tv The Profit CNBC September 26, 2016 11:30pm-12:31am EDT
not abandoning the current line of business. ricky: to produce more product to go out the door, we need more people here. where we gonna put these people? lemonis: gonna have to work in shifts. ricky: okay. roni: i feel like the reality is the money that i'm making and the responsibilities that i have -- it doesn't work for me. lemonis: is everybody here paid by the hour? ricky: yes. lemonis: when revenue goes down, do people's hours get cut? tad: yes. roni: we leave earlier and definitely have, like, another day off. lemonis: well, when you saw the food truck, how many of you thought to yourself, "how could we afford to buy a food truck, and we can't afford to give everybody raises?" raise your hand if you thought that. roni: i think we all thought that. lemonis: raise your hand. sad: everybody raise your hand. lemonis: so, no group discussions are happening. and that's creating a lot of tension. jennifer: that's why maybe everybody didn't "whoo-hoo" when we saw the truck. lemonis: yeah. look, i don't think tad kept the food trucks from his team on purpose. i don't believe he operates with malice. he's just so hung up with what's going on inside of his own head and so anxious that he just didn't think about anybody else.
it's the same exact problem that causes him to panic and look over the shoulders. the purpose of the food trucks was to take away some of the unpredictability. if the entertainment business happens to be taking a two-week hiatus in chicago, i don't want to stand around wondering how we're gonna get our bills paid. and the goal would be, we know that a percentage of the revenue that comes from the food trucks is going to go into an employee kitty. i want to make some damn money. and i want you guys to make some money. if the food truck doesn't work, we don't get a bonus. if the food truck goes out and sells a bunch of stuff, everybody gets an extra check on top of their wage. we're going to get the pay right for everybody on a per-hour basis. jennifer: sweet. okay. roni: pinkie-promise me? lemonis: yes, but then you got to stop bitching. [ laughter ] roni: deal. lemonis: and so what you have to do as the leader of the business is take responsibility, going forward, and actually communicate with the team. now that mutiny is off the table, it's time to get back to business.
so i brought tad to panos foods, the largest food distributor in chicago. currently, tad uses several different vendors. but by consolidating all of his purchasing into one vendor, we're gonna save a ton of money. what would you say that you'll save buying here on a consolidated basis with one supplier, versus the way you buy today? tad: i would hope it would be at least 2% to 3%. adam: i would hope, anywhere between 8% to 10%. lemonis: it's always good to save money, but making money is more important. we need that second food truck. tad: tad's found one in l.a. that seems perfect. rachel: three-compartment sink and then the water heater and all that is down under here. tad: you know it's -- it's awesome. lemonis: i really feel like we're on the road to success. rachel: thank you, guys. lemonis: let's see if we can find the trucks. now that we have both food trucks, i've asked the maintenance team
at camping world to prep them for artwork. and tad and i are stopping by to check on their progress. what's happening? man #7: not much, sir. how 'bout you? lemonis: how does this one look? man #7: it's a little rough. lemonis: how much work you think there's gonna be? a lot? man #7: there's gonna be quite a bit, sir. we're looking at oil cooler lines... dirk: okay. man #7: engine serpentine belt is cracked real bad. dirk: okay. man #7: okay. right rear caliper, right rear brake hose. both outer tie rods have play in them. the steering dampener is weak. dirk: okay. man #7: okay? dirk: quite a bit. what do you think it's gonna cost? mark: conservative, i'm gonna say you're probably $4,500. lemonis: did you take it to a service center before you gave him the money? tad: no. lemonis: and so we paid how much for this truck? tad: $50,000. lemonis: it doesn't look good. mark: no. so that's gonna need a complete scrape and reseal. another $800 to $1,000. lemonis: did you look on the roof, or no? tad: no. no ladder. lemonis: no estimate, no research, and now we're gonna spend another who know's what.
i'm not happy about this. why does that happen? why, in one sense, are you in the weeds, in everybody's business, in everybody's -- questioning everything they're doing, but on something like this, you gloss over the detail? how does that happen? tad: i happen to love this [bleep] truck. and i'm asking for help in areas. and i don't feel like i'm getting it. lemonis: what help would you like? you want me to make sure that there's a place for you to get an inspection before you buy it? tad: yeah! lemonis: i did! i did! tad: you know what, give me a [bleep] break on this [bleep] damn truck! lemonis: why? tad: 'cause i drove all [bleep] night! mayi'm not getting treated right. lemonis: how? because i'm asking you and challenging you? tad: yeah. lemonis: you don't like it when people challenge you? tad: i don't -- i don't like it. [bleep] you. lemonis: if your business is in trouble and you need my help, log on to...
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but when we brought our daughter home, that was it. now i have nicoderm cq. the nicoderm cq patch with unique extended release technology helps prevent your urge to smoke all day. it's the best thing that ever happened to me. every great why needs a great how. you don't like it when people challenge you? tad: i don't -- i don't like it. [bleep] you. i need this [bleep]. i'm so tired and spent. lemonis: i know you're tired. it's part of being a business owner, and you know that. that's the choice you make when you own a business. and so you drove all night. yeah. you made [bleep] arrangements. we have a $5,000 bill or more here, 'cause you didn't get it inspected. okay. you'll learn from it. you think i'm picking on you. i'm not. but i will tell you that now you know how your people feel.
and they want to feel appreciated. and a pat on the back sometimes just isn't good enough. you know that. tad: i do. lemonis: if you really, genuinely don't change, everybody at some point will walk out. and you'll lose your business, and i'll lose my money, and they'll be gone. i know you're a good person. i'm happy about these trucks. i'm not happy that you [bleep] this one up. but i'm happy about them. okay? tad: marcus, thank you. tad: i want to tell everyone how excited i am for a new honest foods. i want to apologize, and i want to take responsibility for things that i've done in the past. and i want you guys to help in making this company great. i just want to say thanks for being here. jennifer: yay! i really appreciate you guys sticking close by. jennifer: whoo-hoo! lemonis: look, i really feel like tad is turning a corner. since our last talk, he's communicating better,
he's working well with others, and i'm very optimistic. where are the concepts that i tasked you guys to come up with? and it's not a moment too soon. he and the team need to work together to finalize the food-truck concepts before the big event at camping world. jennifer: i was in maui this summer. one of my favorite things in the world is the shave ice. tad: an 80% margin. lemonis: next one? tad: the grilled-cheese truck. lemonis: could be a huge moneymaker. and while i'm working with the artist to get the graphics ready to wrap the trucks, tad is working with the team to prepare the final menu. tad: i don't want it to just be my ideas. i want it to be your guys' ideas. ricky: we'll do a grilled-cheese dessert. tad: okay. ricky: nutella. tad: okay. ricky: banana. tad: oh, i like that. ricky: marshmallow. tad: is it getting gooey, ricky? ricky: oh, yeah. tad: that's a winner. ricky: four cheeses. tad: eight slices of cheese? i love it. oh, man. that's amazing. great ideas, guys. i love it. tad: hi, marcus.
how are you? lemonis: all right, buddy. you want to give me a quick tour of what everything is? it's camping world and good sam's 50th birthday party, and i'm excited. so let's look at the presentation of the food. i brought the entire honest crew to make sure that we throw a party that's worthy of 50 great years. and they're putting on the finishing touches before the guests show up. oh, i like this, now. tad: so... lemonis: this is clever. tad: we had these built for us. so it gives us more of like a rustic or a forest setting. lemonis: that, i like. oh, i like this. you turned a grill sideways. and you did the same here... tad: mm-hmm. lemonis: ...with serving dishes. tad: and these are all things that sell here at camping world. lemonis: yeah. very smart. i like this a lot. you made these displays? they're fantastic. roni: thank you. lemonis: what i'm seeing has blown me away. they've taken presentation to the next level. there's trees for the cupcakes. and there's grills for the salad bowls. they've looked at every single detail. good. tad: yeah.
lemonis: and as usual, the food was kickass. those were sick. how does the truck work? tad: truck is awesome. lemonis: grilled cheese from? tad: the big cheese. lemonis: the big cheese. tad: all right. lemonis: you're the big cheese. the food trucks turned out great. and now with the ability to go mobile, honest foods should be busy all year long. this really came out cool. tad: it looks great, right? lemonis: i love this van. tad: yeah. lemonis: so, that is not a snow cone. jim: it's not a snow cone. it's shave ice. lemonis: okay. jim: you eat it like a snow cone. lemonis: that's good. as honest foods continues to grow, keeping the lines of communication open will be more important than ever. when they're out on the road or they're at an event, or there's a problem, there's an emergency, i want them to have a solution that i know works. so we're gonna put in this at&t enhanced push-to-talk that allows you guys to communicate more efficently. and if you want to talk to one person, you can. if you want to talk to a group, you can, with one touch of a button. jennifer: is anybody back there that can bring us up one of those half pans of the grilled cheese? ricky: i just got done with a brand-new batch i can bring out.
jennifer: awesome, thank you. lemonis: this type of communication helps us be more efficient and avoid mistakes. why move this? tad: when we got here, it was overcast. and then, all of a sudden, the weather started changing and shifting on us. uh... [ thunder crashing ] lemonis: aw, [bleep]. there's water on them. i feel like this wind is gonna -- if that thing blows over, holy christopher. [bleep] lemonis: why don't we... [ thunder crashing ]
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♪ lemonis: why move this? tad: when we got here, it was overcast. and then, all of a sudden, the weather started changing and shifting on us. [ thunder crashing ] lemonis: aw, [bleep]. there's water on them. i feel like this wind is gonna -- if that thing blows over, holy christopher. tad: i got it. lemonis: why don't we... [ thunder crashing ] as much as i hate all this rain, i'm impressed with tad and the team. by the time the first lightning bolt struck, they had already moved the dessert table under the tent. the weather is -- is unpredictable today. now we just need to move it back. tad: do you want me to go with you? man #10: i got it. tad: okay. lemonis: we've invited all of our local customers to come celebrate camping world and good sam's 50th birthday. there are over 1,000 people coming, some by the busloads.
♪ [ applause ] folks, can you hear me in the back? folks, can we have your attention, please? i want to have a round of applause for the honest foods team, who did an amazing job preparing our meal today. [ cheers and applause ] tad: can i say anything? lemonis: yes. tad: on behalf of myself and the staff at honest foods, thank you from the bottom of our hearts. and we'd like to thank you, marcus. we got you a birthday gift. [ cheers and applause ] ♪ lemonis: all right! hold on a second. there we go! [ cheers and applause ] tad and the team have done an amazing job with the food and the atmosphere. and the guests, well, they're eating it up. the food trucks are also a big hit. by adding them, we'll be able to maintain
a steady stream of revenue all year long. and with the pressure finally off tad, i know he'll make progress with the way he communicates with the team. i expect honest foods to become the go-to catering company for all of chicago. first of all, i don't know if i've seen a group work harder. when we first started this process, we wanted to try to find a way to give everybody raises. and we believe we're at the point where everybody's going to be able to get a nice raise. crowd: yeah! lemonis: you too! tad: all right! lemonis: all right! tad: i think this is a great opportunity for me to grow as a person but to grow as a boss and a manager and grow as a friend. jennifer: yeah! whoo! lemonis: bring it in! bring it in! bring it in! tad: ready? caterers: one, two, three, honest foods!
♪ lemonis: standard burger, come on down! ...i'm back to check on the progress at standard burger... how you doing, sir? good to see you. joe t.: good, brother. you, too. lemonis: so far, i've invested over $400,000 in this quick-service restaurant to make it a model for a national franchise. but what i've put in place has gone off the rails. sammy: bad burgers, bad fries, bad customer service... for the last 90 days, it's been [bleep] lemonis: and the partners are too busy fighting to fix it. joe t.: i'm the guy that's here every day... sammy: right, what's your problem? joe t.: ...and you're the guy that shows up once a month, that's what it is. that's the problem. lemonis: we have a big opportunity to grow this business. we have a franchisee scheduled to come here, but it looks like chaos to me. but if these guys can't grow up... sammy: i laid out all the kitchen equipment, designed the entire space -- joe t.: i know. if it wasn't for you,
we'd all be up the [bleep] creek without a paddle. lemonis: i may have to cut my losses. i've had enough. my name is marcus lemonis, and i risk my own money to save struggling businesses. we're not gonna wake up every morning wondering if we have a job. we're gonna wake up every morning wondering how many jobs we have to do. it's not always pretty... everything's gonna change. everything. ...but i do it to save jobs and i do it to make money. this... let's go to work. ...is "the profit." ♪ i receive thousands of applications from people looking for my help, but none were more persistent than sammy lazoja from standard burger. so, earlier this year, i headed to staten island to meet him and his partners. sammy: it's a pleasure to meet you. how are you? lemonis: how you doing? my first impression was not good. is the restaurant making money? -todd: no. lemonis: how much are you losing? covello: $5,000, $6,000 a month. lemonis: their pricing was all over the place. todd: there's no logic on it. lemonis: there's no logic. thank you.
and the restaurant was a mess. look at the toilet. it's disgusting. the product was underwhelming. honestly, i would say the burgers are average. but it didn't take long to find out why... you guys have frozen burger? -sammy: yes. lemonis: ...the four partners didn't know what they were doing. joe t.: keep in mind, none of us have had any restaurant ownership experience at all. lemonis: oh, i don't have to keep it in mind. i picked up on it. and instead of figuring it out... sammy: we had an idea. it [bleep] went to [bleep] lemonis: ...they fought bitterly. sammy: that's [bleep] that i don't love this place. joe t.: hey! that's enough. fuji, that's enough. lemonis: sammy's brother, fuji, the only one with restaurant experience, had been pushed out of the business. todd: we've all had issues with him. lemonis: after tasting the burgers that he made, i quickly decided that if i was gonna be involved in standard burger, so was fuji. fuji is in charge of the kitchen. so he is now a partner, as well. i made a deal to invest $130,000 for 30% of the business. we got a deal? we're gonna start over.
if we're gonna set the standard, it's gonna be my standard. we upped the quality of our ingredients, simplified the menu, and overhauled the space. [ laughter and applause ] we needed somebody to run the day-to-day operations, so joseph stepped up to be the general manager. but i wasn't just fixing up one restaurant in staten island, i saw standard burger as a national opportunity. and this place would be the model we'd use to sell franchisees on the concept. to the burger boys. -all: burger boys. lemonis: six months and about a half a million dollars later, we're just about ready. ♪ today we're at "time out" magazine's battle of the burger, and there's about 50 restaurants here competing for one prize -- best burger in new york city. joe t.: so let's rock this out. let's show everybody who we are. [ cheering ] [ whistling ] lemonis: the business plan is to launch standard burger
into other markets through a franchise model. and so, when you can get recognition as the best burger in new york, that bodes very well for getting potential franchisees. come on down! try the standard burger! joe t.: has everybody got a chance to try the texan from standard burger? lemonis: everybody was out there, fired up, promoting it, getting excited. what do you think? -man: oh! lemonis: you see? it's good. joe t.: best burger here. come in and give it a try. -lemonis: come on down! -joe t.: we got a line going. lemonis: standard burger! we were going up against some real competitors. i was nervous. but after being there for five hours and talking to thousands of people... ...standard burger was the winner of battle of the burger. and i'm not gonna lie to you, i was pretty fired up. i always enjoy revisiting businesses. but coming back to an award-winner? even better.
but i'm not just here to hang out. we're about to have our first meeting with a potential franchisee, and i want to make sure we're ready. so far, so good. the place looks as good as it did when i left the last time a few months ago. hey, guys. -woman: morning. lemonis: some of you missed out on it. it was exciting. -woman: we know. lemonis: how you doing, sir? good to see you. joe t.: good, brother. you, too. lemonis: i'll give you one initial compliment -- i walked the parking lot, i don't see a speck of paper anywhere. joe t.: so that's part of our training that we do here. every employee knows that before they clock in, they're to walk the property fully. lemonis: it looks fantastic. joe t.: thank you so much for saying so. lemonis: and you can see it when you walk in. it looks fantastic. -joe t.: thank you, marcus. lemonis: and you didn't know i was coming, so that makes a big difference. as you're building a business model, one of the things that you have to have in place is fantastic presentation. and for me, they've gotten an "a." guys, what are all these little chalkboards for? joe t.: uh... lemonis: as a customer, i'm not happy about that. fuji: that's what i'm saying. because i see a lot of people come in and they look at that,
they look at that, and we don't simplify it enough for them. lemonis: yeah. i'd rather redo the board. joe t.: i was just looking for what it costs. lemonis: no, but can't you just change it to $6 up there? fuji: no, that's a completely different item. lemonis: what is the real difference in the item? joe t.: some toppings. lemonis: one of the things that i wanted to do last time was pare down the menu and simplify it. after spending over $400,000 building a master plan for a business that i want to scale, i'm now seeing the exact opposite of what i wanted. okay, can i order, please? -joe t.: sure. welcome to standard burger. how can i help you today? lemonis: i'll have a standard burger, please. actually, you know what? i'm gonna save a dollar. i'm gonna just get a hamburger. joe t.: hamburger, okay. lemonis: and so what's the size of the patty on that? joe t.: the same -- three and a half ounces. the bun is the same. it's a 4-inch bun. lemonis: okay. why do i have to pay $1.00 more for this one? joe t.: 'cause the hamburger itself has no toppings. it's just meat and bread. the standard burger has lettuce, tomato... lemonis: it has no tomato on it? can i have a hamburger with lettuce? joe t.: we'd offer you the standard burger then, sir. lemonis: so i have to pay $1 for a tomato?
joe t.: it's not just tomato. it's lettuce and tomato and i think there's some onions on there, also -- pickle. sammy: but i think we actually lose money like this. joe t.: we lose money like this? sammy: i think so. joe t.: so your suggestion is to leave those burgers or don't leave those burgers? -sammy: wipe them out. -joe t.: wipe them out? so the highest-selling burger in the restaurant, you want to wipe off the menu? sammy: well, it's the highest selling 'cause it's the cheapest. we're inventing items on the menu just to make some people happy. joe t.: we didn't invent any items on the menu. and they've been incorporated now for three months, and this is the first i'm hearing that nobody likes them. lemonis: the problem is that it wasn't part of our original concept. and so when we depart from it, it could create animosity. sammy: these are the areas where, like, sometimes i feel offended and i don't come to the restaurant, because, like, i walk in and i got -- joe t.: you don't come to the restaurant 'cause you don't feel like it, sam. let's not make-believe. -sammy: so i did all this -- -joe t.: you did all this? -sammy: well, i tried. i put effort in to do all this -- joe t.: you put effort in. okay, i finished it, though. you start stuff and then i wind up finishing it. that's how it goes. you don't think so? sammy: no. joe t.: so when you left for your honeymoon without telling anybody what was going on in the middle of all this construction, who finished it? sammy: you did. you -- joe t.: did you tell me what you were doing?
did you tell me where you were? -sammy: yeah, i said -- joe t.: did you tell me what stage you were at? did you tell what vendor was coming? sammy: joe, did the place get built? joe t.: it did, because i slept on the bench. that's why it got built. sammy: joe, it was my honeymoon. i entrusted you 'cause you're my friend. joe t.: i know. but you're telling me right now that you feel like i make decisions without you. sammy: you do. joe t.: we didn't even see you, though, sam. you're welcome to come in this door and join the conversation any time you like. lemonis: listen, i've had enough. we have a franchisee scheduled to come here. he's expecting to see consistency, and there's chalkboards up here, you've changed the price of things -- it looks like chaos to me. why don't we do this? why don't we take a little kind of cooling off break for a minute? i'm gonna go talk to the staff, okay? -joe t.: yeah. -lemonis: okay. how's chef fuji doing? dana: i love fuji. he's great. he's here every day almost all day. lemonis: working his butt off? dana: he sweats. it's hard. [ laughs ] lemonis: how are things different? dana: a lot more organized, more efficient.
lemonis: does it always look this clean back here? -dana: yeah. -lemonis: it really does? no b.s.? -dana: no. lemonis: okay. no b.s. joe, i just did a walk of the kitchen, and it's on-point. no doubt about it. so i want to work in the kitchen with you guys. man: so where was this going? lemonis: i noticed there was some confusion in the kitchen. things are not running as smoothly as they first appeared. which burger is this? man: texan toppings with an egg on it. lemonis: did somebody order a texan with an egg? anybody order it with an egg? you're still waiting for it? is this it? joe t.: i'll get you a burger in sec. lemonis: you got yours and you didn't get yours. that will be on us, by the way. joe t.: are you working on 41 over there? -man: i'm on 45. -joe t.: there's no 41 there? lemonis: we're waiting for a burger with an egg. joe t.: i need that firing, okay? lemonis: who ordered this one? man: we had to remake this burger. -lemonis: is this a refire? -man: yes.
well, we dropped it. -lemonis: so this is a no bueno? not only have they messed up two orders, they're completely disorganized. we had another issue. different table, totally the wrong burger. when he went out there, somebody said they didn't order it. woman: that was number eight. that was the one that you wrote down. man: no, it wasn't. lemonis: we're not busy. so what happened? joe t.: sticking knives in your friends' backs, and you say bull[bleep] to other people, and expect it to go under the rug. sammy: hold up. joe t.: i'm the rug! sweep it under me!
lemonis: we had another issue. different table, totally the wrong burger. so what happened? man: you're pulling us out of working our station. lemonis: whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa. these orders got placed before i even walked in the door. man: yeah, yeah. lemonis: so don't be putting that on me. man: i'm sorry. i'm sorry. lemonis: how often does that happen? joe t.: not very often. lemonis: so it's totally coincidental that all three orders that i pick up are jacked up? man: yes. lemonis: in the restaurant business, there are going to be mistakes that happen in the kitchen, but when i see it happen over and over again, i'm starting to worry about how much this is affecting our food costs. can we sit down and have a financial discussion? joe t.: sure. sure. lemonis: i wanted to go over top-line revenue for the last 90 days. and then i want to dig into food costs. what were we doing prior to that renovation? $50,000 a month?
-todd: yes. -lemonis: okay. and so in the month of june, right out of the gates, $108,000. the gross profit on that -- $73,000. -todd: right. -lemonis: and so food costs, as you know, are a function of the cost of the product and what else? -joe t.: labor. -lemonis: nope. -todd: budget? -lemonis: nope. -joe t.: price sold? -lemonis: that's right. the restaurant business is really one in the margins and the smallest of numbers. and the most important factor in the restaurant business is food costs. food costs are calculated by taking all of the costs of the actual ingredients and dividing them by the retail price. and at standard burger, that number can't be greater than 30%. so in the month of june, our food costs were 31.4%. i want to be under 30%. so we're a point and a half away. then, when i come to july, we jump up to 34%. nothing changed with the cost of the food. you want to know why we went to 34%? todd: because we dropped the price. lemonis: right. with this economy burger that joe's come up with,
all he's done is lower the retail price. taking out lettuce and tomato isn't gonna help our food costs. in fact, our food costs have jumped from 31% to 34%, and those three percentage points matter. that's a recipe for disaster. and so we all agree our concept is gonna have a really good burger, but we can't compromise on ingredients. so we can negotiate with the vendor, we can work on food costs, or we can be careful what we do on discount. those are things we need to do to get the 1.5% out of june and the 4.2% out of july. this is a good financial discussion. i feel like we're making progress. i'm not scared about the numbers. the fact that we're breaking even and i know where the opportunity is, is better than losing money. anytime you're building a concept, you have to invest in the strategy. i'm okay breaking even because i feel like i'm investing for the future, but it's a hell of a lot better than losing money like they were before. and then one thing, sammy, when joe says you're not coming around, how many times have you been here in the last 90 days? sammy: probably 30.
lemonis: so, once every three days? sammy: yeah. [ laughter ] lemonis: what do you think, fuji? you think he's been here once every three days? fuji: not once every three days. lemonis: once every four days? fuji: i'd give him once a week. -lemonis: once a week? -fuji: about that. sammy: i had my own reasons why i wasn't coming around. lemonis: what are they? sammy: i was just feeling that, you know, i was being kind of pushed to the side a little bit. lemonis: but you're the largest shareholder. sammy: yeah. lemonis: you shouldn't have to be invited to your business. and so that's on you, right? or no? -sammy: yeah, no. it's on me. lemonis: it's not their job to tell you what your role is. it's your job to establish what your role is and say to the guys, "guys, here's what i was thinking i could contribute to the group." at this point, i feel like i'm ready for any question that a potential franchisee may ask, so i've agreed to go see another location that sammy's been going on and on about. sammy: hey, marcus. lemonis: do i think we need a second location? no.
look, i'm focused on franchising, but i'm always open to new ideas. but i expected there to be a door and, like, a ceiling. what is this? -sammy: construction. lemonis: well, what is this? sammy: well, so it's a new shopping center being built, a movie theater's being built over there, and this is the venue that's available. lemonis: how you doing guys? marcus. jack: jack hays. nice to meet you. -lemonis: jack, how are you? -jeremy: jeremy felt. jed: jed hays. nice to meet you. lemonis: how are you? father-son? -together: yes. -lemonis: very good. and so, what's the plan here? maybe you guys could give us a summary and we could walk it? jed: yes. those buildings there, that's t.j. maxx. they're gonna open in the next few months. lemonis: let's walk the space. it's a construction site. what are they asking a foot? -jed: $777. lemonis: that's pretty strong. how many square feet? jed: 3,000. lemonis: so, over $230,000 a year? divide that by 12, you're talking about 18 grand a month? a good rule of thumb is that a restaurant's rent shouldn't exceed more than 8% of its total revenue. with an $18,000 rent factor, the restaurant would have to do
at least $225,000 a month in sales. standard's current restaurant does about $100,000 a month in sales. if we were to open up a new location like this one, we would have to more than double our business. how many people live within 1 mile, 5 mile, 10 mile? sammy: i have the demographics for it. -lemonis: what is it? -sammy: it's... -lemonis: you brought me here. -sammy: yeah. lemonis: so what is it? sammy: it's... i can't remember. joe t.: i think it's gonna be more of shopping traffic than it is gonna be lunch business crowd. lemonis: shopping for what? joe t.: shopping for t.j. maxx. lemonis: t.j. maxx -- what is that customer? -jack: discount. -lemonis: discount. they gonna come here and spend 20 bucks? -joe t.: right. -jed: they do. lemonis: now i want to be clear with you guys. i'm not saying this is a bad idea. joe t.: after this conversation, i don't think it's a good idea, though. lemonis: well, but we don't have the data to say whether it's good or bad. this space, with the variables that we've talked about, scares me. let me talk to these guys for just a minute. jed: okay. lemonis: the problem that i'm having with these guys
is they basically just pull [bleep] out of the air. "we'll just go to a location and we hope the rent's gonna work out." you're not gonna do that with my money. we're in the business of building a box, marketing it, polishing it, perfecting it, and then having somebody say, "i'll take one. i'll take one." that's what a franchise is. we are not in the business of leasing space and building [bleep] out. joe t.: and if it happens the way it happened the first time, i'm gonna be sleeping on the bench over there, too. sammy: come on, let's be honest. i did everything that i was possible able to. i was leaving on my honeymoon. joe t.: you can say "honeymoon." i don't care if you went to japan, you should've told me before you left what i'm doing. sammy: i left you with directions and what was happening. -joe t.: me? me? sammy: yeah, i said, "hey, joe. this is what's happening. can you just keep an eye on it?" joe t.: holy cow, bro. sammy: and you can ask all the contractors you can. i dealt with every single thing. joe t.: i'm the one who scheduled the dates, i'm the one who scheduled the lead times -- i did all that stuff. i held the bag. sammy: are you kidding me? i killed myself. i'm telling you i worked on everything possible. joe t.: i hear chinese and bull[bleep] right now. that's what i hear.
joe t.: i apologize if your daughter and i may have had some relationship with each other that didn't work out. we didn't have an affair. it wasn't like that. joe: oh, no. you had an affair. but when we brought our daughter home, that was it. now i have nicoderm cq. the nicoderm cq patch with unique extended release technology helps prevent your urge to smoke all day. it's the best thing that ever happened to me. every great why needs a great how.
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but when we brought our daughter home, that was it. now i have nicoderm cq. the nicoderm cq patch with unique extended release technology helps prevent your urge to smoke all day. it's the best thing that ever happened to me. every great why needs a great how. sammy: i'm telling you, i worked on everything possible to build out that space. joe t.: i hear chinese and bull[bleep] right now. that's what i hear. sammy: chinese and bull[bleep] joe t.: do not attack my integrity or my work ethic or my [bleep] job status, dude. if it was up to you, we would still be closed. sammy: the fact that you honestly think that i abandoned you and i left for my honeymoon and i left you tasking to open the restaurant... joe t.: forget the honeymoon part. it's before you went on your honeymoon. you were one foot in, one foot out. sammy: i laid out all the kitchen equipment, i helped designed the new line, i helped design the entire space... joe t.: i know. if it wasn't for, we'd all be up the [bleep] creek without a paddle. thanks, sam. lemonis: over the six months that i've worked with joe, i've noticed that, on several occasions, he's got a very short fuse. joe. -joe t.: yep? lemonis: come here, bud. if joe can't have a conversation with somebody without erupting,
he's never gonna grow professionally. i told you when i came back for the opening that i was super proud of what you did... joe t.: thank you. lemonis: ...and that i felt like you did all the work. i don't think you ever felt like i didn't give you that credit. joe t.: no, of course. yeah. -lemonis: okay. -joe t.: okay. lemonis: the only thing that's missing is your ability to absorb information from other people. because i think it'll -- honestly, i think it'll help. it'll make people feel like they can approach you. joe t.: but i've never done business with anyone who feels that i'm unapproachable. i do well with relationships. lemonis: but let's assume that we can work on it. joe t.: but, yeah, as long as you don't stick your foot out to trip me, we'll keep moving, but don't try to trip me up. lemonis: but he may even do that. joe t.: then we're gonna go to war. lemonis: no, you don't have to go to war. what you have to do is just say, "you know what, man? i probably wasn't thinking about it right." joe t.: i will. i promise. lemonis: okay. i'll see you back at the office. joe t.: yeah, i'll see you in a few minutes. ♪ lemonis: on my way back into the restaurant, sammy grabbed me and told me that he wanted to talk to me. sammy: a lot of bull[bleep] a lot of lies, marcus.
lemonis: well, tell me about them. sammy: the whole construction thing, let's put that to the side. the restaurant isn't being ran correctly. for the last 90 days, it's been [bleep] -- bad burgers, bad fries, bad customer service, bad relations. i came in, and literally every customer had a complaint. every customer. you remember you said to me, "if they can do it, then..." lemonis: "let joe run the business." sammy: right? i stepped back, i walked away, this "sammy's not coming around no more" stems from that. it's not genuine. -lemonis: what's not genuine? sammy: joe. he's not being genuine. lemonis: he's not being honest? sammy: no. he's bull[bleep] he's bull[bleep] about stuff. lemonis: all right, well, why don't we let the dust settle a little bit? -sammy: okay. -lemonis: all right? sammy: got it. lemonis: the blow-up between sammy and joe gives me real concern. i know we have a management problem, but i need to put that off to the side and get focused, because we have a meeting with the first potential franchisee. how are you, john? -john: good. how are you? lemonis: good to see you. i'm marcus. i'm blown away by the interest that we already have with the concept, but closing a deal here today will give us real momentum.
we've gotten a lot of applications -- almost 800 -- since we kind of launched the concept. and so one of the prerequisites we have is that there's significant restaurant experience. do you have it? -john: sure. my wife's family has been in the restaurant catering business for almost 50 years. i have a background in design and construction. lemonis: well, clearly your background is qualified. why don't we take a look at the menu board? john: you've got five burgers. are there other things than just burgers? i know it's standard burger, but... lemonis: is there something specific that you'd like to see on the menu that you feel is missing? john: i think if you add a kids' menu, i think that would be helpful, because i've got three children. if we're gonna bring the kids for lunch or dinner, you kind of want to see it on the menu. lemonis: i wouldn't be surprised if other franchisees ask the same question about the kids' menu and other non-burger options. this is good feedback and something i should have thought of the first time. john: how about your food costs? -lemonis: right now we're 34%. -john: that's very high. lemonis: and where would you like to be? john: i think in the 30-range -- 28%, 30%. lemonis: so we have some work to do.
john: a little work to do for sure. lemonis: okay. i can tell that john is pretty close to saying yes. if we can resolve the menu issues and get our food costs down, then i feel like we're close to a handshake deal. i think, based on your visit, we've gotten some good feedback, and so i think we have some work to do. and maybe we can schedule to meet in a couple weeks. -john: okay. -lemonis: we'll see you soon. john: okay, take care. thanks. ♪ lemonis: our first priority now is getting those food costs down. and before we dig into ways to do that, i want to find out what joe was thinking with the $6 burger of his. how much is this? joe t.: that is a standard burger. that's 6 bucks. -lemonis: how much is this? -joe t.: $7. lemonis: what's the difference? joe t.: lettuce, tomato, onion, ketchup, pickles... lemonis: so this. how much does that cost? joe t.: i'd say another 50 cents. lemonis: that better not cost 50 cents. how did you arrive at that? joe t.: 8 cents for the raw onion... lemonis: i have a hard time believing that a couple pieces of onion cost 8 cents. how much does a whole onion cost? dana: $23.58 for 25 pounds.
lemonis: so that's 94 cents a pound -- 0.2 of one ounce. joe t.: of one ounce. my pricing was probably right on the onions, then. lemonis: no. it's a penny. joe t.: okay, we're not paying a penny for red onions. something's off. lemonis: it's math. okay, what else? joe t.: you got 15 cents for tomato. lemonis: put the tomatoes on there. -dana: 0.8. -lemonis: it's 10.7 cents. you guys got to get your food costs a little more detailed. i think it would help. now i know why joe cut the cost of the burger by $1 while barely cutting the cost of the food. that's 'cause he doesn't know the cost of the ingredients. the general manager has to know these numbers. sammy: that's why our numbers are down. 'cause we're shooting from the hip on the pricing of it. joe t.: nobody shot from the hip. i got direct from marcus to -- lemonis: i didn't tell you to put a $6 chalkboard burger out there. joe t.: when i run the report and the hamburger and the cheeseburger are the two highest-selling items in the restaurant... lemonis: they're the two highest-selling because they're the two lowest-priced. but if you don't have the option, people just order this. we still have to get our food costs down, and i don't want it to be higher than 30%.
and i'm not willing to cut the retail price or compromise on quality, so that leaves one option -- we negotiate with our vendors. so i'm gonna call pat lafrieda and work on the price of meat -- our single-biggest ingredient. [ ringing ] i'm doing good, my man. you got a quick second? so, i'm working on the food costs at standard burger, and i'm struggling to make it work on the numbers. what are you charging me for the standard burger per pound today? pat: it's $3.95 a pound for you guys. lemonis: okay. and so i'm struggling. i'll tell you, i'm off by like 40 cents. pat: that's a big drop. lemonis: that works for me. that works for me. and i appreciate that. -pat: you got it, brother. -lemonis: thank you so much. -pat: all right. lemonis: okay. look, it may seem crazy to people that we would call up a vendor and renegotiate pricing just because we weren't happy with our margins,
but it would be crazier not to ask. in the case of pat lafrieda, he's willing to make those concessions because he knows we're building a brand for the future and he wants to be a vendor for all of the businesses -- not just this one. [ laughter ] just by calling and asking, we saved 10%. why don't we go outside? -joe t.: let's do it. -lemonis: let's go sit outside. i hadn't had a one-on-one conversation with joe since the construction site, and i could tell he was still on edge. so i asked him to step outside. you know, when it comes to sammy, you have a difficult time letting him talk. i know you don't realize it, but... joe t.: no, i realize it. lemonis: you keep cutting him off. joe t.: i'm trying to cut him off. lemonis: he feels like your bull[bleep] me. joe t.: i'm bull[bleep] you? lemonis: that's what he feels like. -joe t.: on what front? -lemonis: i don't know. let me get him. hey, sammy! sammy: yeah? lemonis: come on up. so, i was having a conversation with joe.
and i told him that you felt -- you told me this, so you got to be a man about it -- that you felt like he was bull[bleep] me a little bit. -sammy: a little bit, yeah. -joe t.: where? sammy: about how smooth things are running. i think the restaurant still needs a lot of help. joe t.: how would you know? sammy: 'cause i just spent time here and -- joe t.: when did you spend time here? be specific -- what date? sammy: two weeks ago? joe t.: i'm the guy that's here every day and you're the guy that shows up once a month! that's the problem. so if you want to [bleep] stop calling my name and bull[bleep] together, be ready to be a man and stand next to me and say so. sammy: i'm not calling you a [bleep] i'm saying there's problems here. joe t.: yeah, there's problems here. you're the problem here. -sammy: i'm the problem? joe t.: yeah, that's right, 'cause you stick knives in your friends' backs and you say bull[bleep] to other people and expect it to go under the rug. that's what you expect. -sammy: hold up. joe t.: i'm the rug! sweep it under me! sammy: i'm not sweeping under your. joe t.: i'm the rug! i'm the rug! sweep it under me. that's what i thought. sammy: this isn't a conversation. joe t.: no, it's not a conversation. you just tried to tarnish my name. sammy: i didn't tarnish your name. joe t.: telling marcus that i'm bull[bleep] him.
sammy: lying doesn't help. joe t.: why not pick up the phone and say, "hey, joe --" sammy: 'cause i've done that and this is the [bleep] reaction i get from you! joe t.: do me a favor -- take two weeks, come here, and do my job. sammy: you don't pay me to do that. joe t.: i won't get paid ever again. start now. i quit. i quit. start now. did you raise your hand? did you say you would do it? you know why? 'cause you're bull[bleep] that's why! sammy: i'm not bull[bleep] i'm not bull[bleep] joe t.: you are bull[bleep] let's see how well you run this place, or if people come here to work for you, or if people love you, or if people love coming here because of you. you want to know something? nobody likes you. you're nothing. you're an ass[bleep] sammy: i'm not an ass[bleep] i'm not an ass[bleep] lemonis: joe, come on. joe t.: marcus, please. this is between him and i. seriously. -lemonis: i know that. sammy: i'm not an ass [bleep] we have girls that i've just found out that have been working for us for years that just got fired just like that. that's bull [bleep] what did she do? joe t.: do you run this restaurant? or do you just want to advocate for pretty girl? don't make the mistake of saying my name and bull[bleep] again, bro. i gave you a pass just now. don't do that again. lemonis: joe, let me ask you a question. who's the girl that you fired?
joe t.: the girl i fired? -lemonis: who is it? -sammy: nikki. lemonis: who is that right there? it all happened so fast. when sammy started confronting joe about the fact that this employee was fired, i see this man in the parking lot leaning against his car, and he's giving all of us this bit of a death stare. sammy: that's nikki's dad. joe t.: holy [bleep] sammy: that's gonna be a problem. lemonis: if your business is in trouble and you need my help, log on to... but when we brought our daughter home, that was it. now i have nicoderm cq. the nicoderm cq patch with unique extended release technology helps prevent your urge to smoke all day. it's the best thing that ever happened to me. every great why needs a great how. but my back pain was making it hard to sleep and open up on time. then i found aleve pm.
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lemonis: joe, let me ask you a question. who's the girl that you fired? joe t.: the girl i fired? -lemonis: who is it? -sammy: nikki. lemonis: who is that right there? sammy: that's nikki's dad. joe t.: holy [bleep] sammy: that's gonna be a problem. lemonis: how you doing, joe? is your daughter nikki? -joe: yeah. lemonis: this is a sensitive situation, and i need to talk to this guy in private by myself and find out what's really going on here. well, that's what my partner was just confronting him about. is he dating your daughter? lemonis: hey, listen, man -- joe t.: i'm really not comfortable not being part of the conversation. joe: well, i'm really not comfortable with you seeing my [bleep] daughter, number one, and then firing her today telling her what a [bleep] worker she is.
joe t.: first of all, your daughter was under evaluation -- joe: don't come up with corporate crap to me. joe t.: i'm not coming up with corporate anything. joe: why'd you fire my daughter? 'cause she's a [bleep] worker? because she's not on your list? joe t.: hey, hey. listen -- joe: [bleep] check. [bleep] check. joe t.: first of all, she didn't do her job well. second of all, her and i didn't get along together. joe: she worked here for three years. you were [bleep] banging her! joe t.: we didn't get along, so -- joe: you were trying to bang her! joe t.: okay, you know what? you got a whole lot of stories, bro. and you know what else? you got a daughter that's very confused and in love with me. i can't have her work here anymore. that's just that. joe: you're a [bleep] jerk [bleep] joe t.: hey, just one second. listen, i apologize if your daughter and i may have had some relationship with each other that didn't work out. big, big mistake on my part. joe: yeah, that's a little inappropriate. lemonis: when did you terminate her? -joe t.: today. -lemonis: in person? joe t.: over the telephone. lemonis: you fired her over the telephone? after three years? joe t.: i had to be here for this thing -- you know what? lemonis: i know, but, joe, you could've waited. you were having an affair with one of the employees. you can't do that. joe t.: we didn't have an affair. it wasn't like that. joe: oh, no. you had an affair. joe t.: it was crush that she had on me.
i was being nice to her. all right, you know what? did sammy tell you come here? joe: yeah, he paid me $1 million. joe t.: he probably did. joe: get the [bleep] out of here. i don't even know who sammy is. -joe t.: he probably did. you know what? i'm gonna break his [bleep] head. lemonis: honestly, i'm gonna be straight with you, i'm surprised you didn't beat the [bleep] out of him. this is crazy. all i know is we have a problem, and i need to find out what's happening. nikki's father told me that she was on the way to talk to me. is this nikki? -joe t.: yeah. lemonis: yes? why don't you take joe inside? hey, come on over here. come on over here. aye yai yai. so, what happened? nikki: i don't know. he called me up while i was at the beach. he told me that i'm not a good worker. lemonis: which is not the first time you ever heard that? nikki: and, i mean, you can ask all the employees. lemonis: did you guys ever date? nikki: it was on and off. lemonis: but you did a little? -nikki: yeah. -lemonis: okay. while you were working here? -nikki: yeah. -lemonis: okay. joe t.: i fired tim the other day. he didn't come here crying with his mom, you know what i mean? i don't get what the hell's going on.