Transcripts For CNBC The Profit 20160207

We did a fullon renovation and launched a new product line. But the owner. Carolyn you almost put my family out of a house. Man i dont care. Lemonis . Still isnt taking her paycheck. But no matter how much you invest or how good your intentions may be, sometimes deals fall apart and partnerships go south. Sal i never did anything to try to break this deal whatsoever. Michael wheres my money . gina ill end you, bro. Michael i havent been paid for three years lemonis tonight, on the profit, a progress report. Michael im closing you down first lemonis my name is Marcus Lemonis, and over the past two years, ive introduced you to 23 Small Businesses across this country. Okay, lets go to work. Most of them struggling. Youve got to trust the process. Some just weeks away from closing their doors. Cut your losses and go home. But all of them looking for answers and help. Woman we certainly need your business expertise. Man absolutely 100 . Lemonis ive made deals with a Candy Company in jacksonville. I didnt really get a good taste. I need another one. A family barbecue south carolina. These ribs are ridiculous. A National Clothing Company Based in new york city. Woman wow. I mean, im blown away. Lemonis . An Ice Cream Company in new jersey. That green teas good. Woman isnt it good . Lemonis . And a used car business in chicago. Whoohoo liquidation. When i get involved, i invest my time and my money. Im 100 in charge. Close to 23 million so far for a stake in those businesses. Im not a consultant, and im not the fairy godmother. My goal save jobs, keep dreams alive, and of course. Scott we got a deal. Lemonis . Make a profit. Im gonna become an owner in this business, and a lot of things are gonna change. Once the shows have been shot and aired, my work is often just beginning. Last year, i made a deal with coopersburg sports, a sports novelty business located in pennsylvania. This is a Family Business run by scott pino along with his son ben and his daughter jackie. Jackie dad scott i cant find the yankee order out here. Lemonis their big seller had always been these novelty bats. At one time, they were in every major league ballpark. Up until just three years ago, they were bringing north of 3 million a year in revenue, and the pinos were a success story. Scott thats the los angeles dodgers, the new york yankees. Lemonis but then, the competition got tough. Scott a major competitor whos really stolen a lot of our business. Lemonis whos the major competitor . Scott Louisville Slugger. Lemonis after years of stability and prosperity, the business went into free fall. How much debt is on the company today . Scott i have about 700,000. My life savings gone. Lemonis when i met the family, their revenue was down 50 . They had racked up almost 700,000 of debt. Coopersburg sports was in real trouble. Jackie how did we not realize that we wouldnt have enough boxes to fulfill the order . Lemonis how many are you short . Jackie about 1,200. Scott our system doesnt manage that. Lemonis what system . The business had some problems that had to be fixed immediately. The warehouse was a disorganized mess. Ben theres not a flow. Without having space to store things, youre just gonna be stepping over stuff. Lemonis and they were gonna have to expand their product line something scotts kids already understood. Jackie you guys want to talk about new products that we want to come up with . Lemonis yeah. Jackie i mean, its the point here that were kind of like. Lemonis yes, please. Jackie . Wanting to get away from the bats . Scott i dont want marcus to take his focus off the bats right now. Lemonis but it was scotts resistance to new ideas that was the companys biggest liability. For you to have this huge delusion that youre gonna beat Louisville Slugger in the long run is just dangerous. Holy [bleep] scott. Scott you know, i started this out of nothing. I just feel like i failed. Lemonis when scott finally accepted that it was time to change, i knew it was time for me to negotiate. So my offer is 630,000 for 30 of the equity, and im gonna want a 3 royalty on every product we sell. Scott we got a deal. Lemonis the first order of business was to find coopersburg a new home. I leased this 20,000 square foot space. Looks good . A place where we would grow and create a proper work flow. Scott its amazing, isnt it . Lemonis and while we began to renovate it, scott was put in charge of forming new partnerships and growing sales. Scott the purpose of our visit today is to show you what we do and what we can do with the existing technology that weve got. Lemonis and the kids were finally allowed to execute their own ideas. Jackie it would basically be our homegate, like, partyware line athome tailgating. Lemonis this is awesome. Jackie thank you. Lemonis it looks really good. Jackie yay, im so excited. Lemonis its been just over seven months since we shook hands on the deal. My initial investment was 635,000, but to date, i have close to 1. 4 dollars. 150,000 went towards paying additional payables, including a 70,000 pastdue Major League Baseball bill. 200,000 went towards building out the warehouse. The balance of the money went towards new inventory. But i hate to say it im already seeing a pattern with scott. Hes come back time and time and time again for more money, which prompted me to bring in dan, a wharton mba graduate, to help the family but more importantly be my eyes and ears on a daily basis. Why dont you guys give me a tour . I want to kind of have you walk me through whats changed. Wow. Look at this place. Scott so whats changed is we tried to organize the bins a little bit where we know whats in each aisle. You can walk down and find a bin label to locate whats on that master list. Lemonis its way better than it used to be. Scott its much more organized. Lemonis i cant believe how good this place looks. The inventory is in the right place. The aisles are labeled. The signs are clear. And thats the way to run a business. Dan was telling me that youre now officially in charge of the warehouse. Ben yeah. Lemonis like, whats different about the process . Ben well, an order comes in. You would pull your Raw Materials from the racks over here. Lemonis okay. Ben . Bring them over to printing right through here. This is why we leave this open. Lemonis so from there to the printing line. Ben yep. Then, once theyre done, theyll get packaged here or barcoded over there. Lemonis uhhuh. Ben and then right to here. And then theyll get routed by someone at the shipping desk. And then, once theyre routed, they go out the door. Lemonis this is a huge improvement over the old warehouse. We used to have to walk to five different rooms just to get one job completed. Now, with the new process, were adding about 75,000 a year in profit 50,000 by eliminating mistakes, knowing where the inventory is, and doing the job right the first time, and 25,000 from not misplacing orders. But whats more important is the change in the process allows the amount of orders they can process to double. Scott ask her how far out she is. Lemonis in the previous year, coopersburg did around 2 million in sales. In their current year, were pacing to do about 3 million in sales. Now, the business is much cleaner than it used to be. We wiped out over 500,000 in debt, and were finally gonna turn a profit. With that kind of growth and potential, i dont mind putting more money in it. How much was this machine, scott . But what im not happy about is surprises. Scott uh, it was about 85,000. This is what it can do, marcus. Lemonis tell me about the cost on this Raw Materials, printing. Right now, its about 80 cents a tile. So this happens to be six tiles right here. Lemonis so its 5. 00 of materials. Scott the man operating has lemonis so how much is that . Dan 12 bucks. Scott and the packaging itself is 2 to 3. Lemonis so now were up to 20. For each mat that we print, the cost of the materials breaks down to 5, 9 for the machine to operate, 3 in labor, and, with the packaging, the cost rises to 22 an item. Now were talking about wholesaling it for 30. Thats only 8 in margin. But scott doesnt have any orders yet. Hes hoping to get some orders. Hell have to generate 263 orders a month just to break even. I want him to have a plan before he spends the money, not come up with a plan after he makes the commitment. Im pissed that you bought the printer. Im not gonna lie. This is a good example of you going out and just making a decision really quick without doing all of the math and all of the research. Lets go in your office and maybe talk about it. So now that we know weve bought a printer that we cant even make money with, i want to find out exactly from scott what he thought we needed more money for. Talk to me about what were doing. Scott were trying to get raw material moving. So, right now, we dont have the material we need because we cannot pay our venders on time to get product in here. Lemonis thats confusing to me, because you havent youve called me for money, and youve gotten it. Dan were behind on the orders, and so what happened is all the sales have gone out. Lemonis cause theres more orders than you thought there was gonna be . Dan theres more orders scott than originally thought. Were outselling the floor. Lemonis which, by the way, is an awesome problem to have. Scott as far as the printer is concerned, we want to print on that printer to react quickly to this collegemarket business, which is 300,000 to 400,000 worth of potential colleges. Lemonis do we have 300,000 of orders . Scott not yet. Lemonis okay, so that thats my issue isnt putting money to chase the business. My issue is putting money in and not knowing what scotts gonna do with it. Scott i know you about want to shoot me right now. Lemonis [ chuckling ] i do kind of want to shoot you. I do, because i feel like it just never ends. You see, when i look at the 85,000, the question is should it go into a new machine for orders that dont exist, or should it go into new inventory, where i know i have a guaranteed return . Scotts not willing to take the time to do the analysis. Thats my issue. I think the concern that i have, scott and, you know, weve talked about this is that our original deal was for me to put 630,000 in the business. Im now well over 1 million bucks. And every time that phone call comes, right, its, we got to get an order out. This is burning down. Thats burning down. But im not sure where the end of the hole is. And so how much money do you think you need right now to kind of clean things up . No b. S. , scott. Scott i dont want to ask you, but i would say 150,000. I dont want to ask you for another nickel. At the point we are right now, i want to work with our vendors, have them partner with us and help us through this crisis. Okay, maybe thats not the right word. I want to have lemonis scott, please. Right, i hear crisis. I hear, holy cow, we got a problem. That freaks me out. You went out and bought a printer and you signed us up for 2,200 a month. What im saying to myself is, ill lend you 150 grand. Pay me 2,200 a month oh, you cant because you bought a printer you didnt need. If you were me, would you stop putting money in this business . How much have you been averaging on saturday . Carolyn we were averaging anywhere from 5,000 to 6,000. Lemonis and what did you last saturday . Carolyn 9,500. Gina do you know the one thing i dont like . Anybody [bleep] with putting food on my table to feed my kids. Michael im closing you down first lemonis what im saying to myself is, ill lend you 150 grand. Pay me 2,200 a month oh, you cant because you bought a printer you didnt need. If you were me, would you stop putting money in this business . Im willing to give you the 150,000, but you got to be out of that machine. I think scott understands his mistake. And were gonna have more mistakes. But scotts a good guy. And i believe in him, and hes a great salesman. Im more willing to put in money and overlook some of his mistakes if i know hes gaining momentum. Scott so, basketball, baseball, hockey. Lemonis whats this . Scott thats the bass pro fish, and this is the car, the nascar. Lemonis oh, this is it . Scott which i wanted to have ready for you, but its not quite ready. Lemonis okay. We know that nascar fans buy nascar products religiously. So this is all the other nascar stuff. Jackie we have our poncho in a ball. This one happens to be in a tire. Lemonis is this how it actually. Jackie yep, inside is a disposable poncho. Lemonis this is a good idea. Were now licensing ponchos and umbrellas, and we sell those at all of the tracks around the country. Take this typical umbrella with nascar. It costs us 8. 00 to make. Well sell for 23 a 15 gross profit. The fee we pay to nascar is a very small percentage of the 23, leaving us with plenty of gross profit. When i first came to coopersburg, they were a baseball company, and that was it. And weve not only expanded the types of product that they have, but weve expanded our licensing. Scott we going to call this the souvenir station, so in the grocery store, you come here. Lemonis so this is new, and this is new . Scott yeah, it will all be the same team. Now the idea is walmart wants to buy a full program that they roll out when it rains with ponchos and umbrellas that bends new margins. Its big. Were working on it right now, jackie and i. Lemonis walmart has placed a huge order for the souvenir station. Its gonna go into thousands of walmarts across the country. The order they just placed was a half a million dollars. That was their first order. This business and this family have come a long way. Five months ago, we were in a very toxic, disorganized building. And today, the conversations really been, we dont have enough help. We have more sales than were 30 orders behind. And so, it feels a little bit like a different Business Today. And so i think you guys honestly should pat yourselves on the back. Business is gonna probably be somewhere around 3 million this year. Last year, they did 2 million. But whats more important is that our margins are closer to 50 about 12 points higher than they were a year ago. Im a lot more confident that were heading in the right direction. Ive invested in all sorts of businesses. And, typically, retail is in my wheelhouse. This will end up becoming our signature product. When i was contacted by a woman in long island who owned four hair salons, i had my doubts. Hair salons arent my thing. But when i met carolyn devito, we clicked. How you doing . Im marcus. Carolyn hi. Im carolyn. Nice to meet you. Lemonis and i decided to stick around and see if i could help her. Carolyn this is tuesday. Its usually a lot busier. Lemonis unique offers everything from haircuts to massages. She even had her own personal hair care line. But i have to tell you, i saw problems the minute i walked through that door. The place looked very rundown. Thats disgusting. With very few customers. At first glance, its not the most inviting space. And she had major inventory problems. You see those hair dyes . At about 20 per bottle, those represented the biggest liability in carolyns business, and no one was tracking it. You dont know what you have in here, do you . Carolyn we reorder based on what comes out of that garbage pail. Lemonis carolyns general manager, well, she wasnt generalmanaging. Woman im here to help you manage, not manage your salon, so dont start with me. Woman 2 shes off saturday, sunday, and monday. Woman 3 our biggest day, shes not even a part of. Lemonis well, what do i need her for . Carolyn inventory systems lemonis all these things that arent happening. Somethings got to change, cause this model doesnt work. Its totally broken. And all these problems were compounded by the fact that she had split with her partner. Carolyn you almost put my family out of a house. Man i dont care. Lemonis and hundreds of thousands of dollars had been squandered. Carolyn [ voice breaking ] im behind on my mortgage, taxes, and things like that. So, i put on a facade, and i put on a happy face every day and wake up as long as my feet hit the floor. Lemonis carolyn was in a very dark place, but i knew she had talent and unbelievable work ethic. And so i knew that i wanted to partner up with her. So, i invested 250,000 for 20 of the salons and 51 of the product line. Congratulations. Carolyn thank you. Thank you. Lemonis the 250,000 was gonna go towards renovating her flagship salon. [ cheering ] lemonis we spend over 150,000 buying new equipment so that the place would look stateoftheart. The place was open about a month after we first shook hands. Carolyn hey, doesnt it look amazing . [ laughter ] amazing lemonis the big opportunity here was the product line. We rebranded it and repackaged it with a new name, erika cole by raquel, a name that represented her three kids. The result was amazing. I feel like we entirely changed the process. Carolyn and i thank you. Lemonis the most important change was firing the general manager and having carolyn step into the role, a role she should have always had. Its been about five months since we renovated, and weve already been named one of the top 20 salons in america by a big industry publication, salon today. Those are the kind of things that make it worth it. Hi, carolyn. Carolyn hi, how are you . Lemonis how are you . Good. Carolyn good to see you. Lemonis the place looks good. Carolyn it looks amazing. Lemonis whats happening . Woman how are you . Lemonis how are you . Woman good lemonis it is so nice to see people excited and smiling. Are you seeing new customers . Debbie yes, we are. Last saturday, we had, i think, eight people walk in the door. Lemonis do you feel like youre more present . Carolyn i feel like im more present. Having a g. M. Kind of, like, separated me from the business. So now i am the g. M. Lemonis and the owner. Carolyn which i was and the owner, which i was before. I just didnt realize it, you know . Lemonis how much had you been averaging on saturday . Carolyn we were averaging anywhere from 5,000 to 6,000. Lemonis and what did you last saturday . Carolyn 9,500. Lemonis last year, the business did about 1 million. But if you look at the last five months, this year, were on pace to do about 1. 4 million. And while thats a nice increase, whats even better is the 14 improvement in margin. That comes from a change in pricing and the elimination of waste by the installation of the color bar. You know what id really like is a free haircut. Carolyn okay. Lemonis everybody at my office says that carolyn is the only one thats not a pain in the ass. [ both laugh ] lemonis i want an honest answer from you carolyn okay. Lemonis okay . Have you been taking your paycheck . Carolyn [ chuckles ] half and half. Lemonis so, im not gonna budge on that. Thats a really big deal to me. Carolyn okay. Lemonis and we made an agreement that you were gonna take your paycheck, so you need to just, please carolyn okay. Lemonis thats my only request. Because if were gonna be partners, i have to know that the one thats doing all the work, which is you, is getting paid. Carolyn okay. Lemonis never in all my years have i ever had to demand that someone take a paycheck. And its not okay with me. But it says a lot about carolyn. Ive done a lot of deals on this show. Youve seen them all. Carolyn mmhmm. Ive enjoyed most of them. But the one that i have with you is different. And its because your work ethic no b. S. , i havent seen it very often. Your dedication to your staff, your commitment to your business i dont think you realize how awesome it is to be partners with somebody that just gives and gives. Most partners i have to be honest, carolyn they just take. You, youre not taking. Youre giving, and i dont want to go on carolyn cause you gave so much already. Lemonis but thats the deal we made. Im with you, okay . Im gonna be with you. Carolyn you make me cry. Lemonis well, what are you crying about . Carolyn no, im happy, cause i never met. [ voice breaking ] anybody like you in my life, actually. [ chuckles ] i really have not. Lemonis carolyn has done an amazing job here, and i am so proud to call her my partner. I have a feeling im not even 20 in charge right now. Carolyn no, youre not. Lemonis [ laughs ] sal where are we at with this job . Fabio itll be done today. Lemonis artistic stitch was once a very successful customembroidery and silkscreening business in queens, new york. At one point, they were bringing in around 2 million of revenue and making a profit for sal loretta and his partner nick. Then, they had a big idea. [ baseball bat cracks ] first, they moved into this new building a 28,000squarefoot warehouse. And then, they began to create new businesses a Sports Complex for kids, an Italian Restaurant. Sal its a multiplex of businesses that really work together. Lemonis thats whats called a mall. It was a huge idea, just not a good one. Sal and nick got away from the business they actually understood. And with the bigger rent. So you actually owe him 120,000 . Their future looked bleak. Sal was the idea guy, and nick was in charge of sales. Nick the biggest tool we use is yellowpages. Com. Lemonis that was a job that did not suit him. You pay him his commission on a monthly basis, right . Nick i just get a salary. Lemonis these guys were barely hanging on. Their core business, embroidery and silk screening. Thats really good. Was still doing 2 million a year. So i made a deal for 660,000 for half the business, and the way we structured the deal was that we would pay down the landlord, we would take care of the other liabilities, so there was a method and a plan. This is a new day. Lets go. Lets go to work. [ applause ] we rebuilt the space to maximize the business for the most revenue silkscreening and embroidery. We also created a new retail space where people could design their own artwork and print their own shirts and hats with a new 27,000 printer i bought them. I also took nick off salary. Im gonna put you on a 100 commission plan. Things were taking off, so we decided to start fresh with a new name in this vibrant location. Queens vibe was coming to life. But throughout the process, there were big clues that sal wasnt being straightforward with me. Wasabi japanese steakhouse 230 . Now im paying for your meals . Sal all right, you know what, guys, come on. Lemonis you told me that this was for construction. You lied to me. Sal i lied to you . Lemonis yeah. I mean, the numbers arent adding up here. And later, i met with sals landlord and heard they were behind in rent several years behind. But whats really bad they didnt even have permission to be open. Michael why cant he get his c of o . Lemonis he doesnt have his certificate of occupancy here . Michael no, not to my knowledge, no. Lemonis how is he operating . Michael hes operating. Now, i got a criminalcourt violation. My name is on it. Lemonis your landlord could go to jail. Do you understand that . Sal i understand what youre saying. Lemonis i tried to get through to sal and keep his business on the road to success. We got a bright future. Sal im excited. Lemonis lets go, come on. But the minute the cameras left, sal and nick started drawing a salary that was never negotiated or approved, and they didnt use any of the money that i invested to bring the landlords pastdue rent current, so i cut ties. Lemonis do i feel like i got hustled . Yeah. Id be happy to never look back again, but i had already invested over 300,000 of my original investment to go towards vendors, pastdue payables, the landlord. Sal and nick are gonna have to pay taxes on the money, and theyre gonna get a 1099. Now, me losing my money is one thing, but the irs, thats a whole nother story. Unreal. Were in queens at artistic stitch, which used to be queens vibe, which is now artistic stitch again. When i went back into the building, the Basketball Court was back in operation and the signage for the Italian Restaurant went back up. Its clear to me that sal has washed his hands of me. When i gave him his tax paperwork, ill do the same. Fabio. Fabio what brings you in today . Lemonis i just came to bring sal his 1099. Fabio all right. Lemonis is he busy in his office upstairs . Fabio hes not here yet. Lemonis no . Fabio hell be here later on. Lemonis yeah . Fabio yeah. Lemonis can i call sal and just let him know i just came to bring his tax bill for him . Fabio all right. [ telephone rings ] woman your call has been forwarded. Lemonis oh, what a surprise. Woman to an automated voicemessaging system. Lemonis ill just wait for him. Ill just hang out. Fabio very well. Lemonis wheres my printer at . Lemonis they sold it . Who did he sell that to . Fabio honestly, i do not im dead serious. Lemonis you literally just saw somebody come and pick it up . Fabio yeah. Lemonis look, i knew things were not on the up and up with sal. But selling a 27,000 printer that doesnt even belong to him . Thats a new low. Do you know where my printer is . Giovanna no. Lemonis you didnt get a check for it . Giovanna no. Lemonis so, you didnt get a check, so sal must have kept the money when he sold everything. Giovanna you know, im really just not comfortable saying anything right now. Lemonis yeah, and youre in charge of accounting . Giovanna yeah. Lemonis and so you know that we were wiring money, and you know what was happening with the payroll you know all of that. Giovanna yeah, its gotten so bad that i might not work anymore. Its very difficult right now. Lemonis yeah. Hows the landlord . Giovanna oh, i havent seen him in a while, actually. He hasnt been lemonis hes been quiet . Giovanna yeah. Lemonis thats never a good thing. All right, well, ill just wait for sal. [ telephone rings ] woman your call has been forwarded [ receiver clicks ] gina we were all excited for it. Every day, like five, six emails and orders and orders, repeats. And then, i knew something happened cause one day went by nothing happened. Lemonis this is a house of cards. Lemonis i know. Gina the one thing i dont like, marcus and this is not towards you. The one thing i dont like excuse my language anybody [bleep] with putting food on my table to feed my kids. Anybody anybody. Therell be a problem. Lemonis i know. You know i get the family thing. Thats why i was here from the beginning. I know things arent good. But i feel bad that these workers are gonna get hurt because of sals bad decisions. And i have a terrible feeling that things are only gonna get worse. Five days after my first visit, i got a call from sals landlord, michael. He informed me that he hadnt been given any of the money that i invested specifically to pay him and he was ready to start eviction. I met with him outside in an effort to calm him down. There were still over a dozen employees there, and i didnt want the thing to totally implode. Michael youre caught with your pants down. Gina leave him alone he cant pay anything. He cant even defend himself. Michael there is no defense. Dont defend guilty people gina im defending him sal gina, gina michael where is my money . where is my money . where is my money . [ all shouting indistinctly ] woman shut up, already xo lemonis when i went there with michael, the landlord, i knew he was upset. I knew he hadnt gotten paid his rent, i knew that he was about to start the eviction process. And i care about a lot of the people that work there. And so i wanted to make sure that all hell didnt break loose. We look familiar to you . Sal yes. Michael i would like some clarification, because i have been talking to you at length, and im just trying to get paid. Lemonis ive tried to help you. Michaels tried to help you. And you just struggle with people straight with people. Sal i never, ever did anything anything at all to go ahead and try to break this deal whatsoever. Lemonis did you take money out of the business that you werent supposed to . Sal to pay some of my expenses that i had. Lemonis personal expenses . Sal yeah. Lemonis you never got my permission to do that. Sal i understand that. Lemonis money was going into the business, and he still wasnt paid. That was our biggest Sticking Point that our landlord get paid. Then, i come to pick up the printer after our deal falls apart, and they tell me that its sold. Michael youre caught with your pants down. Gina leave him alone he cant pay anything. He cant even defend himself. Michael there is no defense. Dont defend guilty people. Gina im defending him sal gina, gina michael where is my money . where is my money . where is my money . [ indistinct shouting ] woman shut up, already shut up, already gina get out of my [bleep] face lemonis Michael Michael gina im the wrong [bleep] one. Im the wrong one. Im the wrong [bleep] one. It takes one phone call. Sal gina. Gina. Gina . And ill end you, bro. Sal gina, please. Gina [ shouting indistinctly ] michael you have no respect. Gina sit the [bleep] down. Michael no respect. Gina not when you get in my face and try to talk to me like that fabio do me a favor, babe, please . Just calm down. I know. Just calm down. Lemonis gina is going bananas because shes scared that shes gonna lose her job. This is how she provides for her family. What i was worried about is this thing was gonna get totally out of hand. Woman 2 hes the one starting the problem him. Sal honestly michael i havent been paid for three years, and im no good . Ive let it slide for three freakin years lemonis okay, okay. Gina, please dont go out there. Michael im closing you down first, because i got to get paid sal gina. Gina. Michael thats the facts all right . lemonis you know, as im watching this go down, im pissed off at sal. Im angry. This is the hole that sal dug not only for him but for everyone around him. The fear, the anger, the disappointment, everything is erupting right now. Sal [ sighs ] lemonis and sal knows he did it. You had to follow the plan. And when you got into a bad spot, you made a decision that you just shouldnt have made. Sal and i agree with you. I made a mistake there. You know, i should have contacted you and said, hey, Marcus Lemonis im gonna take money out of the company for myself. Sal yeah, i agree. I agree. Lemonis i know deep down youre not a terrible guy, but i think your thought process is just off. You can see what not telling the truth look at what happens. It gets crazy. Sal i dont know how much more sincere i can be as far as apologizing to you for what happened here. I never wanted it to go that route, honestly. Okay, again, i apologize. Lemonis yeah. I wish you luck, sal. Sal thank you. Thank you, marcus. Lemonis i wish you luck. Fabio thank you. Lemonis i do wish the best for sal and his whole team going forward, but, unfortunately, its not gonna be with me. Lemonis my offer is 660,000. 200,000. 300,000. Look, in all my deals, i hope to have a perfect relationship with all my partners. Do we have a deal . Woman lets do it. Lemonis okay. But its equally as important for me to build a relationship with the people that work there. The Management Team will own 25 of the business. Theyre the backbone of the business. And thats what brought me to the Key West Key Lime Pie Company and the fact that i like sweets. Jim brush and Allison Sloat were partners in life and in the pie company. Their pie won a ton of awards, but the business lost money. And they were several hundred thousand dollars in debt. Theres a lot of places to get key lime pie in key west. What are the ingredients . Jim it comes in onegallon pails. Its already reconstituted. Lemonis their pie was good, but there was nothing that special about it. Jim and we put a whipped topping on it. Lemonis and what is that made of . Jim that is a powdered product. Lemonis and it definitely was not homemade. You guys dont make your own crust . Woman no, we dont. Lemonis and they had also opened up a second store that was bleeding money. How much business will this store do . Jim this store is probably losing about 20,000, 25,000. Lemonis but the biggest problem might have been jim himself. He was definitely resistant to change. Jim youre telling me youre closing the store . Lemonis thats right. Jim okay, thats enough. Youre out of here. Youre gone. Lemonis and, honestly, he seemed to have anger issues. [ clatter ] tammy you want me to order it even though there may or may not be enough money to pay for it. Jim im tired of this bull[bleep] lemonis stuck in the middle of this mess was tammy. Tammy every week, its a fight, which is just ridiculous. Lemonis and what else are you managing . Tammy staffing, any humanresources issues, any customer complaints, scheduling. Lemonis employee issues . Tammy special events. Lemonis the only thing that jim and i actually agreed on was tammys value. Jim shes a great employee. She does everything that needs to get done. And she works two and a half days a week at her other job. Lemonis she was working 40 hours a week and making 300. She was the heart and soul of this place. Jim i wish i could pay her more money, but i cant afford it right now. Lemonis jim and allison werent even able to pay themselves. Whens the last time you took a paycheck . Allison seven months ago. Lemonis okay. The business was on its last leg. If they dont turn this business around soon, there wont be any business. Jim damn it, im tired of this. Lemonis look, this place had potential, but if we could turn it into a real pie store, a destination, not a cluttered minimart, with pies that are homemade with proprietary ingredients in great flavors and a great atmosphere, then this place would be great. And if jim and allison could agree, then wed have a deal. I will put up to 450,000 to satisfy the payables as needed. I will have 51 . You will have 49 . Jim no, thats not gonna happen. Lemonis what if we make, for a wage, 1. 00 for every pie that we sell . Do we have a deal . Jim we have a deal. Lemonis and with the deal done, i made my first and most important move. I have to tell you we need you here. And this is more important than any pie well ever make, but im gonna need your help. Youre gonna be our leader here, okay . Tammy okay. Lemonis but in order for you to be able to have a good peace of mind, im gonna give you six months worth of pay, and im gonna pay you 1,000 a week so you dont have to bartend. Tammy [ laughs ] lemonis okay . Tammy [ sniffles ] thank you. Lemonis the reason that i did the deal is because i knew that if i had somebody like tammy that the chances of it succeeding were significantly greater. If we dont make it, we dont sell it. Everythings 1 come on in we made room for our 200,000 overhaul. Im gonna want to have reclaimed wood everywhere. Jim i like that. Lemonis the kitchen got new appliances and new equipment, and we added a new dessert and beverage bar all to enhance the customer experience. We went to work creating a new recipe with fresh ingredients and a homemade crust. Its good. With tammy in charge, the business skyrocketed over 18 . But, more importantly, it went from losing 100,000 a year to making money. Woman i would like a piece of key lime pie. Do you want one, too . Woman 2 yes, please. Woman 3 this is great pie. Man best key lime pie ever. Lemonis hows this feel to you . Tammy its awesome. Having one job and being able to spend more time with my children, its unbelievable. [ voice breaking ] i cant. [ laughs ] lemonis its been over a year since i made my investment, and, unfortunately, my investment has had to double to over 700,000. The additional monies that i had to put in took care of bills that i didnt know about. They took care of irs payments that were more than i thought they were going to be. And it took care of other small issues to get the store to exactly where i wanted it to be. Whats happening, tammy . Tammy marcus. Lemonis how are you . Tammy good. Lemonis the place looks great. Tammy thank you. Lemonis how are you . Shelisa im good. Lemonis how long have you been here . Shelisa for two months now. Lemonis and is she mean . Shelisa no, shes very nice. I like my job. Lemonis you like your job . Good. And whats your favorite piece of pie . Shelisa the mango. Lemonis the mango pie . We have mango pie now . Tammy we have mango pie. Lemonis very cool. Tammy took another step in moving us in the right direction, like selling pie in a cup. Do people like this . Tammy they do. They like to see it. Lemonis what are we selling this for . Tammy 5. 95. Lemonis what does it cost . Tammy 1. 09. Lemonis so, good margin. Tammy yeah. Lemonis are you selling a lot of these . Tammy we are. Lemonis when i first arrived in key west, they were doing about 1 million a year of business, but they were losing about 100,000 a year. Today, its gonna do about 1. 2 million. Thats a 20 increase. But whats more important is that the margins went from 15 to 35 . And so that 100,000 loss is now looking more like about 100,000 profit at the end of the year. Whats happening with jim and allison . Have you heard from them . Tammy ah. Lemonis whats happening with jim and allison . Have you heard from them . Tammy yeah. Lemonis jim and allison are no longer involved in the day to day operations. When i did the deal, i put tammy in charge, and the problem was that jim kept getting involved and kind of undermining tammy and really creating conflict with the employees. And so the best thing to do was for me to buy them out. So all of the debt got wiped out and they got a check for some cash that they can put in their pocket. And furthermore, the royalty, the 1. 00 per pie and 15 cents a pie slice is turning out to be very lucrative for them. What happened . Tammy we had a falling out. Lemonis you and jim did . Tammy so yeah. He wanted to continue saying what we were still doing wrong. I mean, its jim. Hes not gonna change. Lemonis i think jim would still like to be a part of the business, but hes not a bad guy. Hes just not the greatest employer in the world. How many new flavors do you have now . Tammy blueberry, mango, and blood orange. Lemonis have you gone out and done any sampling . Tammy not yet. Just be careful. Lemonis tammy knew that, in key west, there was lots of key lime pie places. But not everybody likes key lime pie. And so she wanted to come up with some other tropical flavors that would allow us to sell to more people. Come on down for some pie free samples blueberry, blood orange come on down for some free pie would you like to try a sample . Woman blood orange, please. Lemonis blood orange . Woman thank you. Lemonis you want to give that to her first, cause shes betterlooking . All blood orange puree, all natural. Woman wow. Lemonis blood orange pie. Man youre saying this is better than key lime . Lemonis lets see what you think of this. Man id buy it. Lemonis you like it . Man id buy it. Lemonis its good, right . Man fantastic. Lemonis what would you do differently . Tammy you can buy it. Man make it bigger. Lemonis make them bigger. Woman mmm. Woman 2 yummy buy it. Lemonis made the same way as a key lime pie, except no key lime juice. Were using a blood orange puree or fresh blueberries. Woman its really good. Man oh, thats good. I like it. Lemonis you taste the fresh blueberries . Man oh, yeah. Lemonis the feedback on the product, its amazing. And its great for many reasons. It gives us the ability to attract new customers, and probably, more importantly, were gonna make more money. What do you think of that . Woman its pretty damn good. Lemonis pretty damn good. Woman pretty damn good. Lemonis id watch your language around here. Theres kids. Woman [ laughs ] lemonis this place is always packed. Tammy mmhmm. Its a good thing we sell our pie bars here. Lemonis good thing. Tammy [ laughs ] i wanted to take tammy back to hogfish bar, the place she used to bartend at. I thought it would be a Perfect Place to talk to her about something really important. But every comment i get from every customer, whether its on yelp or whether its on twitter or facebook or whatever, is always, i went to the pie shop. I met tammy. The place is awesome. And so, i think, for me, my confidence in the Business Today is really all because of you. Tammy i mean, its its amazing. Lemonis and i say this from the bottom of my heart. I could not have done this without you, and you have made a really bad situation initially turn out to be absolute gold. But i dont want to feel like we have an employer employee relationship. And so i really want you to wake up in the morning and feel like youre going to business. I want you to have 25 of the business with me. Im here to help you, but its not my business. Tammy and its crazy. Its crazy. Lemonis why is it crazy . Tammy i dont have a bachelors on the wall, and im you see me as the owner. Like, its just that amount of confidence is its what drives us to get bigger and better. Lemonis look, if youre gonna have a successful business, you have to have people on the team that actually love the business and care about it as much as you do. So i just wanted you to know how proud i am and grateful. Tammy thank you. Lemonis im more grateful than i am anything to you. Tammy well, im grateful. [ laughs ] lemonis no, im more grateful. [ both laugh ] cheers. Lemonis cheers. [ glasses clink ] tammy you want to invest in a dive company . Lemonis are you kidding . Tammy [ laughs ] tonight, on the profit, Key West Key Lime Pie Company, a pie Company Nationally recognized for their awardwinning desserts, run by a temperamental owner. Who micromanages his selfless employees. I call bull[bleep] to that. Is there anybody that does anything competent down in the florida keys . With resources stretched thin at multiple locations. You want me to order it even though there may or may not be enough money to pay for it . Dont worry about that. U. S. Key lime pie company has failed to make a profit on 1. 4 million in sales. If i cant get this owner to focus on his core business of pies. If we dont make, we dont sell itend of discussion. This business will crumble. I really dont want to filmed during this. I really dont. My name is Marcus Lemonis, and i fix failing businesses