Transcripts For CNBC The Profit 20160828

Its like a train wreck. If i cant restore some leadership in this legendary brand. Mike youve really got the wrong picture of this whole thing. Lemonis no, no, no. I got the very clear picture. Its going to melt down this time for good. Get this right, or its gonna die. My name is marcus lemonis, and i risk my own money to save struggling businesses. Were not gonna wake up every morning wondering if we have a job. Were gonna wake up every morning wondering how many jobs we have to do. Its not always pretty. Everythings gonna change. Everything. But i do it to save jobs, and i do it to make money. This. Lets go to work. Is the profit. Together we, for farrells, give you a cheer wed like to wish you a happy birthday lemonis in 2009, mike fleming and paul kramer brought back farrells ice cream parlour. Shauna hi welcome to farrells. How are you doing today . Lemonis . An iconic familyrestaurant brand known for its americana theme, its mini candy stores, and, of course, its oversized sundaes. Man huge. Man 2 hoo lemonis founded by bob farrell in 1963, the company, at one point, had as many as 130 locations. In the 80s, bob retired, and the chain was sold to a group of investors. But they mismanaged the stores, lost the magic, and soon after, every last one of them was gone. Eager to open up a familyoriented business, mike enlisted paul to help him restore farrells to its glory days. They even put a new spin on the restaurants famous birthday song. Together clap your hands clap, clap your hands clap lemonis but they moved way too fast, opening up seven restaurants in just a few short years, some of them never generating a profit. And thanks to high rent, more than a Million Dollars of debt, and a slew of operational blunders, one location is already gone, with the rest in deep trouble. Mike where are we gonna get that extra money . Theres no money in here. Lemonis if i cant help them stabilize their stores, this great comeback story will come to an end any day now. Shauna i mean, we need help. Theres no doubt. Lemonis im meeting the owners at the buena park restaurant, which apparently is one of their better locations. Ive got to say im excited to get started. Any time you can bring people together, families together, and have fun, thats a business worth investing in. Woman good morning. Lemonis hi. This place is awesome. This is really cool. Mike marcus. Mike fleming. Lemonis nice to meet you. Mike oh, my gosh. And welcome to farrells ice cream parlour. Are you celebrating anything today . Lemonis im celebrating life. [ siren wails, bell dings ] [ horns honking ] woman whoo together it goes 1, 2, a 1, 2, 3. Happy birthday woman happy birthday. Lemonis wow. Out of nowhere, this big drum comes, and people are screaming, happy birthday i mean, it was crazy. Woman happy birthday lemonis how does everybody feel about the awesome birthday songs . Woman it was just too loud. We couldnt have a conversation. Lemonis too much . Woman yeah. Lemonis im all for having fun and singing happy birthday and celebrating things, but theres a point where its not an enjoyable Dining Experience anymore. Man well, this would be our menu. Lemonis okay. Mike the theme is a turnofthecentury theme. Lemonis how many different items are on this menu . Mike theres over 100. Lemonis theres a lot on here. So, youve had a ton of restaurant experience . Mike i had very little restaurant experience. Lemonis why did you start this business . Mike its hard to describe. Farrells is a place where lifetime memories are made. Lifetime. Its all about family. Ive got my daughter working for me. Lemonis okay. Id love to meet her. Mike let me see. Shauna. Want you to meet marcus lemonis. Lemonis hi. How are you . Im marcus. Shauna im shauna. Nice to meet you. Lemonis nice to meet you. Father daughter working together . Shauna yeah, yeah. Its fun. Lemonis and have you been in the business a while . Shauna i have. I started right out of college. So, im the director of marketing now. Lemonis youre the person that gets everybody in the front door. Shauna yes, thats my goal. Lemonis whats it like working with your dad . Shauna i love working with him. I mean, my dad has always said that he started all of his businesses because he wanted to be able to pass something down to his kids, and, of course, i want to make him proud. Mike shes a huge inspiration for me and a motivation for me. Lemonis you can feel the affection between you guys. Shauna yeah. Mike oh, yeah. Id like to have you meet my business partner, paul kramer. Lemonis okay. Mike want you to meet marcus lemonis. Lemonis how are you . Im marcus. Nice to meet you. Paul thank you for joining us here. Lemonis absolutely. How do you share roles and responsibilities . Paul operations for me. I have restaurant background. Lemonis what are the numbers here . Paul were doing 4 million. I can go back and mike no, we werent that high. Paul dont think so . Mike nope. Paul we did, yeah. Lemonis so the numbers arent Crystal Clear . Paul yes. Mike yeah. Lemonis i dont know what just happened. Paul answers my question, and then mike says hes wrong. And quite frankly, they both look totally lost. How many stores exist today . Mike theres five stores. Bob farrell started the company back in 1963. When we started the company, he came up to the opening. He goes, guys, you did it. This is farrells. Lemonis oh, thats awesome. Paul my uncle would take me to farrells growing up. And farrells is part of families. It was part of mine, and its part of millions as they grow up. Lemonis lot of childhood memories. Mike when we closed Mission Viejo earlier this year, it was one of the worst days of my life. Bob had passed away at the time. [ voice breaking ] he was. He would not have been happy. cause he never bob never had a store close. Lemonis so, what happened in Mission Viejo . Mike a bunch of things happened. First of all, our rent was high. Then there was another very popular restaurant across from us. Ultimately, we werent able to pay rent. The other problem we had, we had operational issues. We were running high in food. Lemonis whose responsibility is that . Mike paul has handled all of that. Paul [ chuckling ] yeah. Lemonis okay. Normally when you meet somebody that has business partners, they dont start ratting people out this quickly. I thought it was a little peculiar that, right out of the rip, he tells me, well, we had this one location, and it didnt do well. Oh, by the way, it was that guys fault. And mikes supposed to be the c. E. O. What kind of c. E. O. Does that to his people . Paul so, youve seen our fountain . Lemonis i have not. This is really what you guys are known for, right . These giant icecream sundaes . Paul it is. Lemonis so, who came up with the recipes for the ice cream . Mike well, bob farrell actually gave us recipes, but we dont make our own ice cream on premises. We have a third party. That is thrifty. Lemonis and so you give them your recipes, and they make them . Mike no. We use their particular brand. We didnt have the money to be able to do the bob farrell recipes. Lemonis you got to be kidding me. This isnt just some ordinary icecream parlor. This is an iconic brand thats been around since 1963, and theyre using an ice cream that i could buy at a local drugstore . If youre known for ice cream, you should at least have something thats special, and special to only you. So, can you give me a little tour of the candy store . Shauna sure. Sandy, this is marcus. Sandy hi. Lemonis hi, sandy. Im marcus. Sandy its a pleasure to meet you. Shauna sandys in charge of all of our candy and merchandise. Lemonis and so your fulltime job is the candy store . Sandy no. H. R. , payroll duties. This is last on my list. Lemonis yeah. Sandy yeah. Lemonis ive never seen a candy store or any Retail Business that has its h. R. Director running the merchandise. I guess i shouldnt be that surprised. If they dont see the importance of having their ice cream be special, why would the candy be any different . Its a nice attempt at a theme, but im not really sure that the themes clear to me. When you walk in the front door, it looks like they went to the local Convenience Store and just said, give me some lollipops and some sweet tarts. Its not nostalgic. Theres nothing really curated. And whats this all this bacon . Why do you have bacon cotton candy . Sandy people like bacon right now. Same thing with the bacon soda. Lemonis i mean, i know the craze with bacon, but how does it connect to farrells . Shauna it doesnt. There is no bacon connection. Lemonis yeah. Shauna and i think that there are a lot of things that could probably go away. Sandy well, i love the product. Shauna the barrels used to be filled with oldtime candy, and thats what people really remembered. Lemonis penny candy. Shauna yes, yes. The createyourown in this day and age is huge. So i would definitely put the barrels back. Lemonis thats clever. I like that idea. The candy store, thats marketing to me, because its the first thing you see when you come into the store. You want people to be wowed by this. You want it to be special, something memorable, not to mention that candy, typically, has amazing margins. So, do you know how much the store did in total sales last month . Sandy 2,000 in candy and about 4,000 in merchandise. Something like that. Lemonis so 6,000 total . Candy sales seem terrible for what it should be. And theres a history of farrells being in the candy business. Wasnt an accident that bob farrell was successful. Nice meeting you, by the way. Sandy it was nice to meet you. Lemonis and these people screwed it up. Have you ever asked sandy, like, why this isnt right . Shauna no, i havent asked her. The frustrating part is, i feel like my a lot of either ideas or thoughts are kind of squelched. Lemonis even though youre the marketing person . Shauna yes. So, sometimes i feel like im still viewed as the boss daughter. Lemonis its common for the employees to be skeptical of the boss son or daughter, because they believe that theyre gonna get preferential treatment. But the only person that ive noticed that has any attention to detail is shauna. Buena park has a ton of problems, and its supposed to be one of their better locations, so ive asked mike to actually show me what he considers his worst location, and im a heck of a lot less excited now. Im marcus. How are you . Travis good. Pleasure to meet you. Lemonis nice to meet you. Youre the manager here . Travis this is one of my stores. So, im the regional director for the company. Lemonis how much revenue do you do . Travis well, last year, this location did 2. 4 million and lost 92,000. Lemonis why is that . Travis the floor plans not ideal, and, uh. In a little bit of a rougher area. A lot of it had to do with the management that we had in prior to me taking over this location. Lemonis and how long have you been here . Travis about three months. Lemonis take me back to the kitchen. Travis yeah, absolutely. Lemonis lets walk back there. Travis we need to replace a lot of equipment. We have a meat drawer underneath our charbroiler. Thats gone out. Every month, we have somebody come out thats repairing it. Our reachin coolers, i can repair this piece of equipment, or i can purchase plates and silverware. I was in a truly amazing job. I worked for hilton. And farrells came back. Got the job, cost me about half of my salary. Lemonis you took a pay cut . Travis yeah. Lemonis big pay cut. Travis big pay cut. Lemonis travis really believes in what farrells is doing, and hes got a good grasp on whats wrong and what needs to be fixed. I really was impressed with him. Lets go see what this food looks like. If you look at the presentation. Travis its boring. Lemonis i mean, this plate is too small for this setup. Travis to me, were just not competitive. Its loud. Lemonis too loud. [ siren wails ] travis and, you know, its its hard to compete. Lemonis its cute once, and its happening every five minutes. Travis yeah. Lemonis do people complain about it . Travis they just dont come back. Lemonis somebody needs to tell these team members that are singing that its not a tryout for a musical. If i make a deal here, the volume of the musics going down. You know what i thought we could do if all of us, including paul and sandy, can go in the other room. Mike sure. Lemonis . And just go over financials. Mike absolutely. Woman e. J. , party of three e. J. lemonis lets look at the revenue. Paul lets go to the sales tab. Lemonis 17 million of sales across the company. Mike right. Lemonis buena park 359,000 in profit. Brea made 200,000. Riverside made 70,000. Rancho cucamonga lost 92,000. Sacramento lost 300,000. Five locations of which three of them make money. Where is the cash to fund the loss coming from . Shauna buena park. Lemonis where else . Paul brea. Shauna riverside. Lemonis every location that makes money. Mike yeah. Were trying to keep it afloat. Paul yeah. Lemonis i want to summarize the debt, as i understand it. Its made up of bank loans, legal bills, the buildout loan for this place, taxes, and payables. You said that you man ah, farrells crowd, look this way cause i got something very important to say lemonis so, the total amount of debt. [ drums beating ] you want to hear something funny . Thats the reason people dont come back here. Shauna i know it is. Lemonis its actually annoying. It can be done in a more elegant way. I dont want to come here and enjoy a meal if its not my birthday, cause i dont want to listen to that nine times. 1,940,000 is the total debt for this entire company, and you have no cash. I mean, its just its like a train wreck. Paul yeah. Lemonis out of their five locations, three are making money, generating profits of just over 600,000 last year. But when you look at the two remaining locations, their losses take that profit down to just about 250,000. And then you factor in servicing debt of almost 2 million, its obvious to me why this thing is in the red. They cant make improvements, they cant make repairs, and their tabs with their food vendors are piling high. As far as im concerned, you might as well just turn the lights out after you do that math. Shauna i think we grew way too fast. By the time we realized where we were at, it was too late. Paul its been stressful the last eight months. Its its been its been rough. Lemonis we need to get this right, or its gonna die tomorrow. So what i want to do is take these numbers and think about them, okay . Ill see you guys soon. Paul okay. Lemonis what mike and paul have built really wasnt the farrells of yesteryear. Theyve come up with some poor imitation of it. The customer experience, the ice cream, the candy store those are just not here. I believe in the original concept, but i dont know if i believe in them. The scary thing for me as i sit here right now is, i dont really know what im walking into. What i see is a kitchen thats got Kitchen Equipment thats missing. I feel like im being asked to partner with people that dont know their numbers. It scares me. I mean, i hope you can appreciate that. How much ice cream do you buy a year . Mike are you gonna add it up . Paul yeah. Mike okay. cause i got the sheet. Lemonis the place is called farrells ice cream parlour. You should probably know how much ice cream you sell. Mike paul was handling the number stuff. Trust, but verify is what Ronald Reagan said. I trusted, but i didnt verify, and its pulling this damn company down. Lemonis in order to be a leader, you dont blame people. You solve problems. Take some ownership of your issues. When i think about making an investment, i think about investing in hard assets. Mike mmhmm. Lemonis in this case, theres no cash flow, theres no real assets, and so the only thing thats really left is, what is the farrells brand worth . Mike okay. Lemonis so i have interest in investing in two things the trademark and the locations themselves so i can invest in the people. And if i make an investment in these locations, there is no money going sideways. They stand on their own, and they either make it, or they dont. So, my offer is 750,000. But i want 51 . If your business is in trouble and you need my help, log on to. Lemonis my offer is 750,000. But i want 51 . That money would go into the stores to bring the payables current, to get the equipment fixed. The most profitable location is buena park. So buena park is gonna be a prototypical concept that were gonna come up with a model. Were gonna set a standard for the store. Were gonna set a standard for the ice cream. Were gonna set a standard for the menu. Mike golly. Lemonis so, do we have a deal . Mike yeah. We have a deal. Lemonis great. Mike we have a deal, marcus. Wow. Lemonis ill see you guys tomorrow. Mike thank you so much. Lemonis yep. Were gonna head outside, okay . All the store managers and the people from the office. I wanted to meet with all the employees at another location so more people can hear about the deal that i made and find out what the direction of the Company Going forward is. So, yesterday, paul and mike and i made a deal for me to invest 750,000 into farrells. Going forward, these locations either win on their own or they die on their own. Were gonna dig in to the presentation, to pay the payables, to make sure that the equipment you have in your store actually functions. Travis we appreciate you having the belief in us. Kim if it wasnt for you doing this, none of us would be here in six months. Lemonis i got your back. Okay . Everybody excited . Together yes lemonis lets go inside and get to work. Paul all right. Lemonis all right, 1, 2, 3. Together farrells lemonis all right. [ screaming ] [ growls ] hi, guys. Travis hi. Lemonis how are you . Sandy hi. Lemonis whats happening . Travis good, marcus. Nice seeing you. Lemonis for me, farrells needs to be more than just a restaurant. It needs to be an overall experience, and in order for them to learn that and see that, im gonna take them to Universal Studios hollywood, a place that really understands the guest experience. Were gonna head down to one of the coolest places here mels diner. Travis awesome. Lemonis how are you . Im marcus. Eric chef eric. I oversee the entire food operation. Lemonis for the whole park . Eric for the entire park. Lemonis so, one of the reasons that i wanted to bring this team here is, ive invested in a Company Called farrells. Eric as a kid, i remember going there for ice cream and burgers and fries, and i remember it well. Lemonis at a sitdown place like farrells, how many menu items would you recommend, max . Eric i would have no more than 20. You know, its great to have 50 items, but is it better to have 20 that you do flawlessly . Lemonis part of the reason were here today is presentation. Would you be able to maybe give us some inspiration . Eric for sure. All right, guys. This is one of our signature items that we often have for our guests. And the key to this whole thing is the plate. The thing with a rim, it gives you a border, gives you, like, a target to aim for. Travis absolutely. Our portions take up the whole plate, as you saw overlap most of our plates. Eric and i say, if we make the portions too big, people can only consume so much. Lemonis thank you very much, chef. Paul thank you, chef. Travis we learned a lot. Lemonis why dont we go to the candy store . Sandy okay. Lemonis because when you come into our store, thats the first thing you see. Travis it reminds you of the oldschool farrells. When you walked in, it was just multiple rows of color. Lemonis and what youd be able to do is have whats called a cyo, right . Its a createyourown container, branded farrells, that they could fill up. Mike that would be great for birthday parties as an option where the kids can come into the candy store. Lemonis and get a cyo container. Mike right. And thats their goody bag. Sandy you know, this is great idea, but for our stores, it just means mess on the floor with the kids spilling it. Weve got issues of opening them at the table. Lemonis so you dont like this idea for your store . Sandy for our store, no. Lemonis respectfully, i dont agree. Sandy travis, operationally, do we have staff to be able to keep up with that on the floor, what thats gonna look like on a friday, saturday, and sunday . Travis to me, it works. Lemonis so you like that. Travis i do like it, yeah. Lemonis and youre worried about . Sandy the mess. Lemonis i have no idea why sandy was assigned to be in charge of the candy store. Shes shes not good at it. I want their store to look exactly like it looks here fun and colorful and stocked. Or is it just a restaurant that sells candy . Paul no, it needs to be an experience. Lemonis it was great to see the candy store at universal. We learned a lot. But what i really wanted to do is customize what our current customers want, so i arranged for a focus group back at the brea location. How does the candy store, just the general merchandise, feel to you . Woman it holds no interest to me. Woman 2 yeah. Lemonis no interest . Woman 3 so small and so cramped, its almost like you want to get out. Lemonis whats missing . Woman 4 chocolate. Lemonis okay. What else . Woman 2 like, where you can get, like, a little bag of candy and do penny candy. Lemonis penny bags, penny candy, okay. Woman 2 like, these arent special. I mean, you can get these candies anywhere. Lemonis shaunas in charge of marketing for the company. Shauna hi nice to meet you. Lemonis and what do you think about the candy here . Shauna i think we need a lot more of that oldfashioned candy. We used to have a lot of the barrels lining. Sandy um, were trying to get away from this 10cent candy, but thats. Shauna well, i think its about wanting to share something with your child that you had as a kid. Woman 2 yeah. Lemonis shaunas coming up with creative ways to make the business better and really seeing the candy store as visual marketing for the customers. Sandys thing i like the way my candy store exists. And i got a news flash for you, sandy its not working. I thought maybe the three of us could talk outside. Shauna sure. Sandy sure. Lemonis after seeing the tension between the two of them in the candy store, i thought it would be a good idea to go outside away from everybody and have a good conversation between sandy and shauna. One of the things that i thought we could do is have some really open dialogue about the dynamic between the two of you. Shauna i feel like i try to take on things, and you try to take them back. I dont know if thats your lack of trust in me or you think im not gonna get things done. Lemonis who do you report to . Do you report to sandy . Shauna yeah, and i think thats one of the reasons that i feel really held back. I dont get full control over things that fall under marketing. You dont want to make the changes that will positively affect the way we do things. I brought it up multiple times. Sandy yeah, unfortunately, its not that simple. Shauna well, it is. Sandy its not that simple. Shauna just the way things are brought up and shot down is really frustrating. Mike some of the areas that paul is in, he is not good at. Lemonis why are you blaming everybody else . Mike im not blaming lemonis what about you . Shauna just the way things are brought up and shot down is really frustrating. Sandy its not that simple, though. It really isnt. Lemonis its important for people to recognize how others are feeling, especially in the workplace, and address peoples concerns. And so i asked paul to join, as well. I wanted to sit them down cause i feel like theres this elephant in the room. I mean, they dont like each other. Shauna i feel like i bring up things, and its just like, well, its just not that simple. You know, leave that to us. Sandy im your boss. But it is awkward when something doesnt get done and i dont want to Say Something because youre mikes daughter. Paul one thing ill add is, sometimes, in the meetings that we have, i dont feel youre completely open and say exactly what you feel, and then you tell your dad later, and it circles around, and your dad tells me. Shauna i think it goes back to kind of who i am its mikes daughter. So a lot of things that i bring up get brushed under the carpet, and sometimes i kind of feel like its just, paul and sandy just shot it down. They dont like the idea. Paul sorry you feel that way about me. We should have sat down a long time ago and had the conversation. Lemonis going forward, you are 100 in charge of marketing. Okay . Very good. Thank you. Shauna thank you. Lemonis what shocked me most when i first went to farrells is to find out that they dont actually have their own ice cream. Today, thats gonna change. What do you pay for ice cream today . Paul 17. 50 for a 3gallon tub. Lemonis all right. Lets go to work. Im taking mike and paul to fosselmans, one of the oldest and most beloved icecream manufacturers in los angeles. Im marcus. John nice to meet you. Lemonis and were gonna see if they can help us bring back bob farrells original recipes. John growing up as a kid in the icecream business, im familiar with farrells. Lemonis bob farrell had a number of recipes. They found those. They didnt do anything with them. John fantastic. No, thats great. So, i mean, we could truly make it true to form, spot on. Lemonis whats pricing look like if bills are paid on time . John sure. 30 per 3gallon tub. Lemonis so, theyre paying 17. 50. Can we see what its like in the back . John okay, yeah. So, this is basically where we make everything here. The key is keeping it at the right temperature. It should be zero degrees in the dipping cabinet, negative10 for storage. Lemonis what are you in the dipping cabinet . Paul 10. John 10 fahrenheit . Paul correct. John so high. Lemonis so, whats happening with that . John youre giving away product. The ice cream isnt hard enough. Youre not getting the air in the scoop. It compresses on itself. The yield of a 3gallon tub you should get 60 4ounce scoops. Lemonis 60 4ounce scoops. John 4ounce scoops. If i have that product at 10 degrees, ill be lucky to get 40. Mike yeah. Lemonis look, i was willing to bite the bullet and actually pay more for ice cream, but now that we know were gonna get more scoops per tub, were actually gonna come out pretty close to even. Right now, farrells is paying 17. 50 per tub, but because were serving it at too high of a temperature, were only yielding 40 scoops. That means were paying 44 cents per scoop. Fosselmans is going to charge us 30 per tub, but because we now know the right temperature to serve it at, itll yield 60 scoops, meaning that the new cost per scoop is around 50 cents. Were only gonna pay 6 cents more per scoop, but we now have the original recipe, and its also proprietary. Thank you, my man. John thank you. Lemonis really appreciate it. Mike john, thank you so much. John thank you. Great meeting you guys. Lemonis thanks, guys. John take care. Lemonis part of being a leader is trying to figure out a way to crack the code on ice cream, bringing bobs recipes back. Mike i had people that i thought were doing those kinds of things. Lemonis who did you think was doing that . Mike paul, for one. Lemonis youre saying pauls the wrong person to do the job . Mike some of the areas that paul is in, he is not good at. Paul like what . Mike i think, first of all, just dealing with the products. Paul youre telling me that i dont have a background or understand product costs and where we should be . Mike no, im not im not saying that. Lemonis you just told him that he wasnt capable of doing his job. Mike no, i did not say that. What i said paul you did. Lemonis yeah, you actually did say that. Why are you blaming everybody else . Mike im not blaming everybody. Lemonis well, you said, paul should have done this. What about you . The money that i committed to invest was not enough to solve the problem. You miscalculated by 200,000. Lemonis why are you blaming everybody else . Mike im not blaming everybody. Lemonis well, you said, paul should have done this. What about you . Your job, as the c. E. O. Of the business, is to be the coach. Rather than running people under the bus, you got to get them on the bus with you. Mike youve really got the wrong picture of this whole thing. Lemonis no, no, no. I got the very clear picture. Im confident that mike has a big heart and his intentions are in the right place, but im not sure he knows what to do, and because of that, what he does is ultimately just point fingers at everybody else, and thats not gonna work. C. E. O. Has one job, and thats to lead and communicate. Ill see you guys back at the shop. Mike okay. Shauna i really would like to see this being completely knocked out, extending the candy store, and creating an entire buildyourown section. Sandy i actually think that it could just be in a much smaller footprint. Lemonis its time to work on the candy store, and were gonna figure out what merchandise stays and what merchandise goes. What are the things that you dont want here anymore . Pull some things off, and lets put them in a pile somewhere. Sandy thats a great gift opportunity, you know . Just. Lemonis farrells is supposed to be an experience thats fun and happy things, and shauna seems to get the direction that i want to go to back to where it started. Sandy i think were missing a market here. Lemonis sandy, meanwhile not so much. Guys, ii think we have to change things up. Sandy, i think, going forward, really, you just need to be focusing on the h. R. Function and staying out of the candy business. Sandy i dont like it because thats the thing i enjoy doing. Thats what i have the background in. Lemonis and so, if thats your background, why does stuff like that exist . Empty shelves. Sandy because its last on my list. Shauna it should be one of the things at the top of the list. Lemonis this is a revenuegenerating department. These stores have to have the right inventory, the right buying process. You cant do it anymore. Its clear to me that sandy is not qualified to run this part of the business, so i think its time to move on. Your job is to make sure this place gets good traffic, and when people come here, they have an unbelievable experience, and they want to come back. All right . Thank you. Sandy got us going. Shauna thanks. Lemonis with shauna now in charge of the candy and merchandise store, and ice cream squared away, were ready to take farrells to the next level. Weve started renovating the buena park location, both outside and inside. But weve also started expanding the candy store. Were also trimming our food costs. Mike has been using a middleman to negotiate pricing with vendors, so were gonna go direct to the distributor and see how much margin improvement we can actually secure. How much total food do you buy in a given year . Mike about 4 million. Lemonis if we brought you all of our business, what could i expect to save on an annual basis . Erik at least 8 . Lemonis this is a nobrainer. Were gonna save 8 on our food costs on 4 million worth of purchases. Thats 320,000 a year, which is almost enough to wipe out the losses for their two locations in the red. Speaking of savings, were buying new Kitchen Equipment so we can stop wasting money on repairing the broken stuff. Travis so, we are missing three cold wells, but we need to go a little bit bigger. This is 48. Lemonis and travis continues to impress. Travis a new unit like this is gonna pay for itself in two years. Lemonis and were finally whittling down the menu. Fish tacos or no . I dont think, farrells fish tacos. Paul its not a big seller. Lemonis okay. So thatll put us at 19 items. Limiting the menu will allow customers to make decisions quicker, and once they do, the tables will actually turn faster, generating more revenue. Okay, guys, thank you. Mike thank you, marcus. Hey, marcus. How are you . Lemonis mike, how are you . Whats going on . Ive been getting all these emails and texts from you. Mike what weve got is a cash crunch. We were unable to make rent. Lemonis cash crunch . I put in all the money that i needed to to stabilize things, and now hes asking me for more . Did he make another mistake . Im gonna get to the bottom of this. Hey, guys. Mike marcus, how are you . Lemonis how are you . Good to see you. Mike nice to see you again. Lemonis good to see you. [ sighs ] so, remember that my offer was only to put 750,000 into the business. Mike well, you know, it was not enough. We have payables and rents. Lemonis can i see this . Paul sure. Lemonis so, you need another 200,000 to keep the doors open in rancho. Right . So the money that i committed to invest was not enough to solve the problem. You miscalculated by 200,000. Mike i approached paul, and i said, you know, whats going on with this . And he goes, you knew about it, and i said, i did not know about it. Im telling you, i did not know about it. Paul ive never hidden anything. Ive never ive ive. Integrity is incredibly important to me. Its all, really. Its the only thing. Mike yeah, i know, i know. Paul its the only thing that cant be taken away. [ sighs ] [ sniffles ] mike paul and i have been through a lot. Weve been through so much. I mean, weve gone through hell. Weve gone through hell together. Lemonis but youve trashed him since ive been here. Mike you know what . Lemonis you kind of have, and hes been professional about it. Nobody wants a leader that blames them. What is it that causes you to blame people . Mike probably, uh probably an insecurity. I get frustrated, and i want to do the best that i can. Lemonis were at a real crossroad here, so what do you want me to do . Mike i understand. Lemonis what is your suggestion . Mike id like to have you id like to have you help us. I want to see this thing work. Would there be a way that you would consider loaning. Not even lemonis no way. Im not loaning the company money. Xo lemonis im not loaning the company money. Mike what would you do . If you were sitting in my seat right now, what would you do . Lemonis is travis here . Mike travis is here. Lemonis ill tell you exactly what id do. Ill go get him. Okay. My original deal with these guys was 750,000, and it was gonna solve all of the problems. But now we need another 200,000 to keep the doors open in rancho. So they asked if i would lend them the money. Travis well, as much as i hate to do it to the community and to our staff, i think, for the sake of our company, i think we have to close the doors. Since you last left, weve had a lot of structural maintenance issues. We have a roof that needs to be repaired, we have an hvac system that needs to be replaced, were in the 650,000 to 700,000 range, and i think we could easily hit 1 million. I think the investments gonna be too high. Lemonis ive always been impressed with travis, and i had a feeling that putting more money in rancho is a bad idea. But for him to put the health of the company in front of himself, those are the kind of people i want to do business with. It shows me the kind of guy he is. This is a big blow for him. Paul travis is an incredible guy. Lemonis in order to grow this company, i think we need travis on the team in a bigger way. So id like to have you be partners with all of us. Youll have 5 of the whole thing. Paul wow. Lemonis okay . Travis thank you. Lemonis youve earned it. And the equitys not gonna come from you guys. Its gonna come out of my share. Travis i dont want to be anywhere else. I couldnt imagine being anywhere else. Im in my dream job. Thank you. Lemonis all right . Mike help me with the numbers, will you, please . [ paul laughs ] travis ill make you proud. Lemonis all right. Mike may joke about needing help with the numbers, but the reality of it is, its just not his strong suit. And so i thought it might make sense to redefine his role. Travis, i want you to be in charge of the general managers in the stores. Travis okay. Lemonis they report to you, and the buck stops with you. Mike, you love the brand, and you love the guest experience. You are gonna be responsible to get out there and sell the brand. Mike thats what i love the most. Thats thats who i am. Lemonis meanwhile, my crew is working around the clock to put our prototypical store in buena park back together. Shauna has taken full control of this candy store, and she has sourced some amazing products. And we finally got around to fixing that long birthday song. Mike we want them to have the birthday of their life, but we dont want to be overboard. Excited, but were not screaming. Lemonis im feeling really optimistic. Today is the grand reopening of farrells in buena park. But when i walked in, there was no way we were close to ready. Mike, give me a summary of whats not done right now. Mike um, so far, pretty much, were close. Lemonis candy store wasnt ready. They were still painting outside. The kitchen hadnt prepped everything. The dining room was still a mess. I was worried. They have tons of people coming. This is not gonna work. Monis of farrells in buena park,g and theres a line of customers already gathered here. We got to get everybody moving. All right, so, listen. Id like you to check the stations, lets check the kitchen, lets make sure the candy stores cleaned up, and lets get everything set up, tables set up. The new store is amazing. The candy store before was nothing more than an afterthought. What exists there now is an experience. Instead of being jammed into a small corner, its basically taking up the whole front of the store. What was once a cramped, small seating area is now dedicated to bulk candy with really good margins. And we refreshed the look of the outside, brightening it up and changing the sign. In all, we spent 75,000 making the improvements. So, walk me through what changed over here. Shauna one of the things were trying to do is all the bulk candy. People can do bags. They can do little containers. We have readymade gift baskets. Lemonis oh, look at that that is awesome. Shauna take to a party. Lemonis i really feel strongly now that putting shauna in charge of the candy store was the right decision. Woman 1, 2, 3 together lets go, farrells [ cheers and applause ] mike welcome, welcome man yeah. Man 2 this place looks great. Lemonis how are you . Folks, the candy store is over here, if youre waiting in line. Woman this store is so great. Lemonis isnt it fun . Woman this is amazing. Lemonis how is it . Good . Man oh, its great. Lemonis good. Food came out in time . Man yeah. Lemonis came out quick . Good. Tonight, that kitchen was on fire. The portions were smaller. Travis did a great job sourcing new plates so that the food had a better presentation. Watch out, watch out, watch out. Who wanted ice cream . Together its your birthday. But youre so shy. But youre the sweetest thing. I cant imagine whyyy. [ cheers and applause ] lemonis im excited for the future of farrells because we have the right people in place. Mike yeah. Lemonis i got to run, buddy. Mike oh, man. Lemonis mike is like a totally different person. Hes happier, hes calmer. Hes now able to focus on one thing, and thats representing the brand. Dont let anybody mess with you. Paul i wont. I wont. Lemonis and with mike out of his hair, im sure pauls gonna flourish. Lemonis okay, my man. Travis bye. Thank you for everything. Lemonis well see you, brother. But whats made me the happiest is seeing shauna and travis come into their own. And once the people are right, takes care of everything else. Thank you very much for coming tonight. Tell your friends and family that farrells is back. [ cheers and applause ] this season on the profit. The deals are big. Man now youre in business, and business isnt funny when youre losing money. Lemonis the stakes are big. The business is literally going to close. And the personalities well, theyre big, too. Man [bleep] come on boil woman thats just [bleep] youre screaming at me. Its just [bleep] man well just keep going on the way we are. Lemonis and you will not survive. I look at people, process, and product. Fixing the product. Lets go to work. And the process. Get off your ass and go help him fix it. Thats the easy part. The people. Man im literally over this. Like, i cant do this. Lemonis . Thats a whole other story. You take two months off a year . Man yeah. Lemonis but youre a business owner. Man i need to be legit. Lemonis but this isnt legit. This is, like, dishonest. Are you guys trying to kill this store . This is real business. Man theres just a lot of people counting on me. Lemonis so failure isnt an option. If you want this name to survive, then these are the tough choices you have to make, even if it hurts. Man its an American Dream story. And this is your chance. Venture s dont sit in offices. For us, this is our office. [guys cheering] that is huge. What is that thing . Meet the adventure capitalists. Three extreme investors. Ready to put their own money behind the next great business idea for the great outdoors. This product is a 12 out of 10. In each episode, entrepreneurs will pitch their concepts. This is a personal shark repellant. Hoping for an investment that will transform their small business. I emptied out my 401k to do this. Into an outdoor phenomenon. Im looking for 500 thousand. But it has to work