Transcripts For CNBC The Profit 20240712

My name is Marcus Lemonis. And i risk my own money to save struggling businesses. Were not going to wake up every morning wondering if we have a job. Were going to wake up every morning wondering how many jobs we have to do. Its not always pretty. Everythings going to change. Everything. But i do it to save jobs and i do it to make money. This. Lets go to work. Is the profit. In 1979, shortly after immigrating to the United States from mexico, Gilbert Martinez opened up Pacific Hospitality design, a commercial Furniture Manufacturing Company located just outside los angeles. Ana so far, so good. Thats good. Lemonis it was a true Family Business with gilberts daughter ana growing up on the shop floor. Ana this one here. Lemonis these days, she oversees design, while her father oversees production. And over the years, theyve built big accounts with Companies Like the coffee bean, mgm, and caesars entertainment. Ana weve got to make sure that we send quality stuff. Theyre unhappy because we didnt catch it. Lemonis but a recent drop in sales has left the company with a serious cash crunch. Ana i do apologize. The order will be going out. We dont have an exact date yet. Lemonis bills are now going unpaid, orders are getting delayed, and with every passing day, gilbert and ana find themselves deeper in the hole. About a yearandahalf ago, i invested in another family furniture Manufacturing Business grafton furniture, located in miami. Since that time, the business has grown by about 50 . With their focus on residential furniture and pacifics on commercial furniture, i think theyd make a perfect match. Hi, there. Woman hello. Lemonis is ana here . Woman let me go get her. Lemonis let her know marcus is here. Woman okay. Lemonis thank you. I didnt really understand when i walked into pacific, why i was seeing residential furniture. I thought this was a hospitality business. If this is a showroom, i dont think theyre showing the right stuff. Ana hi, Marcus Lemonis are you ana . Ana yes. Lemonis how are you . Ana nice to meet you. Lemonis its really nice to meet you. Ana yes. Very nice to meet you. Lemonis how long have you guys been here . Ana weve been in this location about 13 years. Lemonis wow. Ana yes. Lemonis how are you, sir . Im marcus. How are you, sir . Nice to meet you. Gilbert me too. Lemonis how long have you guys been in business . Gilbert 40 years. Lemonis 40 years . And what is your business primarily . Is it hospitality . Ana mostly hospitality. We do guest room furniture, public space furniture, as well as restaurant furniture. Lemonis and how much of your business is hospitality . Ana probably like 90 . Lemonis 90 . Whats the other 10 . Ana a mix of like retail, as well as residential. So pretty much everything you see here in the showroom, we have manufactured. Lemonis beautiful quality. Ana these are some of the products that were currently making. These frames are actually for planet hollywood. Were doing about, almost 400 of them. And then we have headboards that were doing. We do these for lemonis and who designs all this . Ana thatd be me. These are all my designs. Lemonis its nice. You have a lot of talent. Ana that would be something that i would love to do day and night, but i dont do much of it anymore, because i do many other things. Lemonis and how much business will you do a year . Ana this year, were probably about like 2. 8 million. Lemonis and will you make money at 2. 8 million . Ana i dont know the answer, because im not i know i should know my numbers. I say yes, but im not 100 sure. Last year, we were on the red. Lemonis how much did you lose last year . Ana i think it was like 46,000. We would have orders where theyre, please make this for us, and then we would say yes, and theres no money in it. Lemonis who would say yes, you or your dad . Ana we would. Lemonis whos we . Ana my dad. Lemonis he loves to say yes to everybody . Ana yes. Lemonis when i look at him over there making that chair, he doesnt look like hes ready to retire. Ana i know. Lemonis does he want to . Ana he says he does. He works monday through sunday. Lemonis thats seven days a week. Ana yeah. This actually, ill have them flip it over so you can see it. Lemonis is this a sofa . Ana it is. So this is the outside back of it. Its going to have fabric and then the lemonis is that for your house . Man [ laughs ] no. Lemonis no. Thats a big pink chair. Man very big, very pink. Lemonis what does this cost to make . Ana papa, how much does it cost us to make this chair . Ana about 300 . Gilbert. Yeah. Lemonis and what does it sell for . 500 . Ana we have a price list. Are we selling it for 500 . Ive got to check. Lemonis i would hope that one of them would know their numbers. Ana its much worse than we thought. Lemonis whats much worse . Ana the price. Its 420. This one, i got the price. Lemonis it costs you 300, you sell it for 420. Ana yes. Lemonis and youre making a 28 margin. This chair should be 675 to 700. So what jobs are you making money on, cause youre not making money on this. Gilbert not on the chair. Lemonis the furniture business in the u. S. Is extremely competitive, which could cause some manufacturers to underbid, but furniture margins in this business need to be north of 55 , not only to make a product, but to leave yourself some gross profit to deal with Quality Control issues and damage. For example, if they were getting at 57 margin on 2. 8 million of sales, theyd actually be generating 1. 6 million of gross profit, instead of their 28 margin, which generates less than 800,000 of gross profit. Im going to walk around and just kind of get the lay of the land, if thats all right . Ana absolutely. Feel free. Lemonis thank you. Theres a sense of chaos at pacific, and theres no flow to the way furniture gets made. Theres raw material everywhere, and a lot of it is damaged. And theres waste all over the place. You look around this place, you see margin leakage everywhere. But what i really want to do now is get gilberts take on what he thinks the biggest problems are. How did you start the business . What was the first thing you started with . Upholstery shop. You were how old, 20 . And how old are you now . Gilbert 61. Lemonis what do you worry about . Cash. Where did all the cash go . Who does the accounting here . So if i want to talk about the numbers, id talk about it with ana. Ill go talk to her about it. Thank you, gilbert. Thank you, my friend. Gilbert thank you. Lemonis why did you call me . Ana february, march, april, like were really hard for us, like we almost couldnt make payroll. My dads health is another one. I feel like when hes stressed, he just deteriorates more. Sorry. I dont want to see my dad one day, just drop dead and be like, ill feel guilty for the rest of my life. I mean, he was diagnosed with parkinsons a couple years ago, so the man you see now is not the man that was five years ago. Theres days that he cant even move. Lemonis it must kill you to see him like that. Ana it does, and i try not to break down in front of him, because i know that if i do, he breaks down, especially when things are tough. He has really bad days, and hes here. He shouldnt be here. Lemonis how tight is money right now . Ana in march, we had to put money out our own personal, like my husband and i, and my husband was like, this is the this is it. Were not putting any more. Lemonis how much money have you put in personally . Ana personally, was 75,000. Lemonis thousand . Ana mmhmm. Lemonis whoa. Ana theres definitely a potential. I think we have history, we have great clients, we do a great product, we have great people. Lemonis you need help. You need help. Is your Balance Sheet in here . Ana yes, it should be in there. Lemonis so, in january, you did about 220,000. Ana yes. Lemonis february, 175,000. March, 200,000. April, like 30,000. Ana ugh. 30,000. I think it was 30,000, and then it was the same. Lemonis may, 50,000. And june, back up. So what happened in april and may . Ana we didnt have any sales. Lemonis you can see why ana and her dad are now feeling the real pressure when it comes to cash flow. Low margins, poor efficiency. Now, when those things exist and business is great, you can just skim by, but when business drops, its like putting a noose around your neck. There is no chance of survival. So you think youll do about 2. 8 million for the year and break even . Ana probably. Lemonis thats what it looks like to me. So 288,000 in payables. Ana mmhmm. Lemonis 106,000 of them are past due. And 300,000 to a family member. Thats 406,000 in liabilities. Yikes. What do you ultimately want to do with the business . Do you want to try . Ana i want to take it over, yes, i mean. Lemonis you do want to . Ana i dont i mean, thats what ive always wanted. I couldve given up a long time ago. Lemonis why didnt you . Ana because i feel like its like my dna. Lemonis all right. Can i keep this just to study it . Ana absolutely. Of course. Lemonis hi. How are you . Ana were nervous. Im nervous. I dont know. Lemonis what are you nervous about . Ana this whole day has been an amazing experience. Lemonis you did a good job today. Gilbert really . Lemonis yes. Im very impressed. Gilbert why . Lemonis because any time one person over 40 years can build a business in america and have it stay open and last, is a big accomplishment. Youve fed a lot of people over the years and you have a lot to be proud of. Gilbert i never thinking about that. I thinking of something, i thinking with my heart, not, not with my brain. Lemonis well, thats why youre successful. Gilbert you think so . Lemonis yes. Because business isnt just about thinking with your checkbook. How proud are you of your dad . Ana very proud. To have him be an immigrant that didnt go to college, to accomplish what hes accomplished is, i mean, its amazing. Lemonis what worries you the most about your dad . Ana his health and, you know, having him gilbert im okay. Ana i know youre okay, but some days, youre not okay. Gilbert dont worry too much. Ana i do worry. Gilbert okay. Ana im going to worry about you. Hes so stubborn, you know. Its like. Gilbert dont cry. Ana i know, youre making me cry. I dont want to cry. Lemonis you may not know, but i have an interest in another furniture business. Its in miami. Its called grafton furniture. Its similar, because you make a type of furniture, but theyre in the you know, theyre in the residential furniture business. Ana right. Right. Lemonis like pacific, graftons a Family Business, and they suffered from a lot of the same issues when i first met them. They had problems with their process and their efficiency, but in the last year, theyve made a ton of progress and their business is up about 50 . They lose a lot of customers, because they cant handle the freight to the west coast. And im assuming that you lose a lot of customers cause you cant handle the freight. Ana to the east coast, right. Lemonis . To the east coast. And i see that they could help you. And i feel like you could help them a lot. So im going to make an offer for 300,000. The 300,000 is going to go towards improving the facility and putting the rest in working capital in the business. Once we fix the margins, the company will have plenty of cash flow to service the debt. For that, i would want 40 of the business. Grafton and i would be partners in this deal. But i think when you think about it, the decision you have to make is, do i want to be partners with marcus and grafton . Ana right. I mean, i definitely want to be partners with you. Thats absolutely no question about it. But im not sure. Steve this should not have been upholstered prior to paint. This counter stool, really bad. Steve yeah, they didnt sand it properly. Lemonis are they capable of producing graftonquality furniture here right now . Steve no, not right now. Not right now. Lefor that, i would wantke 40 of the business. 0,000. Grafton and i would be partners in this deal. And the decision you have to make is, do i want to be partners with marcus and grafton . Ana i mean, i definitely want to be partners with you, but im not sure. I mean, i just wish i wouldve been the first furniture manufacturer on your portfolio, you know, versus the other way around, but. Lemonis right. Well, one thing we can do is we can up it to 45 and then i can give you 5 of grafton. Ana what do you think about that . I feel like that lemonis so that you feel like youre a shareholder in their business, and theyre a shareholder in your business. Ana thats a fair totally fair. Lemonis does that feel better . Ana yes. Lemonis theyre really good at custom, and youre really good at commercial mass production. And i want to be clear, you know hes still the boss, right . Ana absolutely. Lemonis im 100 in charge of you, but not of you. Youre still the jefe. Lemonis we have a deal . Ana we have a deal. Lemonis im excited to go to work. Ana thank you so much. Lemonis thank you very much. Gilbert you happy . Ana just to see you be able to work less, its going to make me very happy. Lemonis guys, ive been waiting for you. Why you always late . Grafton furniture is currently run by steve grafton, who also grew up in the furniture business, and it was founded by his late father esteban. Now hes helped by his son steven, the Third Generation of the grafton family. In my time working with the graftons, theyve implemented a new manufacturing process that not only changed the efficiency, but it changed the profitability. And that new process also has strong Quality Control measures that ensure that every customer is happy. This is anas father gilbert. This is steve grafton. I flew both of them out to california because i wanted them to be part of our first employee meeting. Steve my son steven. Ana very nice to meet you. Stevie nice to meet you. Ana ana maria. Nice to meet you. Steve hola todos. Man hola. Lemonis so i wanted you guys to know that ana and gilbert and i made a deal, along with stevie and steven, to invest 300,000 into Pacific Hospitality, to buy a 45 stake. And so, Going Forward, these two businesses are going to be one company. Putting the businesses together means more work, more business, and more money for everybody. But im 100 in charge. Okay . Lets go to work. What do you see here . You see opportunity . Stevie absolutely. I see us a few years ago, five, six years ago. Lemonis is that what it feels like . Stevie almost exactly. Lemonis what do you think of the quality of their work . Steve for hospitality, its fine. For residential, its not fine. Lemonis its not fine . So what are you noticing that would make it not fine . Steve well, when the leg is not perfectly smooth like i could show you on a finished product on the other side lemonis show it to me. As were touring the warehouse, steve is pointing out flaws on some of the furniture. Steve this should not have been upholstered prior to paint. This counter stool. Lemonis yeah, really bad. Steve yeah, they didnt sand it properly. Hospitality is different. Line furniture is different. Lemonis yeah, but we have to be able to make hospitality in miami and custom residential here. Steve correct. Lemonis or weve totally made a bad investment. Are they capable of producing graftonquality furniture here right now . Steve no, not right now. Not right now. I would be scared. Lemonis im sure this isnt a lot of fun for ana, but in order for her company to go to the next level, she has to really change the way she operates. You want to get this business going, you got to get your ducks in a row now. Who here is actually designated specifically to not let something leave here before its right . Ana mmm. Its norm well, i we dont we dont have a specified person. Lemonis youre dealing with big corporate clients like coffee bean, mgm, caesars palace, and theres nobody checking this furniture before it leaves . So if theres a problem, who actually finds it out, the customer . And when i look at that chair right there, why would he be fabricating it before the legs are stained . Ana yeah. They shouldnt have done that. Steve do the workers normally have an order that they look at . Ana they dont. Lemonis theres no work order status, so one chair, you dont know where it is in the production cycle . Ana no. Lemonis thats an easy thing to put in. Drop the process in, literally drop the template in. To create an environment where efficiency is maximized and mistakes are minimized, its not that hard. Its called a production line. What we need to do is create dedicated stations so that every single part of the process has its place and theyre in the right order. Framing, upholstering, finishing, staining, top coating, Quality Control. When we get things right the first time around, were not compressing margin by every mistake that we make. While this is a good idea, now what we have to do is make room for it. What is all that . Ana yeah, leftover stuff. I mean, its prototypes. Theres frames from a project. Its just accumulated. I kind of say, we can upholster, we can finish it. Lemonis no bs, ana. If you threw out everything that you havent used in five months, this place would be more able to breathe and more functional. All this stuff has to go. Ana i know. Lemonis and so im going to call, and im going to bring as many trucks and as many dumpsters and as many men as i can find, and every single part of this warehouse that you havent touched in months is going in the garbage. [ truck beeping ] today, its time to take out the trash. Whatever were not giving away to the employees, well, its going right in the dumpster. Ana i dont know if i want to see this. Lemonis this isnt just a quickly tidyup, were throwing everything out so we can entirely revamp the place, then we can make furniture efficiently and profitably. Come on. Were also cleaning out the showroom up front. Gilbert everything goes . Lemonis huh . Gilbert everything goes . Lemonis todos. Want to grab this cushion . Ana uh. Hold on, dont. Lemonis you all right . Whats wrong . Ana its okay. Lemonis whats wrong . If your business is in trouble and you need my help, log on to theprofitcasting. Com. Lemonis you all right . Whats wrong . Ana nothing. Lemonis whats wrong . Ana its okay. Gilbert its okay. Dont worry about it. Its okay. Youre okay to cry. Ana i know. Gilbert i know you made these things and you design these things, but. Lemonis you designed this yourself . Ana yeah. Gilbert dont cry. Dont cry. Lemonis i sympathize with ana, because i can tell that shes put everything she has in this place, her heart, her time, her savings. I get it, but these are the kind of changes that have to be made to move forward. Ana i just, i wasnt expecting this. Lemonis you werent prepared for it. Ana no. Lemonis and im sorry to make you do this. Ana no, no, no. No, its fine. I mean, if you asked the girls, our plan was to expand our offices all the way here and get rid of this. Lemonis so we have a jump start. Ana yeah. Lemonis so ana its just sooner than i thought. Lemonis all right. Are these all your work . Ana yes. Lemonis so what did you design on here. Show me. Ana these pieces here. Lemonis yeah . Beautiful. That . You did that . Ana yeah. Lemonis oh, you really like designing. Ana oh, i enjoy it. Lemonis you may actually be a better designer than steve. Were just getting ready to remodel pacific. And i know ana has a ton of passion for design, so i thought id give her a chance to draw up the plans. But first, we need to take a little field trip. Welcome to grafton. Ana im excited. Steve hi, there. Lemonis good seeing you, buddy. I want ana to see what weve done at grafton and whats worked, so that as shes making changes, she can incorporate all of them at the pacific. Steve this is our design lab. We have designers coming in to go over a project. Ana do you make a profit, im assuming, on the fabrics . Steve yeah. And the designers like that, because its all onestop shop. Lemonis were going to take a little tour of the warehouse. Steve this is the shipping area. Stevie no yellow dot, doesnt go out the door. Ana i like that. Lemonis thats his seal of approval. Keep going. Steve and so this is our frame shop. Lemonis everybodys got their own station. The materials are where theyre supposed to be. Ana its a lot more organized. Lemonis ana got to work on the plans as soon as she left miami and what she came up with in only a week blew me away. Ana so this is the floor plan, and now the furniture will come out through there. This would be our offices. Lemonis not only is the shop floor design accomplishing maximum efficiency, but the front Office Design is the kind of First Impression you want to give corporate clients. Its beautiful. Like, its literally stunning. This looks like a designer did this space. Who did this design . Ana myself. Lemonis i mean, honestly, i want to work here. We started the renovation immediately, but i wanted to do one half and then the other, so we can still keep making furniture. Now that the remodeling is underway, its time to focus on the most important thing, growing the business. Ive asked ana and steve to meet me at my office in los angeles. Hi, guys. How are you . Ana hey, marcus. How are you . Steve marcus. Lemonis i own a Restaurant Franchise concept called the simple greek, and were in need of a furniture supplier for all of our franchisees. So im looking for ana and steve to bid on the business together. We have one concept thats really taken off, and thats the simple greek. We have about 250 franchises sold. The last thing thats left to getting these franchises open is getting the furniture package right. And so id like you to lead the design process, ana. Ana okay. This is totally up my alley. Lemonis okay . I know that typically, you lead the design process. Steve yeah. Of course, cause ive got more experience and ive been working in this industry for many years. I should be design, you be lead sales, hospitality. Ana i mean, im going to disagree. I am a designer, im a furniture designer, but, i mean, i think it should be a team effort, definitely. I mean, i would like to run things by you. Steve well, it it okay. Lemonis are you pissed off right now . You look a little fired up right now. Steve i am. I am fired up. I do think its fresh and its clean. Sam its a nice look. I dont want to say its not. But its not, i think, what were looking for. Its just there. Lemonis okay. Lookentertainmentour experience xfinity x1. Its the easiest way to watch live tv and all your favorite streaming apps. Plus, x1 also includes peacock premium at no extra cost. This baby is the total package. It streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. Yup, the best really did get better. Magnificent. Xfinity x1 just got even better, with peacock premium included at no additional cost. No strings attached. Stevana i mean,be design, you bim going to disagree. Ity. Lemonis are you pissed off right now . You look a little fired up right now. Steve i am. I am fired up. Ana i know youre an interior designer, so am i. Ive done a couple design houses throughout like pasadena showcase, philharmonic. I feel like i have more of an experience in that, because i see aesthetic and whats out there and whats new. Steve [ chuckles ] okay. So lets do that. Lets do that. Let me see, let me see what you can come up with, and i dont know, maybe ill surprise you and come up with something myself. Lemonis meaning that you want to compete with her on the design . Steve well, yeah. Lemonis yes . Steve yeah, i do. Lemonis so it sounds like thats what were doing. Were going to set a timeline of, call it two weeks. Steve okay. Lemonis steve has done unbelievable residential work, but what i want him to do is learn to respect anas understanding and knowledge of the commercial business. But if he wants to put his design against hers, a little competition could be good for the company, but as a whole. Steve i really want to talk about how were going to work, because right now, im bidding a job in las vegas. Forwarded the package to ana maria, she priced it. Lemonis what did you do with the price that she quoted . Steve i actually added 35 . Lemonis meaning that she left margin on the table . Steve yeah. Ana yeah, i wouldve thought that you wouldve called me to discuss maybe a little bit further, as far as like how much did you mark it up, whats your profit . Lemonis ana is better at design, but steve is better at business. Thats why this merger makes sense. Both of them need to help each other. Thats what a partnerships about. And so, when you find a situation where you feel like you could coach her on where you think the room is, i expect you to do that. The goal is for both boats to rise. While ana and steve work on their designs for the simple greek, construction continues at Pacific Hospitality. Were changing the layout and look of our office area to make it more practical and a much better First Impression. The old showroom area is being turned into a Design Center so that the employees can use it and so can the clients. As for the warehouse, weve knocked down the wall separating the framing and the staining area, creating a more fluid work environment. And were adding a new paint booth to not only improve efficiency, but dramatically improve margins. Meanwhile, im working with ana and gilbert to improve their pricing issues. If the job costs 132, and you want to have a 50 margin, this has to be sold for 264. Ana okay. Lemonis you were willing to sell it for a 41 margin. On 2. 8 million, 9 is 252,000. How much money did you lose last year . Ana about 45,000. Lemonis right, and so that difference of just spending more time on the quoting process, you go from losing 50,000 to making 200,000. Hi, guys. Steve hey, marcus. Lemonis how are you . Steve good, how are you doing . Lemonis its been about two weeks since i tasked ana and steve with the simple greek project. And so i wanted to see what the two of them have come up with. I wanted you to meet sam lundy. He oversees simple greek concept. The simple greek job is more significant than i think they realize. Each location would buy about 20,000 worth of furniture. There are about 250 franchises already signed up. That would equal about 5 million in business. By the way, thats more than pacific and grafton do combined in a year. I want to get the job right, i want to get the presentation right, and i want to win the business. You want to take him through your presentation first . Steve basically, i thought of the simple greek concept, simple and greek. So i elected to do a blue and white and butcher block. Smallscale, comfortable. I also did an allwood, bent plywood, very durable. I have a banquette, so i did the detailed piping. And for value engineering, we could eliminate this component and put this back right on the wall. So this comes undone, its on a cleat. Sam you know what ive found a lot, steve, is that when you have that kind of bench, it gets ripped easy. And once it rips, you have to get a whole new bench. And the colors, im not thrilled with the blues. Steve okay. Lemonis so lets go over to the tables and chairs. Sam and to me, ive seen this before, steve, and thats my thing. We want to keep the traditional piece, to some degree, but we also want to modernize. And so, we want it to be a little different. Steve i do think its fresh and its clean and its simple greek, so thats why i went with it. Sam its a nice look. I dont want to say its not. But its not, i think, what were looking for. Its just there. And we want something that mirrors what we believe we have as a concept. This is not it. Steve okay. Maybe if you articulate clear vision, not just words. Give me specifics. Sam but, steve, steve . Im not a designer, either. Steve than what do you know about design . Sam if you want me to go out to 20 houses and find what i think i like, i can do that. Thats not what im here to do. Im here to give you feedback and tell you that this is not it. Steve okay. So then you sam all right, ill let you finish, im sorry. Steve let me just finish. Lemonis i mean, youre asking for feedback. No, but youre asking for feedback. Steve but thats the feedback im getting here. Lemonis its funny for me to watch this. Because youre asking for feedback, like, i can make anything. Just tell me what you want me to make. Which is how we function here at grafton. Thats different than what hes asking for. Hes saying, theres nothing unique about this. It feels like a stock item. I know its not, but it looks like it. In order for this deal to work for me, you no longer can be in charge of design. Steve i lemonis so you have to let it all go. Steve no way. Im not letting go. Lemonis theres nothing unique about this. It feels like a stock item. Steve designed some perfectly simple, standard furniture for simple greek, but thats the problem. It was just plain. Sam didnt like it. Hes the one making the decision. At this point, i just hope that ana does better, because if she doesnt, sam has the right to go out and find an alternative supplier. And pacific and grafton, along with me, can kiss that revenue goodbye. Im not going to make sam do business with one of my Companies Just because i own it. Its got to be good enough to win the business. Ana so this is my interpretation of simple greek. I kind of started the process with what reminds me of greece or greek restaurant. So i just went through so many inspiration images that kind of inspired me to design the furniture. And i really call these mood boards. I feel like this puts you in the mood like, when you walk into a space, whats the mood . The table, what i designed was in a powder coated metal, and again, bringing in those colors, the blue, the green, and it has a bar top finish. Lemonis and thats cool, thats different. Ana and then for the chair, i wanted to bring in the logo of the simple greek and then the texture pattern fabric on the seat, and its all lasercut, and then finished in a green powder coat to have that olive color. And then for the bar stool, i decided to kind of powder coat it in the blue, just to be able to have like that contrast color of the blue and the green and so everything can sort of colorcoordinate. With the booth, its just again, like resembling a lot of the arches and like, greek architecture. And then it has that nice, little shape with scoop ports, arches on the bottom. All the fabrics here have nanotechs and theyre a moisture barrier. Steve yes. Ana so theyre all basically steve and this is. . Ana this is vinyl. Steve yeah. Sam i got to tell you, its cool. Lemonis its different. Sam its different, and its cool. Ana when i walk into this space, i want to feel like im captivated by a lot of elements. Sam its a good approach. Very nice approach. Steve well, i think your boards are beautiful. I think you did a great job. Its just that i disagree with him, and i disagree with her. The furniture aint as beautiful as the boards, personally. I think the banquette is ugly. Lemonis let him go. Steve let me go. The colors, im not that fond of in that. I dont see these colors there. And i think the scale of the chair is too big. Sam but its not about the furniture as much as its about what were trying to create and as an overall brand and image, and then the furniture comes into it, and i can see by looking at this, i like it. I like that its got a little element of a curve, its got the textured bottom and a textured top. Its it catches my eye. I like the way you think. We want to be unique, and a lot of the things you have will meld very well with the elements weve already created from the standpoint of the walls and the signage and things like that. Lemonis you think the franchisees would be pleased with this . Sam i think if we set this up in a store and we put a board together and show them, i think theyd be blown away. Lemonis why dont we just set it up in the first prototype . Lets do it. Thanks, sam, for coming today. Appreciate it. Sam real pleasure, real pleasure. Ana thank you so much. Lemonis great job. Lemonis hello, guys. Steve hey. Ana hey. Good morning. Lemonis how are you . After seeing the presentations that both steve and ana put on for sam for the simple greek, its clear to me that each of them have their strengths and their weaknesses. So i wanted to sit down with them and discuss how were going to handle design Going Forward. You know, ana, initially, when i first came to you, it was a Pretty Simple idea. Invest in pacific, have it be part of grafton, and go on down its merry way. But things, i think, have taken a different turn for me, especially after seeing the simple greek pitch. Ana really opened my eyes. Your presentation was what im always looking for in business leaders. What sam felt and what i felt is that you had one goal in mind, and that was to make that business successful and add value in any way that you could. So, ana, the way id like to be have it structured Going Forward is pacific and grafton will be one company. Youll be in charge of design for that whole business, and steve will be in charge of the manufacturing and the sales side of things and some of the administrative things. Steve i just think youre wrong taking design away from me. Lemonis i think youre a fantastic manager, but i dont think youre a fantastic designer. Steve what do you know about the furniture business . Design and sales go handinhand. How are you going to take away design from me and give it to her, when shes in california and im servicing my clients in miami . Lemonis you are no longer in charge of design anymore. You have to let it all go. Steve no way. Im not letting go. Steve no way. Im not letting go. How are you going to take away design from me and give it to her, when shes in california and im servicing my clients in miami . I think youre deadwrong. Lemonis look, steve, i dont think you really bring to the table what ana brings to the table. Steve ive been doing this for 30 years, marcus. She has no idea what goes on at grafton. She doesnt know how my carpenters work, she doesnt know how our cabinet makers work. No offense, ana. I mean, but lets can we walk before we run here . Ana well, you know, i mean, im not a bully. You know, im always a team player, no matter what, and i always feel like i lemonis do you feel like hes a bully sometimes . Ana maybe a little bit. Like, you know, just kind of like, hmm, is this the true steve, you know . Whats better for you, not better for both of us kind of thing, you know . Steve i i just taken aback. I. If i ever come off as a bully, its not who i want you to think i am. For that, i apologize. So if i come across that way, just say, excuse me . Just stop me, stop me, please. Lemonis you really understand manufacturing. Would you agree . Steve yes. Lemonis what would you say your strong suit is in the business . Steve sales, managing, client relationships. Lemonis and so your talent and your skill has to be shared across the enterprise. Steve okay. Lemonis just like i want her skill and her talent to be shared across the enterprise, as well. You are the leader of the global business. Your job is to make sure that the manufacturing process, the Quality Control, the sales, those things stay intact. I see ana laying over the whole organization to review designs before they go to clients. I do not want a design to leave without her at least getting a look at it. Just like i dont want a sales quote going to a customer without you signing off on it. Steve of course im fearful of letting go of some key aspect of the business. Lemonis yeah. Steve but i guarantee you, marcus, i will give her that that ill let go. Ill let go. Lemonis i want to get the best out of both of you. Ana, so Going Forward, you will be in charge of interior design for every business that i own. Steve wow. Lemonis you will have a hand at being, in my mind, my chief designer. Ana oh, my gosh. Im about to pass out. Steve nice. Ana oh, my gosh. Are you serious . Lemonis very serious. Ana can i like give you a big hug, like. . Lemonis sure. Anas going to be involved with not only the design of the furniture, but of the entire interior space of every business i have, whether thats sweet petes, bentleys, farrells, anything. Because ive been looking for Somebody Just to do this, and she brings something to the table that i just dont have. And youll get to deal with all the people that i get to deal with on a daily basis. We finally finished remodeling pacific, so i wanted to stop by and see how it turned out. Oh, my gosh. This looks totally different. I totally love it. Ana its more of an open space. Lemonis what do you think . Woman i love it. Lemonis its awesome. Woman its so much better. Lemonis the office area has more space and a larger number of workstations, so they can work efficiently and have open communication and feel good about their work environment. And before, when there was an old showroom with furniture just laying around, well, now its a Design Center that can be used by employees and clients. Wait a minute, this is totally different. Ana yes, we knocked the wall that was here, so this will be our new finishing department. Lemonis like a totally different business. In the warehouse, 6,000squarefeet of what used to be disorganized chaos has now been transformed into a framing department, a finishing department, and a brandnew spray booth. We spent over 150,000 transforming this entire facility. Primary purpose was to improve efficiency, creative process, and eliminate mistakes. When we look at the annual business, 2,800,000, the goal was to pick up margin before we even thought about picking up any more revenue. With the new pricing process in place, a new efficiency in place, my expectations is that we pick up at a minimum, 20 points of margin. 20 points of margin across 2,800,000 a year in business is 560,000 in gross profit. Thats one heck of a return on 150,000. Steve hi, ana. Ana hi, steve. Lemonis also, in order to cut down travel and enhance communication, i linked up Pacific Hospitality and grafton furniture with at t collaborate. Ana did you get the files i sent you about the simple greek project . Steve yes, i did. Lemonis ana and steve will be able to make calls, hold conferences, and even share designs with one easytouse platform. And with simple greek franchises set to open all across the country, its imperative that pacific and grafton stay connected and communicate. Ana, i mean, the reason that this business is successful and will be successful is because youre a big driver. Ana you kind of brought this out of me, which i knew was there, but i never really applied it. You like, kicked my butt and woke me up and in a way. Lemonis you should be very proud because she is who she is because of her, but also because of you. Gilbert i dont think that i can live without this. Lemonis yeah, i know. We cant be without you. Ana hes like a different man. Hes not as stressed anymore. And, i mean, he went on a vacation for a whole week. Lemonis im very proud. Ana aw. Thank you so much. Lemonis very proud of you. Ana you have no idea how what this means. Lemonis Pacific Hospitality has been around for 40 years, but with ana and her new structure and assistance from steve, well, i can see pacific growing nicely over the next 40 years. Ana i love you, papa. Jeff my son, taylor. Tonigtaylor taylor. It. Lemonis taylor. How are you . Behind the fatherson team behind the texas tea chain, the only thing brewing is trouble. How much do you owe . Jeff right around a million. Lemonis theyve failed to fully think through the concept. Theres no coffee, theres nothing to eat. Are you guys trying to kill this store . Theyve left their franchisees to fend for themselves. Ryan just struggling to make a living down there. Dawn weve been subsidizing this business for over 18 months. Lemonis and with their relationship steeped in mistrust from the start. Jeff how can i believe anything that comes out of your mouth at this point . Lemonis . Tensions have come to a boil. Taylor i never felt like youre my father