tv The Profit CNBC December 29, 2018 4:00am-5:00am EST
lemonis: tonight on "the profit"... annette: shake what your mama gave you! lemonis: you got to shake it and stir it. ...a florida gelato pop business has big potential... we know that the margins in this business are spectacular. ...but the owner's been frozen in place. help me build the blueprint. tony: okay. i will. lemonis: 'cause i don't feel like you're into it right now. tony: well, i'm frustrated. lemonis: he's let his operation fall into chaos. there's no inventory system. there's no process to anything. he's left his employees to fend for themselves. tony's really not around that much. yolanda: no. lemonis: when's the last time you worked the truck? tony: i don't work in the truck. lemonis: and he's sunk hundreds of thousands of dollars into a failed franchise model, putting his family's life savings at risk. they're not gonna bail you out anymore.
there's no more going back to them for money...ever. if i can't shake him out of his tailspin, his company's day in the sun will come to an end. tony: the process is a little [voice breaking] overwhelming. i put my whole life into this. lemonis: 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...is "the profit." -let's go to work. ♪ ♪ tony: ladies, we got bars to make. lemonis: in 2012, tony fellows launched hippops, a dessert truck specializing in handcrafted gelato bars. tony: so you choose your flavor and then your dip and then whatever topping you'd like. woman: great. lemonis: his goal was to generate some buzz
in sunny south florida, then franchise the concept nationwide. tony: thank you. enjoy. lemonis: tony had been in the frozen-desserts business before trying his hand at real estate, only to suffer big losses when the market collapsed. he decided to return to his roots, and that is when hippops was born. yolanda: oreo milk rainbow. that'll be $6. lemonis: but while the truck itself has been profitable, the franchise effort is a bust, burning tons of money with nothing to show for it, and putting tony's dreams on ice. freyda: it's been very slow for the last six months. tony: we're in debt now $50,000? freyda: yes. lemonis: still, i think the concept is fun and easy to replicate, and with my help, i'm confident tony can put this business on the right track, so i'm heading to fort lauderdale to jump right in. "handcrafted awesomeness."
good morning. tony: holy smokes! lemonis: how you doing, my man? i'm marcus. tony: marcus. tony. lemonis: nice to meet you. tony: oh, my god. this is unbelievable. lemonis: this is a cool truck. wow. can i try one? tony: absolutely. lemonis: okay, so there's how many different toppings? tony: we have about a dozen unique toppings. lemonis: okay. tony: and then three chocolate dips. lemonis: so you take a base, you dip it, and then you can put all the toppings on it. tony: my favorite is definitely the godfather. lemonis: okay. are you the godfather? tony: i don't know. lemonis: okay. tony: you might -- you might be the godfather. lemonis: there you go. tony: can i get a traditional size bar, please. lemonis: hey, hey, hey, i'm ordering. how are you? i'm marcus. jorge: hey. how you doing? i'm jorge. lemonis: jorge? do you have coconut? jorge: i do. sprinkles? lemonis: it's breakfast time, so i wanted to have a little fruit. okay, so let's do dark chocolate with -- what are the other chocolate options? jorge: chocolate sprinkles. lemonis: let's do that. tony: so we handcraft them in small batches here. ♪ how's your breakfast? lemonis: i think it tastes amazing.
i actually think it tastes really amazing. tony: thank you. it's a littler healthier option, because with gelato, you're using skim milk and just a little bit of cream. so the base itself is about 93% fat-free. when you get the bar, it should be nice and creamy. lemonis: how much is this? jorge: that'll be $5. lemonis: i mean, it seems like a heck of a deal for 5 bucks. what does it cost you to make this? tony: the bar itself runs about 50 cents. lemonis: okay. and then the toppings? tony: so 25 cents for the toppings and 25 cents for the dippers. lemonis: stick? tony: so the stick runs 5 cents. lemonis: okay. tony: all in, with the dip and topping, i have about an 80% gross margin. lemonis: how many of these will you sell in a day? tony: we could do anywhere from about $1,000 to as much as $2,500. lemonis: does this truck run every single day? tony: yes, sir. lemonis: when a food truck can do $1,000 to $2,500 a day, 6 to 7 days a week, at 70%-plus margins, that's a business that i would be interested in. so, let's go in the truck. i want to see how this whole thing works. what's all the milk and whipped toppings?
tony: you can take any pop and turn it into a popshake. lemonis: what do you sell it for? tony: $8. lemonis: $8. and of a percentage of sales, how many milkshakes do you sell? tony: 5% to 7%. lemonis: is it labor-intensive? tony: it's labor-intensive. lemonis: so why do you do it? why not just stay simple? tony: you know, we didn't have it initially. lemonis: yeah. tony: but folks came and asked, and we wanted them to be able to have that option. lemonis: yeah. so this is a traditional gelato case. tony: no, this is a special case. lemonis: what's special in... tony: you know, it's all glass, and it's completely open over here. there's only one manufacturer in italy that makes a case like this. lemonis: how much does it cost? tony: i paid $25,000 for it. lemonis: for this?! what did it cost to set up this whole truck? tony: all in, about $125,000. lemonis: i'm not sure if tony did any research on what a truck like this should cost, or whether he thought that spending gobs of money would automatically make the business successful, but what i do know is that he overpaid.
it's not complicated. there's not tons of cooking equipment with hoods. there's a refrigerator, a sink, and an ice-cream cooler. maybe $75,000? where did the name come from? tony: so actually, my mother came up with the name. lemonis: oh, she did? okay. tony: she did. lemonis: take me back to why you started it, how long it's been around. tony: 2009, i was in real estate, buying properties, and then, you know, real-estate market fell apart. i lost money. lemonis: and so who funded the growth of the real-estate business? tony: my dad. lemonis: and how much did you lose during that whole thing? tony: we probably lost a couple hundred thousand dollars. ice cream's always been my passion, and so i thought, "wow. we could really create a different experience, take the pops to the people." and if the business model worked, my dream was to franchise it. lemonis: and do you feel like you've proved the concept? tony: i believe so. i franchised it around a year and a half ago. lemonis: you set up the franchise. tony: i did. lemonis: and how many have you sold? 10? 20? tony: i sold one large deal. an international deal in dubai.
lemonis: so why not any success in the united states? tony: i don't know. lemonis: the first sale he has is halfway across the world? and he couldn't sell one in the united states? so, where do you make the pops? tony: so the whole creamery is in the back of the warehouse. lemonis: can i see it? tony: absolutely. sure. ♪ lemonis: oh, wow. this is like a real kitchen. ladies, i'm marcus. how are you? annette: hi. i'm annette. annette. lemonis: annette. yolanda: yolanda. lemonis: yolanda, nice to meet you. i'm marcus. can we make a batch from scratch? tony: absolutely. lemonis: what do we have prepped? yolanda: we have pistachio prepped and we have lemon. lemonis: lemon? yolanda: lemon with mint. annette: you a lemon guy? lemonis: my last name is lemon. annette: all right. give it here! there you go! lemonis: let's make lemon! yolanda: this is the lemon mix. annette: out of fresh lemons. lemonis: fresh lemons. yolanda: we squeeze fresh lemons. annette: go ahead, now! there you go, marcus! shake what your mama gave you! lemonis: you got to shake it and stir it. annette: there you go!
lemonis: okay, so that's the mix. now what we doing? annette: you got to pour this in the gelato machine. lemonis: okay, so this goes in the machine. annette: yeah. okay, now we're gonna mint and zested lemon. go ahead, there. go ahead and pour it. don't -- lemonis: i got it. okay. annette: and let it come out. we gonna put it in the mold. what we do...take it... tony: and then it has to go into the blast freezer. lemonis: and these will take how long? annette: two hours. lemonis: two hours. yolanda: and this is our biggest problem. lemonis: what's the problem? yolanda: it -- it goes on "defrost" and it shuts down. lemonis: so this doesn't work? tony: so every six hours, it goes onto a defrost. lemonis: so why wouldn't you get another one? tony: so it's brand-new. it's about $7,500. lemonis: it's odd to me that with everything tony spent money on, that he would only invest in one freezer. not only does he limit his ability to grow his business, but if the one freezer goes bad, he's out of business. these freezers cost about $7,500. i'm not minimizing the amount,
but in comparison to what he spent on the truck, it's not much at all. so, let me spend some time just with them, okay? i'll see you in a little bit. tony: okay. lemonis: yeah. get out of here. tony: you got it. all right. lemonis: don't be supervising our conversation. yolanda: [ laughs ] lemonis: what's it like working for tony? annette: it has its up and downs. out of a week, we'll see him probably, i'd say about three days for that week. and then he's here a couple hours about. yolanda: sometimes we don't see tony for a whole week. lemonis: there's times you don't see him for a whole week? so tony's really not around that much. yolanda: no. lemonis: oy. where's all the inventory? annette: the big white freezer. lemonis: can you show me real quick? annette: okay. yolanda: like, see these freezers? this is where we hold our products. lemonis: why does this look like this? open like this? i mean, it seems totally disorganized. yolanda: yeah. lemonis: so how do you know what's in here? it it labeled on top? yolanda: no. lemonis: and so you really never know, unless you come out and look, what you have and what you don't. there's no inventory system. yolanda: right. no. lemonis: in order for a franchise to sell,
there has to be a proof of concept. and that concept includes not only the revenue and the profitability of the idea, but the systems that are in place. a franchisee's gonna want to see a detailed inventory management system, clear procedures for storing, ordering, and labeling product. they're gonna want to see a clean and thoughtfully designed facility with the correct workflow and the right equipment, and they're gonna want to know that the franchisor has thought through every little detail, and when there's a problem, they've come up with a solution. but tony hasn't done any of those things and then he wonders why he hasn't struck any deals. oh, thank you. okay. is this -- hi, ma'am. how are you? freyda: i'm good. i'm freyda. lemonis: i'm marcus. freyda: hi, marcus. nice to meet you. lemonis: are you the bookkeeper here? freyda: i'm the bookkeeper. and i am the mother. lemonis: oh, you're anthony's mother? okay. well, that's awesome. do you get paid? freyda: yes, with kisses. tony: with pops.
lemonis: so you don't get paid? freyda: i work for love. lemonis: is he a good manager? freyda: he's a good manager. he's a phenomenal boss. lemonis: now, is that his employee talking or his mother talking? tony: [ laughs ] lemonis: you know, when you reached out to me, you told me this was a franchise concept. and so how many different potential franchisees have you actually pitched? tony: we've done webinars with at least, um, 300 people. lemonis: i'm sorry? why do you think not one person converted? tony: i don't know why. lemonis: maybe they don't think the concept's good. when i look at all of the finished pops in the freezers, there's not really an inventory system of what's in there, what needs to be made, there's not a schedule. typically, before you make it a franchise concept, you have to perfect your own business. how much money have you put into this whole concept so far? tony: we're somewhere close to around a half a million dollars. my parents invested money. lemonis: how much money have you and your husband invested in this business? freyda: around $200,000. tony: but it's closer to $350,000. lemonis: out of your personal savings? freyda: out of our personal savings,
because we believe in our son. lemonis: where did the rest of the money come from? tony: the rest of the money came from the dubai deal, too. lemonis: no money came from you personally? tony: yeah, about $50,000 from myself. lemonis: so they really -- do you own -- do you and your husband own the business? you own none of it? tony: it was a loan. freyda: it's a loan. lemonis: you charge him an interest rate? freyda: i wouldn't. my husband does. lemonis: and do you pay the interest monthly? tony: we do, but, you know, i -- she doesn't always pay it. you know, for me, it's important to be able to, you know, to get my parents' money back to them. they're not young. lemonis: and if they can't get it back, what does that mean? tony: [ voice breaking ] i'm scared. yeah. [ sighs ] 'cause i want to be able to get my parents' money out of the business. lemonis: you want to what? tony: get their money out of the business. freyda: he's always had a tough life. he really got into trouble. lemonis: what kind of trouble? freyda: bad trouble. lemonis: what kind of trouble? freyda: drugs. okay? lemonis: you had a drug problem? freyda: drugs. tony: thank god, you know, october, i celebrated 19 years clean.
lemonis: congratulations. tony: thank you. it's important. and i have three little kids and -- lemonis: are you married? tony: i'm divorced. lemonis: divorced. okay. tony: yeah. you know, this business is, like, everything i have. lemonis: how do you pay your rent and your car payment and all that? tony: i live at home. lemonis: you live with mom and dad. tony: yeah. it helps financially. lemonis: yeah. tony: you know, for my children and my ex-wife. my ex-wife does all the social media. lemonis: she's an employee of company? tony: yes. so there's other people i'm responsible for here, as well. lemonis: tough. i've met a lot of people throughout my business career that have suffered with different dependencies, and the fact that tony was able to recognize the problem and recover and stay clean is a sign of hard work. what i'd like to do is, let's gather the fina-- i want to gather the financial data and we could sit down and go over some numbers. tony: sure. ♪ lemonis: so in 2015, you did $533,000 in sales. the gross profit was $435,000, which is 81% margin, which is killer. tony: yep. lemonis: your total expenses were $381,000,
and the company shows a profit of $54,000. tony: correct. lemonis: in 2016? tony: $492,000. lemonis: okay, gross profit's the same at 80%. and right now, the business shows it's gonna lose about $8,000 for the year. $7,000 to $8,000. tony: yes. lemonis: so this is the gelato business. this is hippops handcrafted gelato bars. that's one entity. now the franchise concept. tony: now, the franchise concept has no -- lemonis: it's a separate legal entity? tony: right, so there are no -- essentially no sales, you know, for the whole year. lemonis: how much has it lost in the last two years? tony: it's lost...$250,000. lemonis: so you have, in the last two years, the actual hippop entity is netting to north of $40,000 in profit. the other legal entity, this "franchise idea," has lost $250,000. gone. do you feel like this is a well-oiled machine? tony: no, that's why i called you. if the structure -- lemonis: but, i mean, you essentially called me to come build your business for you. tony: alongside with me. lemonis: uh-huh. tell me about your watch. tony: so it's a rolex.
lemonis: how much is that watch worth? tony: $10,000. you know, it's the one luxury, you know, that i have. lemonis: it's a [bleep] watch. tony: i know. lemonis: and i'll tell you that if i was a potential franchisee, i look at stuff like that. and then i find out that there's one freezer in the kitchen, really would be better if there was two, 'cause you could crank up production. how much does the freezer cost? tony: $7,500. lemonis: how much does the watch cost? tony: i get it. lemonis: i will tell you one thing, i give you a lot of credit for making other sacrifices. living at home. you're taking care of your kids. you've been honest with me about your past. that meant a lot to me. you should feel good about where you stand today. tony: i appreciate that. lemonis: i appreciate the time we spent today. i'll study the numbers, and i'll be in touch, okay? tony: okay, great. ♪ lemonis: tony, how are you? tony: i'm great. how are you?
lemonis: good seeing you. edward: mr. lemonis, how are you? lemonis: hi, i'm marcus. edward: ed fellows. lemonis: ed, nice to meet you. edward: same here. lemonis: wait, i know you. freyda: i know you. lemonis: how are you? is he behaving? freyda: absolutely. lemonis: okay, well, that's his mother talking. i wonder what his dad has to say. edward: ask his father. lemonis: that's right. it's a little out of the ordinary for me to meet with the parents of the owner. edward: okay. lemonis: but as i learned about the genesis of where the money came from, i thought it'd be good for us to talk as a family if i'm gonna be part of your family. edward: not a problem. lemonis: when it comes to the business, i think the business today, it's an ice-cream truck. it is not today a franchise concept. edward: but is it doable? lemonis: is it doable by somebody who wants to show up every single day and to pay attention to the details? yes. i don't know if tony is that person. 'cause i will tell you, your staff thinks you don't put a lot of time in. tony: it was a difficult year.
you know, i ended up, you know, leaving a 17-year relationship [voice breaking] and sharing, you know, with my kids, you know, that our marriage was ending. i kind of felt, you know, like i failed. lemonis: yeah. i want to know that you're gonna be willing to make the sacrifices that are necessary. tony: i'm committed to my business. lemonis: here's the good news, right? the good news is, is that it's a very simple, reasonably-priced dessert that anybody can enjoy, no matter what age they are or where they come from. edward: correct. lemonis: and we know that the margins in this business are spectacular. i'm willing to make an offer. so i want to make an offer of $100,000 for 50% of the business. franchising is a good idea when you have a model that you can show somebody that's what's called a proof of concept. none of that's been done yet. and i understand process and what it's gonna take, and i think it takes $100,000 to get it right.
of course, i'll be 100% in charge. tony: and so what happens to my salary? lemonis: what do you make today? tony: about $100,000. lemonis: [ chuckling ] okay. i mean, i don't mean to be funny about it, but that is shocking to me. you are not gonna live the life of luxury, at least while i'm around. tony: i'm not living the life of luxury now. lemonis: give me your watch. tony: i mean, this is a 10-year-old watch. lemonis: give me your watch. you want to know what it's gonna go towards? buying a new freezer. you'll hold onto that for me. and do not... freyda: i will not give it to him. lemonis: ...give it back to him. freyda: i promise. lemonis: when the business makes money, you can take half of the profits and i'll take the other half. it's not about me, it's about the business. ♪ tony: what do you guys think? lemonis: no, no, no. be an adult. edward: this is your decision. lemonis: don't put the pressure on them. because they're not gonna bail you out anymore. if your business is in trouble and you need my help, log on to...
tony: what do you guys think? ♪ 'cause no matter howe hofar away you roam ♪ ♪ ♪ if you want to be happy in a million ways ♪ ♪ for the holidays you can't beat home sweet home ♪ be an adult. edward: this is your decision. lemonis: don't put the pressure on them. because they're not gonna bail you out anymore. there's no more going back to them for money...ever, while we're partners. ♪ so do we have a deal? tony: we have a deal. it's scary, but i believe in you, and i believe in myself. and i know we'll build a business.
lemonis: you're gonna do the work. i'm gonna do with you, but i'm not gonna do for you. tony: i will. lemonis: i'll see you guys. edward: okay, take care. ♪ lemonis: good morning. freyda: good morning. lemonis: so yesterday, i agreed to put in $100,000 into the business and to have 100% control of what happens. can you guys do me a a favor and ask tony what time it is? annette: what time is it, tony? tony: my -- my watch is gone. lemonis: you want a new blast freezer? annette: yes. lemonis: we're gonna get one. we're gonna sell his watch. yolanda: [ laughs ] annette: yeah, right. you serious? lemonis: i'm very serious. we're gonna get our priorities right. we're gonna get new equipment. we're gonna put a new system in place. we're gonna work to develop new flavors. we're gonna find new customers. we can't just stay doing what we're doing. it won't work. are you ready to go to work? thank you. ♪ i'll take an apron, and i want to be -- i'm on your team. i'm working for you today. jorge: [ chuckles ] all right, so teach me what we're doing here. in order for me to better understand how to improve the business,
i want to see the food truck live in action. and i want to see what tony's commitment is to this process. is tony normally at these events? jorge: no. lemonis: he doesn't come hang out with you guys? jorge: unless i need him to, he won't come. lemonis: you don't neme here. i'm gonna screw things up for you today. jorge: yeah. lemonis: how are you, ma'am? step on up. how are you? woman: can i have a vanilla bean, please? with the semi-sweet chocolate dip? lemonis: is that dark semi-sweet? yolanda: yeah. thank you, and you enjoy. woman: wow. that looks great. thanks. lemonis: enjoy. thank you. woman: thank you. lemonis: i need to be taught, 'cause i'm gonna be in the line with you. yolanda: oh, okay, then. jorge: you dip it in. pull it out. then you put that -- lemonis: okay. yolanda: this is gonna be fun. lemonis: hey. lemonis: i'm running [bleep] here. [ laughter ] you know why? tony: already? lemonis: 'cause you're not on time. what time is it? tony: it's 5:47. lemonis: so you're late. tony: i'm late. lemonis: okay, can't be late with me. when's the last time you worked the truck? tony: i don't work in the truck. lemonis: ever? tony: nope. lemonis: okay. it's important for any business that i invest in,
for the owner to be there, so that he could protect my investment and his investment. i don't invest in businesses, i invest in people who operate businesses. and if he wants to be an absentee owner, then he's got the wrong guy. tony: hey, folks, how are you? woman: hi. tony: what can i get for you guys tonight? woman: can i get a milkshake, please? tony: milkshake. sure. woman: a mango milkshake. tony: mango? sure. absolutely. lemonis: how long does it take to make a milkshake? tony: five minutes. lemonis: five minutes?! lemonis: anything for you, sir? man: mango popsicle. lemonis: okay, do you want it dipped in chocolate? man: sure, yeah. woman: thank you. woman: hazelnut ice cream in milk chocolate. lemonis: you said "milk"? so it's gelato on monday, karate on fridays. what can i get ya? woman: i want the chocolate with the white chocolate. lemonis: thank you for your business. man: may i have a vanilla bean, shredded coconut?
lemonis: thank you. good seeing you. woman: okay, i would like a pistachio with the dark chocolate. ♪ all righty. lemonis: all right. would you like a little whipped cream on top? it comes with it. yeah, sure. you got it. lemonis: here you go, guys. that took over five minutes to make that shake. for me, it's speed. certain number of people out here, the longer they wait, they may walk off. the key to the food-truck business is the velocity in which you can turn customers. what tony needs to really understand, that this is simple math. he may be selling the shake for $8, but it takes him so much more time, that in that same time, he could've sold 5 pops. that's $25, not $8. so, what i want to do tomorrow is i want to go through the warehouse. i want to understand inventory. i want to look at the production process. we're gonna simplify everything. ♪
tony: here's a complete list of the inventory. lemonis: great. if this concept is ultimately gonna be marketed to potential franchisees, the number-one thing the company's gonna have to show people is process. so we're gonna start by digging into the inventory. so where's the inventory of, like, these freezers, those coolers, that ladder? where is all that? tony: i don't have an inventory of that. lemonis: why not? tony: just because it's just been us. lemonis: you want to have an inventory of things like your dollies and your freezers and your styrofoam freezers. i want you to just go through the warehouse and i want you to write down any fixed asset you see. i want to put it all down and, i want to assign values to it. all right? tony: yep. lemonis: how much of this is garbage? tony: probably a lot of it. lemonis: can't do inventory if i don't know what's here. ♪ these don't need to be here. every single inch of this place is gonna have a purpose. it's gonna have a label. "this is for this," "this is for that,"
and if we don't use it, it goes away. tony: we need those shelves for the blast freezer. lemonis: for the blast freezer that's not working well? tony: yes. lemonis: there's so much dust on them. you obviously haven't used them in a year. you wanted process, i'll give you process. so, tony, this is your job for the next week, is to get this place organized, with shelving, so it's got truck supplies, freezer supplies, paper supplies. and what i don't like is this. let's give them a system where they can see a quantity, how much they're supposed to have -- pineapple, mango, chocolate -- so that it essentially looks like a jewelry store. and remember, we're creating a blueprint. if you want to franchise this in the future, we want to be able to say to somebody, "you can get a 2,000-square-foot warehouse. we'll come in, we'll help you lay out the plan." help me build the blueprint. tony: okay. i will. lemonis: 'cause i don't feel like you're into it right now. are you into this, or are you frustrated? tony: well, i'm a little frustrated. lemonis: why? tony: yeah.
just with the equity issue. you're still hung up on that. tony: i am. okay, so what would you like to do? tony: i'd like to discuss it. lemonis: sure. let's go in the office. so i'm standing here doing all this and you're focused on that? okay. tony: so, you know, one of the things that i didn't discuss with you and, you know, that i needed to bring, you know, to your attention is, niva does have some equity. lemonis: your ex-wife? tony: my ex-wife. you know, we just recently got divorced. lemonis: what's the reason you didn't tell me yesterday? tony: because i didn't realize i was gonna -- i was gonna be giving away 50% equity in the business. lemonis: but i asked you if you accepted my offer, you said yes. the fact that your ex-wife is a partner of mine is a very big problem, considering that i haven't met her. why didn't you tell me about any of that? ♪ you're staying here, and you're gonna -- tony: see a friend. lemonis: is there a catering event tomorrow? tony: is there -- i have a few catering events tomorrow.
lemonis: the fact that your ex-wife is a partner of mine is a very big problem, considering that i haven't met her. so you already got an "f" in the first day of our relationship of not telling me the truth. why didn't you tell me about any of that? what's wrong? talk to me. talk to me, tony. tony: the process is a little [voice breaking] overwhelming. lemonis: what's overwhelming? tony: i put my whole life into this business for the last four years. didn't expect to give up 50% equity in the business and have niva have 25%. i know i'm gaining something, but it just doesn't feel that way. lemonis: i think in life, people get overwhelmed. this is an overwhelming process for you. i'm here to help you. i am willing to sit down with you today
and we can talk about reworking the deal, but she's got to be at the table. tony: yes. i agree. lemonis: period. end of story. your facts are sketchy right now. tony: i-i understand that. lemonis: and i need her to clean them up, 'cause i don't feel like i'm getting the whole story. tony: that's fair enough. i'll call her and get her to... lemonis: okay. tony: ...to meet us. lemonis: i'll see you in a little bit. tony: okay. lemonis: all right? ♪ hello. i'm marcus. niva: hi. niva. lemonis: nice to meet you. thank you for coming, by the way. niva, just so you know, i just learned about an hour ago, that you are a 25% owner in the business. how do you feel about what's happening? niva: financially ignorant, basically, and not kind of knowing what's going on. tony: it's difficult to come into a situation and say, "okay, here's 50% of your company for $100,000." niva: absolutely. tony: i'm having a difficulty with that. lemonis: so you're not comfortable with the deal that's on the table today. we need to resolve this issue,
or we need to shake hands and i need to move on. so where -- where are we? tony: i feel good at 35%. lemonis: for me to have 35%? that's too low for me. i can't go down by 15% 'cause you had a sleepless night. i'm willing to go down to 40%. tony: so you're gonna go to 40% and we're gonna hold 60%. lemonis: right. tony: and from the 60%, niva gets 25%. lemonis: you guys work that out. tony: how do you feel about that? so if he has 40%, and there's 60%, so i'm at 25%, you're at 35%. tony: why would i take less equity and leave you at -- lemonis: stop. you really, honestly, stop. for you to go down a little isn't unreasonable. do you agree with that? niva: i agree. lemonis: okay. maybe you go from 25% to 20%. do you feel it's valuable enough for you to give up 5% for me to come in? niva: yes. lemonis: okay. so i'll be at 40%, you'll be at 40%, and she'll be at 20%. and i'm doing that only because i feel like it's not fair for me to be disrespectful to her, okay? tony: yes, sir. lemonis: do we have a deal?
nice to finally meet you. are we good? tony: we're good. lemonis: this is it. tony: we're good. lemonis: okay. thank you for coming by. niva: thank you. ♪ lemonis: i don't like the milkshakes, and i don't want them on the truck anymore, because it takes time. so here's what i think about it. 1, 2, 3, make money. so frozen bananas. in order to make this franchise concept more attractive, i want to add more high-margin items that could be made quickly to replace the milkshake. i own a pie company. tony: amazing. lemonis: key lime pie. they can ship 'em here. we'll put them right in the freezer. so go through the process. what i ultimately want to do is expand the product offering to increase the number of times you would see a particular customer. if all you have is gelato pops and you're parked at the same place every wednesday, for 52 weeks a year, you may only see a particular customer once, maybe twice a month. but if your product offering is wide to include other products, you may see them every wednesday.
going forward, no more milkshakes. and we're gonna add other things like banana, key lime pie, but i want to have a process for adding that on. as we generate more products, we'll increase our repeat business and the more repeat business we have, the more money we make. obviously, the more money we make, the more viable the concept. [ engine starts ] oh, yeah! another way to make this franchise concept more viable is to double the revenue by leveraging the existing kitchen and adding a second truck. so today, i'm bringing tony to miami trailer. i want to start expanding the fleet right away, but i also want tony to realize that we don't have to spend $120,000 to add a new truck. it's a $60,000 investment. in my mind, you're gonna get a three-year life-span out of it. if his current truck does $500,000 and he's only servicing one small part of south florida, then this truck could easily generate the same amount of revenue.
and at a 75% margin, well, that would be a game-changer for his business. so at 60,000 bucks, we'd like to get this in a week. ♪ hey, bud. i wanted to make a visit to south florida, 'cause i wanted to see if tony followed through on completing organizing the warehouse. walk me through what you did. let's start up front. tony: we actually finished this wall. lemonis: what happened to the shelving we were gonna put up here? tony: we didn't put up any shelving yet. lemonis: how come? tony: what i decided was to put stuff for the truck on the side. lemonis: and what about this? remember, wanted to organize -- we wanted to organize stuff like that. so we really didn't get that done. tony: no. not yet. lemonis: getting the freezers organized was top priority. tony: all the -- all the sorbets are here. lemonis: but this isn't organized by anything.
it looks the same to me. tony: well, we organized it. lemonis: it feels like you put up some drywall, you moved the metal racks over there, you reshuffled around the freezers, and that was it. if you ultimately want to duplicate this model and sell this concept to other people, it needs to be so refined that people come here and they say, "holy [bleep] these people are thinking about every last thing." tony: i get it. lemonis: okay? ♪ i continue to be frustrated with tony, but what i know is that in order for him to actually make progress, he may be the type of individual that needs to visualize things. so what i've decided to do is give him a surprise visit to new jersey. i'm taking him to mr. green tea. richard emanuele, this is tony. tony: hey, rich. richard: hey, tony. tony: it's a pleasure to meet you. lemonis: niva. niva: hi. niva. lemonis: when i first invested in mr. green tea, they were doing about $750,000 in sales.
three and a half years later, they're gonna do north of $10 million. i brought tony so he can come up with a lot of new ideas and see different things. but what i also wanted him to do was to see that if he trusted the process, what could actually happen to his business. so i wanted them to learn about organization and how organized everything has to be, which has been... richard: we've been working on for years, back and forth, but... and i think we're getting there. richard: we're getting there. sometimes, you know, you need that person from the outside, because i think sometimes, we get stuck in tunnel vision. and you start to open your eyes and you do a little bit and all of a sudden, you know, people like it and you say, "wow. okay. this is really the way to go." lemonis: so i wanted them to see how a real creamery works. richard: right. lemonis: because i have gotten us a very big job in south beach. it's the grand opening of the new t-mobile store. so i want to work on flavor development that's customized for them. ♪
the quality of this production is very organized. it's the process that, no matter how small or how big, it has to be there. richard: nothing comes in here without it being tagged with exact orders, barcoded, and what the flavor is. there are no mixed pallets. lemonis: do you see how organized everything is? niva: yeah. richard: it all starts with real, regular, natural ingredients, real fruit. so we're gonna try guava and cream cheese. so these are -- these are small, little guavas. niva: so we're not peeling it? richard: no. richard: then i have a -- a supplier that i could get you hooked up with. niva: [ laughs ] richard: okay. niva: oh. tony: oh. niva: we go all in? lemonis: all in. richard: all in, baby. lemonis: part of the reason that i want them to develop new flavors, is i want to see tony put a process in place. i want you to develop two different ideas for the t-mobile thing.
you know their colors. let's try to do something big, okay? tony: sounds good. lemonis: i haven't seen him do it yet. just trying to understand your schedule for the next couple days. so you're gonna go back, when, tonight? tony: tomorrow. i have some friends that live up this way, so i'm gonna go see them. lemonis: is there a catering event tomorrow? tony: is there -- i have a few catering events tomorrow. lemonis: so you won't be there for them? tony: well, our business will be there. i personally won't be there. lemonis: who's gonna run them tomorrow? tony: well, my partner will be there. lemonis: your partner marcus? tony: niva. niva: we came up for business, and that's what we came up for. i also want to stay in manhattan for the night and see some friends. tony: why is it an issue that i'm going back tomorrow, for you? niva: because we came up here for one purpose and it's to be here. and it's done, it's over with, we need to go back, we need to keep on going. lemonis: but i think the point that niva's making is she's going back today and she's gonna cover for the catering event. and you're staying here, and you're gonna... tony: see a friend. i just need the direction.
lemonis: i think the point that niva's making is she's going back today and she's gonna cover for the catering event. and you're staying here, and you're gonna... tony: see a friend. niva: we came up here for one purpose and it's to be here. and it's done, it's over with, we need to go back, we need to keep on going. lemonis: there's an event tomorrow, so sometimes if you want to see a friend and you just... tony: so are you concerned that the catering job
will not be -- take -- be done tomorrow? lemonis: i'm concerned that you're not going home today when the work is done and getting back to work. the reason to come up to new jersey was to come up, meet this family, get some contacts, learn some process, and go back down there and get back to work. tony: i understand what -- what you're saying. lemonis: we're in the middle of this whole business process. tony: right. lemonis: and that includes everybody being 100% in and working hard. and so in the next week, you need to come up with a few options for that t-mobile grand-opening event. ready to make some other stuff? tony: let's make it. lemonis: all right, let's go. ♪ okay. what do we have to see? tony: all right. niva: okay. lemonis: it's been about a week since i've seen tony and niva, and i wanted to check in on them to see how their new flavor development was coming along for the upcoming event. niva: we have a mango chili.
lemonis: okay. niva: and a café cubano. tony: so niva named the mango "t-mobile mango." lemonis: colorwise, how will that tie back to their brand? tony: that flavor doesn't relate to the -- the -- the brand, it's more miami. lemonis: really? tony: it has a little chili in it. t-mobile's very hot. it's on a big upswing. lemonis: the company that they're making the product for uses magenta, a bright pink color, and i'm looking at a product that's, like, brown-orange? and more importantly, he didn't even take the time to make it into a popsicle, so that i could visualize what it would look like or how it would taste. this [bleep] is not ice cream. tony: i-i was a little overwhelmed. you know, you want to try and get everything done at one time and you can't. lemonis: he did a good job of trying to [bleep] me, but i'm not buying it. i just wanted you to finish one task. i flew you up to new jersey so that you can learn from people that do it really well. and i did that for one reason. see somebody who started as a small business, who now has a huge business, and then i tasked you with what?
tony: creating two flavors. lemonis: so you can imagine my frustration, because i don't really know what the point is. tony: the point is, is our process is broken. lemonis: i know, but i -- but i took you somewhere to see a process. then you come back here and you do none of it. if you want me to write you a check and, like, go away, i -- i'm not gonna do that. i'm not the right guy. if it's just that you don't want to do it, i would rather you just be a man and just say to me, "i don't really want to do that." tony: no, i'm open to doing it. lemonis: but then why didn't you do it? tony: i thought that we did. lemonis: i... ♪
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i would rather you just be a man and just say to me, "i don't really want to do that." tony: i thought that we did. lemonis: i... i feel like i haven't gotten answers. i don't get the truth out of you all the time. tony: no. i just need the direction. if i wasn't open to change, i would have never called you. lemonis: did you sell your watch yet? tony: no, i gave it to my -- i gave it to my father against money that i -- i owed him. lemonis: but you could've taken it and sold it and... ♪ i need to take a minute to determine if i should move forward and really understand if this is a business that can be helped or it's a business that can just do its thing. i really have to think about that.
let me take a minute, okay? i just need to cool off. rather than getting upset, i felt like i needed to step out and just collect my thoughts and really process everything that's happened. ♪ i really wanted to see it through for tony's benefit, but i feel like every step of the way, he's either bucked the process, ignored it, or simply not engaged. and i don't know what to do at the point, but being angry isn't gonna solve anything. i thought it would be good to get all of us together and really have a conversation of where my head's at. it's been a tougher process for me than i had originally expected. i feel like your follow-through for stuff just wasn't what i had wanted it to be. tony: no, i mean, i-i -- i think being accountable and, you know, having to answer to a partner, i mean, i think it's something that i have to really work on.
lemonis: is it fair to say you were never really happy with the original financial arrangement? tony: i just didn't feel $100,000 was reasonable for 40%. lemonis: i do not want to put you in a situation where you're gonna be uncomfortable and regret having a partner, nor do i want to be in the situation. because i honestly don't believe that you really ever wanted a partner. tony: i-i-i agree. lemonis: i don't feel like we can do business together. i think it's better to just, you know, end it in a way where we can respect each other, we can shake hands. i think that tony is not a bad person. he's just not the kind of person i should be in business with. normally, i would exit and you'd never see me again. tony: right. lemonis: but i -- i'm here. and i think you have a ton of potential and you do have a good business. and you're a smart guy, and you're gonna kick ass. with all that tony has been through in his life and the challenges that he's had to overcome, i felt like it was important to leave him with a glimmer of hope, with the idea that
it was possible if he put the work in. okay? tony: absolutely. lemonis: okay, buddy. tony: thanks, man. lemonis: good luck to you. tony: be well. thank you. lemonis: i thought giving him his dignity and respect may be the thing that he actually needs more than anything. [dramatic orchestral music] male narrator: this ordinary office is a gateway to another world, one of financial independence and life-changing opportunity. - so are you nervous? - yeah. narrator: because in this room... - hi. - hi. - how are you? i'm nadia. - robin. narrator: real job interviews are about to unfold... - we have our first candidate here. narrator: with 20 cameras capturing every second. [suspenseful music] - let's do this. narrator: see the tricks... - are you good with names? - absolutely. - what were our names? - oh, no! narrator: the triumphs... - you passed that test. narrator: the blunders... - would i go back into public accounting again? no.