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tv   The Profit  CNBC  March 31, 2019 4:00am-5:00am EDT

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lemonis: i thought he was just way out of his league. i thought he was trying to live in his father's footsteps, and there was no chance of that happening, none. ♪ oh, are you gonna take it? are you gonna do this one? all right, you go. lemonis: you go. amber: you're the star of the show. lemonis: actually, apparently, according to social media, you're the star of these shows. amber: i got recognized last week. lemonis: yeah, okay. why don't you just take it from here? amber: tonight we're gonna take an inside look at my favorite family, my favorite product. lemonis: ice cream's not your favorite product. shoes and handbags are your favorite product. amber: i don't know about that. lemonis: it's my favorite family, and it's one of my best investments. amber: okay. lemonis: yeah. amber: what is it? lemonis: what? amber: what are we watching? lemonis: uh, bentley's? amber: mr. green tea! [ laughs ] bentleys! lemonis: in the last five years, i've visited over 70 businesses. it's delicious. and i've traveled the country trying to fix the people... christina: i don't want to be that person that cries on tape. lemonis: ...fix the process...
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i don't think you guys have any idea what's in your inventory. holy [bleep] ...and create a few products... welcome to your new store. man: oh, my god. channa: i owe my life to this company. lemonis: that is the reason that i'm here. i spend hundreds of days a year working on these companies. why didn't you do it? man #2: i thought that we did. lemonis: holy [bleep] but we can't always fit everything i'm thinking into the show. tonight we're gonna do an inside look at one of my favorite episodes from season one -- mr. green tea. michael: you are strangling the progression of the business. richard and lemonis: back up. you're crossing the line between father and boss. lemonis: is that good? amber: no. lemonis: over the next hour, i'm gonna take you behind the scenes... what are you doing? ...to share with you what i was actually thinking during filming... this is never gonna happen again. i was trying to establish a relationship with michael that wasn't scolding him in front of his parents. ...share some secrets...
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i think we actually -- not that we "broke in"... amber: no, we didn't break in, but we were trespassing. lemonis: but we didn't... ...and give you an honest assessment of my decisions. lori: whoa. lemonis: isn't it beautiful? richard: you know, michael, the more i look at this place, the more scared i get. lemonis: honestly, i walked in there, and i thought to myself, "what in the world are we doing?" what a mess. my name is marcus lemonis, and this is an inside look. cameraman: we're rolling. amber: are you gonna have more energy than you have now? lemonis: what's...? amber: you just don't have good -- you know how when us weekly is like, "oh, look at the star's body language," and it's, like, a couple where you can tell that they're kind of, like, sitting apart like that and they're just not getting along? your body language is just off. you're just, like... like, you look like you want nothing to do with me. lemonis: so, we're a couple now? amber: we're a tv couple. lemonis: good energy. bad energy.
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good attitude. bad attitude. amber: i've got a great attitude. lemonis: we're watching a specific episode because you said this is the only one you can bring energy for. amber: because i love this family. i really would love to just talk about your green sweater for green tea! [ laughs ] that's so lame. all right, let's go. we've got to watch this. lemonis: this week i'm going to keyport, new jersey. i'm going to meet the owners of mr. green tea, a family-run ice-cream business... amber: "i go inside mr. green tea with my green sweater." lemonis: for nearly 50 years, mr. green tea has been hand-crafting exotic ice-cream flavors and supplying the asian restaurant trade in new york city. way ahead of their time, mr. green tea was producing flavors like green tea, ginger, and red bean. i'd never invested in food manufacturing. and so i really thought, "this is a good example of taking a good business." it was gonna be a big challenge for me of, like -- i didn't know a lot about that space. and really understanding if the people-process-product thing actually applied just the same.
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it was a real test for it. and that's one of the reasons why i thought this episode would be good. this family business was founded by richard's dad, santo emanuele, in 1968. richard wanted to keep his family legacy alive, so he took over the business and brought his son, michael, with him. richard: michael, there's multiple problems. we got to do what we got to do. amber: i love the family of it. i loved -- it was a second generation? third generation? lemonis: there was richard's dad, richard, and michael. amber: so third generation. i mean, not only are they good tv for me, but they're an awesome family. lemonis: unlike many of the businesses i help, mr. green tea isn't facing a crisis. they generated over $2.5 million a year in revenue, and the emanueles make a very good living. but the business is stagnant. this particular episode almost caught people by surprise. they were like, "wait a minute. i thought this was always about struggling businesses." amber: right. lemonis: "struggling" doesn't have to just mean financially. you could be struggling with your product.
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there could be some psychological problem. there could be a family dynamic. there could be a second-generation problem. amber: expansion. lemonis: yeah, it doesn't always have to mean that the business is losing money. we've had plenty of businesses that aren't failing. amber: right, no, we have. but this was our first one. lemonis: yeah. the emanueles can't seem to agree on a plan for their future. michael has big ideas, but richard always plays it safe, and that creates tension. richard: it's not 75. michael: don't mince my words. i hate that. lemonis: i believe that mr. green tea can be a $50 million company, but they need to be bold, and they need to take chances. they haven't launched new flavors in over a decade, and they're still not well- situated in the retail market. the ice-cream business generates well over $10 billion a year. i want a taste of it. ♪ lori: hello. lemonis: hi. i'm marcus. lori: hi, marcus. nice to meet you. i'm lori.
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lemonis: are you mom? lori: i'm mom. lemonis: i wore green because i wanted to -- lori: you're gonna fit right in. lemonis: i don't understand why you have a problem with my green sweater. amber: more of a problem with your khaki pants. lemonis: what is this, like -- what is this? fashion police? amber: [ laughs ] lori: this is marcus. lemonis: hey, guys. how are you? dick: hi. lemonis: i'm marcus. lori: this is dick. dick's our operations manager. dick: nice to meet you. lori: this is my son, michael. michael: nice to meet you. mike. lemonis: nice to meet you. lori: and my husband, rich. lemonis: very nice to meet you. richard: nice to meet you. heard a lot about you. lemonis: you, too. so, rich, tell me a little bit about the history of mr. green tea. richard: you know, my dad started this business 45, 50 years ago. lori: he's the real mr. green tea. he saw the need of high-quality ice cream for the restaurants. lemonis: do you make the ice cream here on premises? michael: no, we don't actually make anything here. we use co-packers, a few around the tri-state area, and we travel to the co-packers when we need to manufacture, make sure they're to our quality control. lemonis: what does that cost to go there? michael: a lot. richard: they are anywhere between 20% and 30%. lemonis: mr. green tea gives up about 20% margin by using co-packers because they don't produce the product themselves.
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20% margin on $2.5 million of revenue means that they're giving up about a half a million dollars a year in potential profit by not making the product themselves. richard: we have grown... lemonis: pause. i think the lesson for small-business owners in this particular case is that co-packing has its place in the life cycle of your business. knowing when to actually leave it is the hard part. amber: why did you think green tea was ready? lemonis: i felt like they had enough revenue and they understood the science of it all. i'd had these check marks that i could say, "profitable? yes. understands manufacturing? yes. and do they have the brains? yes." richard: we have grown 20% every single year for the last five or six years. and the only reason we're not growing more, especially this year, is we physically can't get enough ice cream. it's logistics in the manufacturing and getting the product here. michael: and for that matter, since we can't fill certain orders, we're not actively going after new ones. we want to build a facility and bring all the manufacturing under one roof. lemonis: what's held you back from doing it?
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richard: well, obviously, you get worried. i'm very, very conservative, and maybe leaning too much -- michael: conservative to a fault. richard: i'm not gonna put a facility up unless i know we have that much gross... lemonis: it's the chicken or the egg. richard: exactly -- coming in. michael: i think we lose out on the potential here of the company by not moving fast enough. lemonis: those are two very different philosophies 'cause one is a little like, "i'm not gonna get anywhere near the edge," and you are just wondering, "how close can i get to the edge without being deadly?" michael: yeah. richard: actually, michael is, "can i actually jump over the edge and make it to the other side?" michael: the food industry's one of those brutal industries -- richard: michael, you're trying to defend yourself where there's no defense. michael: let me finish. six or seven years ago, when in your wildest dreams, you couldn't possibly outgrow this facility, we're there. amber: he's arrogant. lemonis: he used to be arrogant. amber: he's not anymore? lemonis: he's less arrogant today than he used to be. he grew up. amber: i love michael, but -- lemonis: he grew up. what i felt like was happening to michael is you get a little bit of success and you get ahead of yourself.
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it happened to me, too, by the way, when i was younger. amber: okay. lemonis: listen, what michael, i think, brought to the table is he's an engineer by training. but what he understood is how to get ahead of the curve on the food-science part. and i didn't even give him or that enough credit. lori: this is the test-kitchen area. michael: what we do in here is test our supply of milk, sugar, cream, and ingredients to make sure that the suppliers are giving us the same one every week. we have three skus. we have the green tea, the red bean, and the ginger. we'll start with the green tea. this is our top seller. yeah, hence the name mr. green tea. lemonis: the green tea flavor of the company is still the top-selling sku. that green tea's good. lori: isn't it good? lemonis: mr. green tea currently makes three pint flavors, and after being in business for this many years, that's not good enough. i want to see them expand their product offering, expand their flavors, and appeal to a much broader audience. what does it cost to launch, to develop a new flavor?
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michael: a lot. lori: a lot. richard: between the milk and everything, we'll go to a facility, have it run, and test it. michael: if we wanted to get into, let's say, 100 stores this year, in 2013, it would probably cost us about $40,000 to $50,000. richard: yeah, i think more than that. lemonis: do the two of you communicate about these numbers very often? richard: michael does not do the numbers on an everyday basis like i do. lemonis: if you don't know your numbers, you just don't know your business. it's just that simple. richard: i know my numbers. lemonis: you know your numbers? richard: i know my numbers. lemonis: okay. richard: absolutely. lemonis: i noticed on the website that you also have some mochi. michael: yeah, this is a mochi. they come individually wrapped. a little bit of ice cream with a sweet-rice dough on the outside. lori: i tell people it's like a ravioli. lemonis: this dough is -- what were you saying? it's sweet? lori: right. richard: it's flour. it's like a ravioli of ice cream. lemonis: i never had it. i love it. wow! lori: isn't it good? lemonis: it'll be interesting to figure out a way to retail this. michael: i agree. lemonis: i love them. amber: you had never had mochi before that? lemonis: mnh-mnh. amber: really? lemonis: i hadn't had it before because i wasn't as familiar
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with the asian dessert market. and you being in california, you probably ate more sushi, went to more asian restaurants. amber: it was delicious. lemonis: i love it. amber: we literally sat with our monitors watching it, like, right by where the refrigerator is, where you could just open it up and get ice cream. lemonis: if the camera would have turned to the left, you'd be sitting there. amber: yeah, i honestly think i gained like 10 pounds on this episode. [ laughs ] ♪ lemonis: walk me through the logistics here. what is this place here? what happens here? dick: okay, here we have the freezers, where we keep a lot of the stock. lemonis: how does the product get from the co-packer to here? dick: we pick it up. there's three trucks. it's a constant movement of products. lemonis: it's got to cost a lot to do that. dick: it's very intricate because if you miss one day, it's a chain reaction that screws everything up. lemonis: yet another problem with co-packers. we're burning a lot of money transporting product from the co-packer to our storage facility. we need to build a factory right away. how much money does this business need to go to the next level? michael: i think whatever it takes to build a facility.
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lemonis: have you looked at any? michael: yeah. lemonis: what's production capacity? michael: quadruple what we could bring in now. lemonis: where's the facility at? michael: the building we're looking at is in keyport. lemonis: can you take me to see it? michael: i could. ♪ richard: all right, so, this is it. it's been vacant for 25 years. lemonis: i think we actually -- not that we "broke in"... amber: no, we didn't break in, but we were trespassing. lemonis: but we didn't... amber: we didn't break that window. but our co-ep crawled through the window, and then she unlocked it for us. lemonis: i kept saying to you, "don't worry. i'll buy it before the episode airs and it won't matter." amber: right. lemonis: does that mean that every time we trespass i have to buy the building that we trespass? amber: yes. lemonis: okay, no more trespassing. amber: okay. lori: whoa. michael: isn't it beautiful? richard: you know, michael, the more i look at this place, the more scared i get. lemonis: honestly, i walked in there, and i thought to myself, "what in the world are we doing?" amber: i was there. yeah, i didn't even want
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to walk into it, but i did. lemonis: this was an old post office. it had been empty for 10 or 15 years. michael: do you want to come over here? lori: no. lemonis: no. michael: i'll piggyback you. lori: it's okay. richard: what a mess. lemonis: what do you think it takes to get it all the way to open? how much money? michael: $600,000 mark. lemonis: remember, i'm relying on your numbers for the return. michael: it's accurate. lemonis: and how much margin do you think you're gonna pick up by making your own stuff? michael: at least 25%. richard: 20%, just to be on the safe side. lemonis: so it takes a little less than two years to get all your money back? richard: to get everything back, exactly right. ♪ lemonis: businesses are usually about three things for me -- people, process, and product. i think the product's excellent. i think the people are fantastic. and i think the process is broken because we're giving up margin to a third party when we can do it ourselves. and i think the business needs capital without pressure.
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so my offer is $600,000 for 35% of the business. amber: and coincidentally, your offer was the same amount that michael said the building was worth. lemonis: right, because for me, that was the amount of money that i felt like richard was unwilling to spend. and that was the money that michael told me would quadruple the output of the company. amber: and did you think that number was real -- $600,000? lemonis: i took it at face value, yeah. which ended up being more like $1.2 million. amber: right. yeah, double. lemonis: yeah. richard: i wanted to talk about royalties and stuff like that, instead of just a clear percentage. i don't know if i'm willing to give up any ownership of the business. lemonis: i think my offer is very fair. i think my offer is well-thought-out. without me, you're gonna stay a $2 million company until he's 60. richard: this is something i would really have to think about.
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lemonis: that's a real check, by the way. richard: i see that. ♪ i-i-i have to think about it a little bit. lemonis: let me step out so you guys can talk not in front of me, okay? richard: okay. lemonis: when i got up and left the table, i came in to where you were sitting and you looked at me and said, "i don't think he's gonna take the deal." amber: yeah, we actually thought he wasn't. lemonis: you kept saying to me, "oh, my god, what are we gonna do?" amber: yeah, and i was so bummed because i loved them. and i remember thinking, "oh, this is it. we're walking out." michael: are we willing to take this right now? lori: i say go for it. richard: i don't think either of you convinced me. lori: you're not gonna lose. richard: no, i can't, lori. i don't think so. michael: the fact of the matter is we need a facility. we need more flavors and more marketing money. richard: unfortunately for you, this is my company. so you know what -- michael: it's unfortunately for everybody here. richard: well, this is not home.
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this is the office. michael: you are strangling the progression of the business. richard and lemonis: back up. you're crossing the line between father and boss. lemonis: was that good? amber: you sound like you're british. lemonis: it didn't sound like rich? amber: no! lemonis: "back up. you're crossing the line between father and boss." that was pretty good. amber: that wasn't bad. lemonis: yeah. i've seen this episode, like, a thousand times. richard: do not come in here again and speak to me that way. lemonis: if we just signed a deal to buy the bank's position at $240,000... man: i have no problem with that, if that number works. lemonis: it was pretty slick, wasn't it?
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get more into what you're into. get ready to watch with xfinity x1 or the xfinity stream app. xfinity watchathon week. free starting april 8th. boop! lemonis: i don't do makeup. let's -- amber: i did your makeup because we couldn't afford hair and makeup at that time. lemonis: i never... amber: i distinctly remember you saying, "just put some on me. we've got the same skin coloring." lemonis: why don't we see the tape? do you have the video? amber: i do have the video. lemonis: i'll find it. what are you doing? how do you put makeup on? amber: [ laughing ] don't! i was, like, evening you out a little bit. lemonis: evening me out or making me look like a clown? amber: i did not make you look like a clown. you wanted something. lemonis: it was hot. it was summer. i didn't have any sun 'cause i was working too much. here comes your stylist. amber: oh! lemonis: thank you. roll the tape, please.
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michael: so, my dad takes this check, and you receive 35% of the company. lemonis: mm-hmm. richard: the day-to-day operations of the business are gonna stay right here in this office. lemonis: i don't care. richard: you don't want any part of that. lemonis: i don't want any part of it. if you need my advice or you need some input, you'll call me. richard: and this is not a sleep-on-it deal? i can't think about this at all? this is a... lemonis: you can, but the deal will get worse. ♪ michael: obviously, it's very lucrative. it's lucrative on both ends. lori: it's a no-brainer as far as i'm concerned. lemonis: so, do we have a deal? ♪ richard: we have a deal. amber: oh, my god, it's so short. like, what i saw was so short. lemonis: it was hours.
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amber: it was so long. lemonis: hours. amber: we were there for a long time. we went into overtime for this scene. there was a lot of back and forth. lemonis: the only reason that deal got done was 'cause of lori. it's because she... she pushed him. amber: right. lemonis: so, there's a catch. richard: okay. lemonis: sit down. the catch is when you take my money, for the next week, i'm in charge. do you understand that? richard: okay. lemonis: and it's gonna be a very long week. we're here tomorrow early, rise and shine, to work. i would like if you dressed like i'm gonna dress tomorrow, which is in a tie and a shirt, be a little more professional. michael: okay. lemonis: you dress however you want, since you own the joint. amber: because what he's wearing is not okay. lemonis: i wanted him to elevate his game, and i also wanted to change the way his dad looked at him. amber: i don't know why he had -- it's a collared shirt. i don't know why he had to change. lemonis: would you want him to wear a green sweater? amber: no, i don't.
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i don't even want you to wear a green sweater. lemonis: when i go in to look at business, i look at people, process, and product. i love the product. i think the most exciting thing is gonna be developing some new flavors. amber: there are studies, by the way, for what you're saying. if you dress nice, like, you think different, you act different, you perform better on a test. when you feel good about yourself, you actually perform better. lemonis: confidence. amber: right. lemonis: when it comes to the process, i want to explore alternatives to being reliant on co-packers. we're gonna open our own manufacturing plant, which will put us in charge of production. we will also be able to cheaply create and test new products and new flavors. the last one is people. rich has to learn how to take some chances. i like cash in the bank like you do, and i don't like debt. but i also like growth. you know what concerns me about michael is he doesn't know his numbers the way he should. all right, let's go to work.
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i'd like to go maybe make some ice cream. michael: let's do it. lemonis: educate me on something. once the ingredients are established, it can be modified into frozen yogurt, it can be modified into soft-serve. what i don't like about the business today is i don't like that the whole business foundation is based on one name. michael: i always thought that we could do another brand. i thought maybe we could do a gelato company. we are italian, and we deal primarily in asian flavors. it would be nice to take our heritage into making some other products that we make money on. so i came up with the idea of solo gelato. 'cause the word "solo" means the same thing in italian as it does in english. lemonis: i love it. michael: it's a singular flavor -- solo, one. so the tagline could be something like, "sometimes all you need is one bold flavor." lemonis: i love the idea. richard: um... michael: but... richard: there's always a "but." michael: but launching a whole new brand -- richard: i never really thought about launching a whole new line. michael: it's gonna be... richard: it's gonna be expensive.
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lemonis: richard was always, like -- you know, i picture him, like, on a horse. he's just pulling it back and pulling it back instead of letting the race horse go. and i don't say that as a point of criticism. but everything with him is very methodical. amber: and you really legit liked the idea of the gelato? lemonis: i liked the idea that michael was thinking about increasing revenue. amber: right. lemonis: and whether it was with gelato or with mochi or with other flavors, i liked the idea that somebody was talking about moving the business forward. we offer, since 19... richard: '68. lemonis: ...'68, the most fantastic line of green tea ice cream, ginger ice cream, red bean. but we've now started to expand into solo gelato and... michael: mochi. lemonis: mochi and whatever else you decide to launch. michael: i like the ideas, yeah. lemonis: i've arranged for michael and richard to have a call at the bank so they can negotiate for the building we saw the other day.
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michael: what do we want to do the initial offer at? richard: i think we have to offer at $200,000. michael: $200,000. richard: right. michael: and we'll sign the check today? is that what we're telling them? richard: yeah, it will be a done deal. michael: yes? amber: michael's just ready to go, go, go. sign the check today. lemonis: look which seat he's sitting in. amber: he's sitting in richard's, but you're also teaching him how to make a deal, right? lemonis: in a tie. nico: hello, this is nico. michael: hi, nico, it's mike again from mr. green tea. how you doing? nico: good, guys. how are you? michael: good, good. i have the three investors here with us, and we want to make a deal happen quickly. nici had mentioned to you guys the $275,000. i know there's some back-taxes and stuff that are due. can you give me an idea of what you were thinking? michael: we were thinking about offering today and trying to get it wrapped up quickly at $200,000. nicno way. i could potentially do $250,000. richard: quarter of a million's out of the question. that's crazy. michael: i don't think you understand the amount of work that this place has to go through before it's even habitable. lemonis: i don't hear you telling him the reasons why in cash and reasons why -- quick close.
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sell him on it. michael: listen, we're doing no financing, cash deal, quick, get it done with. nico: listen, i appreciate what you're telling me. i'm just telling you i can't agree to that. i can agree to $240,000. lemonis: he already went from $275,000 to $250,000 to $240,000. michael: we'll do $230,000, and we'll wrap it up today. nico: i can't. michael: okay, we'll take the $240,000 deal if you pay the taxes. nico: no, i just told you i can't. michael: all right. lemonis: how much are the taxes? michael: $15,000. lemonis: $15,000? michael: yeah. lemonis: so you're paying $255,000. michael: we're paying $255,000 on it, yeah. let's split the taxes at $240,000, then. nico: i cannot. michael: you will not go a penny below $240,000? nico: i can't. lemonis: if your business is in trouble and you need my help, log on to theprofitcasting.com.
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amber: i do. lemonis: at their house? amber: uh-huh. lemonis: where they made us, like, the giant italian meal? amber: oh, my god, it was the best italian meal. lemonis: they're a big part of my life today. amber: i mean, they really became a family. lemonis: they came to my wedding. amber: they're good tv.
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they're a great family. they care about each other. lemonis: and they're good businesspeople. amber: even michael? lemonis: actually, michael's the best. amber: really? lemonis: yeah. michael: let's split the taxes at $240,000. nico: i cannot. michael: you will not go a penny below $240,000? nico: i can't. i can look at what i would sell it for and take out the expenses that i had factored in. amber: watch the master. lemonis: hi, nico. this is marcus. i'm a new investor in mr. green tea. nico: hey, marcus. lemonis: are you greek? nico: yes. lemonis: so am i. [ speaks greek ] nico: oh, see, you know how the greeks are, then. lemonis: that's right. i do know how the greeks are. listen, one of the things that i think may be a better angle is for us just to buy the bank's position. so if we just signed a deal to buy the bank's position at $240,000, the economics are the same for you, but they put us in a little better spot. and i want the leverage to have the ability to get something back. when the original borrower took out a loan
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against the warehouse, he pledged additional pieces of property other than the warehouse as part of the loan. the loan is now in default, and the bank is foreclosing. so when i buy the bank note, i'm not only gonna get the warehouse's collateral, but i'm going to get other pieces of property as collateral, as well. my plan is to liquidate those other pieces of property, which will lower my investment from $240,000 to $140,000. nico: you are 100% correct. lemonis: this is pretty slick, wasn't it? michael: okay, so we have a deal, then. lemonis: okay, thanks, buddy. i appreciate it. efharisto. amber: like, your one word. lemonis: i'm whatever i need to be to make it happen. amber: exactly. totally. smart. ♪
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lemonis: holy moly. look at you. looking sharp. michael: thank you. lemonis: okay, pause. see how everybody's elevating their game? amber: uh-huh. lemonis: michael doesn't look better? amber: yeah. lemonis: okay, thank you. while the warehouse papers are being drawn up, i've asked the graphic designers to put together some new looks and logos for not only the company but the solo gelato line. this is crack one at solo. another look here. lori: love that one. michael: very european. lori: i agree. richard: i like them. i really do. this one -- i mean, listen. women sell products very easily. this makes you turn. lori: well, sex sells. richard: yeah, but it's just... you know. lemonis: okay, lori. is this whole thing a little surreal for you? because some of these things you've been wanting to do for a long time. lori: it would have taken michael and i like... michael: weeks. lori: and could we even do it? lemonis: based on rich's pace, we could probably have this done by 2035?
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at least. lori: i said, "rich, you're gonna have to learn to move a little bit faster." ♪ lemonis: michael called and told us to meet him outside the office. he has a surprise for us. michael: what do you think? lemonis: what is it? michael: it's a fiat 500. lemonis: i know it's a car. i know what kind of car it is. what's your thought here? what is this? michael: it's a mobile promotional vehicle. it's a way to test the retail theory and see how many people actually want to buy mochi, ice cream, and mr. green tea products in new york. really low operating costs. we can get about between 650 and 700 mochi in this freezer. out the door, car, graphics, and the freezer was $18,500. lemonis: $18,000. how many mochi do we have to sell to pay for this? michael: uh... i do have numbers. i do have numbers.
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they're in my head. lemonis: that doesn't... i wouldn't take michael to a street fight. amber: no. lemonis: 'cause i would get my ass kicked. but i would take him -- i would cheat off his test. especially, like, some science thing. amber: or math. lemonis: i know you didn't cheat. amber: i did. lemonis: thank you for owning it. amber: i did. lemonis: 'cause for a minute, i thought i was the only, like, third-grade cheater. amber: in math. my worst subject. lemonis: oh, is that why you have me? amber: uh-huh. richard: you just can't keep all these numbers in your head and think that everyone could read what you're thinking. michael: why can't you trust that i know what i'm doing? richard: because i could have spent that $18,000 five other ways. lori: michael, the word that comes to my mind is "reckless." lemonis: your numbers weren't right. michael: it was a mistake. lemonis: but it's a mistake with my money. michael: i know that. amber: why did you stick around? this was over double what you thought it would be. lemonis: yeah. at least i felt like my money was safe.
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the biggest week in television is almost here. xfinity watchathon week.
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starting april 8th, enjoy free access to the best shows and movies from hbo, showtime, epix and more. what! whether it's more jaw droppers, standing o's upon standing o's or tv's biggest show stoppers. get more into what you're into. get ready to watch with xfinity x1 or the xfinity stream app. xfinity watchathon week. free starting april 8th. boop! michael: that wasn't a reckless purchase. richard: what's it gonna cost to insure? lemonis: gas, repairs, maintenance? all these things. richard: tolls, everything. michael: i factored that all in. richard: but you have to show that to me. you have to show that to marcus. you have to show that to all of us. lemonis: the business terminology that really is what richard is asking for is called the pro forma. amber: he had none of the information. lemonis: well, it isn't just having the information. it's actually putting it on paper and running out the model. and so any time you're gonna make any investment
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or open a business or do something, you would build a financial model that would show the investment and then the revenue, the gross profit, the expense, the profit or loss. and in some cases, if it's a loss, you may be able to rationalize the loss to say, "yeah, it's a form of marketing." and that's what was missing, for sure. he's got better ideas than all of us, but what's inside your head has to come out on paper. richard: the lesson to be learned is it has to be on paper. lori: it boils down to communication. we're gonna communicate from now on. lemonis: lori's about to slap his ass. amber: [ chuckles ] lemonis: all right, this is the long sale agreement. the building is officially ours as soon as rich signs. richard: so fast. [ sighing ] hmm... lori: you're making me nervous. i know those sighs. richard: you're all good with this? michael: it's what we want. lemonis: do you see a problem with it? richard: [ sighs ] no. i don't see a problem with it. i guess i thought i was gonna have more time thinking about it. lemonis: think about what? richard: maybe i need more time.
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what's that look for? lori: i-i... richard: i think i need more time. lemonis: to do what? i have a construction crew getting ready to clean up this building, like, tomorrow morning. i mean, listen, if you want to keep this company a $2 million company, then just keep things the way they are. richard: [ sighs ] it's just overwhelming to me, marcus. it's just i hope you guys don't get too disappointed, but i just can't sign this right now. i just can't. lemonis: let's go take a walk. rich needs to take a moment and clear his mind. hopefully he'll get past it and make this deal happen. i think the thing that rich was struggling with wasn't the $225,000 or $240,000 or whatever the math was. it was that the business was actually now going to have to dramatically change. more money was gonna have to be spent. the expectations were gonna be higher. the sales numbers were gonna need to be bigger. amber: have to take chances. lemonis: new accounts were gonna have to be found. it wasn't the actual building.
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it was what it represented. amber: for sure. he was comfortable. lemonis: i don't know what happened back there, but you obviously got something on your mind. richard: i got too overwhelmed. all of a sudden, reality set in. i guess everything happened. it came through so fast. it just became a little overwhelming. lemonis: what i don't want to do is i don't want to sell you on this concept. you have to really want to do it. when i decided to move forward on this project, i did it for one simple reason -- the economics gave us one heck of a return. so if we end up having $600,000 to $800,000 in this building, it's very simple math. you told me that you thought the margins that were evaporating from our business were anywhere from 20% to 30%. our current business is $2 million. so on $2 million of business, it's anywhere from $400,000 to $600,000 a year evaporating. i want to try to bring that back.
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but what's even more important is it won't be as profitable, it won't be as big, and it won't be ready for michael to take it over if you don't take this step. ♪ cake in the conference room! lemonis: whether i'm a part of this business or not, showing 'em you're ready to be your own boss. that's the beauty of your smile. bring out the best in it with crest 3d white. crest removes 95% of surface stains... in just three days.
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the ice cream will still get made, but it won't be as profitable, it won't be as big, and it won't be ready for michael to take it over
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if you don't take this step. richard: i'm ready. i feel better. just getting out and clearing my head a little bit, just talking to you one-on-one, i'm ready. lemonis: your dad and your brother would be very proud of you. richard: they would be. they would be. i know they would be. ♪ lemonis: cleanup is finally underway at the warehouse, but a big problem has come up, and i need to meet with michael immediately. michael, there's something that i want to talk to you about, okay? michael: okay. lemonis: you like my green jacket? you didn't like the green thing. i'm a little upset. green sweater, green jacket. from the beginning, we've been talking about $600,000 is the building and the build-out and the equipment. i made this investment largely because i believe in you. i didn't factor in all the details because i'm not an engineer or an architect, and i knew you were working on the drawings. then i get an e-mail
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that says the building isn't gonna cost $600,000. it's gonna cost $1 million. amber: funny enough, right now this is, like, one of the only scenes that was shot outside of mr. green tea or that warehouse. lemonis: why did we change the way we shot this? jim: this is a documentary show. and we are always moving. we don't stop. so this is a good opportunity to start slowing it down a little bit. it slowed everything down with the camera. lemonis: i think you're right. it did feel like you could concentrate more as a viewer. jim: yeah, let the viewer focus on the material and the information and not be distracted with cameras trying to, like, do stuff. lemonis: or is it because i constantly move and can't sit still? i can't move forward if i don't know for sure what the numbers are gonna be. when the number came back at $1.3 million, you know, more than double what the original estimate was, i'm not gonna lie to you -- michael: sticker shock. lemonis: well, it kind of pissed me off. michael: it was a mistake. lemonis: but it's a mistake
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with my money. michael: i know that. didn't know my numbers. it was a huge mistake, clearly. lemonis: there's this old adage in business, right? it's under-promise and over-deliver. and in this case, we over-promised and under-delivered. i was trying to establish a relationship with michael that wasn't scolding him in front of his parents, and it didn't give either of his parents a chance to solve, fix, defend, criticize. i sometimes feel like rich and lori insulate him. amber: sure. this moment -- after all this, why did you stick around? this was over double what you thought it would be. lemonis: yeah, after spending time with rich, i think i felt like my money was safe. i didn't feel like anybody had any -- was pulling a fast one or that they were gonna be irresponsible. and it actually is maybe the best business relationship that i have because i have michael on one end, who pulls, and i have richard on the other end, who pulls the other way. and what happens is something really beautiful in the middle.
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super-aggressive and super-conservative end up being just right. and i felt like that is probably why this business goes down as one of the most successful businesses to ever be on the show. look, this is business. your numbers weren't right. i need to know for sure that this is never gonna happen again. michael: it is never gonna happen again. ♪ i'm real excited for you to see the inside. we got a lot done. i know you were worried about the $40,000 to clean the place up. lemonis: the $40,000 to clean up garbage? michael: did you see it? lemonis: i thought i'd come down here myself. michael: there was a lot to clean up, and believe me, you wouldn't have. lemonis: michael, you did a great job getting this place cleaned up. michael: thank you. lemonis: i mean, you move as fast as i do. michael: it happened quick. lemonis: it's a great shell. michael: back here, the whole length of the building is the freezer. freezer will go this way, trucks will come in here, and we'll have a really easy work flow from our deliveries directly into the production room. lemonis: we're gonna have a first-class facility.
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probably the best on the east coast. michael: everything from the freezer to the equipment that's coming from italy is the best in the world. lemonis: and this is what we have to show your dad is the investment. we know that we're gonna have a 20% margin improvement on that $2 million. it's a $400,000 annual improvement in margin. and it's funny because your dad -- if he would have just sat down and done those numbers, he would have done it a long time ago. michael: hey, what's going on? amber: michael, how's business? how much better is it today than when we first met you? lori: it's a completely different business.
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the biggest week in television is almost here. lemonis: hold on one second. [xfinity watchathon week. starting april 8th, enjoy free access to the best shows and movies from hbo, showtime, epix and more. what! whether it's more jaw droppers, standing o's upon standing o's or tv's biggest show stoppers. get more into what you're into. get ready to watch with xfinity x1 or the xfinity stream app. xfinity watchathon week. free starting april 8th. boop!
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amber: richard? michael? lemonis: "hey, what's up?" michael: hey, what's going on? lemonis: i was close, wasn't i? michael, are you there? lori, are you there? lori: i'm here. amber: we're actually recording this. we're doing an interview right now. we're going back on green tea, and we're talking about it. michael, how's business? how much better is it today than when we first met you? michael: we were an ice-cream- delivery company five years ago. now we're a full-scale food science and manufacturing company with all the bells and whistles. we do our own microbiology now. there's a lot of companies that don't even get near that kind of level of retail. lori: it's a completely different business. you guys would know it if you came and saw us. amber: i miss you! lemonis: goodbye. michael: can someone respond to me, please? lemonis: goodbye, michael. we love you.
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michael: all right. amber: bye, michael. we love you. [ laughs ] richard: okay, guys, i am projecting probably about 35% to 50% growth next year. lemonis: you think we can do almost $4 million next year? richard: i believe we can. the company in this next year looks like it's gonna grow by leaps and bounds. lemonis: the factory's scheduled to open in the next 90 days, and the co-packer will be gone, which will give us the ability to double our profit from $450,000 to $900,000. in addition to that, rich has $1 million of orders sitting on his desk, and i expect those orders to get processed very quickly. michael: i learned about calculated risk. everything you do, every decision you make in a business has to have that risk-reward. lemonis: you guys have pulled off, in my opinion, what is one of the hardest things to do in american business, which is to have a family business. because so often, the failure rate is off the charts. you should be very proud of yourselves.
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they're great people. amber: when we went back to film a recap a year later, remember michael wanted more money, he wanted equity. lemonis: and he played the "i can get another job" card. amber: that's right. michael: i think 7% to 10% ownership of the business would be more than fair. lemonis: and if he said to you, "no, i'm not comfortable doing that"? michael: then i guess we're back at keeping my ear to the ground for potential other options, i guess. lemonis: and i remember you saying to me, "you better get him to slow his roll, or his dad's gonna roll him out of the building." amber: [ laughing ] right! 'cause as a parent, i would, too. i would say, "go work somewhere else. see what it's like. the grass isn't always greener. go ahead. go get a raise." lemonis: would you say that to your child? amber: yes! i'm not gonna hand my kids everything. lemonis: be interesting. i can't wait for that. i'm sure i'll be plenty involved. amber: i'm sure you'll be hiring them. lemonis: they'll be working at camping world like everybody else. amber: totally. lemonis: michael has been working really hard to push the mochi and the new solo product line. michael: $1.
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lemonis: the response has been fantastic. we're looking into retail space in new york city. they're a block away from times square. and the traffic up and down here is tremendous. mr. green tea continues to grow its restaurant clientele. oh. remember how good that place was? keyport fish. that place was so -- amber: that place was so good. michael: i have our new coconut gelato. woman: mmm! lemonis: the equipment is on its way over from italy. and once it's installed, we'll have one of the most state-of-the-art ice-cream manufacturers on the entire east coast. the building will be able to produce 1,600 gallons of ice cream a day. it'll have over 18,000 feet of freezer space to store all the product. amber: how long did it take to actually do the build-out? lemonis: over a year. amber: and how much money did it actually take? lemonis: between equipment, raw materials, build-out -- a little under $1.4 million. amber: oh, my god. lemonis: but that $1.4 million has generated so much business, and it wouldn't surprise me in a couple years if we actually had to get a new facility.
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amber: geez. lemonis: yeah. the relationship between father and son is the best it's ever been. and they have a newfound respect for each other. there is no doubt in my mind at all that mr. green tea will be a national brand and make richard's father prouder than he could ever imagine. when we met him, they did a couple million dollars a year in business. now it makes much more than a couple million dollars a year in profit. amber: that's crazy. lemonis: my return on investment -- i've already gotten my money back three times. amber: wow. lemonis: i didn't get it physically back 'cause we keep re-investing it, and we still own the factory free and clear. but if you look at their pints today, they don't say "mr. green tea" on them anymore. the company's still called mr. green tea, but the packaging was changed in a way where it promotes the flavor, and it feels modern. back then, they were co-packing just ice cream with a third party. that was it. today they're manufacturing what they're selling, and i think that's the difference.
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they became vertically integrated, and they've picked up a ton of margin. it's a green cash machine. i think i'm gonna put my green sweater on again just... amber: oh, you should, for sure. i'm surprised you didn't wear one today. lemonis: [ laughs ] lemonis: what coffee? okay, where's your coffee? first of all, i'm not drinking coffee out of this mug. amber: why? lemonis: because. amber: you know, you're so high-maintenance. lemonis: no, what it is, is that because, "oh, i don't want to show the logo on the cup." amber: seriously? lemonis: i don't like it that much, though. amber: well, you drink it now. lemonis: i do now. amber: why didn't you drink it before? lemonis: i always felt that i was always hyper, and i thought, "who in the world wants me injected with caffeine?" amber: so have decaf. lemonis: that's what i do. amber: oh. lemonis: yeah, my coffee's decaf, but then i look like i'm hip by drinking coffee. amber: your goat milk that you like now. such an ass[bleep] he ordered goat milk yesterday. lemonis: excuse me. it's oat milk. amber: oh, sorry. that's even worse. lemonis: can we get started with the episode? amber: yes, please.

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