tv The Profit CNBC February 24, 2015 12:00am-1:01am EST
lemonis: tonight on "the profit"... andreas: meat in the gyro? lemonis: ...my big fat greek gyro is a small franchise with a growing footprint. are you guys still in love with this business? -mike: i am. -kathleen: i am. lemonis: already, there are five locations up and running. -how long have you been here? -jace: a little over 3 years. lemonis: and as the business has grown, so have the problems. mike: you're my partner. you can pick up the slack, as well. kathleen: you're gonna put it on me now? lemonis: husband-and-wife team who started it have no idea how to run it. rich: i've lost respect for mike as an individual. lemonis: their food misses the mark. they're actually terrible. andreas: you don't like them? lemonis: no. their branding is all over the place. hamburgers and hot dogs? and the franchisees aren't getting anything close to the help they need. kane: the only help we ever got from them was on the first of the month, they came and picked up their royalty check. lemonis: for this business to survive, i'll have to put a clear process in place and fix what's broken.
you can't tell somebody else how to run their house when you can't run your own house right. otherwise, this would-be empire will be a big, fat bust. kathleen: tell him, "this is my livelihood." lemonis: my name is marcus lemonis, and i fix failing businesses. if you don't like money, don't follow my process. i make the tough decisions. we're closing the store. we're done. i'm not talking about it anymore. i back them up, spending my own money. it's not always pretty... man: perfect flavor. lemonis: ...but this is business. you got to trust the process. i do it to save jobs, and i do it to make money. thanks for your business. this is "the profit." just about 15 miles south of pittsburgh in a small town called mcmurray, pennsylvania, there's a fast casual restaurant known as my big fat greek gyro. michael: what can i get for you? woman: gyro and fries. lemonis: husband and wife mike ference and kathleen kamoyerou...
kathleen: they prefer our sauce. lemonis: ...started the business 10 years ago. kathleen's parents emigrated from greece. man: we used to make the gyro by hand. lemonis: and she wanted to celebrate the culture and enjoy the food she grew up with. man: it's one of the best. period. lemonis: and mike wanted to turn the gyro into the next big thing in fast casual dining. they've already sold four franchises around the greater pittsburgh area. andreas: if you could just sign that for me. lemonis: and now kathleen's sons, michael and andreas, are in the process of buying the original flagship store. andreas: it's what happens when you got two young, strong bulls who are ready to take the horns. lemonis: but the franchises are under-performing, and there's confusion about how to grow. andreas: mike -- he's not involved. lemonis: i love the concept, and my dad is greek, and i've always wanted to find an opportunity to share my culture. if this family takes my lead, i believe we can take this franchise to the next level.
-hey, how are you? -andreas: good. how are you? -lemonis: i'm marcus. -andreas: i'm andreas. -lemonis: nice to meet you. -andreas: nice to meet you. lemonis: it was kind of hard to find. andreas: yeah, it is. it's a hidden treasure. this is my mother. -lemonis: [ speaks greek ] -andreas: [ speaks greek ] this is my brother, michael, by the way. lemonis: how you doing, michael? andreas: this is my stepdad. -this is big mike. -mike: mike ference. -lemonis: how you doing, mike? -michael: my pleasure. lemonis: nice to meet you. i'm marcus. -mike: pleased to meet you. -andreas: come on in. -lemonis: you guys are married. -mike: we are. lemonis: so, you own the business together. kathleen: together. we're partners. mike: and then we're gonna concentrate hopefully more on franchises. -lemonis: legitimate franchises? -mike: legitimate franchises. they actually have a 10-year franchise agreement with us where they pay an up-front fee. lemonis: how much was that? mike: it's $10,000 per store. and then they pay an ongoing royalty fee, as well. lemonis: okay. franchising is an incredibly attractive business model because it allows you to get paid once you perfect a concept. my big fat greek gyro only gets about $10,000 when they sign up a new franchise. in success, that fee could grow much higher. better still, each of your franchisees
pay the owner a royalty on a monthly basis. that could be anywhere between 4% and 12% of your monthly sales. mike: right now we're making about $60,000, $65,000 annually on royalties. lemonis: they pay an up-front fee. mike: correct. lemonis: you control the branding. mike: correct. lemonis: who picks the locations? who goes out and vets it 'cause it's your brand? mike: i do. lemonis: who developed the menu? kathleen: we did. lemonis: i was gonna take a trip to greece this summer, and i'm looking for tater tots... cheese sticks, cheddar balls, mushrooms. -hummus isn't greek. -andreas: lebanese. lemonis: what do you actually make yourself? mike: we have the traditional gyro. we have steak. we have fresh chicken. and then we have souvlaki, which is a pork. and you can either have a sandwich, a salad, or a platter. lemonis: do you know how to hand-roll grape leaves? mike: absolutely, we do. kathleen: yeah, but we buy them frozen. mike: we don't have the square footage for it. kathleen: yeah, you can't -- did you see our kitchen? mike: here, we'll show you the kitchen.
you'll get a better understanding. kathleen: this is our kitchen. lemonis: what kitchen? mike: it's a broom closet with a refrigerator. lemonis: you guys said you were taking me into the kitchen. -mike: we were being facetious. -lemonis: oh. [ laughter ] a lot of frozen stuff. this food barely qualifies as greek. and worse off, most of it's not even made fresh. spanakopita's frozen? -you buy it frozen? -kathleen: yes. lemonis: i'm gonna teach you how to make some. i don't care how small the kitchen is. you want to have a good business? don't serve food out of the freezer. i don't know any greeks, at least my yia-yia and my aunts and uncles -- they're not getting spanakopita out of the freezer, right? frozen food is never gonna be as tasty as fresh food. and, in fact, it's a lot more expensive. buying frozen fries from a distributor costs my big fat greek gyro 48 cents per serving. but if they buy raw potatoes and prepare the fries themselves, that cost drops nearly 71% to 14 cents per serving.
if they sell 200 orders of fries every day, they've just earned an additional $68 for that day. and over the course of a year, that's almost $25,000. that's money in the bank. frozen grape leaves. lemonis: they taste... they're actually terrible. andreas: you don't like them? lemonis: no. do you? michael: i can't eat them like that. lemonis: for a restaurant to be successful, they need to manage their food costs. i'm wondering if mike and kathleen know how to make healthy margins from their biggest seller -- the gyro sandwich. what does this actually cost? mike: about 16 cents apiece. lemonis: how much is the foil? mike: foil's about 4 cents apiece, so we have... lemonis: 16 cents for the bread, -4 cents for the foil. -mike: correct. we're putting about $1.20 worth of meat on there. lemonis: okay, how much is that sauce? mike: it's about 22 cents to make. lemonis: so now i'm at $1.52? -mike: mm-hmm. -lemonis: okay, what's next? mike: then we're gonna sprinkle a little bit of onion. lemonis: okay. what else? mike: and then lettuce, and then tomato, as well.
lemonis: we're at $1.52 now. how much does the lettuce, onion, and tomato cost? mike: probably about 9 to 10 cents. -lemonis: so we're at $1.62. -mike: correct. lemonis: what do you sell this for? mike: we sell it for $7.50. lemonis: okay. it appears as though it costs about $1.62 to make a gyro sandwich. and they sell it for $7.50, a 78% margin. now, i know the other products that are frozen and sourced from other manufacturers -- they don't come with the same margins, which is all the more reason to add more fresh, homemade, authentic items. who came up with the name? -kathleen: you did. -mike: yeah, i did. kathleen: we have issues with the name, too. lemonis: what are the issues? mike: well, there was a company in california that actually trademarked "my big fat greek." lemonis: you ever had any dialogue with them? mike: one e-mail conversation. -lemonis: no phone call. -mike: no. it was very short and very brief. lemonis: "go pound sand. you go pound sand." mike: pretty much. lemonis: normally, when there's a trademark dispute in a name, it's something you can work through,
especially if it's a single location. but in this case, we've sold the rights to the name to franchisees. now we're finding out we can't actually use the name. you got a problem. how many franchisees do you have? mike: five other stores. -lemonis: including this one? -kathleen: yes. lemonis: and so the other four, in addition to this one, how do they do? mike: they do -- they do...okay. lemonis: so, who has the best location? -mike: the market square store. -kathleen: market square. -lemonis: where's that? -kathleen: downtown. lemonis: downtown. who has the worst location? kathleen: right now? -mike: probably mt. lebanon. -kathleen: mt. lebanon. lemonis: how often do you see them in person? mike: a couple times a month, we try to, at minimum. lemonis: okay. so, here's what i want to do. i'm actually gonna spend some time just with them. since andreas and michael are now franchisees, i want to get a feel for their relationship with both their mom and mike and find out if they're getting the support that they really need. andreas: so far, marcus, i can show you. lemonis: how you doing? welcome. -andreas: come on in. -lemoniti kanis. so, that's one thing that i would do -- instead of saying "hello," i would just change it.
make it straight-up, like, greek. michael: at one point, we started playing greek music here, and mike didn't like it. lemonis: what do you mean, "mike didn't like it"? michael: he's very stubborn, very... lemonis: it's a greek restaurant. andreas: my brother and i would like to, like, pop in each store once every two weeks and let me taste the sauce consistency, everything. lemonis: what is one thing that's broken in this overall concept? andreas: one thing that's broken is conformity. mike -- he's not involved. lemonis: how is the relationship between him and your mom? it seems a little strained right now. michael: it's the way that he talks to you. it drives her crazy. it drives the other franchise stores crazy. lemonis: whoever he's talking to. michael: anybody. lemonis: i keep hearing from everybody how mike talks to people, but i have to be honest. i haven't seen it. maybe he's on his best behavior for me. that wouldn't surprise me. growing up, did you -- did, you know, mike and your mom -- done a good job raising you? michael: well, when you said, "growing up," it wasn't growing up. i was 15, he was 13
when our father passed. lemonis: oh, my gosh. -your father died. -michael: yeah. lemonis: how did he die? michael: my mom and him were going on a trip to vegas. they were ran off the road by a semitruck. lemonis: your mom was in the car. michael: my mother survived because she had her seat belt on. really think it changed her life. lemonis: do you think your mom's recovered from that accident mentally, emotionally? michael: i think she feels blessed to just be here. andreas: she lives for us. she -- it's all about us. lemonis: this family suffered a terrible tragedy, and it's left them all in, i would say, a very tough place. this business is important to them not just because it's the way they make their living and it's a way that they pay their bills, but it's a way they keep their family together. it's a way that they spend time together. and i think kathleen needs it, and so do the boys. how did you get past the accident? kathleen: my kids. it's huge for me and my kids. i never got to mourn any of that.
i hold a lot in. lemonis: you were in the car. kathleen: yes. it's hard. but they -- these kids are what keep me grounded. they keep me whole. and mike knows that, as well. lemonis: how can i help you? kathleen: i'm very frustrated. i just feel like i built something so great here, and to put it out there and not see it do as well as i want it to do, it's frustrating. lemonis: you mean with the other locations? kathleen: it's our biggest argument. we fight all the time about the other franchises. that was, like, a mess from the beginning. i think it was very mismanaged, and that's hard for me to say. 'cause i have a lot of respect for mike. i just want things to be the right way. i don't feel like i'm being heard. i just feel like i'm being held back. lemonis: what's becoming clear to me is that the franchisee model that mike set up seems to be pretty dysfunctional.
i need to look at the numbers to see the big picture. what i'm looking for is what does the parent company look like? and then what do all the individual franchises underneath him look like? and so where's the parent company financials? mike: that would be just our personal returns. we were acting as a franchisor through our personal income. lemonis: right, but what is the legal entity? where is the parent company? mike: we just set up the my big fat greek gyro llc as the franchise, or model for the franchisees. kathleen: but we just did that. lemonis: and so this is kind of a new business. who does these financials? mike: we have an accountant. lemonis: okay, the most recent year, this location did $300,000 in sales -and made $100,000. -mike: correct. lemonis: great return on capital. how much debt does the business have today? -kathleen: no debt. -lemonis: no debt. and does the business have a lot of cash today? mike: on hand? no. lemonis: even though this place is mismanaged
and the menu is largely uninspired, it still makes $100,000 on $300,000 in sales. and while i'm impressed with that, i'm frustrated with the fact that the franchisees aren't getting the guidance that they deserve. so i want to go meet some of the franchisees and get a better understanding of how this operation actually functions. -how you doing? -jace: good. how are you? -lemonis: i'm marcus. -jace: jace. lemonis: according to mike, the mt. lebanon franchise is the one that's struggling the most, and i can see why. it's dark. it's dirty. the menu's confusing. do they serve hamburgers and hot dogs, or do they serve gyros? you wonder why people aren't coming here? you're not giving them a reason to come. how long have you been here? jace: a little over three years. lemonis: how much do you interact with your franchisors? how much do you interact with them? jace: uh, not too much. they come in the first of the month to get their check, and then i don't see them too much after that. lemonis: they don't come in and help
and talk about ideas and help market the place? jace: not really, no. like, i don't see them unless it's the first. lemonis: make good money? jace: no. not the money we want to be making. lemonis: so, how do you keep the doors open? jace: we're just -- skin of our teeth right now. lemonis: all right, my man. nice meeting you. jace: it was very nice meeting you, too. lemonis: take care. i'm on my way to the market square location. it's in the heart of downtown and gets a ton of traffic. how are you? -sasha: hi. -lemonis: i'm marcus. sasha: i'm sasha. nice to meet you. -lemonis: nice to meet you. -rich: hi, marcus. -i'm richard. how are you? -lemonis: nice to meet you. market square serves gyros, but beyond that, there are few similarities to the other locations. the color scheme and seating are different. even the layout's different. same brand, different experience. not a good idea. how's business? tell me a little bit about it. rich: well, as far as business is concerned, we do about a half a million a year. lemonis: half a million in sales? rich: well, to break even. lemonis: so, how often do you see mike and kathleen? sasha: the first of the month, like clockwork.
rich: they're here to get their royalty check. lemonis: do they stay for a day and work on your business and help you? rich: no. we put $175,000 of our own money into it. we just gutted this entire building. lemonis: so, you put in all this equipment, the floors, the ceilings, the whole thing. sasha: everything. lemonis: $175,000's a lot of money to invest without getting support. sasha: yeah. lemonis: after visiting a number of the locations, it's obvious to me that there's no system, there's no process, and there's no consistency. it's a bigger problem than i thought it was gonna be. you know, it's a lot to take in here. i'm a little disillusioned by what i thought i was coming to invest in. i thought there was a true franchisor/franchisee model with a parent company on top that had franchisees underneath them that were successful, and that i expected to find a lot more authenticity. and, really, what i feel like i've come to is a nice concept
that feels a lot more like a startup to a franchise than it really is a well-oiled franchise machine. this is a startup. mike: for the market square store, i personally shopped for that particular location. there has been sweat equity that we invested in these particular stores. lemonis: you didn't invest any sweat into those other locations. you guys didn't do anything. mike: the volume of work that you -- lemonis: have to do? mike: today is gonna be a fraction of what, in reality, you do. -lemonis: are you kidding me? -mike: no, i'm not. lemonis: you have to change the name, re-market it, rebuild the stores, come up with a new concept, figure out how to communicate with these guys, put in a system. mike: these are all very doable things. lemonis: well, you just now decided to stop procrastinating? mike: that's not a bad thing, is it? lemonis: i'm struggling with what it is that you would like me to invest in. this business needs structure, discipline, and, more importantly, leadership. those other franchises --
they gave you a check for $10,000. they pay you on a monthly basis. what are you giving them in return? kathleen: what are we giving them? mike: not as much as they deserve. lemonis: nothing. -you don't go visit them. -mike: no, we do. lemonis: you don't provide the leadership that they need. you do not provide the structure. kathleen: we visit them, but we don't -- he's right. -we don't. -mike: no, we don't. we need to. lemonis: what were you gonna say? kathleen: i would like to stay there for hours and just tell them what they're doing and not doing and how to do this and how to do that, taste their sauce. lemonis: do you feel like you know how to do that? kathleen: i know how to do that. lemonis: do you feel like you know more than mike on how to do it operationally? kathleen: he'll say that he knows more, -but i think i know more. -lemonis: i'm asking you. -kathleen: yes, i do. -lemonis: okay. why should i invest with you guys? kathleen: i think we have a great concept. lemonis: a new name has to be created. a new concept has to be created. a new menu has to be created. i have serious doubts about who i'm gonna partner with and how much of the lifting i'm gonna have to do. it scares me.
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kathleen: i would love to go and implement the things that i tell you to do, but you put me in a situation like it's something that you should be doing and i shouldn't. ...fighting and arguing. mike: my intent is never to make you feel that way, and if i do, then i apologize for that 'cause that's not my intent. lemonis: i think the idea of the business is very smart. i think the execution is awful. what bothers me more than anything else is that we took money from franchisees, and we didn't deliver on what we said we were going to do. mike: what we sold them is something that we firmly, firmly believe in. lemonis: you don't believe it 'cause you didn't execute it here. you can't tell somebody else how to run their house when you can't run -your own house right. -kathleen: right. lemonis: let me tell you what i like about the business. when i look at the financials of this location and it does $300,000 in sales and makes $100,000, it's phenomenal. and so you've proved to me that the concept can work. that's what has kept me sitting here.
and so my offer is $350,000. but for my $350,000, i want 55% of the business. full control. i'm investing in the parent company. you are a partner of the parent company. you will maintain 100% ownership of this franchise. as we sell franchises around the country, we will share in everything we do going forward. do we have a deal? mike: um... i don't know if it's... i don't know if it's enough, based on the potential that our concept has. lemonis: the potential that i'm gonna create? mike: because of the hard work that i'm willing to put in down the road, you are gonna reap the benefits that you didn't know were capable of being reached. i want you to, i don't know, put a little bit more faith in us, just like we're putting in you, -even though it's hard to do. -lemonis: i have faith in you.
i'm putting a check on the table. so, do we have a deal at $350,000? 'cause i'm not willing to pay more. and if it doesn't work, i understand. kathleen: i-i-i'm ready to make a deal. i-i-i-i'm ready. yeah. mike: 45% of a lot is better off than 100% of a little. lemonis: do we have a deal? -kathleen: we got a deal. -lemonis: all right. kathleen: i'm ready for new beginnings. mike: mm! lemonis: i'm investing $350,000 that's all gonna go into the franchisee locations. today, five franchise locations pay the parent company $65,000 in fees. so starting day one, i get 55% of that -- $35,750. if i can improve their business collectively $1 million on an annual basis, the franchisor will collect an additional $50,000. my share of that will be $27,500, taking my total return to $63,250,
an 18% annual return. now you can see why i'm concerned about the franchisees. if they win, i win. we have a lot of work to do. gather over there. i wanted to let you know that the three of us have made a deal. we're not gonna fix this place in a week. it's gonna take time, and we're gonna try things. and it's not always gonna be fun. but my job is to make sure that you guys have a bright future. andreas: you guys deserve this, and we're gonna work our asses off. woman: we're a family. andreas: [ laughs ] come on, mama. come on, mike. you can come in. -kathleen: come on. -michael: greek group hug. [ laughter ] lemonis: all right, let's get to work. let's go. kathleen: whoo! lemonis: the first thing i'm gonna do is narrow this menu. and i want to get rid of everything that's frozen.
kathleen: no more cheese sticks. lemonis: in order for us to improve the profitability of this business, we have to add more authentic, homemade greek items. we're greek, or we're not greek. -what are we? -woman: greek! lemonis: if we don't make it, our margins aren't gonna be good enough. mushrooms, chicken tenders, tater tots. we're gonna donate this food. i don't want it around here anymore. all right, let's head downtown. mike: all right. lemonis: the next thing i want to do is take kathleen and mike to meet with all the franchisees. when i first met a couple of them, it was very obvious to me that mike and kathleen were way out of touch. my investment wasn't into a single business. it was into a system. i don't want five restaurants. i want 50 or 500. and i want to fix the relationship between mike, kathleen, and the franchisees. i wanted to get you guys together today to give you an update on what's transpired, but, more importantly, to start the process of having good and open lines of communication. and what i thought i was coming to help was a very healthy franchise organization
that wanted to grow. instead, what i found was a very unhealthy franchise organization whose franchisee/franchisor relationships are broken. and so the deal that i made is to put $350,000 up at the parent company, the franchisor level. i'm gonna take that money, and i'm gonna re-invest and help you fix your businesses. in my opinion, i think we've failed you guys, but i want to hear from you on what you think we've done wrong. kane: we've been open since -- it was four years this past june. we have yet to make money. the only help we ever got from them was on the first of the month, they came and picked up their royalty check. i mean, we have been robbing peter to pay paul since month two. i mean, we've put our heart and soul into this. i lay awake at night. sasha: with the royalty fees, i never saw them being put back into the business. there was no visibility for the business in general. advertising -- you know, we're all up -- left to do that ourselves, and that's a lot of money.
karla: i'm a single mom. i can't support my family. rick: having not done this before -- been in a franchise, i just assumed this was the way it was. rich: you know, we've never come together as a group. lemonis: is this the first time you've ever gotten together? sasha: i've never met these people. -kathleen: as a group. -lemonis: you never met them? kane: we weren't even allowed to talk to the other franchise people. mike: i don't want to look in the rearview mirror and say, "wow, boy, did we really jack things up." i can just look at where we're at now and where we need to go. lemonis: yeah, but in order to move forward, we have to understand what the issues are. i thought you guys met all the time. -kane: no. -rick: no. rich: that's probably one of the most upsetting elements of me being in this business was that lack of support. lemonis: what are you worried about the most? rich: i have to respect someone that i take direction from. lemonis: have you lost business respect for mike? rich: i've lost respect for mike as an individual. lemonis: so, this name came from a branding expert. kathleen: i hate this name. lemonis: but you're not a branding expert. kathleen: okay. i'm offended.
lemonis: don't trust the process? don't take my money. huh, fifteen minutes could save you fifteen percent or more on car insurance. everybody knows that. well, did you know words really can hurt you? what...? jesse don't go! jesse...no! i'm sorry daisy, but i'm a loner. and a loner gotta be alone. heee yawww!
e*trade gives you the support and guidance to make informed decisions. are you type e*? lemonis: have you lost business respect for mike? rich: i've lost respect for mike as an individual. lemonis: the fact that we haven't gotten together -- you guys haven't gotten together as a group is mind-boggling. sasha: it's mind-blowing to me that we just didn't, even once a year, have a meeting. kane: "you bought the name. go do it." lemonis: well, the name you bought, by the way, isn't allowed to be used. first time you ever heard about this? sasha: yes. kane: why isn't some of that communicated? do we not deserve to know some of these things? kathleen: no, you definitely deserve to know. kane: how long have you known that? mike: this has been going on for years. rick: what we thought we were paying for was "my big fat greek gyro" name. lemonis: here's the deal. there's a new sheriff. it's me. what are your total sales? kane: $261,000. lemonis: and how much did you make? kane: nothing. lemonis: does your business make money? rick: no. no, i put money into it. sasha: we don't make money. lemonis: you don't make money? so, no one here's making money except you guys.
in my opinion, mike and kathleen have a big problem on their hands. they sold people on this concept, but the execution has been horrible. they're supposed to be in charge of things like process, direction, giving these people guidance. they haven't done any of those things. what you want to hear from people is for them to take responsibility for their actions. kane: right. lemonis: do you guys feel like they failed you? -kane: yes. -karla: yes. rick: yeah. mike: i'm gonna reiterate for the 50th time. lemonis: without being condescending. kane: 'cause you're good at that. mike: we have screwed up. and i mean that sincerely. it kills me to know that we're in this situation because we have not followed through with what you had expected us to do. i take absolute full responsibility. we did not re-invest ourselves or help you grow. we have failed you miserably in not accepting your voice. you guys not only bought into the concept,
but i think, more importantly, you bought into us. and the fact that we had failed hurts me a lot. it does. karla: i'm so glad this day came because there are days that i have just -- couldn't sleep at night and cried myself because i don't have the money to invest. kane: we can't fix it. financially, we can't fix it. i've taken all the money i can. lemonis: we're moving forward. we are gonna come up with a new name, but, more importantly, we're changing the concept. if you follow the process, i'm gonna put as much money as i have to to make sure you're successful. look, change is difficult, right? it's very hard. but we're gonna make a lot of money together. sasha: i'm ready. i'm ready for that. in mt. lebanon, i'm gonna make that place look awesome. look, change is difficult. it's not gonna happen tomorrow. it's gonna happen right now.
we're gonna start the process now. sasha: all right. thank you. [ applause ] lemonis: you know, i can't be here every day. mike: i know. lemonis: and these people want a leader. and i don't know if you have what it takes. mike: oh, i'm ready. and i'm more than capable of carrying the load. lemonis: i want to tell you that i'm convinced, but i'm not. i hate putting my name on things that people aren't proud of. i hate it. i hate it. -it's a big deal for me. -mike: i'm more proud of this than i've ever been proud of anything. lemonis: you shouldn't be proud of this right now. it's a disaster. the only way this is gonna work -- you're gonna have to take very specific direction from me because if we tell them one thing and we do something else, i'll have to fire you. i think you sold them a bill of goods, and you didn't follow through. i need to get convinced that you're the right guy to lead.
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works! works? works. works. kathleen: i'm just so glad this all came to a head because it needed to happen. we need to make things better. mike: i just feel horrible that you find out that people lose respect for you. when rich said that, that's just -- it's like a punch to the gut. it's the worst. kathleen: you got to build that respect back up because it's the last thing you need. mike: it's not gonna happen overnight. little by little, day by day. -kathleen: i know. -mike: i'm ready. time to step it up and make it right.
lemonis: i brought the team to a new sushi concept in downtown pittsburgh that i feel has a really cutting-edge idea. what i love about this place is how simple and clean it is. this is the base. add what you want. here are our sides. and here's what's featured. the menu's simple, and it's easy to order. not only does it make the customer experience better, but it makes it a heck of a lot easier for the staff. kathleen: beautiful presentation. very nice. lemonis: and there's less waste. and less waste means more money. do you think you could execute this -at your place? -andreas: for sure. lemonis: if u're giving them different ways to use the assets that you have, then i can one day come and have a pita sandwich, another day come and have a rice bowl, another day come and have a salad. and so the goal would be to increase the frequency of visit. andreas: for sure. lemonis: do you guys -- starting to get the idea of what i'm looking for? -kathleen: absolutely. -michael: absolutely.
it's a simple process where you go into an ordering system and you go station by station, building your own ingredients. this is known as fast casual. while there's plenty of different varieties for concepts like this, no one is doing it in the greek food business. with the new concept in place, i want to make one franchise a prototype, so i'm starting with mt. lebanon because it's in the worst shape. this won't be a bar anymore. this is pretty much presentation. jace: this is it, yeah. lemonis: and so the customer will come down, and this is actually where they're gonna pay. and so we'll probably adjust this a little bit. we'll cut it down so that it's a.d.a. compliant, but we'll also put a blocker here. with more simple elements and cleaner lines, it's easier to duplicate. whether it's this box or 100 other boxes, we could scale this across the country. do you want them to pay first or pay last? jace: definitely last 'cause you can up-sell things -at the end. -lemonis: perfect. we're gonna probably have to close for a couple weeks. get this stuff done, all right? our next step is to make our own food fit this model.
so you're gonna get these green beans cut and seasoned. we're gonna season our chicken with a little bit more lemon, a little bit more salt and pepper. so i want to get the greek flavors up in all the food. instead of using water and greek rice, i use chicken broth. watch this. see, it's got a little bit of char on it. mike: more dill, less cucumber? lemonis: i think it's perfect. jace: opa! kathleen: that's it! you got that. i like that the best. lemonis: now that we've made a simple and authentic menu, i want to show the team how we're gonna service our customers. okay, come on up. o. jace: would you like to start off with a bowl or pita? kane: a bowl, please. jace: bowl? lemonis: how's that bowl? kane: great.
jace: what's up? kathleen: hey, guys, what's going on here? where's the construction people? rick: don't know the answer to that. jace: yeah, i couldn't tell you. mike: when did they start? jace: on wednesday. mike: how long did they say it was gonna take? jace: they said like 10 days. mike: this is day number three. these floors don't lay themselves. kathleen: this is never gonna be done in 10 days. did they say when they would be back? jace: i thought they were gonna be here at 8:00 this morning. -kathleen: what time is it? -mike: 9:20, almost. -jace: yeah. -kathleen: wow. mike: why don't you call him and see where he's at? say we're a little anxious to get this ball rolling. kathleen: tell him, "this is my livelihood." derek: yeah, what's up, buddy? mike: hey, derek. derek: yeah. how are you? mike: i'm -- i'd probably be a lot better if there were guys here working. what time are they supposed to be here? derek: i don't know what the schedule is 'cause -- kathleen: what? mike: is there a different contact number that we should have other than yours so we can kind of coordinate the schedules a little bit better? derek: no, i'll get it figured out. mike: i think we were under the impression
that this build-out would take about 10 days. derek: absolutely. mike: i'm sure you guys are miracle workers, but, yeah, right now, when you're looking at it, it's kind of hard to see the light at the end of the tunnel. derek: right. kathleen: this is ridiculous. lemonis: if your business is in trouble and you need my help, log on to... want to know a secret? i wasn't always a redhead. you'd never know it though, because it's nice'n easy color so natural looking
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mike: all right, so, hopefully, we'll see you guys shortly, then. derek: yes. thanks. mike: all right, you're welcome. bye. [ door opens ] hey, speak of the devils. what's up, guys? well, don't let us hold you up. lemonis: mike has seven days to help me implement the renovation of the mt. lebanon location. i want to brighten up the place by putting in subway-tile walls and new light fixtures. a new counter and serving area will be built to improve and streamline the ordering process. new tables, new equipment, and new floors. in all, i'm spending $85,000 of the $350,000 i invested. it's a big renovation for a pretty small space. hey, guys. -mike: hey, how are you? -kathleen: hi! lemonis: i'm really excited to gather up the franchisees at market square. i want to show them the new look and the new name -- the simple greek. lemonis: so, this name came from a branding expert. kathleen: um, "simple greek"? i'm offended.
mike: the feeling that i get is that when you say, "the simple greek," it's almost, like, condescending. like you're calling them somebody not too smart, like a very simple person, like a simple arse. it's a matter of semantics, if you will. lemonis: now, with all due respect, you're not greek. i'm greek. i'm not offended by it. i don't feel like you're calling me stupid. kathleen: i'm offended. lemonis: so that's one to one so far in terms of being offended. kathleen: are you offended? andreas: initially, i didn't really like "the simple greek," but when i see it on paper, it doesn't really bother me. lemonis: are you offended by "the simple greek"? -michael: i could be. -lemonis: you could be. michael: yeah. kathleen: i hate this name. lemonis: but you're not a branding expert, and i am. here's the option. because i want to respect your decision, you can call it whatever you want, but if you take my money, then it's going to be called something that works. don't trust the process? don't take my money. in any successful business, somebody has to be the leader. that's just what happens.
if we're gonna go to battle, it can't be like, "all right, which way are we going? everybody vote." it just doesn't work that way. you got to pick a path, and you got to go. i think that brands and names should be conversational. they should be entertaining. i like the fact that the name "the simple greek" is a bit funny and it's a bit ironic and it's okay once in a while to make fun of yourself. it's the greatest way to get people to do business with you. mike: they're also gonna remember "the simple greek," and there is an irony to it. and i think that when you walk in and you say, "what makes it so simple?" it's not as though the employees are dumb. it's just the process is that easy. -lemonis: right. -sasha: we are being simple. the process is simple, so it does make sense. kathleen: all right. that's fine. i will go with it. -mike: good. -lemonis: okay. this is what i do for a living. you got to trust the process.
when i walk in the door, it feels like a different place. -jace: it really does. -kathleen: absolutely. lemonis: i am blown away with how the place looks. it used to look dark and dingy, and now it's brighter, cleaner, d more simple. we replaced the old lighting with new fixtures, and we put in recessed lighting that really lights up the place. before, it was a cluttered, disorganized work space. and now the new kitchen is way more organized and supports our ordering process. so you took the lead, and you did it. good job. while i feel like we're on the right track, i'm very concerned about us making tonight's opening. there's no tables and chairs. there's no signage on the walls. there's no food prepared. i don't know how we're gonna make this. what we have to do is we have to work together. we're gonna get the furniture up here and ready to go. i want this thing to be open by tonight. for business advice and extra scenes from the show, log on to...
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[ horn honks ] lemonis: i love the fact that everybody showed up, and they're working together. it's like one big team. i think the biggest thing that i've seen in this entire process is that mike has built a rapport with the franchisees. they have rallied around him, all hands on deck, all pulling for the same cause. and in the end, that's the sign of a good leader -- a person that can rally people around them to come through in a time of need. ma'am, are you eating the profits? this food looks amazing -- fresh, clean, homemade, authentic, simple, and greek. this is the kind of food i'm proud to put my name on. we knew that the franchise system was really struggling on the communication side. in any business, i always tell people it's important to know their numbers. and in order to know their numbers, you have to have the right systems in place. i had at&t come in, and they set everything up,
so all of the stores will have wi-fi. they'll all have a new p.o.s. system, and it includes mobile pay. so if you do any street festivals or greek festivals, it's hooked right up to your system. you can swipe and pay. the thing for me that's most important is it's got an inventory system. it's really about communicating, which we weren't doing before. while they're finishing, i want to show you this. now that we've completed the renovation of the mt. lebanon location, i'm confident that it's time to move forward on the other locations. over the next six to eight months, we'll have completed all of them, with the first one being market square in mid-january. this is it. salt-and-pepper-shaker container looks weird there. let me get rid of these ladders. we're moments away from the opening, and it's important for every person in this group to see how far we've come in a very short period of time. what i wanted to do before we went inside is have you guys look through the glass and really see your future.
lemonis: jace. -you did an awesome job. -jace: thank you. lemonis: mike, you pulled it out, buddy. mike: thank you. lemonis: you did everything you needed to do. i think this is a good example of a team working together. how do you guys like the way the logo looks? -karla: i love it. -kane: i like it. -sasha: i love it. -kathleen: it looks nice, -but i don't like what it says. -lemonis: okay. kathleen: you said i didn't have to like it. lemonis: you're gonna like the checks that it prints. kathleen: okay, yeah. kane: that's the bottom line. lemonis: so, why don't we go inside? ladies first. when i first came here, my big fat greek gyro was a pretty broken business. in fact, it was more of a startup. but as we open these doors tonight, we're looking forward to the future. come on in out of the cold. kathleen: your first customers. did you find the ordering process to be kind of easy? woman: very nice. lemonis: simply just pick and go through. this is incredible, and the place is hopping. what's really exciting for me is to watch the franchisor and the franchisees work together. they're truly acting like a team now. mike: i just want to take a moment
and thank everybody for coming tonight -- the launch of the simple greek. i want to thank each and every franchisee individually from the bottom of my heart for participating in this. i know that change is very difficult, but i think that this change is gonna be well, well worth it. here's to mr. lemonis, and here's to the simple greek. [ cheers and applause ] andreas: opa! lemonis: with the simple greek mt. lebanon location completed, i'm excited to move forward on to the other locations and continue this across the country. what i feel best about is i now believe in the product and the process. but i especially believe in the people. the future of the simple greek not only looks bright, but it looks very profitable. all: opa! [ cheers and applause ] kathleen: opa!
greenville, south carolina, is home to west end coffee... ...a regional roaster with great product... that's pretty awesome. ...but even better margins. -we sell it for how much? -john: $48. lemonis: that margin's killer. co-owners are living proof that you should never mix business with pleasure. john: [bleep] you're horrible at doing the right things until you're forced to do it. lemonis: i not only have to put the right process in place... you made a huge inventory mistake. ...i have to figure out a way for the owners to coexist. you're so busy fighting that you're not busy selling. if not, west end coffee will grind to a halt. all right. rookie mistake. my name is marcus lemonis, and i fix failing businesses.