Tom Armenti, president and chief executive officer of Fat Shack Inc., kick-started his business after finishing college, with $5,000 he had won playing online poker. His hopes were very low at the time, considering the huge construction quotes that ran between $150,000 and $200,000.
“There’s No Way I Can Do This”
“I remember thinking, ‘There’s no way I can do this,’” Armenti said in an interview to Business Insider’s Katherine Tangalakis-Lippert.
Instead of giving up, he found a workaround. Rather than building a restaurant, he borrowed one using his gambling money. In 2010, he launched Fat Shack by operating out of a local bagel shop at night, after it had closed for the day.
The early days were difficult, as he had no storage space on site, so he kept ingredients in freezers in his garage and brought in just enough inventory for each day.
While the situation was less than ideal, the peculiar arrangement proved to work out for him, as students started to order, spread the word, and keep the phone ringing.
Shortly after, he decided to move the business to Fort Collins, Colorado, considering the much larger student population there and, in 2011, opened the first full Fat Shack location.
The Shark Tank Effect
The business skyrocketed in the first week, and more growth soon followed, prompting him to open a second location in Boulder with a close friend. The test franchise was also a success, making the two friends realize the concept could scale.
By 2015, they launched the first official franchise locations, often led by people who had already worked within the business.
A major turning point came four years later, when the company appeared on Shark Tank, securing the founder a deal with Mark Cuban for $250,000 in exchange for 15% of the company.
Thanks to the exposure, sales once again surged, inquiries poured in, and the company expanded rapidly, reaching 30 locations and generating around $20 million in annual revenue.
Despite that success, the restaurant industry has become more challenging, amid constantly changing consumer habits and rising competition, forcing Fat Shack to make a tough decision: stay true to its identity or go with the flow and offer healthier options.
They opted for the former. “There’s no way we could reinvent ourselves as a health brand,” said Armenti.
Their chain continues to choose value, increase portion sizes, and keep prices steady. Even now, the founder remains hands-on, often working in stores alongside staff.