop at a coffee shop and find a CTO...off to the races. Not to mention margins that will literally blow your mind or make you cry, depending on which end of the spectrum you're on. In my first business, I was on the latter of that equation. That's how I know tears are definitely involved.
Rather than complain about why you can't even get a snippet of interest from that Angel Investor you've been emailing for 6 months, go figure out a better, more profitable and feasible business model that shows him you're a game changer and out to cause disruption in your space like Cousin's Maine.
Shark Tank found THEM on their nearly brand new Twitter page!
How ridiculous is that?
How many times have you just shot a random tweet out there into the universe and thought nothing of it?
I don't have a big audience, they said...
Nobody is going to read this, they said...
Boom!
Shark Tank comes calling.
And they turned them down! TWICE!
I salute you both, Sabin and Jim.
Recognizing you're not ready to put your best foot forward and recognizing your business is stable enough to not have a crazy tight runway completely shifts the entire paradigm and gives power back to the business owner.
Talk about a way to show some of the biggest investment players in the world you have a stable and thriving business!
If Daymond John, Mark Cuban, Barbara Corcoran and the gang came calling, what would you do?
To be totally candid and transparent, I would have purchased the first ticket out of town (HA!).
Ready or not, here I come!
Businesses That are Built to Last Thrive Off Investment Dollars, Not Survive!
Startup capital and the big promise of investment dollars is all the rave these days.
Needing money to grow, expand, bring on the right talent to expand your successes and achieve new revenue milestones are by all means adequate reasons to give away a big portion of equity (15-25%/round).
Sitting at home with mere a business idea in your mom's basement while you consistently spend your days playing the latest version of Madden and eating Toaster Strudels is not.
Now, there are obviously varying degrees of these two very polar extremes and I'll stress even further that every single business model is different.
I made the mistake of NOT seeking outside dollars even though we experienced revenue growth of over 1,000% from Year 1 to Year 2 and hit nearly $500,000.
I needed help.
That year took so much out of me and to then double down and do it again, hitting $1.2MM and still not having the proper resources and a team I could compensate in accordance with this growth made life oh so much harder than it had to be.
Key talent that played a vital role in that growth left for better, high paying opportunities. Managing cash flow became the bane of my existence as growth requires that awesome thing called CASH!
Eventually, I burned out and the business began to implode.
Why?
Because I built an entire multi-million dollar company around one thing...me and my ability to keep the wheels turning and most days from falling off entirely.
It's All About Playing Your Cards Right
This is what I respect so much about Cousin's Maine Lobster and why you should take note.
It's not just about making money and it's not just about raising money.
Crazy, I know.
It's all about the timing by which you execute on both.
That's it...that's the key.
Businesses are like children.
Often times, you will find yourself literally treating it as such, failing to recognize it's ugly when that really does need to be said.
But seriously, you wouldn't send your kid to a 4th grade reading level before they've even learned to walk or talk.
By the same token, you also wouldn't feed breast milk to a 7 year old. (weird metaphor but it's the first thing that came to mind)
Your business needs what it needs when it needs it.
It's your job to identify and recognize when those key milestones have been achieved.
You don't want your kid to grow up too fast but you also don't want to not give it the tools it needs to not fall behind in class.
This is where Cousin's Maine Lobster just completely blew it out of the water.
Their timing was absolutely perfect.
Achieved success, waited until the right moment when they had proof of concept and a viable product, and then sought out the resources they needed to ignite the fire of growth.
Now that, regardless of industry, is the recipe for success.
But don't come at me, or any investor for that matter, with your story about your billion dollar idea.
I've had three of those just since I started typing up this blog.
News Flash! Your idea isn't worth anything.
The same way your kid isn't going to just be born and accepted into Harvard Law, it's going to take time, resources, nurturing, sacrifice and commitment before they start finding you on Twitter or sending those gimmicks in the mail called scholarship offers.
Please Don't Stop Dreaming
I love you and I love that you have ideas...
I really do.
A dear friend of mine tells everyone before he departs to keep the dream alive!
And I think that's such a vital part of entrepreneurship. When we give it it's proper time and place.
Your business is eventually going to become stressful and can rob you of that passion and zest for your idea.
Losing that is like losing a pedal in the Tour de France...Game Over!
But what I do want is to see you WIN!
My job is to give you the formula to the best of my ability, or at the very least point you in the general vicinity of your destination.
I train Jockeys, not Horses. It's always going to be your job to figure out what's best for your business. I can't do that for you.
What I can do is help you become the best entrepreneur you can be and rest assured you'll learn from the abundance of mistakes I've made along the way.
My humility ego can take a back seat if it means it helps you in even the slightest way to move towards building a business you both love and deserve.
Hoping one day to see you on the Tank, pitching your heart out and setting your industry on fire.
Hope you all enjoy…
To Learn More about Cousins Maine Lobster, visit CousinsMaineLobster.com
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