Transcripts For CNBC The Profit 20240714

My name is marcus lemonis, healthy, beautiful smiles for life. And i risk my own money to save struggling businesses. Liberty mutual customizes your car insurance, hmm. Exactly. So you only pay for what you need. Were not going to wake up every morning nice. But, uh. Wondering if we have a job. Whats up with your. Partner . Were going to wake up every morning not again. Limu thats your reflection. Wondering how many jobs we have to do. Its not always pretty. Only pay for what you need. Everything is going to change. Everything. Liberty, liberty, liberty, liberty but i do it to save jobs, and i do it to make money. Of 97 percent of the meetings that youve held. This. Lets go to work. Is the profit. Lisa no, no, no, but youve changed some things that i had to find out later. It does make it difficult. In 2010, Justin Romines started rayjus giovanni i mean. Lisa i would like to focus on this and have you step back. With his fishing buddy, ray odom. Justin if you take the graphic stuff out of there, giovanni i dont want to help i bet you its almost. Lemonis as 50 50 partners, in stuff that im a distraction on. Their goal is to bring professionallooking sports shirts lisa but sometimes you do. To amateur fishermen. When i need you involved, ill bring you in. Katie we only need five small. Justin okay. But were short this material for all this . Otherwise, we got it. Katie correct. Giovanni okay. Lemonis with little experience in the apparel industry, i got you. They set up a fullservice operation in lawrence, illinois, lemonis this is what i really wanted out of lisa where they cut, sew, and print customizable garments. Her ability to take control of the situation and be a leader. Katie i expect at least two to three more of these today. So, we really need to go to work, justin well, then, fine. Well ship today. And i definitely want to see something. Lisa okay. Lemonis . In the next. Lemonis fishing fanatics started snapping them up, lisa week . Lemonis yeah. Lisa yeah. Thats fine. Well get started right away. And sales eventually grew to over a Million Dollars a year. Iget started right away. But fishing is a seasonal sport, giovanni ill be out of it. Lemonis okay. See you, buddy. And that means unpredictable revenue. Giovanni thanks, sir. Lemonis bye. Ray well, february, march isnt bad. April got our ass kicked. Things are moving forward at bentleys. Lemonis and the slow months have led to a lack of funds giovanni we have been working on acquiring natural pet market while their debt continues to climb. Justin we also have no material here right now in wheaton, illinois. To get the lamb order done, her best year was about 850,000. So we got to figure out how to get more in the bank. Lemonis now, rayjus finds itself this year, shes on pace for about 720,000. On dangerously thin ice. She wants 285,000 for the business. Lemonis gio has genuinely done a great job Sports Apparel is a 35 billion market in the u. S. Of getting feedback from his team before he makes decisions. I have a massive investment in the outdoor space giovanni moment of truth. Yes or no . Woman yes. With my acquisitions of gander and overtons, giovanni you want to go for it. Nevine . Nevine yes. Giovanni mark . Mark yes. And this could be a great addition to them. Giovanni dan . Dan yes, i do. Man absolutely. Hello . Lisa i think we got to doublecheck, as i look through the warehouse, make sure the names involved. Lets tighten up the numbers, ii honestly thought i was in somebodys storage garage but im good with the 285,000 as the final number. That was just holding boats in there. Giovanni well move forward. Ill take the next step. Ill set it up today. Thanks, guys. Nevine thank you. Hello . Cathy hello. Lemonis how are you . Cathy good. How are you . Lemonis hi. And then i go into this area where i see all these women working, lemonis meanwhile, weve gotten the packaging settled for our best in show line, and, i got to tell you, it was and the product is now in production. It was hot as. In there. Soon, were going to have another highmargin item hey. How are you . Nick hi, there. That will help us get our overall margins up. Matt marcus. Matt thompson. Lemonis brian brian. G, matt . . Lemonis brian. Nice to meet you guys. I didnt know where to walk in. Where are ray and justin . Matt ray and justin . Brian ray is right at his desk in there. Teams on board. Giovanni all right. Lemonis i went into another area well go in the back with tracy. That felt like an airconditioned office. Lemonis now that gio has met with the staff and hes gotten lisa on board, i want to head back to natural pet market ray we already made a blue one that goes with it. And see the negotiation with tracy. Lemonis hello . But i want to see how they do. Justin hello. Hi. Lemonis hi. Giovanni so, for bentleys, justin how are you . Lemonis im good. The acquisition is more than a store. Justin im justin. Lemonis justin, how are you . Im marcus. Its you and the future that we hope you have with our company. Justin thats ray. Lemonis nice to meet you. Ray hi. Lemonis hey. How are you . Im marcus. Ray good. For me, i think, the way the deal stands, nice to meet you, marcus. Lemonis nice to meet you. So is that what ray and jus is . The 285,000 number is fair for both of us ray exactly. Yep. Justin thats right. Lemonis okay. Justin its a little bit because i think theres upside for you. Of a play on outrageous. Lemonis okay. And theres upside, but theres also a lot of risk, for us. Justin jerseys and crazy stuff we make. Lemonis they dont seem so outrageous. I mean, what are your thoughts . Justin if you wear it to the store, lisa after looking at the numbers, people kind of look at you funny. I think its a great deal with you involved with training, lemonis you guys have, like, a boat dealership in your garage. Justin yeah, thats my boat and his boat. Doing some videos, and working with us to help educate our staff. Tracy yeah. Ray my roomateincolleges boat and then two other rentals. Giovanni but we have the expectation lemonis you guys do a lot of fishing, obviously. Of the name natural pet market. Justin as much as we can. Ray yep. [ laughs ] and im sorry cause this didnt come up. Tracy no, it didnt. Giovanni im kind of throwing that in the valuation justin we are kind of geared towards the fisherman and the boater. Just cause i feel like we have to reinvest a lot. Sunprotection designed. Ray completely custom shirt. So, this starts as plain white fabric. Tracy good question, lemonis so a customer calls you and says, i want to make a shirt for my fishing tournament. And thats something to seriously consider. Ray on our website, they can actually go on lemonis would it be better for you to get your 285,000, and build their shirt. Then they can add their logos or would it be better to take 30,000 less because we have a logo library online. Lemonis they can add their logos or other peoples logos . In the Purchase Price ray well, theyre adding other peoples logos. And get a few Percentage Points on the food possibility theres a lot of companies that either, a, dont mind that they use their logo, or anything that has npm on it . But a lot of these guys that we deal with what im open to doing is put you as the face of the product are sponsored by these companies. Lemonis its almost like a dryfit shirt and give you a royalty of 2 percent from under armour or nike, so im thinking to myself, this is really cool that should far exceed the 30,000. Because, in all of my stores where i sell outdoor equipment, tracy well, lets say this. These products could do really well. If you are looking into privatelabeling foods so an individual customer that buys this, what does it cost . And if my 15year reputation name is going to be on it, how many is the minimum they have to order . Let me have a say whats in those foods. Justin one. Ray one is the minimum. Lisa i just would say keep an open mind, too, justin one is the minimum. Lemonis where does the bulk of the revenue come from . Because we have to look at affordability, so i think justin essentially that. Giovanni no, no, no. There is one elephant in the room. Lemonis and so your entire business is individual consumers going onto the website, we would be supplying the kibble component, making a custom shirt . But would be controlling it and then bundling it. Ray 80 percent of them. Justin 80 percent of it, yeah. Lemonis this would be all the stuff that lisa would be doing, not you. Giovanni um. Lemonis wow. Justin yep. Lemonis youre in the customprinting business lemonis for exclusives, extras, one consumer all the time. And business advice, visit. I think that the customizable shirt business is a nicetohave. Its a nice little Side Business in my opinion, not a core business. What experience do you guys have in this space . Ray none. Lemonis oh. Ray i was a disc jockey. Justin im in management information. Lemonis disc jockey. Justin it guy. Lemonis what are the roles that you guys have . Ray design, product development. You may be at increased risk for Pneumococcal Pneumonia lisa we have to look at affordability. Justin and i do some sales work. A potentially serious bacterial lung disease lemonis can you show me the factory . Ray sure. Lemonis well, how did you make that can disrupt your life for weeks. That transition from radio to here . Ray i always built websites for myself in severe cases, Pneumococcal Pneumonia can put you in the hospital. And designed tshirts for myself cause i was a disc jockey. It can hit quickly, without warning, lemonis okay. Making you miss out on what matters most. Ray and im still on the radio now. It was always my creative outlet. Lemonis youre still a disc jockey today . Ray yeah. Just one dose of the prevnar 13® vaccine lemonis and how often do you do that . Ray i go twice a week, but im on every day. Can help protect you from Pneumococcal Pneumonia. Lemonis so youre good. Ray i like to think so. Its not a yearly shot. Prevnar 13® is approved for adults to help prevent so it just kind of transitioned infections from 13 strains of the bacteria that cause from i get to be creative on the radio Pneumococcal Pneumonia. And write stupid songs and fake commercials, dont get prevnar 13® if you have had a severe allergic reaction to the vaccine or its ingredients. And, here, i get to draw. Lemonis oh, very cool. Adults with weakened immune systems may have a lower response to the vaccine. Justin heres our factory, marcus. The most common side effects were pain, this is our area where we do sewing. Redness and swelling at the injection site, this is cathy, by the way. Lemonis hi, cathy. Im marcus. Cathy hi. Limited arm movement, fatigue, headache, muscle pain, lemonis how are you . Cathy nice to meet you. Lemonis nice to meet you. What are you sewing . Joint pain, less appetite, vomiting, fever, cathy jockstraps. Chills, and rash. Lemonis [ chuckling ] jockstraps . Okay. Ask about prevention. Ask your doctor or pharmacist about prevnar 13®. So, this is part of your lineup . Justin we do this for a client. The seasonality of the business, this is to help us keep these guys working all year round. Cake in the Conference Room showing em youre ready. To be your own boss. Katie you can laugh out loud because everyone does thats the beauty of your smile. When they hear that we make jockstraps. Crests three dimensional whitening. Lemonis i dont feel like ive met. Removes stains,. Katie oh. Im katie groves. Nice to meet you. Whitens inbetween teeth. And protects from future stains. Im manager in charge of special projects, crest. So im over jockstraps, healthy, beautiful smiles for life. Lamb and goat products, as well as. Yeah. Yeah, this is nice. Lemonis wait. What . Hmm. [ laughter ] katie sorry. How did you make the dip so rich and creamy . This is a lamb blanket. Oh its a philadelphia they put it over their wool to keep them clean. Family recipe. Can i see it . Theyre mainly used for state fairs, all that sort of thing. No. Philadelphia dips. So good, youll take all the credit. Lemonis so, this is also contractmade . Katie correct. Justin correct. Katie this is for goats. They are leg warmers. Lemonis these are for ts and. It stops them from biting on their leg. Lemonis jockstraps, lamb coats, and goat leg warmers . Ahh now thats crisp. Crisp taste. Brewed with no corn syrup. Bud light. Like, Richard Simmons goat leg warmers. Super emma just about sleeps in her cape. Like, theres nothing else you could have come up with . But when we realized she was battling sensitive skin, how much revenue will you do in jockstraps a year . We switched to tide pods free gentle. Justin close to 30,000 a year. Its gentle on her skin, and dermatologist recommended. Lemonis and how much will you generate in revenue from the lambs and the goats . Tide free and gentle. Justin lambs and goats so far this year are at 80,000. Safe for skin with psoriasis, and eczema. Lemonis 80 . Justin yeah. Lemonis so how much revenue will you do in those custom tshirts . Justin about 1 million a year. Ray about a million bucks. Lemonis i like the fact that they are trying to fill these voids of the irregular cash flow, but the products that theyre making are such a small percentage of their revenue, its so off the mark of their core business that its not even really scalable. All right, guys. Ill hang out here with them. Justin okay. Lemonis i dont need you. Justin all right. Holly hi. Im holly. Nice to meet you. Lemonis nice to meet you. What do you guys think about them cutting and sewing things like lamb and goat and jockstraps . Katie it takes about three times as long to do a lamb product as a shirt product. Holly mmhmm. Katie . Just because the shirt construction is super simple. Lemonis and how much money do you make on the lamb product versus the shirt product . Katie oh, shirt is way more. I mean, it cost us, what, about 30, id say, to make a shirt, and we sell it for over 100. And, a lamb product, we sell for 17. Lemonis and it costs three times the amount of time to make it, takes three times . Katie yeah. Yeah. Lemonis have you guys gotten together and had an opinion with the two of them and said, this is ridiculous . Holly it doesnt really matter. Lemonis at all . Holly were kind of, like, on our own out here. Nobody really comes out here. It gets really hot in here. Lemonis no ac in here. Holly and katie no ac. Holly every friday, theyre gone fishing. Giovanni no, no, no. There is one elephant in the room. Lemonis theyre gone fishing. We would be supplying the kibble component, holly they go fishing all the time. But would be controlling it and bundling it. Lemonis well, how do you make payroll through fishing . Lemonis this would be all the stuff katie yeah, well, those are questions we have, as well. That lisa would be doing, not you. Im following lisas lead. Giovanni okay. Holly yes. Lisa its going to be our private label. Were not going to do anything lemonis did they tell you why i was coming . Katie they didnt actually tell us why you were coming, against our food promise that youre its the same concept you have here. But its a real small company, so we know why youre here. Tracy right. Right. Holly we know all the gossip. Lemonis why am i here . And if were aligned anyway, it should be an easy deal. Lisa yeah. Giovanni yeah. Katie well, youre here because the business is out of money. I mean, thats easy for us. Tracy sure. Lisa i just would say having a little bit invested theres nothing left to pay anyone. Our vendors are maxed out on their credits. In the longterm growth will keep you way more engaged. We cant order more material, does that work with you, that that includes the name and if they dont make a deal with you, well all be looking for jobs. And everything we talked about . We have payroll due, and there were at least three to five people tracy yeah. I think so. Giovanni great. Perfect. Who hadnt cashed their checks from last pay period. Tracy awesome. Lisa thanks. Lemonis you guys hold the paychecks . Lemonis thank you. It was really nice meeting you, by the way. Holly yes. Lemonis have you ever tracy it was nice meeting you, too. Had a check bounce . Katie yeah. Lemonis what im noticing about lisa lemonis maybe one of the reasons is that she truly is starting to get comfortable that the business is struggling is because these guys are only putting in putting her stake in the ground that shes the president , 4 days of effort. And i feel like we got a good deal. All right. Ill see you guys in a little bit. Holly okay. Lemonis thank you so much. This process, gio, that you did. Katie bye, marcus. Lemonis bye. Giovanni i like it. Lemonis . Was better. The other thing that i liked is that you went over this with the staff. Giovanni yeah. Is it warmer in here than it was in there even . Lemonis so they understand it now, marci oh, yeah. And you actually let lisa make the decision. The thing is the press runs at 390 degrees, lisa yes. Giovanni i learned my lesson. Lemonis i love working with you guys. So its always hot. Lisa [ chuckles ] lemonis thanks, lisa. Lemonis yeah, but, i mean, they could pump some cool air in here. Marci it would be a little more enjoyable. Lemonis its odd to me that marci is out in the warehouse standing and working with this very hot machine things are going great at bentleys, and the schaumburg store is now open. I mean, really hot. And right on the other side of the wall wow. Holy cow. Are a bunch of guys sitting in cubicles after i visited schaumburg, with plenty of light and plenty of air conditioning. Lisa got the store open in 5 days. So what is is this printed on paper . This store looks ridiculous. Marci yeah. So, this is printed on special paper. Lisa im pretty excited about it. Lemonis okay. The girls inside were telling me lemonis oh, my god. Giovanni it was 2 years in the making. That the business is somewhat disorganized. Lemonis now that we have a process in place, marci it is a little frustrating, though, once construction is complete, the stores will open in no more than 7 days. To kbe able to make payroll. Hint lemonis as opposed to getting on the phone, is this the new royal animal stuff . Selling, making money. Marci mmhmm. Lisa yes. Just in time for the winter. Fishing is more important. Lemonis the new royal animal products are on the shelf, i actually have a video on my phone of a friday afternoon and with a 65 percent margin, this is going to help us raise our overall margin. I think you would probably find pretty interesting. So this is just me. What i like is that you put all the highmargin product right up front. Its a quarter after 1 00. Lets go see whats going on in rayjus. It looks unbelievable. Sike lets see whos all here. [ laughter ] but, most of all, im noticing a huge difference in these two. Lemonis nobody. Whats changed about your life . Giovanni i mean, everything. I think im calmer because i dont have a stress that we had before. Lemonis look, of all the businesses doesnt that piss you guys off . Marci yeah. That ive invested in the show, lemonis you want to talk about morale being bad . Its the biggest investment when one of your employees feels the need with the biggest risk to lose it. To go video things that bother them. But that risk is dramatically minimized because im investing in people who respect what were doing justin. Justin, why dont you and i, well go take a walk . Justin okay. And who give everything that they possibly can. Lemonis lets get some fresh air. And the reward . Look, after all the things that ive heard from the employees, its going to be huge. I thought it would be a good idea for me to grab justin oneonone giovanni hey. Lemonis hey. And get to the bottom of some of the issues. How much money do you have invested personally in this business . Justin right now, me personally, this is cool. About 16,000 of my own personal money. A manufacturer and a retailer with a unique product. That was actually money taken from tax returns is everything in here cork . Amanda yes. Lemonis . Experienced early success because of past payroll taxes that were due. And expanded to four locations, lemonis what . I dont understand. But owner amanda daileys poor communication. Justin so, they took from my personal tax returns. Lemonis who is they . Justin the irs. Amanda [ chuckles ] we moved. And applied it to Tax Liability for rayjus. Lemonis i dont remember ever talking about moving. And her reckless spending. Creditcard fees 257,000. Lemonis were you guys not paying taxes at the company . Justin correct. Correct. Lemonis how come . Justin cash flow. Lemonis is the company past due on taxes now, too . Is putting this oncebuoyant business at risk. Justin yes. Lemonis how bad . Justin 88,000. Amanda if we dont stop this cycle of borrowing yep. Lemonis holy. And not having enough money to repay things, justin they visited us two, three weeks ago. Theres no way we can survive it. Lemonis the irs did . Justin yes. Lemonis if i cant teach amanda lemonis im now starting to feel sorry how to put a cork in her mounting debt. For the people that are working in the warehouse. Its almost like everybody has just gotten comfortable this heat, the conditions, and, at the end of the day, with a huge space ray and justin are just literally, like, running a house of cards, it looks like. It would be nice if there was air conditioning in here. Justin yep. The only thing is, is you couldnt you would not want to air condition this guy because its 390 degrees basically a giant oven. Its a heat press. Lemonis is that space air conditioned . Justin yes. Well, to a certain extent. We blow air into there from the other room because the girls complain. Lemonis cause the ladies told me its not air conditioned at all. Justin well, we leave the door open. Lemonis [ chuckling ] we leave the door open. I cant believe that he just told me that they open the door a little bit so that the women can have air conditioning. I have a really mixed emotion here because i like the potential for what this product could deliver, and i know where i would sell it. But you dont want to judge a book by its cover, but the first couple of pages arent looking good. What is cool is that you have people here in illinois making a product, and youre designing stuff. That is why i came. So, if i look at the financials for last year, you did 1,282,000 in business, gross profit of 596,000, which is not a great margin, especially when youre selling direct to consumer. Youre not wholesaling the product. Why are the margins so bad . Ray we need to raise the prices just if we want to keep selling. Lemonis the counterargument to that is you dont just raise prices to fix margins. You have to find out whats actually causing the margins. Ray sure. Justin and i know exactly. Lemonis what is it . Justin we had, in the heart of our busy season last year, both of those printers go down. And, that happening, it just absolutely killed our momentum, killed our ray sales. Justin . Our sales, it killed our profitability. Ray yeah. Justin we lost, printer time alone, 254,000 last year. Lemonis so how much would it have cost to buy a new printer . Ray 30,000. Justin [ sighs ] yeah. Lemonis and what could you guys have sold personally to buy a printer . Justin nothing. Ray plasma . [ laughs ] justin well, the company is on life support, and i know that. Ive known it for several months, several years even. Lemonis how far do you guys think you are away from closing . Justin if some things dont turn around, within a month or two. Lemonis can you make payroll next week . Justin not yet. Ray not at this point. Lemonis how do you guys pay your bills . Like, how do you pay your personal bills . This place makes no money. Ray i have the radio job. But thats why i reached out because its time where we need to turn the ship around. I see the numbers, and they suck. I know that. Lemonis the numbers dont suck. The margins suck. Ray yeah. Lemonis and your employees think you guys suck. They think you guys are more interested in going fishing than you are making sure they get their paycheck. Justin thats a shock to me cause i feel like im the one that tries to settle differences with them. Ray ill be honest. Im shocked. Lemonis [ groans ] ray no, really, cause i think i have a great relationship with the employees. Lemonis youre on the radio. Ray sure. Lemonis and you have the gift of gab. Ray sure. Lemonis so i doubt that youre shocked by much. Ray depends, yeah. Mmhmm. Lemonis okay . Ray but the character that im playing lemonis do you understand what im saying . He can get away with it. Ray the character that im playing on the radio is not the character i am in real life. Lemonis i dont want you do be a character. Ray im dad in real life. Im a guy that cares about my family, about my employees. On the radio, this is not me. Im a sexist, egotistical, racist pig on the radio. Lemonis did you just say that out loud . I make a living telling people that i am a sexist and a racist. That just got uncomfortable really fast. If your business is in trouble and you need my help, log on to. Ray on the radio, this is not me. You wanna see something thatamazing . Ing. Go to hilton instead of a travel site and youll experience a whole new range of emotions like. The relaxing feeling of knowing youre getting the best price. Thesell work. The utter delight of free wifi. Oh man this is the best part. Isnt that you . Yeah. And the magic power of unlocking your room with your phone. I can read minds too. Really . Book at hilton. Com. If you find a lower rate, we match it and give you 25 off that stay. Expect better. Expect hilton. Number one in Overall Network performance. Full of awards. Highest in Wireless Network Quality Performance. Highest in Wireless Network Quality Performance in the North Central region. Its hard to know what to think. Thats why sprints doing things differently and offering a new one hundred percent total satisfaction guarantee. So, you can try out the network, see the savings and decide for yourself. Switch to sprint and get both an unlimited plan and one of the newest phones included for just thirtyfive dollars a month. For people with hearing loss, visit sprintrelay. Com. Here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Im a sexist, egotistical, racist pig on the radio. Lemonis i knew ray had a side job, and i thought it may be a distraction. But i didnt realize that the focus of it was to demonize minorities and degrade women. What do you think a woman would think of your radio show . Ray that im a pig. Im going to say what every other man wants to say that doesnt have the balls to do it. Justin i dont like sexist or racist things. Absolutely not. So my hope with having you come here was to eliminate the tax burden. Lemonis but im just trying to understand this. Ray okay. Lemonis when you go onto the radio. Ray mmhmm. Lemonis . And youre doing your thing, and you said sexist, racist are the people that are listening also the same . Ray yeah, i think so because i put a humor spin on everything. Lemonis but whats funny about racism . Ray its not the dick joke you tell. Its how you tell the dick joke that makes it funny. Lemonis i dont understand that. I am a big believer that you are who you do business with. And so the fact that you think i would do business with you because you do that, whether its your personality or not, i just cant. I can get over business problems. Fix the process. Make it safe. Put the air conditioning in. Figure out how to pay the taxes. Create a better work environment. Sell more. Diversify the product. I can fix those. I cant fix you from being a racist and a sexist. But heres the good news. I wont have to fix it cause im not gonna be here. Nice meeting you. Justin nice to meet you, too. Lemonis i wish you guys luck. Justin all right. Lemonis thank you so much, okay . Sometimes, you deal with people that dont have their head screwed on straight, then they have a perspective about others that isnt right. And, sometimes, you deal with others that only think about other people, like my friends at bentleys. And so, while im here in illinois, i want to see what theyre up to. In 2015, i invested in a sevenstore pet chain called bentleys corner barkery. It was started by lisa and giovanni senafe. Lisa we do allnatural food, no byproducts, corn, wheat, or soy in our foods. Lemonis lisa, the president of the company, oversaw the product assortment and the merchandising while gio, the head of business development, hunted for new locations. Giovanni i have been calling stores to see if theyd be interested in selling. Lemonis giovanni was expanding the business faster than they could handle it without a clear plan. Giovanni i go get the deals and then go, hey, well figure out how to pay for it afterward. Lemonis the locations lacked a cohesive look. This store looks totally different than arlington. The operation was a mess. This is how you manage your inventory . And the company was losing money. We cant run a business that way. Giovanni hey, bud. Lemonis the senafes had recently adopted a little boy. Giovanni sebastian, say hi. Lemonis hi, buddy. And they were desperate to stabilize their situation so they can give him the life that he deserved. Giovanni im not gonna put him through what we did. Lisa we dont want to move him all the time. Lemonis because its tough. Giovanni yeah. Lemonis my initial investment was 400,000 for 40 percent of the business and to loan the company an additional 1. 3 million for future growth with a caveat. Giovanni okay. Lemonis i wanted them to prove to me that they could follow a process and do things the right way before they expanded the brand. And they did. With my help, they organized distribution. They gave the shops a cohesive look. So i gave them the green light and the money to start growing again. Im willing to take the leap with you. Turns out, it was quite a leap. In the past 2 years, my investment went from around 1 million to almost 50 million. Weve grown from 7 stores to 81 locations. Weve taken on a new name bentleys petstuff. And lisa and gio, theyve done a phenomenal job overseeing a rapid expansion without compromising their values or the culture that got them where they are today. Im here in chicago so that i can meet with lisa and gio and really dig into their numbers and their business. But, first, were going to their new location in schaumburg, a store that theyre in the process of opening. And gio wants to show me this new prototype item that hes come up with. Hi, guys. How are you . Man good. How about yourself . Lisa so, weve changed up some of the fixtures, redone the snack wagon. We kind of gave it a fresher look. So, people can come in and use this selfwash machine. They can pick shampoos, dry the dog, rinse the dog. Everything is kind of selfcontained. Lemonis how much did this cost to do . Giovanni i mean, the machine is 17,000. Lemonis 17,000 . Giovanni yeah. This isnt a revenue generator as much as its more about traffic. Lemonis 17,000 investment just for the machine. What did it cost to build out this space . Giovanni about 8,000. Lemonis 8,000. Giovanni yes. Lemonis its not a revenue generator . Giovanni just brings in more frequent traffic. Lemonis give me the return on investments. Giovanni 18 months. Lemonis walk me through it. Giovanni the four we have are averaging about 1,000 a month in sales. Lemonis so you have 25,000 invested in this idea . Giovanni yes. Lemonis so how did you get the 18 months if its 1,000 . Giovanni i cant remember if its 17,000 allin with the room. Its 18 months. We did it. Lemonis gio gets so excited running around the country Opening Stores that he forgets to just take a minute and sit down and actually run the numbers through a machine, like, a calculator. Grand opening would be at the end of next week or no . Lisa october. October 15th. Lemonis thats, like, a month from now. Lisa we were going to do it the weekend before, but, i mean, youve changed it. Lemonis what do you mean, youve changed it . Giovanni i definitely put more of my energy on opening a store in georgia that is opening in four weeks. Lemonis you said to lisa, i got this. Giovanni yes. Lemonis if lisa has a certain way that she wants to run the business, why would you come behind her and change it . The stores arent getting to cash flow positive quick enough. You delaying these grand openings four weeks, thats affecting the overall return on the investment because your rent is how much a month here . Giovanni 11,000. Lemonis and how much is that a day . Giovanni 400 a day. Lemonis great. The thing that makes me crazy is why everything that was for this store wasnt sitting in shrinkwrapped pallets. Giovanni already stickered. Lemonis . Waiting. From the minute this store opened, it showed up, and it got unpacked. Theres not proper planning happening. There should be a newstoreopening team, and it should be done on a very tight calendar. Bye, guys. Thank you. Lisa bye, guys. Lemonis part of the reason that i wanted to get everybody together is to really understand the newstoreopening process from your perspective to try to fix this system. So i think this is the one thats at its rawest, right . Man yes. Yeah. Woman yes. Lemonis im checking out another location that gio says he wants to open, but ive added a little twist by asking his team to come there because i want him to see for himself how they really feel about this process. What else is out there right now . Giovanni we have wauwatosa. Thats next march. I dont think they know about wauwatosa. Lemonis did you know about wauwatosa . Nevine no. Dan no. Lemonis did you . Man no. Lemonis did you . Woman no. Lemonis did you sign a lease . Giovanni yes. Lemonis how do people in the office legitimately not know . Giovanni its not like they need to do anything. It doesnt exist yet. Its being built. Lemonis what if somebody had an opinion prior to its signing . How would you know . Lisa we wouldnt. Lemonis this is the visual in my mind when i think about your business. Theres you with a pen and the lease running in circles. Giovanni i so disagree. Lemonis and theres everybody chasing you. Giovanni i totally disagree. Lemonis but it may be you disagree how . Giovanni i can tell you lemonis you signed wauwatosa, and nobody knew it. Giovanni do you think that i dont listen . Lemonis am i the only person that thinks you dont listen . Giovanni i dont know. Nevine well, when youre talking too much, you cant hear what others are saying. Dan i think he reverts to what it took to run six stores, knowing everything thats going on. And that doesnt work at 80plus stores. Giovanni the fact that eight people are even here talking about this is laughable to me. Lemonis no, whats laughable is that you dont see the value of having more people in the tent. Theres a process problem. You cannot drive this bus by yourself anymore. Giovanni you want me so far out of the business. Lemonis i do not. And nobody here wants to say it. Just stop. Nobody wants to say it to you, including your wife. Giovanni we dont know this space. Lemonis when you say we, are you saying lisa or you . Giovanni bentleys. Lemonis but you just said that shes the only one that picks products. Giovanni correct. I dont lemonis okay. Then you say, we dont know what were doing, which is the same as saying, she really doesnt know how to do this. And this is a real person named mackenzie book. Lemonis theres a process problem. Hi, im mac book. So mac, which laptop lasts longer . Surface laptop lasts longer. Hmm, interesting. And which ones faster . This ones faster. Really . Amazing. Which one has a better touchscreen . The surface has a better touchscreen. Because it actually has a touchscreen. Oh, right. Macs dont have touchscreens. You should get a surface. Trust me, im mac book. Well, there you have it. Mac book says, get a surface. Tthe new Samsung Galaxy note 10 with the powerful s pen has arrived at sprint. And you get it for 50 off when you switch. Yup. That means less than 20 per month. So what are you waiting for . For people with hearing loss, visit sprintrelay. Com woman 1 i had no symptoms of hepatitis c. Man 1 mine. Man 1 . Caused liver damage. Vo epclusa treats all main types of chronic hep c. Vo whatever your type, ask your doctor if epclusa is your kind of cure. Woman 2 i had the common type. Man 2 mine was rare. Vo epclusa has a 98 overall cure rate. Man 3 i just found out about my hepatitis c. Woman 3 i knew for years. Vo epclusa is only one pill, once a day, taken with or without food for 12 weeks. Vo before starting epclusa, your doctor will test if you have had hepatitis b, which may flare up, and could cause serious liver problems during and after treatment. Vo tell your doctor if you have had hepatitis b, other liver or kidney problems, hiv, or other medical conditions. Vo . And all medicines you take, including herbal supplements. Vo taking amiodarone with epclusa may cause a serious slowing of your heart rate. Vo common side effects include headache and tiredness. Vo ask your doctor today, if epclusa is your kind of cure. Whoa, thats crisp. Crisp taste. Brewed with no corn syrup. Bud light. You cannot drive this bus by yourself anymore, and nobody here wants to say it. Just stop. Nobody wants to say it to you, including your wife. So, going forward, what we are going to do is that you and i are going to get a group together. We just have to create that process. I want him to now accept the fact that they need to be involved in every step of the process. If he would just trust in some other people, the end product could actually end up being better. And once a month, hold a meeting in order to prevent people not feeling included. Woman increasing communication. Nevine engagement. Woman yep. Lemonis how many stores exist today . 81 . Giovanni 81, yeah. So, this is the Balance Sheet through the end of june. Lemonis i wanted to sit down with lisa and gio and go over their historical financials, and, while theyre doing amazing, i want them to see that theres room for improvement. So it looks like the business is on pace to do somewhere around 88 million bucks in revenue. It looks like the business will make about 4. 6 million. The margins are coming in around 47 percent, which is really three points less than it needs to be. Giovanni yeah. Lemonis look, theres no golden rule that says what the margins need to be in a retail store, but i dont like to be in the Retail Business with margins that are less than 50 percent. By the way, when bentleys gets to 50, im gonna move it to 55. And when it gets to 55, im gonna move it to 56 because we always need to be thinking on how to improve the business. Because youre 88 million now, going to 100, 115 million. So you Start Talking about three Percentage Points on 100 million its real money. And so i think what we should do over the next week or so is to really start to dig in and see where our margins can get better. You remember i did that bid deal with murchisonhume where i bought best in show . Giovanni yes. Yeah. Lisa yeah. Right. Lemonis so i want to actually put that to work. Lisa so were going to start out with a dog spot and odor remover and a cat spot and odor remover. Lemonis so, do you have the formulas and everything . Giovanni you vetted out a couple formulas, correct . Lisa i did. Yeah. Lemonis you remember best in show from a previous business . I paid 100,000 for the trademark. Its a brand that i bought specifically to launch a line of pet products to not only sell in bentleys but in the entire industry. And now im gonna make some money on it. Lisa, i think we need to crank up your ability to say no because your husband is very persuasive. Giovanni sure. Lisa mmhmm. Lemonis do you guys remember what you told me in the basement when we first met, what you guys wanted out of life . Lisa i know that we were looking to grow the business and be able to provide for our kid. Lemonis and so whats different at home now . Lisa now we have two boys. In february, we adopted our second son, miles. Lemonis the one thing that lisa and gio have consistently done is put their employees, their customers, and their family in front of profits. I think thats the big reason that theyre as successful as they are. All right. Ill see you guys tomorrow. Lisa all right. Lemonis im marcus. Tracy hi. Nice to meet you. Lemonis nice to meet you. Gio told me that hes contemplating making another acquisition, and i thought, rather than just approving it, i would go along for the ride. Youve been a long time, havent you . Tracy 13 years. Lemonis what inspired you to start it . Tracy i had a golden retriever. He had arthritis really bad. He couldnt walk up and down stairs. And after 2 weeks on fresh food, he was up and down the stairs. And thats how i came up with this idea. Lemonis similar to how lisa did it. Giovanni shes got a great reputation in the business. Tracy i do like educating people. Lemonis you do . Tracy yeah. I love it. I have consulted with other stores already. Giovanni so, what was the revenue in 16 . Tracy it was almost 900,000. Lemonis wow. 900,000 . Giovanni yeah. Tracy in 17, it went down. Giovanni but youre still at about 61,000, 62,000 a month . Tracy oh, yeah, easy. Giovanni so its still about 720,000 a year . Tracy yeah. Lemonis how much inventory is in here . Tracy about 80,000. Lemonis oh, wow. I love that tracy shares the same values as lisa and the rest of the company, and she could be a killer asset to not only train customers, but train our employees. Giovanni in your mind, what number . Tracy for . Giovanni the purchase. Tracy 285,000. Giovanni 80,000 in inventory . Tracy mmhmm. Lemonis so maybe a different way to think about this is. Giovanni yeah. Lemonis . New store, acquisition. Giovanni sure. Lemonis compare and contrast. Theres the cost to open up a new store. Giovanni so, 218,000. Lemonis okay. Thats a starting point. Now compare it to this transaction sheet. Giovanni so, 285,000 is our Purchase Price. Lemonis included in that 285,000 is what . Giovanni 80,000 in good inventory. Lemonis of assets. Giovanni correct. Lemonis how much do you have to still spend . Giovanni thats what i okay. Lemonis how much do you still have to spend . Giovanni adding inventory, remodeling, 138,000. Lemonis historically, it costs us about 218,000 to open a store. Tracy is asking 285,000 to buy her business. Subtract the 80,000 of inventory that shes including, and our price is about 205,000. Wed still need to spend an additional 138,000 to improve the store and build it out, which puts us at about 343,000 of total investment. So, at the end of the day, wed spend about 218,000 to build a brandnew store or 343,000 to acquire tracys, about 125,000 more. And while thats a premium, well be getting a business that has over 700,000 of revenue. And as a kicker, well get tracy with all of her experience, which is worth way more than 125,000. Giovanni so were paying 125,000 for 50,000 in profit and tracy . Lemonis thats the question, period, end of story. Giovanni i got you. Lemonis i want you to make this argument before you do this deal to the team. Giovanni okay. Lemonis . Because if they all agree collectively to put the money in, what happens to their pride of ownership over that location . Giovanni yeah, they own it way more. Lemonis i think the name natural pet market is really good. As youre working on privatelabel foods, i would use that name. Tracy i do own the trademark on that name. I actually wanted to keep the name. Lemonis look, this deal is not going to be as simple as i thought. The name has to be part of this acquisition, and were going to need to figure that out. We need to think about this. Susan so, lisa, what i did was that i kind of printed out what we spoke about. Lemonis lisa told me about this company, royal animal, out of new york, that specializes in soft goods, particularly pet clothing and accessories. In order for the overall margin to grow from 47 to 50plus, we have to incorporate things that have a 60plus percent margin. And so i want lisa to focus on things that are going to give her that. Susan this is, like, this kind of canvas material. Lisa and our chicago store, it would do great in. Giovanni i definitely dont think that will sell. Lemonis whats Something Like that cost . Susan were wholesaling it for, like, 12. 99. Lemonis whats the suggested retail . Susan i would probably go for 39. 99. Susan i think these were on your list. Lisa i like the puff coat. Giovanni i dont think theyll ever sell. Lemonis oh, thats cool. Lisa thats really cool. I love the raincoats. Giovanni i dont see somebody putting this on their dog. Weve done that, and weve seen that it doesnt move the needle. We do have to get pick and choose. I think i think this will sell. I could picture a corgi in it. And im not the merchandiser. Im just saying. Lemonis well, you seem like it. Giovanni yeah, i definitely dont think that will sell. This is at least cute. Lemonis gio has an opinion, but his opinion sometimes comes without any information. You never once asked lisa what she thought. Lisa its ultimately my decision on the products. Lemonis this is a 100 million business thats making great money. We want to pick up three more points of margin. At the end of the day, we have one person that has to be in charge of the business, and thats not me, and thats not you. Giovanni we dont know this space, and we make guesses. Lemonis when you say we, are you saying lisa, or are you giovanni bentleys. I talk about bentleys. Lemonis no, but you just said that shes the only one that picks product. Giovanni correct. Lemonis okay. Then you say, we dont know what were doing, which is the same as saying, she really doesnt know how to do this. Giovanni we have been working on acquiring natural pet market. She wants 285,000 for the business. Moment of truth yes or no . Lemonis you just said that shes the only one that picks product. We really pride ourselves on temaking it easy for youass, to get your windshield fixed. Teacher lets turn in your science papers. Tech vo this teacher always puts her students first. Student i did mine on volcanoes. Teacher you did . oh, i cant wait to read it. Tech vo so when she had auto glass damage. She chose safelite. With safelite, she could see exactly when wed be there. Teacher you must be pascal. Tech yes maam. Tech vo saving her time. [honk, honk] kids bye tech vo . So she can save the science project. Kids whoa kids vo safelite repair, safelite replace door bell rings its ohey. This is amazing. With moderate to severe ulcerative colitis, are you okay . Even when i was there, i never knew when my symptoms would keep us apart. So i talked to my doctor about humira. I learned humira can help get, and keep uc under control when other medications havent worked well enough. And it helps people achieve control that lasts. So you can experience few or no symptoms. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal infections and cancers, including lymphoma, have happened; as have blood, liver, and nervous system problems, serious allergic reactions, and new or worsening heart failure. Before treatment, get tested for tb. Tell your doctor if youve been to areas where certain fungal infections are common, and if youve had tb, hepatitis b, are prone to infections, or have flulike symptoms or sores. Dont start humira if you have an infection. Be there for you, and them. Ask your gastroenterologist about humira. With humira, control is possible. Liberty mutual customizes your car insurance, hmm. Exactly. So you only pay for what you need. Nice. But, uh. Whats up with your. Partner . Not again. Limu thats your reflection. Only pay for what you need. Liberty, liberty, liberty, liberty at first slice pizza lovers everywhere meet o, thats good frozen pizza one third of our classic crust is made with cauliflower but thats not stopping anyone o, thats good giovanni correct. Lemonis okay. Then you say, we dont know what were doing, which is the same as saying, she really doesnt know how to do this. I wish that lisa felt like she had the freedom to try Different Things without having to hear, like, oh, i told you that wouldnt work. Lisa we all know not every set is going to sell, but, like, i know gray has been very popular. Susan so this is our gray coat this year. And these are two of our bestselling coats, by the way. Lisa i love the raincoats. These, i think, would actually do well. Lemonis whats Something Like this cost . Susan 9. 99. Lemonis and what do you suggest retail on this . Susan it could really go up to, like, 39. 99. Lemonis okay. If you were able to get it to 8 because you did some volume, you just went to 72 points. Those extra seven points start adding up. As we work on growing the margins from 47 to 50, we need to find things that have 65 and 70 percentplus margins, so i love the things that lisa is picking because it naturally is just going to pull those margins up to where they need to be. I feel like we have good momentum. Lisa yeah. For sure. Lemonis and were headed in the right direction. Susan im very excited to work with you. Thank you for coming up. Lemonis thank you, susan, as always. Susan it was so nice seeing you. Lemonis were here at american bottling, a copacker thats going to help us launch best in show, a highmargin cleaning product for pets. Lisa the biggest factor for us is a lot of people with pets have kids, so they want something that they can clean, especially carpets. Kids are running around on their carpets. They dont want a bunch of chemicals that are stuffed in the carpet. Korie its designed to do something very effective and be all natural. It has no ammonia, no bleach. Lemonis theres no chemicals. Korie no chemicals. Lemonis so it fits in your whole lisa it fits perfectly. Yes. I love it. Lemonis lets go look at the packaging options. Lisa oh, look. Very cool. Korie so, we have our dog and our cat. Giovanni i love the white. Its so simple. Dont you like this one better . Lisa i kind of like this cause it stands out a little bit more. Giovanni really . This one is just so much cleaner. Lisa the white, to me, kind of cheapens the look. Giovanni you dont think the kids part should be bigger . Lisa no. These little icons work perfectly. It makes sense. Giovanni but i like the white. Lemonis look, its obvious to me that lisa is really struggling with taking control. Gio continues to walk all over the situation and her. Shes going to have to step up. Can we have a minute, just the three of us . Korie sure. Absolutely. Lemonis okay. Lisa, i just want you to feel like this is your business, and i think gio definitely needs to hear from you. Giovanni i have stayed out of 97 percent of the meetings that youve held. Lisa you may have stayed out of the meetings, but then you had your own meetings without me. Giovanni well, not about the same topics. Lisa no, no, no, but youve changed some things that i had to find out later. Lisa after looking at the numbers, i think its a great deal. Giovanni but we have the expectation of the name natural pet market, and im sorry because this didnt come up. Tracy no, it didnt. Every breath makes you feel closer to nature. Giovanni i have stayed out and every sip makes nature feel closer to you. Michelob ultra pure gold. Beer in its organic form. Theres one thing you can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. gasp singsong budget meeting sweet. If you compare last quarter to this quarter. Various mmm. Its no wonder everything seems a little better with the creamy taste of philly, made with fresh milk and real cream