Transcripts For CNBC The Profit 20171123

Michael youre not making any sense. Youre making stories up lemonis if i cant help this young man mature as a leader. Dont be frustrated. Michael im very frustrated. Lemonis . And get both sides back on the same page. Richard if we bought if we bought michael i got this. Richard you got it . Okay. Lemonis . Mr. Green teas growth could melt away. If michael told you that he was gonna leave, what would you say to him . Richard i guess id ask him when he was leaving. Lemonis my name is marcus lemonis. And i risk my own money to save struggling businesses. Were not gonna wake up every morning wondering if we have a job. Were gonna wake up every morning wondering how many jobs we have to do. Its not always pretty. Everythings gonna change. Everything. But i do it to save jobs, and i do it to make money. Lets go to work. This is the profit. Located in keyport, new jersey, mr. Green tea ice cream is a gourmet icecream manufacturer with a rich family history. Founded in 1968 by santo emanuele, the company is run today by his son, richard, richards wife, lori, and son, michael. When i met them in 2013, they were generating 2 million in sales, mainly coming from selling to restaurants. That green teas good. Lori isnt it good . Lemonis and if we hadnt made a deal. 600,000 for 35 of the business. Theyd probably still be at the same level. Thats because mr. Green tea was at a standstill. Richard we physically cannot fill our orders to distributors. Lemonis part of the problem is that mr. Green tea didnt have their own manufacturing facility. Instead, it used a copacker. By paying a third party, mr. Green tea was losing about 20 of its potential profit. Michael weve been talking about putting up a new facility for a long time now, and its just going slower than richard im not gonna put a facility up unless i know we have the business there. Lemonis but richard was cautious to a fault. Michael you are strangling the business. Richard back up. Youre crossing the line between father and boss. Lemonis it was a classic clash of generations, and i was stuck in the middle. How much money does this business need to go to the next level . Michael whatever it takes to build a facility. Lemonis have you looked at any . So we bought an old, abandoned warehouse. Lori whoa. Michael isnt it beautiful . Lemonis and we went to work and fixed it up. And thats when i learned that michaels enthusiasm had a downside. He had severely underestimated the cost. The building isnt gonna cost 600,000. Its gonna cost 1. 3 million. Michael it was a mistake. Lemonis it was a mistake with my money. Michael i know that. It is never gonna happen again. Lemonis but 1. 3 million later, we have a stateoftheart icecream factory. Michael this takes our pint, fills it with ice cream, heatseals it, daycodes it, and ejects it out the other end. Lemonis our sales more than doubled to about 5 million. And without the drag of a copacker, weve improved our profits, and weve been able to jumpstart our pint business and sell directly to retailers. And michael has grown a great deal, too. Look at how different his game is. You really have your act together. Lori okay. Very good. Lemonis but theres a lot more work ahead of us. Lori hey how are you . lemonis whats the good word . Lori how are you . Good. How are you . Its good to see you. Lemonis this is, like, our twoyear anniversary. Lori i know. Isnt that unbelievable. Lemonis did you think about that . Lori yes, of course. Lemonis how you doing, junior . Michael whats going on . Lemonis whats happening . How come your office is wider than your mothers . Lori [ laughs ] michael i designed the building, so. Lori thats okay. He honestly spends more time here. Richard hey. Lemonis how you doing, my man . We were just having a we were just having a discussion on how well hes doing. Richard okay. Lemonis what i wanted to do is understand how business is. I really want to focus on the pint business, cause that was michaels task. Can we taste some new flavors . I still have never gotten a sample of black sesame. Michael yeah, we can taste black sesame. Lemonis just to be clear. Good morning. Look how beautiful that is. So, remind me, when i met you guys, there was ginger, red bean, and green tea. So, these are the originals. Michael original three. Lemonis . And then Fortune Cookie launched, black sesame. Michael thats the newest. Lemonis . And chai latte. Over the last year, michaels been responsible to launch the pint business, and hes been developing a lot of the flavors. But i was never consulted on any of them. My guess is neither were the customers. Michael thats black sesame. Richard its very different. Michael very different. Richard i mean, you talk about polarizing flavor. Lori im getting you dont like it. Lemonis this has a really strange aftertaste. Never put black in the word in anything with food. What i would have done is i would have put toasted. Lori toasted. Richard there would be no way i would ever launch that. Lemonis i didnt encourage you to do that. Richard and michaels tenacious, you know. Lemonis have you had a commercial focus group of black sesame . Michael no. Lemonis and so as we launched, ginger, chai latte, Fortune Cookie, and black sesame, we had no testing, no focus groups. Richard exactly. Lemonis how has this done in food service . Michael this is not a foodservice item. Lemonis why not . Michael it just to get new flavors into the restaurants is very difficult. They want their green tea, red bean, vanilla. Thats what they want. Lemonis have you introduced that to them . Michael no. Lemonis because the restaurants provide some level of feedback. Its always good to get other peoples opinions, but sometimes i feel like, with michael, he feels like its only his that matters. What does it cost to experiment . Michael its not expensive to just launch a new flavor. Its all cost of goods. Richard youre spending, you know, probably, you know, 10,000 just for that one, which may never work and may sit on all the shelves. Lemonis its a cost of good that if it doesnt work, those goods have no value. Michael who cares about a 10,000 upfront cost . Lemonis i think we all kind of care about the 10,000. Michael im sorry, 10,000 is not richard no, its not 10,000. Youre printing 125,000 of these, which is gonna run you probably 30,000. So its 40,000. And if you have two or three that fail, thats a major hit. Lemonis what about the slotting fee . The slotting fee is the fee that you pay the Grocery Store to basically buy the shelf space. How much are the slotting fees . Michael it was 200,000 for six. Lemonis thats, like, a real investment. So its 33,000 a pint. If, for some reason, this doesnt work out, how much money, between raw ingredients, packaging, and slotting fees . Michael if it ended today . Lemonis if it failed, failed . Richard minimum 70,000. Lemonis so one mistake could be a 70,000 disaster. Richard thats a failure. Lemonis and im worried that were getting sloppy. Mr. Green tea makes around 400,000 a year in profit. And to invest almost 20 of your entire earnings for the year in one flavor without being sure its the right thing, its like playing russian roulette. What does it cost you to make this everything allin . Michael the packaging is 1. 33. Lemonis uhhuh. Michael and then, whats milk at right now . Richard just under 8 a gallon. Michael so that means its 1. 25 gallons of milk in there. So 10 bucks. And then your ingredients, which is 70 cents . Lemonis 1. 33 for the container, 10 for the ice cream, 70 cents for the ingredients. Thats 12. Richard i did michael high cause its extremely high right now. But it changes every week i buy milk. Lemonis okay, well use 11. Richard right. Lemonis what does it cost to deliver it for every one of these . Richard 3. Lemonis so now im at 14. Youre selling this for 28 . So basically, i have a 50 margin on this. You may disagree with this, but a 50 margin on this product just isnt good enough. Richard [ sighs ] lemonis if youre looking at the margins on the 2 1 2gallon product, just on the surface, they look good. But after you factor in all the labor, the cost of the machinery, the cost to run the business, the margins arent that great. So 50 s not good enough. We need to be closer to 60 to absorb the labor. In order to drive down the cost or improve the margins, the singlebiggest ingredient has to be resolved, and thats the cost of the cream. Richard when i can buy my milk right, i get this down to the 6 range in milk, were doing this for under 9. Lemonis well, i want to get that milk price down. Richard but it fluctuates. Lemonis i understand, but i want to get some sort of Contract Price based on volume. Richard i would love to work the numbers with you. Lemonis what i would like to do is sit down with the financials. Richard okay. Lemonis what were our total sales in pints in 2014 . Okay. 1,630,457. Okay, whats the trend for 2015 . Richard probably about 2. 3 million. Lemonis okay, so. Michael which means im not gonna get a raise january 1st of 16. Lemonis you were given a grid, and there was a guarantee established, as well. Michael correct. Lemonis we set up these different tiers zero to 2. 5 million, 2. 5 million to 3. 5 million. Michaels done a pretty good job improving the pint business, but i believe that pay plans drive behavior. And performancebased pay plans are exactly what ive set up for michael. His salary is fixed at 75,000, and he doesnt receive a commission until pint sales achieve a 2. 5 million level. And then michael starts earning a commission of 3. 25 , taking him to 81,250. And it stays that way until sales reach 3. 5 million. And then his percentage is bumped up to 3. 5 . And so on, and he rises along with the business. So that grid was clear. Its 100 Commission Plan with a guarantee. Richard exactly. Lemonis okay. Michael the pay plan is very good. Im fortunate to have it. Is it bothersome to me . Yeah, a little bit. Every revenue dollar increase, the benefits are reaped by the people that have the piece of the pie. I want a piece of it. I want skin in the game. Richard employment does not equal ownership. Lori i agree. Its two completely separate things. Richard it just doesnt. Michael thats not fair to me. I have zero protection when i spent my career here, all right . Im a mechanical engineer. I can go do anything i want tomorrow. Lemonis meaning that if you dont like the sort of plan thats put in front of you michael correct. I can go do something else, yes. Lemonis michael, you seem frustrated about some michael im very yeah, its a frustrating day cause i thought we all agreed with this. Richard if you dont get it right now, youre never gonna change it down the road. Michael i dont care. Every day, on every street, in every town, across america. Small businesses show their love to you. With some friendly advice, a genuine smile and a warm welcome they make your town. Well, your town. Thats why American Express is proud to be the Founding Partner of Small Business saturday. A day where you get to return that love, because shopping small makes a big difference. So, this saturday get up, get out, and shop small. And im the founder of ugmonk. Before shipstation it was crazy, like. Its great when you see a hundred orders come in, but then you realize ive got a hundred orders i have to ship out. Shipstation streamlined that whole process. The order data, the weights of the items, everything is seamlessly put into shipstation, so when we print the shipping label everythings pretty much done. Its so much easier so now were ready, bring on the orders. Shipstation. The number one choice of online sellers. Go to shipstation. Com tv and get two months free. Im a mechanical engineer. I can go do anything i want tomorrow. Lemonis meaning that if you dont like the sort of plan thats in front of you michael correct. I can go do something else, yes. You know, i get offers all the time. I can go start my own business tomorrow. Whatever i put my mind to, i know that i can be successful. So thats my point. Its like whats keeping me here . Lemonis while were going through the financials and trying to understand the performance of the business, michael brings up the necessity to have equity, almost like its been brewing inside of him. Michael this company isnt the same if im not here. Youre still peddling 2. 5 gallons to restaurants only. The entire future of the brand is based off of my vision. Richard thats something im not so sure of, michael. Michael would there be pints if i didnt come in . Richard there was. Lori there would not be pints if michael was not here. Michael thank you. Lemonis you feel like youre bringing such value to the table. Michael im adding new brands to the business. Lemonis look, i understand michaels point here, and he has contributed to the business nicely. But what i dont like is this grandstanding. Hes acting as if hes being treated unfairly, or things arent good for him. Its his parents company, and hes ultimately gonna own it. Its time for him to act like an adult. Michael do you understand what im saying . Lori i understand what youre saying, michael, but i do have a problem with you not being able to separate the fact that youre an employee, and youre being compensated very well versus that, you know, theres this equity thats somewhere going to be yours. Lemonis potentially happening. Lori right. How about this crazy scenario . How about you marry some crazy bitch that we dont like and that something happens to you and now we have to deal with her . Lemonis i think your dads point is the best one. Equity and employment are two different things. Its important to me as a shareholder that one of the Key Employees feels vested in the business. Richard i have a hundred reasons why im not comfortable with that. Lemonis michael, can you and i take a walk . Michael sure. Lemonis okay. I really think its important for me to take michael outside and have a oneonone with him without rich around, without his mom around to really get inside his head and understand what hes really thinking. Is that yours . Michael its a nice car, isnt it . Lemonis is that your car . Michael its my car. Lemonis kind of a big player now. [ chuckles ] thats a nice car. Michael yeah, it was used, so. Lemonis the porsche definitely fits you. Michael yeah . Lemonis i wanted to talk to you away from them. Michael mmhmm. Lemonis i sort of understand how you feel. Michael mmhmm. Lemonis and i understand that, you know, ultimately, you just want to have a path. Michael thats the only problem i have with any of this is im not saying, i need this, or i need to leave. I love it here. I love mr. Green tea. But i would like to have a piece of the pie. You always say, you know, youre an employee of mr. Green tea. And i am. But i dont think i work like one. You know, the employees 5 00 hits, and they go home. They, you know, spend time with their friends and their family, and i dont do that. You know, its 24 hours. Lemonis tell me exactly what you want. Michael i think 7 to 10 ownership of the business would be more than fair. Lemonis and if he said to you, no, im not comfortable doing that . Michael then i guess were back at keeping my ear to the ground for potential other options, i guess. I got a book of ideas for the food industry. Many are ridiculous. Some would work in our current infrastructure. And its like, all right, well, am i gonna continue to give these ideas that i have to a company thats not mine . Lemonis ive never thought of you, from the day i met you, as an employee here. I thought of you as the future of the business. I sort of understand why hes feeling this way. He believes that his contribution is more impactful to the business than just a wage. But i think that the reward has to be commensurate with the performance, and that has to come with time. I would tell you to be patient. Michael yeah. Lemonis we have to do it in a way thats got a plan behind it, you know . Michael mmhmm. Seven years ive been here now. Lemonis who wants to try some ice cream . I was pissed at michael for launching new flavors without doing the research and getting the data. But i was also upset with richard, as the c. E. O. , for letting it happen. They didnt do their research. They didnt ask customers. They just went ahead and paid the slotting fees. Well, were gonna go to shoprite today, and were gonna get feedback whether they like it or not. Michael this is ginger. Thats my favorite. Woman its quite good. Michael good . You like it . His eyes say, ohh man that is pretty good. Young man wow, this is actually amazing. Woman 2 it is. Michael good. Lemonis michael did good on two of the flavors the chai latte and the Fortune Cookie. But. Woman 3 black sesame. Lemonis the name throws you off a little bit . Woman 3 the color. Lemonis the color. Which ones do you not like . Man 2 the black sesame. Boy i dont like the black one. Richard you dont like the black sesame . Okay. Lemonis what didnt you like about it . Boy it tasted disgusting. Lemonis [ laughs ] disgusting . Black sesame got some harsh reviews. And if they would have gotten some feedback in advance, they would have saved themselves 70,000. Richard id like to ask you what you think of the packaging, you know, versus the name . Young man green tea richard okay. Young man right . Lemonis what do you think is in every one of these containers . Woman green tea. [ chuckles ] lemonis green tea. Woman 4 they all say green tea. Woman 5 the green tea the tea flavor. Woman 6 im not a green tea lover, okay . So if i saw mr. Green tea, i might not say, oh, im gonna buy that. Me. Lemonis i think we have some work to do. Most people would expect me to push you to change the name. That doesnt bother me. Theres a legacy there. What bothers me is the presentation of it and having mr. Green tea be the dominant brand. One of the best things that happened at shoprite is seeing the positive feedback about the quality of the ice cream. But we need to put a process in place that forces us to do research and development on new flavors. And we need to go back to the drawing board on the packaging so that customers arent thrown off and think theres green tea in every flavor. So, what i want to do is sort of take the actual packaging, and i want to basically move around some stuff. People dont want to think that theres green tea in the ice cream. Thats the feedback we got. Michael yep. Lemonis pull that mr. Green tea logo up. Can you have these two live individually . Michael yeah, of course. Lemonis get rid of mr. Green tea. Michael totally gone . Lemonis yep. Its a lot cleaner. Michael well, what i was actually gonna do is i was gonna modernize the mr. Green tea font. You put it really faintly somewhere. Lemonis the fonts gone. Michael so, what are you buying . Lemonis sweet sesame ice cream. Michael no brand . Lemonis that brand. Michael im not on board with that. Lemonis im gonna go inside. Just humor me. Save this and send it to the printer. Michael okay. Lemonis okay . When youre collaborating with partners, the idea is to sort of let everybody have their opinion. Instead, he just wants to battle. We just went to shoprite. People told you that they thought it was bad, and were gonna meet as a group. Were gonna get everybodys opinion on this. Michael, you and i worked on that sweet sesame package. Michael i think this is a step in the right direction. It needs, obviously, a lot of time to lemonis it doesnt actually need a lot of time. Michael you dont think so . Lemonis no. I have this background thats the same. I didnt change the fonts on here. This is so subtle that even you would be tricked. Richard no, you had to look twice to realize that wasnt there. Michael with just the logo on the top, it could be confused for a generic brand. Richard i dont think i have a problem with it at all. Lemonis michael, you seem frustrated about some michael im very yeah, its just its a frustrating day cause i thought we all agreed with this. Lori thats why we need marcus. Lemonis michael, when it comes to packaging, believes that he knows better than everybody else. Thats the sort of immaturity that doesnt lead him to being a partner in this business. But we also went to the Grocery Store, in fairness. I want to go with the feedback we got. Lori yeah, mike, its not worth making a mistake. Richard if you dont get it right now, youre never gonna change it down the road. Michael i dont care. How dare you sit there richard its a minor thing, but, Michael Michael youre not making any sense youre making stories up richard michael, whats important to me is the most important thing. Michael thats not fair more people shop online for the holidays than ever before. clapping and the United States Postal Service delivers more of those purchases to homes than anyone else in the country. because we know, even the smallest things are sometimes the biggest. Even the smallest things the all new 2018 camry. Toyota. Lets go places. Lemonis michael, seriously, you got to just let him have his feeling. But you cant let it sort of crank you up to that level. Michael i know. I know. Lemonis its not healthy for you. Michael i know. Lemonis hes gonna think, my kid is still, like, a hothead. Youre not a hothead, are you . Michael no, im not a hothead. Im passionate. Im not a hothead. I work really hard at improving areas of my Business Life of Getting Better at certain things. Lemonis you are Getting Better. Michael i know i am. Lemonis my relationship with michael continues to be one that is a playercoach relationship. While im frustrated with him, i still know that hes the future of this business. Im gonna have to see a literal attitude adjustment. Leibys creamery is a multigenerational creamery thats in the middle of pennsylvania. Theyre producing cream and milk for some of the Biggest Companies in the world. Richard hey, jack. Jack richie. Richard how you doing . Jack good to see you. Michael whats going on . Jack michael. Michael nice to see you. Lemonis jack, im marcus. Jack its nice to meet you. Richard hes our man here. Lemonis one of the things that i wanted to accomplish is to improve our margins because the dairy the cream that goes into the ice cream is the single most expensive item. What do you actually produce here . Jack we produce over 80 different variants of icecream mixes. Lemonis what makes it sort of the different variations . Jack usually butter fat, sugar, and fat content. A haagendazs is a 16 . Lemonis and what are we . Michael a little bit above 12 , yeah. Lemonis okay, so our ice cream is lighter because its got less butter fat. Our flavors are more pronounced. And thats why our quality is so good. Lets take a tour. Jack this is where all the raw milk and cream comes in, marcus. Right now what youre seeing is theyre filling this up with cream. We fill the totes. Lemonis so does it come to you like this . Richard exactly like this. Lemonis its like a water bed. What does this cost . Richard today, 2,100. Last week, 2,800. Lemonis i have a lot of work to do in building a case with rich that michael deserves equity. I want to show his father that when michaels intelligence and salesmanship comes out, he can be very impressive. Jack typically, our margins are between 1. 50 on the gallon to 3. 00 on the gallon. And it depends on how large the customer is. Lemonis how much do we currently buy today . Jack right now you buy about 60,000 gallons a year. Lemonis what do you project it to be in the next 12 months . Richard if were assuming ahead, we should be michael i got this. I got it. Richard you got it . Okay. Michael if these slots turn over the way were expecting them to at our projections, were gonna have a 40 increase. Hopefully, well be purchasing 100,000 gallons next year. Lemonis maybe one of the reasons that michael is the way he is is because he hasnt really had an opportunity to learn because rich steps in and saves the day. Lemonis what do we pay per gallon . Richard as of right now, were at 7. 50. Lemonis could you drop your price, if we make a volume commitment, by 1. 00 a gallon . Jack when your volume gets to a certain level, yes. Michael so, if we make a commitment to 100,000 gallons next year, can we do this . Lemonis the risk here is that were committing ourselves to buying a lot more cream than we may necessarily need. But if we commit to buying 100,000 gallons and we get the better price of 6. 50, the reward is an additional 100,000 in gross profit. Im comfortable taking this risk. Thats a pretty significant savings for just building the relationship. Michael yes. Absolutely. Lemonis today i want to work the line in our pint production facility. And i want to understand our productivity. Michael told me that he wants to get new machinery, but before we do that, i want to make sure its necessary. So, how many can you crank out in a day . Matt about 9,000. Lemonis have you ever done that . Matt no. Ive never needed to. Lemonis this machine, according to matt, could crank out 9,000 a day. Then why would you need more machinery if youre not doing more than 3,000 a month . Richard this is what i feel about michael he has great ideas. Lemonis unbelievably. Richard he wants to implement them. But sometimes he forgets theres a cost and how much we actually have to spend to get to that perfect state. Lori yeah, you need to be a little bit more of a penny pincher, the way i am. And youre not. Richard its the little things. When we want a sample from a vendor, youll give them our u. P. S. Number to send us product. Its like im enraged at that. Michael sending a u. P. S. Bill is not something. Lemonis dont be frustrated. Michael im very frustrated. Lemonis dont be. Michael no. There are things that i have to improve on. Lori this is you. He takes after you. Michael i agree with you. I need to learn certain things, but youre beating me up on stuff that is not true. Richard this is not a beatup. Lemonis this is not an attack. This is a discussion. Michael but how dare you sit there and say sending samples if thats an issue richard its a minor thing. Michael ill tell you what, ill write you a check for the samples, all right . Lemonis michael told me that he wanted to be a 10 owner of the business. Look, i want to make a case to richard that michael should have equity, but hes not making this easy. Michael if you guys are calling me cavalier with money, i want to see an example of it. And you guys are making stuff up thats not true. And then you want me to not get mad at it because richard michael, michael, michael, michael, whats important to me is the most important thing. Michael then youre not making any sense. Youre making stories up. Thats not fair. Lemonis if your business is in trouble and you need my help, log on to. Every day, on every street, in every town, across america. Small businesses show their love to you. With some friendly advice, a genuine smile and a warm welcome they make your town. Well, your town. Thats why American Express is proud to be the Founding Partner of Small Business saturday. A day where you get to return that love, because shopping small makes a big difference. So, this saturday get up, get out, and shop small. Thats why a cutting edgeworld. University counts on centurylink to keep their global campus connected. And why a Pro Football Team chose us to deliver fiberenabled broadband to more than 65,000 fans. And why a leading car brand counts on us to keep their Dealer Network streamlined and nimble. Businesses count on communication, and communication counts on centurylink. Richard michael, whats important to me is the most important thing. Michael youre not making any sense youre making stories up thats not fair. Lemonis calm down. Michael i really am offended by you guys saying im cavalier with money. If i spent 20 to overnight samples here when i saved the Company Hundreds of thousands of dollars cause of this packaging, then i guess im cavalier. Lemonis can you change your tone . Were in a work environment. Its not good delivery. If you and i actually worked for him, in this building, hes your boss. Michael i understand that. Lemonis you probably would have gotten fired in this last argument. You cant change peoples perceptions unless you change your behavior. An arguments never gonna change it. Its just not. So let it go. Michael okay. Lemonis what kind of flavors are you guys thinking about . Michael we can develop our mango. Lemonis think about making it sort of spicy. Richard we need, like, some kind of cayenne or michael a basic powdered chili. I wouldnt go cayenne. Lemonis in order to grow our pint business, as well as our foodservice business, were gonna have to develop more flavors to appeal to more customers. Not everybody wants asianinfluenced flavors. You know, if you look at all of our flavors, right, this is more of sort of more of an International Flavor something that would be maybe in the more spanish, latin american richard exactly. You know, you go down to mexico, wherever you get the mango, and they put on a little cayenne pepper and a little lime juice and it had me start thinking. So i got some stuff. Lemonis so, spice. Mango, lime. You know youre having fun, rich. Richard oh, i love doing this. This, like, brings me back to the root. Lemonis phase one of the focus group start with your employees. Richard grab a spoon. Man late heat. Late heat in the back of your throat a little bit, but, yeah, i feel it. Lemonis would you buy that . Woman id buy it. Lemonis youd buy it . Woman of course. Lemonis do you like green tea . Woman yes. But i like this one. I like spice. Lemonis you like spice. Woman yes. Lemonis do this as, like, a Group Exercise once a month. Woman yeah, come up with ideas. Lemonis you come up with one flavor. If you like it, it goes into the library. You may use it, you may not. Go ahead and box it up. And were gonna take this to do some testing. So, guys, what i want to do here is sort of think about growing the business differently. Tonight were going to 10th avenue burrito, a foodservice customer of mr. Green tea. They currently only buy one flavor. But i want to give them a sample of our new spicy mango and try to pick up more business. And i also want to give michael a chance to shine and show his sales skills. You start to think about being the leader of this business. You have to also ask for the sale. I want people to see how good you are all the time. Michael all right. Lemonis i need to put one on the board for michael because im working towards making this argument with rich for michael for equity. And i need a win here. Richard hey, brian. How are you . You know marcus. Lemonis hi, im marcus. Nice to see you. Richard you know michael. Lori hello. How are you . Richard you know us. Lemonis michael wants to sort of have an opportunity to present to you new flavors and some ideas. And we made one specifically to try to match your menu. Michael so what we brought here today is a few of the products that i think might work with your menu and then one, like i said, that i specifically tailored for you. Richard so, down in miami or in, i guess, maybe mexico, they just cut the mango open, put cayenne pepper on it, squeeze a lime on it. Brian yeah . Michael so give that a try. Go ahead. Yeah, so, its a little soft cause, like, i said, that was made today. Lemonis theres a little kick at the end. Brian there it is. Thats great. Its real subtle, too. Michael if we started producing this on a large scale, is it something you would think about bringing on your menu . Brian for here, probably not. Probably not. Lemonis you would not. Brian probably not. Like, what we do here is very simple. Its a very simple thing. Right now we love the vanilla. Lemonis just vanilla. Brian yeah, just the vanilla. Yeah. Lemonis i wanted to give michael the opportunity to make the sale, but its not going as well as i had hoped, and, quite frankly, rich isnt doing that great either. But then michael really stepped up. Michael would you guys like to try some mango ice cream samples . Free samples. Lemonis it was the best idea of the day. Would you guys like to try some ice cream . I want to see when the flavor hits you. Young woman oh, my god, thats so good. Michael would you like to try some mango ice cream . Lemonis would you order that . Woman i would. Lemonis would you buy it at a Grocery Store . So we had people sample the mango line. Great responses. Brian i know theyre loving it. Theyre chewing away over there. Yeah, yeah, yeah. Michael so, brian, would you consider putting the mango line cayenne on your menu . Brian absolutely. Yeah, absolutely, absolutely. Michael all right, great. Thats awesome. Brian i think it would be a nice compliment, yeah. Absolutely. Lemonis you like that . Brian yeah, i love it. I think like i said, man, i think its a nice, clean flavor. I think its perfect. Lemonis this presentation started off really shaky, but in the end, michael really delivered. Good job at the end, though. Michael all right. Lemonis okay . This simple exercise proved that with a little bit of effort, you can double the business from just one customer. Mr. Green tea does 2. 7 million in food service. If we just improve our business by 10 , well, thats an extra 250,000 in revenue. At a 60 margin, thats real money. Richard we did a good job. Lemonis you did a good job. Richard no, you you did a good job. Lemonis okay. Mr. Green tea is really growing. Instead of going out and buying more trucks to meet increased delivery demand, ive installed the Fleet Management solution from at t. We can track our drivers, helping them to avoid traffic, ensuring that deliveries will be made on time. [ beeps ] man might need you to come back. Tim all right, sounds good. Lemonis the system monitors refrigeration units in each truck which helps to ensure that our product never melts and avoids unnecessary waste. So well save money on fuel, on labor, and most importantly, on inventory. Richard hey, marcus. Lemonis i called rich and asked him to meet me in new york city. Richard is everything good . Lemonis very good. Ultimately, my goal was to get rich to see it my way that michael should have the opportunity to earn equity. You know, rich, i want you to know how much i appreciate your leadership. This is a generational business. It started with your father. Richard right. Lemonis and then your brother took the business to a different level and then passed away, and you were sort of thrown the keys. I think michaels key to the business, and i do feel like he runs the business as if its his own. So what i want you to consider is that he will be able to earn equity. He said to me he wanted 7 to 10 . Richard [ laughing ] where does he come with these numbers . Okay. Lemonis its in his head. Richard you dont inherit equity. You dont get things if you didnt work for them. And he cant. It would set a horrible precedent. Lemonis yeah. He sometimes comes off as entitled to me. But im a big believer that michael will perform at a different level that you and i will ultimately benefit from if he has just a small taste of the equity. Richard um. You know, i dont know. I dont know lemonis if michael told you that if you didnt give him equity, he was gonna leave, what would you say to him . Richard you see, i dont work well under pressure. Lemonis well, what would you say to him . Richard i guess id ask him when hes leaving. Monis if michael told you that if you didnt give him equity, he was gonna leave, what would you say to him . Richard you see, i dont work well under pressure. Lemonis well, what would you say to him . I guess id ask him when hes leaving. Lemonis how come, rich . Richard it is very important to me that he earns the respect of the employees there you know, that he doesnt demand it because hes my son. Lemonis and so a way to fix that is to issue him equity in a way where the profit and loss statement has an impact on his equity and the growth of the Balance Sheet has an impact on him, as well. I completely understand why rich is reluctant to give michael equity. And if i didnt think it would help the business, i wouldnt be pushing so hard. But what i ultimately want to do is give michael just enough to be satisfied and not upset rich. Thats the real goal behind this plan. The hard part is that i just need rich to agree. What id like to do, rich, is put a plan in place that allows him to earn up to 5 . But in order for him to start to see the benefits of that, the debt that you and i have put in has to be paid back. Richard right. Lemonis the only way to do that is not spend money, not waste money, make more money. Richard exactly. Lemonis build the cash in the company and have him feel like hes getting it for not being your son. Richard exactly. Lemonis cause if entitlement creeps in, im gonna take it off the table. Richard yeah. I think its an unbelievable opportunity. Lemonis all right. Richard okay. Lemonis thank you, buddy. Richard thanks again. Lemonis hi, guys. Lori hello. Lemonis im meeting rich, michael, and lori to go over the packaging changes that i asked michael to do based on the direction i gave him the other day. Last time we did this, michael stormed out. It better not happen again. Lets see what you got. Michael so, this is the stuff that you and i worked on. Were using the same background, similar colors. We just have the leaf logo. Lemonis and it still has mr. Green tea here. Michael the website. Yep, absolutely. Lemonis and it still says, distributed by mr. Green tea. Michael distributed by mr. Green tea. Lori i like this. I think its really clean. Michael the fonts are much, much larger. We have a different font. The colors are brighter. Lemonis you did a good job. I really feel like youre starting to take everybodys input. You bringing this here today is sort of a demonstration, for me, that you are making the steps that are necessary to be a partner in the business. Im pretty impressed with the way michael has handled this assignment. Not only did he do everything that i asked him to do, but even sitting here, he seems more collaborative and more open to ideas. And now we have something that all of us can agree to. But theres still one more test that michael needs to pass. So theres one last thing that i want to see you do. Michael okay. Lemonis i want to see you pitch and close. So were gonna head over to 16 handles corporate office, which is one of the largest yogurt shops in all of the United States. Youre gonna have to pitch to them the idea of mr. Green tea the company owning one of their handles forever. Michael forever. Lemonis lets see what happens, because the guy that owns it said to me, look, im open to taking a meeting, but im not necessarily convinced that this is the right strategy for my business. I want you to take the entire lead. Its a huge deal. Richard wow. Lemonis all right, we feel like were ready to go . Michael yeah, absolutely. Lemonis you nervous . Michael a little bit. All right, lets head there. Richard lets do it. Lemonis sixth floor. Richard sixth floor. Lemonis im taking richard and michael to 16 handles, one of this countrys largest frozen yogurt chains. The reason that the company is named 16 handles is that there are literally 16 different flavors in every one of their stores. So every flavor has a handle, like when you pull the yogurt down. What im asking for here today is for them to dedicate one of their handles to mr. Green tea ice cream. How are you . Solomon good to see you. Lemonis good seeing you. Michael hi, im mike. Solomon mike. Solomon. Michael nice to meet you, solomon. Lemonis the goal behind this exercise is to have richard see michael perform in a pitch environment. Its about demonstrating that hes capable of delivering additional value to the Company Without me or his father. I appreciate you guys taking the meeting and even being open and willing to even hear the idea that michael has. Michael mr. Green tea, for over 45 years, has been serving 8 million servings a year, in manhattan alone, of our ice cream. So we have quite a Large Customer base. We want to bring that Customer Base into your stores, and we want to reverseengineer some of our more popular flavors and get that flavor signature into your yogurt. We dont want to hide that its yogurt cause obviously, yogurt has a very different, tart flavor compared to traditional ice cream. So we want to kind of combine the best of both worlds. The idea that we have is to take one of your handles in each of your stores and make it a mr. Green tea flavor of the month, where each month, its a new, unique flavor. Dolores weve never actually talked to anybody about giving up one of our handles before. So its lemonis scary. Dolores its a little scary. Every day, on every street, in every town, across america. Small businesses show their love to you. With some friendly advice, a genuine smile and a warm welcome they make your town. Well, your town. Thats why American Express is proud to be the Founding Partner of Small Business saturday. A day where you get to return that love, because shopping small makes a big difference. So, this saturday get up, get out, and shop small. Doloresabout giving upctually one of our handles before. So its lemonis scary. Dolores its a little scary. Michael we want to stay true to your roots. You know, your customers are walking into 16 handles not to get mr. Green tea ice cream, but walking into 16 handles to get 16 handles frozen yogurt. And you have a lot of success with that. We want to improve upon it by giving you a new portfolio of flavors that dont exist. Lemonis i think for mr. Green tea, this is an opportunity to put itself out in the marketplace and brand itself in a whole new way. If people go to 16 handles and they love the flavors, the likelihood of them going to find the ice cream in the stores is exponentially improved. Solomon look, chocolate and vanilla are our number one and number two. And i dont know if thatll necessarily change. But whatll entice more people to come in is by providing more than what they can find anywhere else. Types of flavors wed be looking for, like the ginger we havent played in that realm, so that really excites us. One of the things thats important for us at 16 handles is that we lead with the best taste. Michael we have a portfolio of 15 flavors, and developing more, that we have decades of data on. The most important aspect of it, obviously, is quality. My grandfather, my father founded the company on those principles. There are certainly no higherquality alternatives. Lemonis would it be okay if we took some of the samples out . Dolores wed love to. Lemonis okay. Who wants to try ginger . Dolores thats pretty tasty. Solomon its good. Its true to flavor. Michael we import ginger root from australia. Richard when you do like chai. Dolores this is spoton, too. Solomon this tastes like exactly like chai. This one excites me because this is a flavor that weve tried in the past that we couldnt get right. Id put this in the handles. Lemonis its obvious to me that 16 handles is really enjoying the flavor and the quality of the product, but we havent gotten the sale yet. And thats what we came here to do. So, what do you think . Are you guys comfortable moving forward, launching a cooperative arrangement with one handle . How do you feel . Dolores i feel good. I feel good. Solomon these are new flavors that our customers will get excited over. Dolores thats a yes. Lemonis yes . Solomon yes. Lemonis awesome. Solomon you guys were awesome. Lemonis thank you for the opportunity. Dolores thank you. Michael thank you, solomon. Thank you so much. Solomon yeah, thank you. Lemonis it feels good to get the deal done with 16 handles because its a nice crossmarketing opportunity for two great companies. You know, i dont ever want to give michael too much credit, but between you and me, i think he killed it. Richard hi. Lets sit here. You go in first . Lori yeah. Lemonis its time to sit down with the family and discuss the idea of michael having equity in the company. Maybe not give him the whole thing, but give him an opportunity to sort of feel like hes getting a seat at the table. I wanted to get all of us together to really talk about michaels progress. Not as a son, but as a manager in the business. What im proposing is that youre given 5 of the business and that you vest 1 a year based on your performance and, you know, everybody sort of agreeing that things are going the right way. Your dad was not in favor of this equity plan. And i wore him down over time only because i do believe that you have worked and have earned something. How do you feel about this proposal . Richard i think its fair. Did he earn it . Yes, i think so. Lemonis you want to shake his hand . Michael yeah, absolutely. I own a multimilliondollar company. Lemonis congratulations, buddy. Michael thank you. Lemonis congratulations. Youve earned it. This is a huge step for michael. Him having equity in the company should only make him hungrier and more ambitious for the future. With the savings that weve experienced by renegotiating the cream and the new sales accounts that weve picked up, this business is scheduled to continue to grow at a very nice pace. And our new relationship with 16 handles not only gives us a ton of marketing exposure, but it forces us to develop new flavors. Im excited for whats gonna happen in the business, but im more excited to see michaels grown. Richard so youre an owner now. Lemonis one thing that he should know for sure im gonna continue to push him. Lemonis tonight, on a special episode of the profit. Whos fired up . After 70 episodes of investing my own money in Small Businesses, im opening my books. Ive never seen a check that big before. Lemonis . Revealing what happened after the cameras stopped rolling. I asked for one thing which deals paid off big time. Im blown away. And which cost me millions . I would run. From the phonies and the frauds i never saw coming. You know, i dont want to be sitting here just. Working . To the incredible Success Stories that changed my life and business forever. Thank you so much. Yeah. This is the profit, my biggest wins and most heartbreaking losses. My name is marcus lemonis,