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tv   The Profit  CNBC  June 11, 2019 10:00pm-11:00pm EDT

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was amazing for it to ever happen. that's tremendous for us. >> tonight on the profit... i go inside sweet pete's, a confectionary shop whose candy-obsessed owner has created a huge variety of sweets. >> that's the caramel. >> that is good. but with a horrible location... part of location is having foot traffic. and i don't see that here. a partnership gone bad... >> i'm calling you out on your integrity. it's crap. >> and an outdated kitchen that won't allow him to keep up with demand... there is a limit to the output, and you're the limit. if i can't turn this business around... >> i don't see how i can go forward. >> sweet pete's will come to a bitter end. >> you guys misrepresent my integrity. >> no, i'm calling you out on-- >> i'm sorry. >> my name is marcus lemonis, and i fix failing businesses. >> we made $10,000 together. >> i make tough decisions... we'll change the recipes.
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>> i mean, that would be the last thing i'd want to do. >> and i back them up with my own cash. it's not always pretty. >> do you want me to get in your face? 'cause that's your face. >> but this is business. >> i've lost faith. we need to change dramatically. >> i do it to save jobs. awesome. and i do it to make money. this the profit. sweet pete's is a candy store located in jacksonville, florida, specializing in chocolates and candy handmade by master chocolatier peter behringer. >> so you guys like candy? >> mm-hmm. >> pete's love of sweets began at the age of 12, when he started making candy for his mom's shop-- peterbrooke chocolatier. >> i wouldn't do anything else. >> family business was thriving, and life was good for pete and his wife, allison. but after a dispute, pete left the business and was forced to start over from scratch. >> the last $10,000 we had, we put into this business. >> starting over required the help of a financing partner. >> my whole idea was, find talented people and
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help support them to get a business going. >> sweet pete's opened its doors in 2010. by 2012, it was doing over $400,000 in revenue, but it posted a loss of $17,000. the stress of that has caused their partnership to crumble. >> you are a fraud. you are a fraud. >> with a colorful array of handmade candy, sweet pete's has a phenomenal product. >> this is how it's done. >> but their lack of business savvy could ultimately be their demise. >> i can't do it. >> i love candy. and i know if sweet pete's has the right process in place, they'll have a winning recipe. >> yeah, that's good. >> walking up to sweet pete's, i can already see an issue. this retail shop is a converted house in the middle of a sleepy residential neighborhood. [door sensor beeps] >> hello. >> i'm marcus. >> i'm brianna. >> how are you? nice to meet you. >> hi. >> allison? >> yes.
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>> marcus. >> nice to meet you. >> nice to meet you. >> hi. i'm pete. >> pete, how are you? nice to meet you. you look like you're a mad scientist, with that lab coat. >> i guess you could say i am a scientist of sorts. >> i was a little surprised at where the place is located. it's, like, in a neighborhood. >> when we started this business, we had maybe a couple hundred dollars in our pocket or something crazy. >> we were not in a great financial position, and so someone offered us this place. and we're putting everything we have into building this. >> how many different types of candies are in here? >> hundreds of different types. >> we make lots and lots and lots of things by hand. it's what sweet pete's specializes in-- thing like caramels, hard candy, pulled sugar, chocolates, toffee. >> i'd like to get down to tasting. >> my personal favorite is this. >> now, everything that i'm gonna taste you made? >> i've got another candy maker on staff who's worked for me for many, many years. i want to try one too. it's the most awesome business there is. it brings some joy to my life. >> so that's an all-natural cherry, soaked in grand marnier, homemade fondant, and dipped in our belgian dark chocolate.
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>> i didn't really get a good taste. i need another one. >> i didn't either. >> can i see the kitchen? >> this is it. >> this is the whole kitchen? >> this is it. >> you're doing all your business out of this kitchen? >> yes. >> yep. >> oh, my gosh. where's the storage at? where are the coolers? where's the walk-in fridge? >> yeah, none of that. >> none of that. >> no wonder this place is struggling. i walk into a kitchen, and they are maxed out. if they had more stoves, a walk-in cooler, drying racks, and space for people to actually work, their business could double or triple tomorrow. and so what is this? >> that's the caramel. >> how you doing, sir? >> pretty good. how are you? >> good. >> this is demetrick. he's our other candy maker. >> how do you function in this space? >> oh, it's like a circus act. we're on top of each other's necks trying to work, you know? [laughter] >> okay. >> i want vanilla. >> vanilla? >> do you guys want to get started? pete's gonna be teaching your class today. >> as sweet pete's started getting ready for a candy demonstration, the place started filling up with kids. >> all right, who likes candy
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here? >> all: me. >> yeah, i love candy. okay. [laughter] so we mixed our sugar. who wants to eat this? [laughter] so this is the pulling process. we're actually folding air into it. we're not using a pump. >> pete came alive in that candy class. the parents were engaged, but the kids were mesmerized. >> you want to make a mustache? >> yeah. [laughter] >> so we'll let this sit for just a minute, and then you can bag them up and take them home. >> yeah, pretty good. [laughs] >> we had a wonderful time. >> thank you. >> thank you very much. >> well, we appreciate you coming in. >> making candy and teaching people how to do it is a great idea. and it's a great model that you could scale across the country. how well do the classes do? >> very well. the field trips are the most popular. and then there's also birthday parties. >> if we had more space, we'd do two or three field trips at a time. >> how much is a class? >> $15 per person. >> how much does it cost you to actually put on the class? >> like, $2.68 a person or something like that. >> wow. that's good margin. >> yeah. >> the real margin in this business is in these classes.
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if an average class has 20 people in it, you would be generating $300 in revenue and $246 in gross profit. those are killer margins. why did you specifically pick this location? >> because our partner said... "i own this location." >> what do you mean "partner"? >> we have a business partner, dane baird. he owns half of the company with us. >> i didn't know that. i thought it was just you guys. him very often. >> is there a lease here on this facility? >> we have--it's up may of next year. >> uh-huh, and how much is it a month? >> $1,400. >> can you break down kind of how your finances work, a summary of your finances? >> we're doing close to $420,000 a year. >> and does the business make any money today? >> no. this year we lost about $17,000. but, you know, last year we only lost, like, $3,000, but we paid ourselves more this year so that we could live. the first year, we made $10,000 combined. >> you can't live off $10,000 a year combined. >> we've been fighting with dane over this. he doesn't want us to get paid
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at all. i tried to get $12 an hour, and he's tried to block that. and it's just been a constant fight with this guy. >> why haven't you guys bought him out? >> i've tried, and he won't sell. i mean, we have tried this for six months now. >> does he contribute? >> no. he hasn't in quite some time. we would try to meet with this guy, 'cause for a while, he was still in charge of our finances. he read this book or something-- something called "the 5-hour"-- and this is not-- >> 4-hour work week. >> 4-hour work week. >> he loves that book. >> who works four hours? >> and i was pulling my hair out for a while. she, like, finally, some fi-- >> i know. i don't have much left. >> it's like... >> not a lot to lose. >> is dane gonna come here today? >> i don't know. >> i mean, it speaks volumes that he hasn't been involved in this process. i mean, how often do you get this opportunity, and you're not gonna be present? >> we need to do a batch of hard candy. i want seven cups of sugar, one cup of water. what i want to do is get it to the texture that i get it to. >> what do we got next? we need to wrap? >> 100 caramels.
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>> i see a dane sighting. [laughs] >> dane's here? >> he's outside. >> oh. >> hey. >> look at this guy. >> wow. long time no see around these parts. >> i know. i know. that's what happens when you have a reality show, i guess, huh? you just show up. >> yeah, you show up. >> so... >> you afraid to wrap a little caramel? >> oh, you know i know how. you know i know how. >> might as well. >> so you having fun? >> i am having a good time. >> that's good. hi, peter. >> hi. long time no see. >> it's still delicious. >> so what brings you here today? what is it that you want? >> what is it i want? >> yeah. >> in terms of? >> in terms of this business. >> well, i'd like it to... >> let's start there. >> to grow so it's profitable.
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i mean, that's-- >> and what are you doing to contribute to that growth? >> well, i mean, when i--when i say, "hey, look, let's get a business plan together and do it," and i just get a blank stare, it's hard to go-- >> not a blank stare, dane. >> i think what we clearly said was we would love to talk to you about a business plan, but let's handle this issue of fair compensation first. >> none of us were ever getting paid what we're worth, period. >> right, but you're-- >> you're not contributing like we are. >> i got over 5,000 hours in this business, right? three and a half years of work. >> how many hours do you think we have? >> how do you figure that? >> i did i.t. i did--i did-- i bought the building. >> buying the building that you--you own the building. >> hold on, hold on. >> the first year, we made $10,000 together. we're well beyond qualified for that. >> i cannot spend time here in an unprofitable business, knowing that i will never get paid. >> but you expect us to do it. >> all right? that is your choice. >> you're full of crap. all you do is talk. >> stop, stop. >> can't make money in this-- >> okay, well, then let's part our ways. i don't have a lot of business experience, but i've owned more businesses than you, and i can tell you, if the partners don't get along, it's not going anywhere.
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we have to be able to work together. >> i have lost faith. we need to change dramatically the business. >> how do we buy you out? what do you want? >> what i want is--i believe in the product, and i believe in the people. >> tell me a number, dane. >> so i don't want to sell. i do not want to sell. >> we don't want to work with you. >> why can't you sell? why can't you sell? >> see, and this is why i can't think, when you're in my face. >> i'm not in your face. do you want me to get in your face? 'cause that's your face. >> that's so unnecessary. that's not necessary. >> it's your choice. >> i'm done. >> this is just crazy talk that we can't be reasonable. >> i'm trying to participate. >> you know this is our life's passion. you know how much we give to this business. >> it's a hostage situation is what it is. you just try to hold us hostage. that's all it is. >> it's not. >> and what's even worse is, i'm sure customers have heard this. >> and you're just taking from us. you're holding us hostage. >> see, i disagree. thank you, but i disagree. >> let's just bring it down, 'cause i don't know. i don't know where to go from here, dane. >> bye. >> well, that was interesting. hey, thanks for coming. >> hey, how are you? >> good. good. i'm dane. >> nice to meet you. >> yeah, pleasure's mine. >> well, that was interesting.
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>> yeah, a lot of passion. >> and so what are your thoughts? >> pete and allison are really talented. >> uh-huh. >> but we've never had a plan-- you know, having some type of, you know, profit at the end of the day. >> what is your strong suit? >> i'd say this, business development, sales. we created this pretty large field-trip business. it was all service related. >> did you create the field-trip business? >> i created it with them, to be honest. i mean-- >> yeah. >> if i didn't come in... >> yeah. >> there would nev--they wouldn't have been--this would never have happened. >> right. how much money have you invested in actual cash into this business? >> um... probably around $85,000 in the building and the grounds, and then-- >> the building's yours, right? that's a private asset. >> that's right. >> so, in this company, how much money have you put in? >> and then about 5,000 hours' worth of labor. >> no, but in dollars. >> and then--and then probably about 1,000, 2,000 bucks in the initial inventory. >> so how much in total dollars have you put into this business? >> from the start, two grand. >> $2,000?
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>> yeah. that's right. >> that's your total investment in the company? >> right. >> $2,000. >> that's right. >> they want to buy you out so they can move on with their life and, you know, obviously, not have that kind of tension. why wouldn't you just take some nice return on your money and move on about your life and not have all the stress? >> i think this is--this could go big. >> right. i think what i saw there is you believe in the product, but they don't believe in your partnership. >> right. >> what happens if they just left here today, and they went and started somewhere else? >> i would--i would take--as a shareholder of the firm, i would take issue with that tactic. >> but what would be your claim? they left. they're employees. they quit. >> but if they did leave and they started something else, that would hurt the firm. >> dane, slavery was outlawed a long time ago. they don't have to stay here. sweet pete's has an amazing product. i love it. but with this toxic partnership, i need to be mindful in how i'm investing in this deal. i have to come up with a deal
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that resolves their past issues and definitely minimizes their interaction. if i can get them to agree, we're all gonna make a lot of money. well, yesterday was interesting. in all my years of doing business, i have never, ever seen, ever, more passion from one person in my entire life. the one thing that's obvious to me is this is a partnership gone very bad. and it's typically pretty hard to repair. dane, in your mind, are we at a point of no return? >> i've always been an optimist, and so for me, i always think there's hope for the future. >> how about for you? >> for me, in a business sense, i don't see how i can go forward. >> and so what's an alternative in your guys' mind? >> we leave. >> yeah. >> and we--and then build again with the right partner. >> i believe it's so lopsided, you know, in terms of our contribution. i feel like he's always trying to look out for whatever's good for him and not the business.
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it's very unfair. >> that's not the case. my wife and i put in some money to get the whole process going. >> you put in $2,000. >> that's right. >> i'd just like to point out, dane, that we would have meetings where you would say, "oh, okay, i'm committed. i'm excited." and then we'd have another meeting where you were out. >> let me make something very clear. i did start to check out, but it was for good reason. and i understand what you were-- >> i don't get that "check out" thing. i mean, if you own 15% of a business and the business is struggling, you don't just check out. >> no, no, no. it wasn't like that. there was no income coming in, and my sore point with the business model is, i really didn't have anything to do that i could feel like i could ever make a living at, 'cause the business is not scalable. >> if i was in your shoes... >> right. >> i would've come back to them and said, "here's what the budget looks like. here are some ideas i have of growing the business 15%. what do you think?" did that happen? >> no. >> i failed in that regard. >> so it's very challenging when you say that you don't like the business model. >> well, i made a list.
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[laughs] so, you know, basically, i've done a lot of sweat equity in this business. >> okay. >> you know, sales, marketing, wholesale. >> let me tell you something. this is your contribution. if we had to list all of our contributions, it would look like the phone book. >> i get it. >> it would look like the phone book. >> i get it. >> you think you contribute as much as me, and you don't. >> i've tried. >> that's just crap. >> words are hollow. >> but i've--guys-- >> crap. >> you've talked, dane, but we need doing. we execute. you have the option to execute, okay? >> you choose not to. >> i'm sorry you feel that way, 'cause, you know, i love the business. i love the product. i love you guys. >> that's your slippery, evasive crap. slippery, evasive crap. >> okay, okay. >> i don't want to talk to you anymore. >> okay. >> i think you're just full of it. you're just full of it. >> pete, come on back, bro. coming up... >> i have a large order. is this doable? >> i don't think that's possible. >> we have to find a way. we have to find a way. >> and later... >> i put my heart and soul into this business, just like you
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have. >> oh, my god, dane. i don't care how [bleep] hard it gets, i will be here. where are you? my body is truly powerful. i have the power to lower my blood sugar and a1c. because i can still make my own insulin. and trulicity activates my body to release it like it's supposed to. trulicity is for people with type 2 diabetes. it's not insulin. i take it once a week. it starts acting in my body from the first dose. trulicity isn't for people with type 1 diabetes
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or diabetic ketoacidosis. don't take trulicity if you're allergic to it, you or your family have medullary thyroid cancer, or have multiple endocrine neoplasia syndrome type 2. stop trulicity and call your doctor right away if you have an allergic reaction, a lump or swelling in your neck, or severe stomach pain. serious side effects may include pancreatitis. taking trulicity with a sulfonylurea or insulin increases low blood sugar risk. side effects include nausea, diarrhea, vomiting, belly pain and decreased appetite, which lead to dehydration and may worsen kidney problems. i have it within me to lower my a1c. ask your doctor about trulicity.
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ro. >> you're just full of it. you're just full of it. >> pete. pete. come on back, bro.
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in any sort of partnership, people bring things to the table. they either bring capital, they bring expertise, or they bring contacts. so what burden are you gonna carry in this partnership? >> i'm not a cook. i would prefer a role that would be not a part of the day-to-day, you know, operations of the business. >> and how are you gonna make it fair? if you don't want to be here, you need to, you know, take a fair amount for your shares. >> well, i'm certainly not interested in selling all my shares. i mean, that's--that's where we're at right now. >> you just want to continue having us do all the work, not really recognizing that work, and ride it out, or make it just really impossible for us to buy you out? those are kind of the two choices? >> no, i mean... >> you know, let's take marcus off the table, 'cause you may or may not do something. >> let me be very clear. i am doing something. so here's my offer. pete and allison, my offer is $750,000. $250,000 is for working capital.
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$500,000 is to provide a facility to get us going. for my $750,000, i will own 50% of the business. you will own 50% of the business. dane, i have no problem giving you back your original investment of $2,000 at 5% interest, but you will get no equity, because you haven't put enough in the business to deserve it. there's no justification for it. you will be 100% commission. if you perform like you've told me you're capable of performing, you will earn 5% equity a year up to 15%, and both of us will contribute to that pot. >> there just has to be some accountability. >> he'll be accountable to me... and that's not easy. >> i could go forward with that. >> that's not really an attractive offer for my personal interest. >> dane, you put $2,000 in the business. >> i mean, i would--i would feel more comfortable selling everything at once--
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the building, the shares. >> not gonna happen. you know, dane's just being greedy. he wants equity with no effort, and now he's trying to get me to buy his building. he just wants me to give him money like a handout. if you don't agree to this, they leave. and whether it's in this building or not or whether it's called sweet pete's or not, i'm doing something. >> [chuckles] i guess i don't have a lot of choices, right? >> yeah, we've been fair on our end. >> marcus... >> we have a deal? >> yes, sir. >> okay. we're sharing 50/50 in the profits. i'm 100% in charge, 'cause it's my job to protect this business and to make sure that everybody does the right thing. and, dane, are you ready to actually work? >> to get back at it? yeah. >> so, pete, that means we get to spend a lot of time together. [laughs] >> boy, how things change. >> makes sense. do we have a deal?
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>> [laughs] >> do we have a deal? >> marcus, thank you. >> this doesn't happen every day. >> thank you. >> allison, can you get the whole team together? >> yeah. come on, guys. can you all come here real quick? >> hi, everybody. >> all: hi. >> i have always wanted to be in the candy business since i was a little kid. and so, last night, pete, allison, and dane and i made a deal. i've become a 50% partner in this business. pete and allison are the other 50%. i'm putting up $750,000 to really grow this business. and so we're clear, i'm in charge now. i focus on three things-- people, process, and product. the people that i have met here are fantastic. i love candy, but more importantly, i love your candy. it's--it's damn good. >> thank you. >> but the process is broken. we have to move this location. it's too hard to find.
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it's hard to get people to come here. the space doesn't work. so we're gonna find the perfect location, and in the interim, we're going to improve the process. pete, you got to get out of the kitchen. you can't control the entire process, and you have to let other people do the work. and if you don't, this place will never grow. it will suffer forever. in order to scale this business and sell a lot more candy, we're gonna need a new retail location with a lot more foot traffic. we're also gonna need a commercial kitchen that has room for staff, the proper equipment, and space for a lot more raw materials. i did this deal because i think the model is unique. the fact that you actually bring people in and you teach them how to make candy is something that i think separates us from everybody. with these classes generating over 500% margins each class, we should be doing these all the time. if we do three classes a day with 20 students in each class at $15 a head, we would be generating approximately $740
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in gross profit per day. that's $5,180 per week, which equates to $270,000 per year. this business lost a little bit of money last year. but i want to try to get to $4 million, $5 million, $6 million, $7 million. we are this close to making money. all right, guys, let's get to work. thank you. >> thank you, marcus. [telephone ringing] >> thank you for calling sweet pete's. place an order for a delivery for a party? 100 purple-and-white lollipops? >> that's a lot of lollipops. >> that is a lot. that's a lot of lollipops. >> 100 green-and-white lollipops, 100 blue-and-white lollipops. you want 100 dark cherry cordials, and you want 600 of what? the party is on wednesday. >> by wednesday. >> let me see how we can get this done for you as soon as possible, and i'll give you a call back within an hour, okay? thank you. bye-bye. i have a large order. >> what is it? >> 100 purple-and-white lollipops, 100 green-and-white
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lollipops... >> is this real? >> 100 blue-and-white lollipops, 600 salted caramels, and 100 dark cherry cordials, and they want it overnighted tomorrow. >> nuh-uh. >> yuh-huh. >> pete, can you make 300 lollipops on tuesday? >> let me figure this out. [groans] >> what i need to know-- is this doable? >> i don't think that's possible. we're gonna need extra manpower to get this done. >> it pains me to turn down an order. >> i know. >> we have to find a way. we have to find a way. >> you guys have had to have large orders like this before, right? >> not-- >> yes, we have, but usually i have time. >> do they have a shelf life, the lollipops? >> they got a long one. >> they have a shelf life? >> super long. >> so then why don't you have an inventory of them? >> i can never get ahead. >> we'll deal with the issue of not having the inventory on hand and the people to make it, but right now it's all hands on deck. we have a $2,000 order. we have to get it done. all right, well, we got a lot to do. let's get working on this.
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>> butter hot. >> stick it in the center. >> okay. >> wrap it over one side. >> dane, so why don't we jump in the kitchen? >> okay, let's do it. >> everyone is working their hardest, but there is a ton to do. so i've asked dane to help out. >> let's put in two cups of water. >> and now is the perfect time for him to demonstrate that he deserves equity. >> so you could do fondant, whatever you want. >> will you help us wrap, dane? >> yeah, i'll help you a little bit. hey, allison, i didn't realize it was gonna be all day. so i just plan to head back and, you know, just take it all in. >> mm-hmm. >> i'll go talk to marcus. >> okay. >> i appreciate you coming here, analyzing the firm. i just plan to head back. >> why are you leaving now? >> right now i'm having difficulty.
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yeah, i just feel like--yeah, i did so much work to get this company off the ground and, you know, got that sign up, and the deal was a tough, tough deal. it's about the equity and how--how the deal was cut. >> i mean, they just got a huge order. >> yeah. >> i mean, can't you help them fill the order and then feel bad later? >> no. i'm not a cook, right? i'm not a candy man. >> if your business is in trouble and you need my help, log on to [music playing] (vo) this is jerry.
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oh, duncan. stay up. no sleepies. >> are we cupping these? >> both: yes. >> hey, pete. >> yeah. >> yeah, we're never gonna get this done. >> we're running out of time here, so we got to figure out how to train some additional people. after dane walked out, this entire staff has been working their butts off to get this order filled. unfortunately, we're in too small of a kitchen, with way too few people. it's time to start growing. i'm gonna get on the phone and try to find some people. >> do you think it's really necessary? >> don't you? >> the issue is getting them to do things the right way. we don't want something good, sometimes it's bad, sometimes it's good, sometimes it's okay. >> i don't either. so you don't believe we can give them a repeatable task and show them how to do it three or four times and they'll get it? >> yes, i can. >> perfect. i got to get 'em on the phone. pete, from sweet pete's, this is debbie. >> hi, pete. >> hi. nice to meet you. >> nice to meet you too. >> want to head on into the kitchen? >> sure. >> the entire staff is working around the clock to get this order filled.
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in the meantime, pete is meeting with potential candy makers to come help. >> want to make some caramel? >> i want to make some caramel. >> okay. >> but it's obvious to me, he struggles to give up control. >> we're gonna need to cook 3/4 of a pound of butter. >> what's the best way to teach somebody? >> probably to have her do it. >> okay. he's gonna have to learn how to let go. how many more candies do we have to make right now? >> it's about 200 in each case. >> oh, my gosh. >> take out three tablespoons-- it's unflavored gelatin. it's on the counter. >> you want me to bloom it or just to chill this right now? >> go ahead and pour it in the cup and chill it. >> we need more clusters. we don't have enough. >> i think you can mix that a little more. >> you want me to try again? >> i think you can keep going. you don't have to stir it so vigorously now. and i don't like to--you know, so we--we don't want to cross-contaminate, and-- i'd like to fill it up a little higher. >> okay. >> you want to scrape all of that out. it's a lot of lollipops. >> it's 400 lollipops. >> 500. looking good. >> we good? >> i'm glad we got it done, and this is good. but we got to come up with a better process. so, as we move forward, we got to have the right amount of staff, and we got to have a
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certain amount of product that's made in advance so that we're not twirling together like a hurricane. make sense? >> it makes a lot of sense. >> dane already walked out, and he doesn't want to earn his part of the business. well, i have another dose of reality for him. i'm gonna let him know that it's time for us to leave this building sooner than anticipated. we need to grow. so the reason that i think you're short in revenue is because you have a very, very tough location--hard to find. you have no foot traffic... none, zero, zilch... nothing. >> [sighs] >> you own this building, right? >> correct. >> if we perfected a 5,000-square-foot space that had a kitchen... >> mm-hmm. >> and a classroom and a store... >> both: yeah. >> i mean, it could be a great model. >> yeah. >> we've said that so many times, and he shut us down. >> we crafted this building, right?
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we paid for it, right? >> but you own it, and they paid rent. >> i understand. however, i financed it with the building and my capital, but-- >> the building is your asset. >> right. >> and how much rent did you get? >> i think it's $1,400 a month, so... >> $17,000. >> yeah. >> so you got a return on capital... and the business lost $17,000. >> [sighs] yeah. >> you did get a return on capital. >> little bit, yeah. >> and what was your return on capital? >> i mean, nothing. >> i started paying myself $12 an hour. >> starting december 1st. but, pete, you getting paid $12 an hour is not return on capital. it's like-- i mean, you didn't even pay yourself holiday pay. dee and erika got paid for christmas day. you didn't. >> working at publix, you can-- >> you know, and the thing is-- the sick thing is, i would be happy to do it if i was being treated fairly, but you don't treat people fairly. you don't treat anybody fairly. >> it's very hard to have a conversation like this. i have spent an awful lot of time here, and you guys misrepresent me and my integrity. >> no, i'm--no, i'm calling
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you out on your integrity. >> i'm sorry. >> i'm calling you out on your integrity. it's crap. >> we are here doing orders with people, and you leave. we stay. you get to leave. >> hold on. hold on. i've been here till midnight with you. >> once or twice, but never on a regular basis. >> yes, christmas happens once a year, and i-- >> dane, slow down and think about what you're--i have to-- >> oh, my god, dane. >> i put my heart and soul into this business, just like you have for three years. >> just like i have? are you really gonna say that? no, no, no, no. i want to understand this. help me understand. you put your heart and soul into this business just the way i have. is that what you're saying? >> we're different people-- >> no, i'm asking-- it's a yes-or-no question, dane. >> yes. >> yes. really? >> until we start agreeing on how to grow the business, period. >> anytime something gets hard, you're done, you're out. >> i need to be-- >> but we stick. the difference between us two is we stand through it. we grind it out, and we're here tomorrow. we'll be here the day after that and the day after that and the day after that. i don't care how [bleep] hard it gets, i will be here. where are you? nowhere. you're blowing with the wind,
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>> i don't care how [bleep] hard it gets, i will be here. where are you? nowhere. you're blowing with the wind, brother.
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[sighs] >> you all right? >> yeah, i'm frustrated. and he expects us to work. it's always disproportionate in his favor, and i'm just tired of it. >> why don't you and i go for a walk or just step outside, so you don't... >> thanks, marcus. >> i'll see you in a little bit. >> okay, bye, marcus. >> this sort of dysfunction happens all the time in partnerships, but at some point, you have to move on. pete has to move forward and keep his eye on the prize. it's not behind him. it's in front of him. pete, let's take a drive and get away from here for a bit. >> dane says he's got his heart and soul in it. and he's critical of failure of ours. but i don't think he's ever tested himself to feel what it's like. >> he was kind of full of [bleep]... 'cause when it came time for him to roll up his sleeves and pitch in, he bailed. >> i might've rushed into a partnership that i didn't...
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understand, or we didn't map it out properly. i saw the house, and it ignited a dream in me. i didn't care about any risks or anything because i didn't have anything to lose. so i just did it. i went for it. >> it takes a lot of guts just to go for it. >> but i'm proud i did it. >> well, you've proved a lot, don't you think? i mean, look at how well you've done. >> yeah. it taught--i just--'cause when i just--that taught me to believe in myself again. and i lost my belief in myself. you probably have experiences like that or seen this before. >> partnerships gone bad? >> yes. >> but what overcomes all of that is the enthusiasm and the passion that you have and the exuberance you have and your will to run through any wall and do whatever it takes. you can't replace that. >> yeah. >> although the dane problem is not resolved, i have to keep
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everything else moving forward. first, i want to show pete and allison how they could benefit from renting space in a commercial kitchen until we can find our own. look at all the equipment. it gives you guys plenty of space to work. >> yeah. >> we already have extra candy makers standing by. and this commercial kitchen can be used when we need it. while it costs $160 a day to rent, it will more than pay for itself. we'll be able to increase production by 500%. you come out, and you start producing larger batches and drive your cost down even more, you're making money. >> that's good. >> yeah, that is. >> that's really good. [laughter] i like that. >> yeah. we're gonna rent out a commercial kitchen, and the quickest way to add revenue and profits is to build out an online business. so i had my team build out a new website with an improved ordering system that connects to our inventory and helps organize our production process. when the internet orders come in, it'll go into a system so that when he comes in in the morning, the printout's already there. and we'll see the open orders,
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the delivered items. it really-- >> that's gonna be awesome. >> that is gonna make everybody's life so much easier, especially mine. >> awesome. i also wanted to create a new marketing plan that is centered around pete, because he's what makes this business special. >> [laughs] >> for me, this is what would make people remember, "oh, that's that fun guy, that candy--that candy science guy with the hair sticking up." >> yes, it's much more fun. >> a few days after our last meeting, dane phoned me and asked me to meet him at a local coffee shop. after all the drama he's caused, i'm dying to know what he wants to talk about. >> hey, marcus. >> you called. you wanted to see me. >> thanks for meeting. i had to meet with you just face-to-face. i couldn't have pete and allison there, but, honestly, sweet pete would not be there if i hadn't gotten involved. >> what is that you ultimately want? >> i think that i got a raw deal. i think that--
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>> so tell me what a not raw deal looks like in your mind. >> i'd really like to get paid for our effort. >> by who, the company? >> by the company, by you. >> why by me? i wasn't here. >> but-- >> how would i pay you for the past? >> right. my contention is, is that the business is a lot more--worth a lot more than just what the balance sheet shows. i think there's value in the sweet pete name. >> you can have it. i don't need the sweet pete name. >> all right, bottom-- >> you know why? 'cause i have pete. and you don't own pete. >> i don't, and i never said-- >> you don't have any rights to him. >> i never said i did. >> so what's the dollar amount that you're asking for? >> now you're involved. you see the opportunity. >> what's the dollar amount you're asking for? >> $150,000. >> for what? >> taking the vision and concept and getting the thing going. >> dane, you put $2,000 in the business. that's crazy. i can't believe this guy. he didn't do one thing to grow this company when he had the chance.
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we made a deal. he shook on it. now he's trying to shake me down for more money? no way. you're essentially telling me to give you a check because you failed. because they're getting something, you want yours too. are you asking for a handout? >> no, i'm asking for-- >> that's how it feels to me. you called me here today. you're asking me for $150,000. i hand you the opportunity to get up to 15% of equity. you don't want that. you want to basically just hang on for the ride, and you're telling me that i'm supposed to pay you for all this work. i don't need you. >> i'm not--no longer in support of what i agreed to verbally. i'm just not. >> and so you're not honoring your handshake? >> i am not. >> coming up... you're essentially not gonna be in charge anymore. >> i "politefully" disagree, so... my experience with usaa
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your shareholder agreement. >> is everything okay? >> i just finished meeting with dane, and in order for him to go away, he wanted me to give him $150,000. >> [groans] >> it's become clear to me that we need to part ways with dane once and for all. i just need to look over this shareholder agreement so i can figure out how to do it legally. the challenge is, is that the name and the recipes are assets of the current business. and so you guys are shareholders with dane, so i'll change the name, and we'll change the recipes, and we'll do whatever we have to, but i'm just not gonna get backed into a corner. >> why do we have to change the recipes? >> 'cause the recipes belong to the business, right? and he's a shareholder, so the only thing we can do is leave and start all over again. >> there's been a lot of work that went into getting things up to this level, and the research and other things that we've done to make these recipes, to have to-- >> i think that's our last option. >> i mean, that would be the last thing i'd want to do. >> there may be something. article three is the capitalization of the company. what it allows for is, it allows for additional capital to come
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in and for a shareholder to be diluted if they're not able to put in money at the same rate as the other shareholders. if he's not able to put money in at the same rate as you are, then his share gets diluted. does that make sense to you guys? >> mm-hmm. >> so he's not gonna have us backed into a corner. >> no, he will not. we'll be able to keep the name. we'll be able to keep the recipes. he'll have a small percentage of equity... but it's better than us having to change everything. >> that's the lesser of the evils. >> i'll get ahold of him. >> thank you, marcus. >> thank you. >> all right, guys. thanks. you know, a lot has happened since i met you guys. i've seen fireworks. i've seen all kinds of things. when you and i met at the coffee shop, you wanted $150,000 for your equity, and i just couldn't come up with that. but i had a chance to look at the articles of incorporation and the books and the records, and it's very clear that if paid-in capital money goes into the business, whoever puts it in will get shares, and the other
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parties are diluted. essentially, they could put money into this business and dilute you down from the shares you have now to nothing if you don't put money in. and what that'll ultimately do is put them in the driver's seat 100%. and so what i'm gonna do is, i'm gonna lend pete and allison money. and they're gonna put money into the business. so, over time, if we keep putting money in and money in and money in and money in, you're gonna get diluted down 6% to 5%, 3% to 2% to 1% to a half of 1%. by doing that, you're essentially not gonna be in charge anymore, and you'll have the ability to put money in at the same time if you choose to. >> yes. >> but i will put as much money in as i have to. does that make sense? >> both: yes. >> does that make sense to you? >> yes, sir. >> and honestly, dane, the reason i came to this resolution is because when we were here, all of us, busting our fannies, trying to make things work to get this order filled, what did you do? you walked out the front door, and you handed me your apron. and honestly, i don't want to be partners with somebody like that. >> i think it's fair. >> so we're moving on. >> right. >> is that basically where we're at?
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we're moving on. this follows the operating agreement which we all signed. >> both: mm-hmm. >> you guys will be in charge, which you want. and so you--you get what you want. >> and you get what you want. >> well, i "politefully" disagree, so... >> okay. >> the other thing we want to let you know is that we're not gonna stay in this location. we have a financial obligation to you as the landlord, i think, for another 15 months. we signed an agreement. we're gonna be honorable, but we needed you to know that as well. coming up... turn around. >> both: oh, my god!
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>> guys, i feel strongly that you got to be where traffic is. sweet pete's has another 15 months left on their lease, but that location is holding back the business. and i did some research, and i said to myself, "all right, there's got to be a way to make this work." what do you think? >> oh, my god. >> whoo! that's awesome, marcus. i like the tagline. >> i love it. >> so, mike, who's the owner of the building, is here. would you like to meet him? >> i would. >> okay, great. mike, good to see you, by the way. >> hey, marcus. how are you?
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>> this is allison, and this is pete. >> nice to meet you. >> nice to see you guys. >> pete, what do you think, buddy? >> love it. it's got a kitchen that's built out, plenty of space for classrooms. we could do a lot of cool things down here. >> do you believe it? >> i can't. it's unbelievable. >> when you and allison think back to the last four, five years, how's this feel standing here right now, knowing what's behind you and what's ahead? >> well, just muscling through things you didn't think you'd have to face, right? when you have a child and you think, "oh, my son's gonna go to private school, and we're gonna give him the best education." and then you find yourself in a position... [voice breaking] not to be able to do that stuff. >> yeah. >> it's damaging on the ego and the pride. it really takes you down to the bottom. >> that kind of feeling is really depressing. >> we knew there was a way out, though. i mean, of course we would figure it out. but to figure it out in this way, i mean, it's just great. thank you. >> absolutely. >> thank you. >> it's gonna take us just under a year to build out this whole space, especially the way i want
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it. so i have one more surprise for them to show 'em how we're gonna make money starting tomorrow. keep looking that way. keep looking that way. [laughter] look away from the parking lot. look away. don't look. don't look. >> [chuckles] don't look? >> all right, ready? turn around. >> what? >> oh, my god! >> oh, my god. >> oh, my god. >> they look great. >> that looks so cool. >> in order to start making more money immediately, i went out and bought us three mobile-marketing vehicles. i got 'em a pickup truck, a concession trailer, and a corporate delivery vehicle. >> thanks, man. >> can we look inside? >> look inside. >> oh, my gosh. [laughter] >> so you can just make candy right here. >> this is bigger than the house. >> that'd be so sweet. >> nobody else has a mobile
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candy kitchen. >> no. >> nobody. nobody has this. >> this is sweet. >> nobody's gonna top this. >> this mobile concept is for now, and it's gonna help them get out and increase their business overnight. >> [laughing] lemonis: tonight on "the profit," i head to south carolina to get a real taste of good old-fashioned barbecue. norton: if the fat ain't dripping on the coals, it's not barbecue. lemonis: a mom-and-pop operation has quickly grown into a million-dollar business. you're almost doing $1 million a year. you guys aren't mom-and-pop anymore. they are struggling to keep up. norton: we've grown faster than we ever imagined we would grow. we have not caught up with ourselves. lynn: this is overwhelming. lemonis: authentic, down-home cooking never goes out of style. lynn: mom always taught us, whatever we do, we do at our best. lemonis: if i can stabilize this business... we're not charging enough. ...there's big money to be made. this meal was amazing. these ribs are ridiculous. my name is marcus lemonis, and i fix failing businesses. if you don't like money, don't follow my advice.


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