Cereality – will it float!

I would love some off the cuff feedback and than I will share mine. Thanks.

As simple as winner/loser is fine.

Here is the website.

Here is their sales pitch on Donny Deutsch:


  1. Todd says:

    Long the idea. But I’d have more company owner retail locations out there before I took my message to the world.

    I’m also not sure about franchising the stores right from the start. Seems to me that you potentially put your future success/failure in the hands of franchisees who may not execute properly.

    For this reason, lots of stores start out as company owned and then franchise later down the line to realize higher growth.

    Also, I saw their milk dispensers only have 2%, skim, and whole milk. Where’s the milk for those who are lactose intolerant ? Soy milk …

  2. John Mahoney says:

    I’d short the idea over the long term because it isn’t a protectable franchise. The idea itself isn’t patentable (for what that might be worth anyway), and they are using popular cereals which anyone can purchase. No real barriers to entry.

    This is a play on convenience. And to make convenience an investible idea, it needs scale and reach. (Hence their desire to franchise) Growing reach is cash intensive, making this early stage a cash burner. If it starts to take off, any other major food chain could jump into this market with instant scale, denying them a return on that early investment.

    It’s a great idea from a consumer perspective, but a tough idea for small a business to make profitable.

    That’s my two cents…

  3. DanL says:

    Winner for the consumer. Been following the location near the Chicago Merc Exch for a couple years. Plenty of free samples, goofy sandwich-board advertisers, and $5 cereal jokes at first. Now a bustling place morning and most afternoons. I’m a convert with the made-to-order banana oatmeal with strawberry jam. Much better $5 morning value than SBUX and some of the waiting lines prove that.. Needs an afternoon menu killer item to make a good investment though.

  4. Dogwood says:

    Long…in college towns.

    Although the barrier to entry is pretty low, can you say Costco?

    The key is creating and maintaining a fun environment that distinguishes the franchise from a mom & pop startup.

    The stores remind me of Zoup.

  5. Todd says:

    I would agreee with Dogwood (I failed to mention earlier) that I think this concept will do much better around college campuses.

    I would also agree with DanL regarding the need for an additional menu item for the afternoon crowd. I don’t buy the notion from Donny Deutsch that there are loads of adults who come home after having a few pops and sit down to watch Letterman with a bowl of cereal.

    When Panera Bread came out, they were known as more of a morning destination like a Manhattan’s Bagels or Bruegger’s Bagels. But they tweaked their menu and brought the afternoon crowd in which really made the company legit.

    They have been able to raise their prices and still do very well. People are almost always in a hurry, and they’re lazy. Fast, healthy, good tasting, fresh food will always sell well.

    I remember when PNRA was $9 back in late 2000 (I purchased it for my Mom’s account). Unfortunately, she insisted on selling in 2001 due to overall market weakness. Bummer …

  6. Dogwood says:

    Don’t know about Zoup’s financials, but I really enjoyed my visit to one of their stores a couple weeks ago. Free samples. Good food. Nice atmosphere. WiFi.

    It was a cold rainy Sunday afternoon, perfect soup weather, and the place was busy.

  7. grandcanuck says:

    Def LONG… they seem to be aggressive franchising, the best way to protect the brand. There is a fad effect but I think it could still have longevity near train/subway stations, in college towns, in, malls food courts, etc.

  8. Steven says:



    Interior shots look like Jamba which gives a good familiar feeling.

    Stay open later. Cereal is a great 4th meal after dinner.

    Name sucks. Change it.

    Who do I send my consult bill to?

  9. Nick Fenton says:

    A couple important elements: price point and convenience factor.

    Price Point: the average consumer is not willing to pay higher prices for something they can easily do at home, unless it’s done better. Starbucks is a success because their coffee tastes better…these guys are mixing cereals, I’m a bit skeptical off the bat. If they can offer a competetive price to what consumers pay in the grocery store for cereal/milk then they may be on to something.

    Convenience Factor: not many consumers are going to go out of their way to get a bowl of cereal when they are able to drive through McDonals and get a Egg McMuffin. Throw in a drive through…problem solved.

    I didn’t watch the video, just the intro, hopefully I’m not stating issues that were addressed in the interview. If so, my apologies.

  10. Eddie Daroza says:

    STUUUUUPPPIIDDDDD!!!!! But, I’d go there every morning if chicks were eatin breakfast there. And they had wireless. Otherwise I’m eating at home on the run. no time.

  11. Todd says:

    Howard said:

    “I would love some off the cuff feedback and than I will share mine.”

    Dude, we’ve been spilling our guts for you for the last 2 days on this gig.

    Us wannabe small time hedge fund managers are curious what you think.

    What’s your take ?

Comments are closed.