tv The Profit CNBC January 26, 2016 1:00am-2:01am EST
tonight, on "the profit"... how are you doing? -richard: what do you think? -lemonis: oh, my gosh. ...a progress report. this place looks great. over the past 18 months, i've traveled the country, trying to help small businesses, everything from pie shops to used-car lots... wow. look at this place. ...to clothing stores. some were in desperate situations. michael: [ voice breaking ] do you think i like to stand next to a man like you and admit that i can't be successful? [ sighs ] lemonis: others just needed some guidance. come on. you're a smart guy. you do the math. and i offered my money and my expertise for a stake in the business. -do we have a deal? -hank: deal. -pete: yes. -alan: yes. lemonis: a few of the deals went south. you don't how to treat people. -andrew: oh, yeah, i do. -lemonis: no. but today, i'm a proud partner in over a dozen companies.
-stephanie: whoo! -lemonis: tonight, i'm gonna tell you how they do it -- my best deals, my worst deals. steve: i'd rather be in more debt than have you running my company. lemonis: this is "the profit" -- a progress report. my name is marcus lemonis. change is difficult. and over the last 18 months, i've introduced you to 23 small businesses across this country, many of them in pretty bad shape. this is a bad scenario. woman: we don't have the money to pay them. larissa: just everything -- all the bills and everything that's just been piling up. it's just so much. lemonis: that's fine. and i fix failing businesses. it's been an interesting journey... well, this looks a lot better in here. ...a tough one. -i took you at your word! -gary: bull[bleep] lemonis: 'cause when each episode ends, my work is just beginning. there you go. to date, i've invested almost $20 million of my own money
to help these small businesses reach their full potential. stephanie: wow. i mean, i'm blown away. lemonis: along the way, i've taken a few hits. you kind of [bleep] me all along the way. but the real story here is that many of these companies have really flourished. -child: i wanted vanilla. -woman: vanilla? lemonis: i've always loved candy, and earlier this year, i went to jacksonville, florida, and i met another sweet tooth, master chocolatier peter behringer... lemonis: you look like you're a mad scientist with that lab coat. peter: i guess you could say i am. lemonis: ...who opened up sweet pete's, a candy store with a small mail-order business, in 2010. peter: it's the most awesome business there is. it brings joy to my life. lemonis: when i first met pete and his wife, allison, their company was generating $400,000 in sales but still posting a $17,000 loss, and it wasn't hard to see why. their store was a small house. it's in a residential location with no foot traffic and not a lot of business.
-can i see the kitchen? -peter: this is it. lemonis: and the kitchen, it was small -- less than 150 square feet. and the equipment -- well, it was better suited to bake a couple cakes rather than making product for a national candy company. and despite those facts, pete's candy was really good. yeah, that's good. peter: we're actually folding air into it. we're not using a pump. lemonis: i didn't really get a good taste. i need another one. but before we could do a deal, i needed to untangle pete and his wife, allison, from dane baird. peter: how do we buy you out? what do you want? dane: so, i don't want to sell. lemonis: dane had put up only $2,000 for his 50% share and had invested no sweat equity. and while pete and allison were collecting a check that they could barely live on... allison: we made $10,000 combined. lemonis: you can't live off $10,000 a year. ...dane, who owned the building sweet pete's operated out of, was collecting a healthy rent check. and how much rent did you get? dane: i think it's $1,400 a month, so... lemonis: their relationship was toxic. peter: i'm calling you out on your integrity. it's crap. i don't care how [bleep] hard it gets, i will be here.
where are you? lemonis: so, i bought dane out for $50,000 -- 25 times his original investment. peter: i never thought i was gonna get dane out of my hair. lemonis: a lot of money, but it allowed all of us to move forward and make a deal. for my $750,000, i will own 50% of the business, you will own 50% of the business. and with that money, we would start with some small moves, like improving the packaging, launching a new website, purchasing some mobile candy vehicles. peter: oh, my god! -allison: oh, my god! -lemonis: but the big move? well, that was to find a new retail location and build out an industrial kitchen. peter: this place that i'm thinking of is right across from city hall. it's right near public transportation. lemonis: and while i was skeptical at first... it feels like i'm going into a haunted house. ...and we found a 110-year-old historic mansion in downtown jacksonville and purchased the property for $500,000
and started the renovation. it's been four months since we took ownership of that property, and i've spent $2.3 million renovating it. we're just a few weeks away from our grand opening, and i couldn't be more excited. -allison: marcus. -lemonis: hey, how are you. allison: i'm doing wonderful. how are you? lemonis: this place looks ridiculous. allison: thank you. lemonis: this was a dark and very dingy room. i'm shocked how much light is in it. i'm blown away. the new sweet pete's will be a destination, and it's got a candy bar that's not only gonna excite kids, but it's gonna delight adults. the molds looks different. you bought some fancy ones? allison: yeah, we're getting fancier around here. lemonis: very cool. and our new packaging design is as playful and as elegant as our new store. -allison: this is my favorite. -lemonis: this came out great. [ chuckling ] those are huge. what do these sell for? allison: those are $22. lemonis: what does it cost to make? allison: $6.50 to make it, with the packaging. lemonis: and then $20 with pete's labor. allison: right, yeah. depends on who's making it. lemonis: let's go find pete.
what's up, pete?! this place looks great. peter: this is kind of like what you see in the movies. lemonis: this is the heart of sweet pete's -- a sleek, modern industrial kitchen. peter: well, this will hold 450 pounds of dark chocolate. and this is a cooker. lemonis: we bought state-of-the-art mixers, refrigerators, toffee makers, and candy cookers, costing over $300,000. now, these tables are made specifically for making caramel? peter: really, any type of candy. lemonis: there's storage, so we can have plenty of inventory to anticipate the demand, and there's an amazing workspace where pete and his staff can not only produce new product, but they can experiment. so, this is a little different than that -- like, we were at the kettle. peter: yeah, it's a little different. lemonis: it's quite a change from the old kitchen they were working in just four months ago. i noticed on the architectural plans i signed off on that there's an event center, there's party rooms. allison: you can do candy cocktails, beer, wine, anything from a corporate luncheon to renting out the entire building for a huge party. lemonis: why don't you guys give me a tour? i want to see the restaurant.
so, this is the candy apple café and cocktail. lemonis: this looks so cool. allison: it's still whimsical and fun but in a very sophisticated way. lemonis: sweet pete's will offer much more than candy. it will also offer a full-service restaurant, factory tours, and candy-making classes. we have space for birthdays, corporate events, and even weddings. we'll generate revenue in many different ways, and we've already seen a jump in sales. right after the first show aired, what kind of volume were you seeing on the internet? allison: oh, it was crazy. we would normally do $15,000 that month. we did $100,000 in a week, basically. lemonis: while it's an expensive proposition, this was the right play for us. allison: it feels very right. lemonis: to date, i've invested over $3 million in sweet pete's, and we've gone from generating $30,000 a month in sales to over $100,000 a month in sales. and we're just getting started. i'm excited about the future. i don't know how you guys are, but... allison: that means a lot to us to hear you say that. lemonis: i feel like i've put on 15 pounds since i met you guys.
pete: i mean, i can't think of anything that could possibly top this -- this is amazing. lemonis: you guys did a great job. peter: we couldn't have done it without you. lemonis: all right, guys. i'll see you in a couple weeks for the grand opening. -allison: all right. awesome. -lemonis: thank you so much. -and send me my christmas order. -allison: [ laughs ] lemonis: i'm out of candy. like every deal i do, sweet pete's started with a handshake, and that brings me to a question that i get all the time -- why do i deals on a handshake? -do we have a deal? -jon: i'm in. -richard: we have a deal. -lemonis: let's go to work. i believe that deals are built on trust. -nancy: we got a deal. -lemonis: we got a deal? -pete: we have a deal. -woman: we have a deal. lemonis: that's more valuable to me than a piece of paper. it's worked well for me so far. but at the end of the day, you ultimately meet people who don't honor their word, and that's where i get burned. it happened on our second episode. do you know where i find hank? maarse flowers was an institution in pasadena, california. when the company's founder, jacob maarse, died, his son, hank, took over the day-to-day operations. -hank: marcus, nice to meet you. -lemonis: nice to meet you.
and he didn't have the touch that his father did. the front of the store was in a state of chaos. [ chuckling ] like, you don't even know where to look first. and they were hemorrhaging money. how much money will this business lose this year? hank: close to $200,000. lemonis: with an infusion of cash and some fresh thinking, i believed maarse could become thriving once again. i'm gonna give you a check for $100,000, but for this $100,000, i want 25% of the profit. hank: all right. i'm okay with that. lemonis: we have a deal? hank: this is all done on a handshake? lemonis: is your handshake not good? hank: mine is. -lemonis: do we have a deal? -hank: deal. lemonis: over the course of about two weeks, i installed a system to track inventory, reorganized the warehouse, wrapped the vans and put in gps systems to make delivery more efficient, brought in designers to re-imagine the front of the store and make the customer experience way better. and i even taught them how to properly price an arrangement. these margins aren't acceptable. we can't make money that way.
lemonis: i invested $150,000 and could already notice business improving. woman: i love shopping here. [ chuckles ] lemonis: but that wasn't enough for hank maarse. hank: between you and me, i'm not gonna take your deal. lemonis: why's that? we had a handshake on it. hank: well, you said you were gonna give us $100,000. lemonis: i spent over $100,000. hank: well, i don't know what you did spend. lemonis: hank, are you [bleep] kidding me? hank: yeah, no, i'm not [bleep] kidding you. we had a deal, and you didn't do it. lemonis: you better call your mama and get my money back. i had a handshake deal, but the contract wasn't done yet. if you want to change the deal, you should be a man about it, but to tell somebody they did nothing? hank: i'm not saying you did nothing. i'm saying you didn't do what you promised. -lemonis: get out of my face. -hank: fine. lemonis: you're a thief and a liar and a cheater. hank walked away. and at that point, i had lost $150,000. two weeks after the episode aired, hank's mother called and sent me a check for $150,000. that deal just cost me time, but that's not always the case. -peter: marcus, i'm peter. -steve: marcus, i'm steve.
-lemonis: nice to meet you. -steve: nice to meet you, too. lemonis: skullduggery, a family-run toy design and manufacturing company in anaheim, california, was exactly the sort of company that i felt had great potential. the company had generated $1.6 million in sales the previous year, but they were still losing money. steve: it's a big loss. lemonis: and while they had one or two products that had real potential, most of their products were missing the mark and collecting dust. i don't get this game. it's not fun. but if i can increase their visibility on the toys that were selling and push them to create new toys, i knew i could turn skullduggery around. so, i did a deal, and i invested $1.1 million for 30% of the company and an ongoing sales royalty. so, i want to be able to have control over the financial side. i don't want you taking on any debt or taking on any other partners without me being okay with it. -steve: i think that's fair. -peter: you want to shake on it? lemonis: and do we need to run this by your dad? -steve: no, i don't think so. -lemonis: we have a deal? steve: i feel good about it. let's do it.
lemonis: so i went to work. i spent $105,000 to redo their facility... we're in the toy business. lemonis: ...and built a state-of-the-art design room. so, this whole room is gonna turn into a lab. and we found a 3-d printer that allowed us to create prototypes for new toys. -will you take a credit card? -man: we'll take a credit card. lemonis: it was a $240,000 investment, this is printed? -man: that was printed. -man #2: layer by layer. lemonis: and i got them a meeting with nascar, and the plan was to do a licensing deal to make the products more appealing to big-box retailers and sell their glow-in-the-dark racecars to a much bigger audience. man: what about your company will help the nascar brand? steve: let me go first. [ laughing ] "hey, steve, why do you think nascar's good for skullduggery?" [ chuckles ] lemonis: and that's where things began to fall apart. steve: you know, i just met with toys "r" us, walgreens, and kmart. -man: yeah. -steve: and... they didn't think nascar was a good idea. no interest at all. lemonis: i was furious.
you absolutely embarrassed me. when you talk, you're a reflection of me, and i don't operate that way. and when i asked them to begin working on new ideas, they came up empty. i asked for one thing. steve: if you could come up with a good idea, i would love to do it. lemonis: honestly, i just feel like you've basically just said, [bleep] you. i'm just not gonna do it." they didn't want to take creative direction, and they also didn't want me to control their finances -- a condition of the original deal. steve: i'd like you to sit down and talk to my father. lemonis: okay. we had a handshake, and we had agreed to the terms of the deal, and i had spent time and money. but they were no longer interested in honoring our deal. pete: i can tell you right now, we are not gonna iron out those deal points -- no way. lemonis: you're asking me to throw a million dollars in and be subjected to whatever fate you decide. "go stand in the corner, and shut the [bleep] up." that's essentially what you're telling me to do. steve: we don't like the fact that you can say no. lemonis: i don't see it working. steve: then, we can just [exhales sharply] if you want. lemonis: yeah. steve, honestly, you kind of [bleep] me all along the way.
you just did. i walked away, and while i was out the $105,000 i spent, i managed to get the 3-d printer returned. people ask me all the time how it feels when people take my money or the deal falls apart. look, it stinks. i work hard for my money. and i didn't always have money. and so the money that i do have, i take very seriously. -hey! good seeing you. -pete: how's everything? lemonis: welcome to jacksonville. this place feels really good. lemonis: now we get to go inside and see tina's bars. michael: awesome. that's why i'm here. richard: how you doing? lemonis: so, this is it? richard: so, this is it. what do you think? lemonis: i was blown away.
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lemoniwoman: we have a deal. lemonis: when i invest in a business, i have a pretty good idea of what i'm gonna do with it. carolyn: it'll be the best haircut you've ever had. lemonis: but sometimes, even i'm surprised of what opportunities come up along the way. [ laughter ] in 2013, i went to new york city to meet jon and andrew baron, the owners of carcash, an auto-buying service. they were hanging on by a thread. jon: we're dangerously low on cash right now, which means i can't buy cars. lemonis: the brothers had taken over the business when their father died. and by the time i arrived, their relationship was falling apart.
jon: next time you want to make a $7,500 purchase, you better come to me first. lemonis: sales were slowing, the losses were mounting, and they were $200,000 in debt. without help, a business that had lasted for decades would be gone within a matter of weeks. andrew: i'll do anything to fix this business. lemonis: the auto industry represents several hundred billion dollars to the american economy, and i felt like carcash was a great place for me to start. so, i struck a deal with the brothers -- $200,000 for 100% of the company, and they would become licensees and maintain their ownership of the original location. -lemonis: do we have a deal? -jon: i'm in. lemonis: all right. do we have a deal? andrew: absolutely. thank you so much. lemonis: let's get to work. and i made the manhattan location the model for what i envision to be the national brand. this whole place is getting redone. i spent $350,000 to renovate the space and dramatically increased our advertising to bring in volume.
i improved the margins by fixing the appraisal process so we could buy lower. jon: i noticed the wheels are a little scuffed, also. lemonis: i also eliminated the wholesalers so we could sell higher. they're taking margin right out of your pocket. do you not see that? jon: who the hell am i gonna sell my cars to? lemonis: dealers. previously, they were buying 70 cars a month at an average gross profit of $1,100 per car. today, they buy an average of 220 cars a month with an average gross profit of $2,300 per car. on an annual basis, they're generating more than $5 million of additional gross profit. that's why changing the process was important. jon: after marcus came, business increased substantially and the profit margins increased, as well. andrew: marcus has imagination, and that's what really propels businesses forward. lemonis: what i love the most is that the baron brothers are closer than ever, and they're secure, debt-free, and making a lot of money. they're each making over $200,000 a year,
with the opportunity to make a lot more. andrew: you gave us hope. lemonis: i'm really proud of you. jon: the man built an entire national brand in one week. it's the most impressive thing i've ever seen. lemonis: to date, i've invested over $1.5 million into what's now known as 1-800-carcash -- $350,000 for renovation, $300,000 to eliminate liabilities and debts, $450,000 for working capital for the manhattan location, and $450,000 for marketing and expansion efforts. man: where do i get started? what do i got to do? lemonis: now i'm taking the carcash brand and opening up locations all over the country, buying over 7,000 cars a year and generating over $100 million in sales. we're now becoming one of america's largest auto-buying services. but as 1-800-carcash continued to grow, i started thinking i was leaving money on the table, and now it was time for me to take the next step and get into the retail business for myself.
i was given that opportunity when i found athans motors -- a high-end used-car dealer outside of the city of chicago. owner pete athans has spent millions turning his dealership into a man cave. how much debt do you have on the business? pete: $6.9 million. lemonis: i'm sorry -- how much? but he didn't know the auto business at all... the reason you're taking a $5,000 loss is 'cause you bought the car wrong. ...and he often failed to listen to people who did. -do you trust tony? -pete: no. lemonis: as a result, athans motors was losing $1.8 million a year. what matters is that you make money, these people's jobs get saved, and the business survives and it thrives. -that's the goal here. -pete: you're right. lemonis: what do you stand to lose if this business closes? pete: i would lose my house, my dream. it would be catastrophic. lemonis: so, i made a deal with pete -- $3.5 million for 50% of the company. -lemonis: automatch usa. -woman: i love it. lemonis: i've re-branded the business, and i've stocked it with affordable cars. luckily, i knew where to find them.
today, i'm headed to jacksonville, florida, to check out one of our new locations. this place feels really good. -hey! good seeing you. -pete: how's everything? lemonis: welcome to jacksonville. -what do you think? -pete: looks great. lemonis: while pete is still a 50/50 partner in automatch and collecting a nice profit every month, he is no longer an employee of automatch. the one thing i noticed is that he's a lot happier. pete: in warren grove, there's a general manager running it. better off having somebody there with everyday experience to run the operations of a big corporation, who has car experience. lemonis: do you feel like you're better off today than you were? pete: i feel my stress level has diminished. my wife's pregnant -- our first baby. dream to be a million-dollar company, now to be a billion-dollar company one day -- my dreams could never dream that high.
lemonis: when i first arrived at athans motors, the sales were around $6 million a year, but the losses were close to $2 million. since then, i've invested $12 million to open up new locations -- my biggest investment to date. by the end of 2015, we'll have nine automatch locations, and i expect them to generate close to $200 million in sales and make a very healthy profit. and the best part is that automatch gets over 60% of its inventory from 1-800-carcash. now, that's a win-win for both companies. if your business is in trouble and you need my help, log on to...
rma. checking your credit score is for chumps. i have great credit. how do you know? duh. you know those change, right? tattoos don't change. try credit karma. it's free and you can see what your score is right now. aren't you a little bit curious? i just got my free credit score! credit karma. really free credit scores. really free. i have got to update my ink. lemonis: when i come to check out an investment, i usually know what i'm getting -- a candy maker, a car dealer, a pie shop. sometimes, there's an even bigger opportunity hiding in plain sight. and that was certainly the case with pro-fit, a small gym in indiana owned by married couple tina and michael sena.
michael thought his gym was one-of-a-kind, and, well, it kind of was because it didn't offer the equipment and services that most people like to use. so, i would need to join anothgym if i wanted to swim or use the elliptical or ride the bike? michael: yes, sir. lemonis: i would only come here for specific -- michael: results. results. lemonis: but for michael, the biggest reason to join his gym was, well, michael. michael: i'm a book author, fitness-product inventor. it's really been the michael sena show. lemonis: not only did he keep tina out of the spotlight... michael: nobody would recognize her name. they would recognize my name first. lemonis: ...he kept her out of the financial decisions, as well. michael: let's you and i have a man-to-man about the numbers. i'd rather -- well, well, she's not familiar with them, so... lemonis: i mean, she's a part owner, right? it just wasn't working. i mean, w-where is everybody? tina: from 11:00 to 3:00, we're empty. lemonis: you don't know much about business. what was working was something that michael was taking completely for granted. did you come up with all these recipes yourself?
tina: i did. lemonis: sidelined by her husband, tina began to make and sell a collection of all-natural protein snacks. tina: i just started throwing some stuff together, see how it tasted. -lemonis: they taste good. -tina: [ chuckles ] lemonis: i saw a lot of potential in tina and her snacks, and i also saw incredible passion in michael. michael: chest up. attaboy. nice, high thighs! lemonis: so, i decided to make two deals with the senas -- $50,000 for a 50% stake in tina's protein snacks... tina: thank you. lemonis: ...and $250,000 for a 75% interest in pro-fit. but michael resented his wife's new business venture. michael: when we met a long time ago, we said we would do everything together. me sitting out here like i'm some chooch. tina: i've done a lot of [bleep] for you. -michael: you talk too much. -tina: this is -- no. lemonis: and i decided i could no longer trust him with my investment. you're off distracted looking at somebody else's business. the deal's off. it was the wake-up call that michael needed. michael: [ voice breaking ] do you think i like to stand next to a man like you, in front of my other people,
and admit that i can't be successful? -you got to be kidding me. -lemonis: listen to me. money is a byproduct. it's not the purpose. and you have a purpose. michael: i just feel i've gotten in the way, maybe haven't always respected you the way i should have, and i'm sorry for that, honey. lemonis: but he realized that his business's biggest asset had been standing next to him all along. tina: oh, my god! no way! aah! michael: we even went as far as to change all of the business cards, the letterhead, everything. it was time. lemonis: i'm amazed at how far michael has come. the deal was back on. i'll give you the money you need to kind of grow the business, and we'll perfect the model. michael: thank you. lemonis: okay? i'm proud of you. michael: thank you so much. tina: welcome to the new pro-fit. michael: yeah! lemonis: today, the gym is thriving. they're offering new classes like yoga and spin, and they regularly sell out. membership is up over 10%, and the profit is, as well. still, i wanted to make sure that michael would treat tina
like the valuable partner she is. the healthier the relationship, the healthier the business. michael: hey, marcus! good to see you! -tina: hi! -lemonis: how are you? -tina: i'm good. how are you. -lemonis: what's new? you guys seem, oddly enough, more at peace with each other than you did the first time we were together. and if you guys weren't healthier, the business, honestly, wouldn't be healthier. michael: that's correct. lemonis: i spent about three months working on getting us into gnc. michael: wow. lemonis: so, now we get to go inside and see tina's bars. michael: awesome. that's why i'm here. lemonis: you want to go take a look at it? michael: congratulations. yeah, let's. awesome. lemonis: this is the real opportunity i found at pro-fit -- tina's bars. and they've taken off. tina: [ gasps ] oh, my gosh. michael: look at that. unbelievable. tina: wow. lemonis: in nine months, we've gone from a brownie sold in a gym in indiana to a new bar sold in over 3,000 gncs across the country. for me, the holy grail was gnc. tina: for me, too. are you kidding me? this is where i shop.
lemonis: and it's exclusively at gnc for a while. michael: my wife's product on these shelves is just amazing. lemonis: with her at the center of attention, he couldn't be more proud. michael: my wife and i have a wonderful marriage. it's solid, and it's now helped our business go to the next level, as well. lemonis: are you proud of her? michael: very proud. very proud. marcus coming into our business and helping us go to the next level was the single best thing that's ever happened to us at pro-fit. lemonis: michael and tina are gonna make a lot more money with the pro-fit bars than they do with the pro-fit gym, and over the next year, we plan on selling about a million bars, generating $900,000 in revenue and $200,000 in profit. and we're gonna launch a number of new product extensions. tina: oh, my god! michael: good job, honey. you did great. tina: oh, i can't believe this! -michael: [ smooches ] -tina: ah! -michael: well done. -tina: amazing.
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seize it! lemonis: i believe in the three pillars in business -- people, process, and product -- and it's been my mantra in life and on the show. improving the product is rarely an issue. noemi: voilà. lemonis: at courage. b, we took a woman's-clothing line that was all over the place... noemi: i never approved this design. -nicolas: you approved this. -stephanie: are you kidding? lemonis: ...and often poorly made. it's disturbing.
and we reinvented the business and created a new line around a few well-edited pieces. woman: i love this top. lemonis: and there are always ways to fix the process. my big fat greek gyro was a collection of mediocre restaurants masquerading as a well-executed franchise concept. it became a true franchise concept when we standardized the look, refined the menu, and changed the way the food was made and served. all: opa! lemonis: but changing people -- that can be tricky. some are eager to jump on board, but others needed coaxing. and then there are these people. andrew: what are you talking about?! -woman: don't even go there. -andrew: i'm not going anywhere. -gary: bull[bleep] i didn't. -lemonis: bull[bleep] when? john: i'm not selling my soul to anybody to put up with your [bleep] lemonis: the owners of key lime pie, jim and alison, had three pie stores, but business was bad and they hadn't taken a check in months. i wanted to shut down one of the stores. it was losing $25,000 a year and it was a no-brainer.
jim: you're coming in here. you're telling me you're closing the store. lemonis: that's right. jim: what are you gonna pull next? i mean, what's gonna happen tomorrow? lemonis: whatever it takes to be very successful. whatever it takes, because the plan that you guys have had didn't work. we're closing the store. we're done. i'm not talking about it anymore. -jim: you better be right. -lemonis: i know i'm right. jim: i can't put up with this [bleep] anymore. lemonis: and then, there was andrew rosenthal, the owner of la dogworks -- a full-service grooming, boarding, and training facility. i thought the staff was fantastic, and i loved the business. and i thought it would be a great investment, but there was one big problem. andrew: who's the top dog? who's the alpha male? me. lemonis: oh, my gosh. i hate him. i spent six very long days with andrew rosenthal, and i thought there was ways to improve his brand. but there were rants... andrew: e-mail me the...schedule! -lemonis: ...and abuse... -andrew: who the... do you think you are, staring me down? lemonis: ...and more rants. woman: that's not fair.
andrew: what are you talking about?! woman: don't even go there. lemonis: you don't know how to treat people. andrew: what people? the staff? lemonis: us people. andrew: [ laughs ] lemonis: and this was one that i simply just had to walk away from. but every once in a while, difficult people do surprise me. nancy: whose phone number is tammy's?! whose number is this on tammy's piece of paper? tom: you want to start airing the dirt, nance? maybe you shouldn't have been at a wedding and [bleep] some guy in a bathroom! -lemonis: remember these two? -nancy: the deal's off! lemonis: tom etheridge and nancy pappas. they owned worldwide trailers. nancy: nancy pappas. nice to meet you. tom: hey, marcus. tom etheridge. lemonis: when they weren't fighting and backstabbing, this former couple ran a company that made custom concession trailers. and so, this is essentially a commercial kitchen. their product was good, and they were generating about $4 million in revenue. and they were even making a profit -- about $400,000 a year. i wanted in. the check that i write will be $700,000, and i get 50% of the business.
nancy: we got a deal. -lemonis: we got a deal? -tom: we got a deal. lemonis: i knew with a few adjustments, this business could grow quickly. they built the trailers in georgia, but tom and nancy ran it from an office 300 miles away in tampa. tom: we're paying two mortgage payments. that's like 2,300 bucks a month. lemonis: if they could consolidate, they would be much more efficient and save a lot of money. nancy: 60 grand is what we're paying in a year to transport them just down here. -lemonis: would you move? -nancy: absolutely not. i live on the beach. lemonis: but there were other warnings. they were careless with inventory. why is there stuff everywhere? -they didn't track it. -man: to be honest with you, this is one of the worst inventories i've seen. lemonis: and they didn't know their numbers. nancy, you should know down to the nickel what it costs you to make an 8.5x20. but in the end, it was their relationship... tom: you don't need to threaten me, nance. nancy: i'm not threatening you! lemonis: ...that drove me away. nancy: 'cause you're a [bleep] scammer and a liar! tom: [bleep] that's you. i can't work with you. nancy: the deal is off!
-tom: i don't give a [bleep] -nancy: the deal's off! lemonis: but in the end, i was there to be a business partner, not a mediator. i can't do business with you guys. but this is a story with a twist -- a happy one. a few months after the deal fell apart, tom reached out to me, and he told me that the show forced them to look at things differently. many of the ideas that he actually discussed with us have taken place since the show aired. lemonis: they moved the entire business to georgia, saving them about $100,000 in expenses, turning it into instant profit. and they finally put in a much-needed inventory system. tom: we can actually keep track of when a p.o. goes out and an order comes. we have the means of verifying that the order's been fulfilled. lemonis: most importantly, they figured out how to let go of the past and move forward together. tom: i sent you that e-mail, right, nance? nancy: we knew that we had some areas that we needed to be a little better at.
we're still pushing along and pumping out trailers -- growing every single year. lemonis: we didn't do the deal, but i'm truly happy that they took something away from our experience. and they turned a negative into a positive. what do you think it takes to get it all the way to open? michael: $600,000 mark. lori: whoa. richard: what a mess. lemonis: the building isn't gonna cost $600,000. it's gonna cost $1.3 million. michael: it was a mistake. lemonis: but it's a mistake with my money. michael: it is never gonna happen again. lori: god, do you believe this? -lemonis: it looks fantastic. -lori: unbelievable.
these are the hands, the hands that drive commerce, that build business across borders. these are the hands of pitney bowes, the craftsmen of commerce. these are the hands that sew the seeds of business growth, that weave the data, and find the perfect spot to thrive. these are the hands of pitney bowes,
the craftsmen of commerce. ank you for everything. woman: thank you, marcus. mike: here's to mr. lemonis, and here's to the simple greek. [ cheers and applause ] lemonis: for me, these investments are about much more than money. i get a lot of satisfaction helping businesses help themselves. but i won't let people take advantage of me, and if they try, things can get messy. when i first went to brooklyn to see a. stein meats, i was excited. for over 75 years, they'd been selling quality meats to new york's finest restaurants and butcher shops. so, how much revenue will you do a year? -alan: we should do about 50. -lemonis: $50 million? -alan: $50 million. -lemonis: that's a big business. lemonis: owners alan buxbaum and howard mora had taken over a. stein from their fathers who founded the company, growing the company from $5 million to $50 million. woman: that's beautiful. lemonis: and their hamburger, the brooklyn burger, was a staple at new york's three biggest sporting venues.
-howard: good burger. -lemonis: it's the best. but it soon became clear that all their success was going to waste. how much do you think you'll lose this year? howard: about $400,000. lemonis: a. stein was a mess. they owed people a lot of money, and then when they sold product to other customers, they didn't even collect that money. still, with some significant adjustments, i felt like i could help alan and howard save the company that their fathers built. so we struck a deal. come here, big guy. and i'm putting in $1 million. -there's the money. -alan: thank you. lemonis: so, in return, i was gonna own 50% of a. stein meats, but then i learned that the company was in way more trouble than i had been led to believe. woman: their payables are about $3.8 million. lemonis: that's several million more than i thought it was. and i learned that this company was more than $5 million in debt. guys, this is bad. this business is two weeks away from closing. i knew i had to withdraw my offer, but i also knew
that alan and howard weren't gonna be able to make payroll unless they got help immediately. they needed $200,000. so we made one last deal. i'm gonna help you as much as i can, but in order for me to give you that money, i'm gonna need to get a return on my money, and the only thing that i can think of is that i buy brooklyn burger from you. alan: we're willing to do whatever it takes. lemonis: on a handshake, i wired them the money that very day, and seven months later, i still don't have the burgers that i paid 200 grand for. but what i do have is a very expensive lawsuit. people always ask me how seriously i take this show. well, why don't you google marcus lemonis and stein meats and see what you find? see, i was happy to take care of those employees. they deserved to get paid -- they did the work. alan and howard are the ones i have a problem with. they took my money and chose not to honor their end of the deal. unfortunately, alan and howard weren't able to save a. stein.
a few months ago, the bank foreclosed on their business, and a. stein no longer exists. sometimes deals fall apart, but sometimes things just fall into place. in season one, i made a deal with mr. green tea ice cream. -that green tea's good. -lori: isn't it good? lemonis: the company, run by the emanuele family -- rich, lori, and their son, michael -- primarily sold their ice cream to asian restaurants in the new york city area. richard: you know, my dad started this business 45, 50 years ago. he saw the need of high-quality ice cream for the restaurants. lemonis: unlike some of the other companies i work with, they were not struggling financially. $2 million in sales, and they made a healthy profit. richard: we have grown 20% every single year for the last five or six years. lemonis: but this was a company that was stuck in neutral. richard: we physically cannot fill our orders to the distributors. lemonis: they ran their business out of a small test kitchen, and they didn't have a factory to produce ice cream. instead, they would go to a third party, a co-packer,
to make the product for them. and because of this, on an annual basis, they would give up about 22% of margin, close to $500,000. and michael had a grand solution to this problem. michael: we want to build a facility and bring all the manufacturing under one roof. lemonis: but richard, who owned 100% of the company, liked to play it safe. lemonis: and what's held you back from doing it? richard: i'm very, very conservative. michael: conservative to a fault. lemonis: this was a company in crisis. michael: you are strangling the business. richard: back up. you're crossing the line between father and boss. lemonis: ice cream is a $10-billion-a-year industry, and it's a crowded market, but i felt like their product was unique, and, despite their challenges, i made an offer. so, do we have a deal? michael: [ exhales sharply ] lori: it's a no-brainer, as far as i'm concerned. richard: we have a deal. lemonis: we were ready to move forward. michael had already found an old, abandoned factory. -lori: whoa. -michael: isn't it beautiful? richard: you know, michael, the more i look at this place,
the more scared i get. lemonis: we'd buy it... the building is officially ours, as soon as rich signs. ...renovate it. what do you think it takes to get it all the way to open? -how much money? -michael: $600,000 mark. lemonis: our plan was simple, but it wasn't cheap. the building isn't gonna cost $600,000. it's gonna cost $1.3 million. this was going to be a big renovation -- $250,000 to buy the building, $50,000 just to get rid of the garbage, $100,000 to put on a new roof, $400,000 to build out the interior of the space, $100,000 to build out the exterior, and $300,000 for state-of-the-art italian ice-cream manufacturing equipment. michael's numbers were off by $700,000. michael: it was a mistake. lemonis: but it's a mistake with my money. michael: i know that. it is never gonna happen again. lemonis: it was a hard lesson for all of us. but a few weeks ago, i saw the new facility, and i was blown away.
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i saw mr. green tea's new facility, and i was blown away. the building was almost unrecognizable. inside, we exposed the ceiling to reference the building's history, but the floors are polished concrete, which gives it a modern and sleek look. the walls, not my first choice. but this is mr. green tea, so it all makes sense. hey! how are you? lori: oh, my god. do you believe this? -lemonis: it looks fantastic. -lori: unbelievable. and the color is not -- it's not bad. lori: yeah, i love this. you guys need your...
lemonis: how are you, buddy? -michael: what's going on? -lemonis: how you doing? -richard: how you doing? -lemonis: what's happening? -you look a little too relaxed. -richard: i know! lemonis: so, this is it? richard: so, this is it. what do you think? lemonis: it's interesting to see how different it looks. this place last time was a war zone. this is our biggest makeover to date -- an 11,000-square-foot facility and a state-of-the-art ice-cream factory. with all this new equipment, i'm excited to see how it works. so, what does this do? michael: this is a pint filler. this takes a pint, drops it into the carousel, fills it with ice cream, heat-seals it, date-codes it, and ejects it out the other end. lemonis: what does a machine like this cost? michael: this is about $150,000. lemonis: just for this little thing? -michael: yes. -lemonis: $150,000? michael: you'll make it up in waste. lemonis: well, aren't you in charge anymore? can i see the process? -michael: we can, yeah. -lemonis: let's do it. [ machine whirs ] this machine is our future, and it can fill up to 4,000 pints per hour.
we get $2.50 for every pint that we sell. that means we can generate up to $10,000 an hour, or $80,000 in an eight-hour day. -come on, lori! -lori: we're doing it. lemonis: holy... [ laughs ] lori: you want to taste it? i mean, it is just beyond beyond, right? lemonis: so much smoother. this is mine. lori: you got it. lemonis: since i did this deal, mr. green tea has more than doubled their revenue, and they're gonna do about $5 million in sales. but with this factory, it has the capacity to do between $25 million and $30 million worth of sales. i've already given them a huge account to make ice cream for crumbs, and they've added new flavors to the mr. green tea line. and over the next six months, mr. green tea ice cream will be in over 6,000 grocery stores nationwide. what do you guys see as next? richard: we're working with another company. they have food service. business was probably $13 million. and they're very interested in us taking that over.
michael: when they contacted us a few weeks ago, her opening line was, "we're done fighting mr. green tea's distribution in new york." and that -- i think that shows, you know, the -- the real -- the real actual labor and work we've put in the distribution end of the company. i think probably the highest moment to date has been knowing that we're finally independent and not relying on other companies to manufacture our products, other companies to make money. that really is the heart and soul of the business. lemonis: look at how different his game is. you really have your act together. i'm telling you, just 'cause i'm not with you... lori: and he's gorgeous, isn't he? michael: okay. very good. all right. lori: the process of working with marcus has been wonderful. it's just something that i never even could have imagined -- really, really a dream come true. lemonis: did you just wipe the kiss of your mother off? michael: i wiped the lipstick off! i didn't want to have lipstick on me. i didn't wipe the kiss off. lemonis: yeah, yeah, yeah, yeah, yeah, yeah. richard: i'm very excited about the future. with marcus' name attached, the show, the amount of companies that have come to us for help or co-packing or taking over their brand
has been unbelievable. so, you know, what's happened in the last two or three months hasn't happened in the last 20 years. lemonis: i'm very proud of you guys. richard: that means so much to me. lemonis: and i'm really proud mostly... of michael, just so you know. [ laughter ] richard: yeah, yeah, yeah, yeah. lemonis: you know, when you come off green tea, that -- that's really the success that i love. and the successes are what keep me going. peter: oh, my god! allison: oh, my god! lemonis: and you can take somebody who has lost their way or who is struggling, and you can set them in a new direction. i'm gonna give you six months worth of pay, okay? take care of your baby. woman: thank you. lemonis: the real heart and soul of what we do here on "the profit" is helping people. what -- what else is there? cheers. man: guys, to a new beginning. lemonis: cheers. [ glasses clink ] woman: oh, yeah. it is.
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