Transcripts For CNBC The Profit 20170505

Will go to the dogs. Chicago, illinois, is home to bentleys corner barkery, a natural petsupply store started by lisa and Giovanni Senafe in 2008. Lisa how many do they need . Just one . Giovanni never a dull day at the barkery, at least for now. Lemonis after losing a pet to illness and convinced it was related to diet, lisa was inspired to open a store and carry food made with healthy ingredients. The concept caught on, and sales surged, and within a few short years, lisa and giovanni expanded aggressively too aggressively. With seven stores open, over half of them are losing money. I love the concept of Healthy Products for pets, and the petsupply industry generates over 16 billion a year. With the right process in place, i feel confident we can fix this broken chain. Im headed to bentleys corner barkery in the Arlington Heights neighborhood, a suburb of chicago. This is the flagship store, and im eager to see the model they have in place. Vic how you doing . Lemonis how are you . Im marcus. Nice to meet you. How are you . Im marcus . Lisa lisa. Nice to meet you. Giovanni hi. Giovanni. Nice to meet you. Lemonis nice to meet you. [ dog barks ] giovanni say hi, angel. Lemonis hi, buddy. Dont be scared. Lemonis so, if you were describing this business to me, how would you describe it . Giovanni trader joes for pets. Lisa like the trader joes or whole foods for pets. We do allnatural food, no byproducts, corn, wheat, or soy in our foods. Lemonis is it dangerous for the animals . Lisa yeah, a lot of them are getting sick. Lemonis the basic premise is we want safety for dogs. Giovanni correct. Lemonis and, so, total revenue of this location is approximately . Giovanni 1. 3 million. Lemonis and of that 1. 3 million, how is that broken out . Giovanni 60 of it is probably food. Lemonis whats the most profitable product in the store today . Lisa treats and chews. Lemonis what are the margins on stuff like this . Lisa theyre about 50 to 60 . Lemonis 12, and this would cost 6 . Lisa about 6. Lemonis what does the other stuff have . Lisa food, it can vary. Sometimes, its, you know, 25 to 30 . Yeah, theyre low margin on foods. Lemonis today, the Arlington Heights location does 1. 3 million worth of revenue annually. 60 comes with a 25 margin, and the other 40 comes with a 55 margin. If lisa and giovanni want to improve the stores profitability, theyll have to change the mix, getting it closer to 50 50. So, you get somebody in for the first time. Whats a typical bag like this cost . Giovanni 70. Lemonis how much . Giovanni 70. Lemonis and if i went to, like, petco or petsmart, what would a typical bag be . Giovanni they have from 40 to 80. I mean, their range is a lot bigger than our range. Lemonis why is that . Giovanni they carry products that wouldnt meet our guidelines. Lemonis but as people come in, right, if theyre on a budget, how do they shop here . Giovanni we dont have it. Lisa we just try to be more specialized. Lemonis i dont know how many people could afford a 70 bag of dog food. With those sorts of price points, youre alienating a sector of the market. And so how do you guys separate your roles . Lisa im more branding, marketing, that kind of stuff, and he does the numbers. Lemonis who focuses on sales . Giovanni the managers, the employees. Lemonis whos in charge of, like, keeping the store up and making it look good . Lisa each location does keep up. Lemonis and who focuses on the managers . Giovanni nobody right now. Lemonis and so you have seven stores all doing their own thing. Giovanni basically, yeah. Lemonis in any business, there should be one leader thats setting the tone, and whether thats the way the store looks or how they merchandise or the product they order, there has to be sort of one person kind of leading the troops. And how many stores do you have today . Giovanni seven. Lemonis all in the chicagoland area . Giovanni yeah, oh, yeah. Lemonis and so all the stores make money today . Lisa no. Lemonis does this location make money . Giovanni oh, my god. This fuels all the growth. Lisa this is our best location. Lemonis what is the goal for you . Lisa we want to scale it. We want to kind of conquer the chicagoland area. We also have talked about acquisition. We did a miniacquisition already with rogers park. So that was an existing store that was failing, and we went in and purchased it. Giovanni and i have been calling stores to see if theyd be interested in selling. I go get the deals and then go, hey, well figure out how to pay for it afterwards. Lemonis so youre in charge of mergers and acquisitions . [ both laugh ] giovanni with no money. Lemonis it seems odd to me that theyre acquiring anything. What they should be acquiring is a leadership process. They should probably worry about home base first. Giovanni hey, bud lisa oh, thats our son. Do you want to say hey to marcus . lemonis and what is your name . Giovanni sebastian, say hi. Lemonis hi, buddy. Give me five. Lisa this is his buddy. Giovanni there you go. Lisa there you go. Giovanni how old was he when you adopted him . Lisa he was only 5 days old. Giovanni sorry, its been a crazy couple weeks for him. Hes got to have surgery next thursday. Lemonis whats wrong with him . Lisa his tonsils and adenoids need to come out. Hes had a hard time breathing at night. G at nig. Lemonis you can tell that all their love and attention is on this baby. And the fact that their son, sebastian, isnt healthy right now clearly would be a distraction for anybody. Giovanni this is where the deal comes crashing. Lisa so, this is our stock room special orders. Giovanni we just got a delivery. Lisa yeah, we just took advantage of some sales, too, so. Lemonis its literally like a bomb went off in here, and there is crap everywhere. This is how you manage your inventory . Giovanni yeah, if we were perfect. Lemonis then i wouldnt be here. What is all this stuff . Giovanni we moved seven times in seven years, so a lot of it is our stuff, too, mixed in. Lemonis what about the mattress . Lisa no, thats not giovanni [ laughs ] look, you wouldnt want the life that we had the last seven years, but thats lemonis why wouldnt i . Giovanni no, i mean lisa we just moved a bunch of times to save money to giovanni we sold our house. We did what we had to to make it. But now we have sebastian. Its not fair to him. Im not gonna put him through it, so. Lemonis what do you mean its not fair . What does that mean . Giovanni to him. Im not gonna put him through what we did. Lisa we dont want to move him all the time. Lemonis because its tough. Giovanni yeah, its tough. [ voice breaking ] we did whatever we had to to survive and never let any of them up there know what it took or it cost me. In seven years, people got bonuses. But now we got sebastian. I cant. I cant. Thats why we called. We cant keep going like this. Lisa so the reason we called is not because this is a failing business, but because we know we need help. Lemonis i have to tell you something. When i see all that crap back there, i can have a bad reaction or an understanding reaction. Understanding the story behind it helps me understand it. Ive seen their best store, and there are some clearcut problems, so i want to visit another location to see the whole picture. Giovanni hey. Lemonis hi. Lisa this is the newest one. Lemonis this is the newest location . This store looks totally different than arlington. The merchandising is different, the layout is different, the lighting is different. The whole thing is different. The one thing thats consistent is this place is also functioning like a miniwarehouse. And theres even more inventory piled up here than there was in the other store. Giovanni i know what youre thinking. We literally just unloaded our delivery. Lemonis and i also wanted to check out the store they acquired at rogers park, but i had some trouble finding it, cause there was no sign of bentleys anywhere. Giovanni we only took it over in december. Lemonis yeah, and, so, when you took it over, did you think it was a good idea to change that awning so that i didnt drive by it three times . Lisa yes, we need to change that. Giovanni yeah. Lemonis why havent you . Giovanni just money lemonis dont say money to me. Dont say money to me. We have money to pile inventory up to the hill, but not money to make sure that the sign is right. One of the most important parts of an acquisition is being able to integrate that new company into an existing platform, but that assumes that there is a platform. So, how often do they come to your store . Dan if im lucky, probably a couple times a month. Lemonis do you wish they came more . Dan i appreciate any time that i get with them. I think weve been selfgoverning for so long. Lemonis and it really seems like these stores operate independently, and theres not even a leader. After taking all this in, id like to talk to lisa alone and get her own perspective. I like the fact that you guys have a number of stores. I dont like the fact that they all look and feel and operate differently and that theres not Clear Management and theres not a clear process and theres not central distribution. So how is the ownership split up . You guys are 50 50 . Lisa well, we got 30 shares, investor. Lemonis what investor . Does he have shares of the company . Lisa yeah, 30 . Lemonis and so you own 70 . Lisa mmhmm, we know we did too much too fast. We never knew it was gonna take off like it did. Lemonis yeah. Gio and lisas biggest struggle is that their exuberance to grow is outweighing the prudence to do it the right way. But i already know that their process is bad. Now i need to see what their financials look like. Well, lets look at the numbers. You dont have a 12month. Giovanni i just have year to date, yeah. Lemonis and so is there a consolidated p l . Giovanni yeah, it should be all the way here. Lemonis at the end . The total consolidatedincome statement is 2. 3 million of revenue through the first seven months of the year. On a yeartodate basis through seven months, youve lost 12,000. Giovanni oh, okay. Lemonis the business is losing money, so why in gods green earth would you open another store . Did you not know that it was losing money . Giovanni no, ill be honest with you to run our business, i dont follow this. Lemonis what do you use . Giovanni whats in the bank and how much money we have and how many bills lemonis so youre running it on the Checking Account . Giovanni im running it on daytoday cash flow. Lemonis the reason that the alarm bells should have gone off that you were losing money is that you didnt have cash to open a store. How much money did you raise from this partner that i heard about . Giovanni 300,000. He has lent us money before. When we took over rogers park, i had to take a loan. Lemonis how much did he lend you, in addition giovanni 100,000. Lemonis so youve gotten 400,000 from him. Giovanni yes. Lemonis thats how you were able to afford the other stores, but youre not generating a profit today. Giovanni yeah, youre right. How much do you guys get paid . Giovanni probably 30 grand this year 34 grand. We sold our motorcycle one month to pay rent. Were borrowing on our lifeinsurance policy to pay for sebastians surgery. But guess what . We chose this. Lemonis is that where that money is coming from . Its coming out of your lifeinsurance policy . Giovanni yeah, we took a loan out. Lemonis the fact that you did whatever you had to to take care of your childs surgery thats the kind of people i want to do business with. Giovanni but its embarrassing. Its seven years. And im taking a loan. Im right back to where we started. Lemonis heres the thing, okay . Most people dont have the courage to do what you do, although i wish you had a little less to keep pushing and opening stores, okay . Most people dont have the courage to adopt a baby like you guys did. And i was adopted, and so i have kind of a Cool Connection with anybody that adopts. You should be very proud of yourself. Listen to me. We just met. What i have to get my head around is can i help you . Let me look at these financials, and ill get back in touch with you, okay . Giovanni yeah. Lemonis hi, guys. Nice to see you again. You look wonderful, by the way. When i learned that bentleys had a 30 investor in the business, i wanted him to be at the negotiation. Thats a serious amount of equity. David, part of the reason that i wanted to meet you is because i always feel its important to meet the person that wrote the last check. David, are you aware that the business loses money today . David loses money today, but its also a lot of new stores have opened. Lemonis one thing that you said to me was you want to continue to grow, and you want to open stores. Are you looking to acquire stores right now . David we are. Lemonis i expected, david, that you were gonna be the disciplinarian, but youre as drunk as they are. David yeah, but in the next 18 months, well have positive cash flow, and i know both of them work hard. Lemonis and are there deals on the table right now . Giovanni i mean, we got callbacks. Thats what were trying to mention was this all happened very quick. I thought there was an opportunity to acquire seven stores. Lemonis how much revenue do they do . Giovanni 3 million. Lemonis how much money do you need to make all the acquisitions . Giovanni 1. 1 million would be a purchase price. Lemonis not only do they open stores too fast, but theyre now telling me that they want to double the size of their company. Are you kidding me . It does frighten me that you guys think youre ready for acquisitions. Should i expect that in the new acquisitions you make, youll also forget to change the sign for nine months . Acquisitions are not a good strategy for a company that doesnt have its foundation right. In order for this acquisition to happen, theyre gonna have to prove that they can run a consistent business, they can provide leadership and provide direction, and understand the importance of making that acquisition. You guys have clearly created a culture that i think is amazing. Honestly, you should be very proud of yourself. So i want to make an offer. My offer is 1. 7 million, okay . And it is broken up into two distinct checks a 400,000 equity check that will go to put sufficient working capital on the companys books to make the renovations of the stores and for the i. T. Infrastructure. The second check i write will be for 1. 3 million. That will go to fund the acquisition and the conversion of those locations so that theyre compliant with what our new look is gonna be. But im gonna have to be convinced that the acquisition is the right thing. For that, im gonna want 40 of the equity. And if you pay off the 1. 3 million, it drops to 25 , and the 15 will go back to you guys. Lisa my biggest concern is with products. I want to make sure that i still have the say in what products come in through the door that they fit in our niche. Lemonis i cant do that for you. Lets say that the chairman of the company said, i want you to create a product that meets her standards, what are you saying to them . Lisa no. We cant run a business that way. Art. It can be sculpted, bringing to life beautiful detail. Or painted in luxurious strokes. And in rare cases. Both. Why pause a spontaneous moment . Cialis for daily use treats ed and the urinary symptoms of bph. Tell your doctor about your medicines, and ask if your heart is healthy enough for sex. 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Lemonis i cant do that for you. But what i can tell you is that i subscribe to your same philosophy, and i would never put my own dog in jeopardy or anybody elses dog in jeopardy to make a buck. Lisa okay. Giovanni good enough for us, yeah. Lemonis so, my offer is 1. 7 million for 40 of the business. When you pay back the 1. 3 million, it reverts back to 25 . Do we have a deal . Giovanni oh, my god. Is it fair . David i think its fair. Giovanni i think its very fair. Lisa okay. Giovanni are you lisa im happy. Giovanni yeah. Lisa we have a deal. Thank you. Lemonis all right . When i write this check, i really am 100 in charge, for real. Giovanni were looking forward to it. Lemonis this is an unusual transaction for me because it involves two separate offers. Offer 1 is 400,000 for 25 of the equity. Offer 2 is 1. 3 million to give them the ability to finance the acquisitions they want to make. I will get a nominal Interest Rate on that loan, but as a kicker for lending them that 1. 3 million, my equity, instead of being 25 , will ratchet up to 40 . When they pay that 1. 3 million back, including the interest, my equity will go back down to 25 . I want them to understand that if they really want to make this acquisition, its gonna cost them a lot. Lisa thank you. Lemonis thank you. Thank you. Congratulations. Now that im in business with lisa and giovanni, ive asked them to gather the entire staff at the glenview location so we can talk about the road ahead. I thought we could get everybody together. We made a deal david, giovanni, lisa, and myself made a deal for me to put up to 1. 7 million in the business. My deal is for 40 of the equity, and it can change after that, but im also 100 in charge. This business does not have a clear leader, and were gonna have one. Giovanni, going forward, im looking to you to be responsible to run the operations. The store managers have to report to somebody. Were gonna get a central warehouse, so inventory isnt gonna sit here. Youre happy about that . Vic im ecstatic. Lemonis so, the key to this whole thing is about creating consistency. The biggest one thats a problem is arlington, and so that store is gonna go through a major transformation, and were gonna build up what we think the stores are supposed to look like. The biggest problem im having right now is that it doesnt feel like we have affordable foods. Today, our prices are averaging like 70 for a 30pound bag, and the market is from 30 to 80. We need to drive that number down so that more people can come in and shop here, because i think youre missing out on a lot of the market. Vic this whole things based on just the quality of the product. Lemonis im not as selfrighteous as you guys are about product. Lisa, from my perspective, youre the person that determines what the brand promise is, what the products are that come in and out. So what i want you to do is actually write it down on paper. I want to see, bullet point by bullet point, exactly what it stands for. Anything else before we get to work . Okay. Lisa hey, how are you . Lemonis im marcus. Lisa marcus, this is kacey. Kacey nice to meet you. Lemonis nice to meet you . How are you . Pet food experts is one of the largest distributors of pet food in the united states. Not only do they carry a ton of brands, but they carry a wide variety of price points. Thats why were here. Do you have your Mission Statement . Lisa this is our food promise that we go off of. Lemonis no byproducts, corn, wheat, or soy. No chemical preservatives. Kacey mmhmm. Lemonis why dont we walk and just kind of get a feel for it . I need lisas expertise and her brand promise to determine what foods are gonna work and not work, but i also need her to be openminded. Do we carry this nutro . Lisa no. Lemonis does it have byproducts, corn, wheat, or soy . Lisa this one i dont know. No, this one doesnt. Lemonis chemical preservatives . Lisa doesnt look like it. Lemonis so, this has the food promise, but you wont carry it. Lisa no. Lemonis why . Lisa when we actually first opened, they were the biggest ones that had all the recalls and stuff, too. Lemonis what kind of car do you drive . Lisa a suburban. Lemonis have chevy ever had a recall . I like the fact that she believes in something, but once she actually takes that and applies it against products that are available in the market, shes now coming up with other excuses of why she doesnt want to carry products. Lemonis this brand here. Kacey yes. Lemonis any good . Kacey yes. Lemonis does it sell well . Kacey it does. Lemonis whats the price like on a bag like this . Kacey 20 bucks. Lemonis is that a good price . Lisa yes, we have some brands that lemonis features premium formulation, multiprotein sources, made in the usa. Lisa made in the usa. Im telling you, the packaging wont do well. Lemonis now youre a packaging expert . Lisa no, but im telling you. [ horn honks ] lemonis quality loyal, not brand loyal. Focusing on brands that get it right from the start. Lisa theres a lot of brands that have made garbage food for a long time and now realize theres a natural market. And theyre making one or two skus to jump on the bandwagon, but their integrity you know what i mean . Lemonis but you just said you were product loyal, not brand loyal. So doesnt that go both ways . You want to kick somebody out because they do something that you dont like, but you dont want to let somebody in if they start to adjust to your way of thinking. Lisa because they still are selling the bad products out there. If they truly believed that this one sku should have byproducts, corn, wheat, or soy, then why wouldnt they implement it throughout . Lemonis lets say that, like, the chairman of the company went into a meeting, and he said, i want you to create a product that meets her standards, cause i want to do business with her. What are you saying to them . Lisa no. Lemonis its kind of a double standard. We cant run a business that way. She keeps telling me that shes product loyal and not brand loyal. Thats a bunch of [bleep] is what it is. Build a business, set a standard, write it down, follow the standard. The thing that worries me about doing business with you is that i feel like if i make a mistake, youre not gonna forgive me. Lisa no, thats not true. Lemonis well, then, why cant you forgive them . Ive asked giovanni to bring his store managers to my office for a meeting. Up to this point, these store managers have been left to their own devices different looks, different merchandising, different inventory plan. And thats not okay with me. If giovanni wants to make this acquisition, hes gonna have to prove that he can be a leader and set the plan and enforce it. Giovanni all right, guys, one, you know, part of lemonis id like you to explain to everybody whats the purpose of today. Giovanni so, the purpose is, i wanted to give you an update of whats going on with us and then share ideas. But on our end, we have been working on an acquisition. Lemonis it still hasnt been determined yet. Giovanni correct, yeah. Just saying were working on it. Lemonis do you have an agenda for the meeting, by chance . Giovanni i didnt know what the agenda was. Lemonis when you normally get together, do you guys have, like, a list of topics that you want to cover . Krystle we dont get together. Lemonis you want to take a crack at writing an agenda on the board so we can have a process to it . Giovanni sure. Shay i would really, at this point, like to know when were doing good and when were doing bad. Giovanni so, i would say first off is just feedback from managers. Dan i would like to get more information or more timely information when special orders are coming into the store. Giovanni a lot of that will get solved with the ware lemonis keep going. Ill do mine. Giovanni okay. Lemonis what im seeing from giovanni today is worrisome. Hes not communicating with his people, hes not guiding them, and hes asking them for the agenda instead of setting it himself. Do you guys feel today that this company is in good enough shape leadership wise to make an acquisition of a whole nother business . Dan no. Lemonis no. Krystle i dont know how we can take on more when we havent perfected what were doing right now. Giovanni whats ironic is the acquisition is probably run way better than ours. Lemonis do you see why im scared to make that acquisition . As a retailer, you have an obligation to deliver the consumer the choice to make that decision on their own and not for them. 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And got rid of the artificial preservatives in all of our meat. Every. Single. One. For every. Single. One of you. What else would you expect from oscar mayer. We eat, sleep and even drive hot dogs. You love your employees so much, which i think is amazing. Sition . But you love them so much that you dont give them any tools or resources or information. Becky well, we want to make it easy. Giovanni yeah, no, and i know that. Lemonis the point that i want to make to you is if youre gonna lead an organization of 5, 10, 15, 25, 30 stores, the only way you can do it is in a structure. The problem is is that for this business to run and make a profit, somebody has to be tactical. I just need you to be a leader. And the only way this company is gonna really grow is if you guys feel like youre part of something. And so im gonna put in a system thats gonna allow you guys to videoconference from somewhere in the store so you guys can see each other. See, thats why being in person helps, cause i can read your face. All right . Thank you, guys. Dan thank you, marcus. Giovanni you wont like the new giovanni, cause ive been way too easy. Shay tactical giovanni. Giovanni yes, tactical giovanni. Lemonis heres what i want to do. This location has to be totally different. Lisa the whole look . Giovanni how so . Lemonis now that youre talking about making acquisitions. Honestly, this doesnt look good. From a design and process standpoint, the Bentley Stores have nothing in common its bad enough when were talking about seven locations, but if this business is gonna expand further, we need a consistent inventory plan, consistent merchandising, a consistent look and feel, and a consistent process. Arlington heights is gonna be the model. I told you yesterday that i wasnt willing to make the acquisition unless you can prove that you are a leader. Giovanni okay. Lemonis and that running a Managers Meeting is part of that, being openminded is part of it, and change is part of it. And so i want to see what sort of leader you are. Giovanni okay. Lemonis today, were closing the store entirely. Giovanni i dont understand lemonis were locking the door. Giovanni now . Right now . Lisa okay. Giovanni for how long . Lemonis as long as it takes to get the store redone. Giovanni okay. Lemonis well, theres a truck and boxes and people here to start loading. Giovanni come on is that really are you being serious . Lemonis i knew the idea of closing this store quickly would catch gio offguard, but i need to know that he can adapt to change and lead people through tough situations. Its a small test of his leadership, but its an important one for me. Giovanni well load thats the biggest thing. Displays will move out tomorrow. So lets just empty out all the cabinets, all the treats. All hands on deck. What we need to do now is just start boxing everything up. Keep it in one category. Dont throw brushes with treats just toys, treats, accessories. Lemonis i set up the central warehouse so everything we pack up today is going there. The goal is to have one hub of inventory so that as it sells it, it can replace it and when that inventory comes in from the manufacturer or the distributor, its sitting in one place and you know whats there. Man gio [ dog growls ] lemonis i like how youre taking direction and giving everybody direction and solving problems. Its the most ive seen you lead since ive known you. I mean that in a nice way. Giovanni no, thank you. Lemonis like, i feel like im watching you like a field general. Giovanni and i am that, and i know i can be. Lemonis okay, lets keep going. Lemonis so, i wanted to kind of get out and talk to people and find out, okay, how many people have ever heard of bentleys . Do you know where its at . Do you know what we stand for . Its kind of getting an understanding of market research, right . This is a nice park. Lisa this is a very nice park. Giovanni okay, go get your owners. Giovanni this is shay, the manager. Anything you ever need. Lemonis uhoh, okay. This is lisa and giovanni. Lisa hi, nice to meet you. Lemonis theyre the owners. Where do you buy your food at . Woman petsmart. Lemonis is it because of price that you go there . Woman we get a purina special blend. Hes allergic to corn, i think. Giovanni our whole store is cornfree. Thats where were different. Lemonis where do you get your food . Woman usually at petco. Dont, like, you guys have the grain merrick . Shes not a grainfree girl for some reason. Lemonis so she needs grain. Woman she needs the grain, yeah. Lemonis do we have merrick brand dog food with grain . Lisa we dont. Lemonis this is an example of lisas selfrighteousness getting in the way of them being a profitable business. They need to carry products that meet everybodys needs. If it falls within the brand promise, they need to carry what the customers want, not what they want, and im gonna push this thing all the way to the wall. Going forward, any product that meets the bentleys food promise should be available. So, like, when somebody says, i want grainfilled, as opposed to grainfree, youre gonna be a powerhouse. You got to carry everything. Giovanni i think well lose a lot of credibility with a lot of the customers on why they trust us. Lemonis let the customer decide what they want. Giovanni and then we have no niche. Im sorry. Lemonis the niche is products that meet this food promise. Giovanni im not gonna agree with it. Lemonis so, then dont have a brand promise, cause it doesnt mean anything. Giovanni i think it does. Lemonis then, if it does, then if somebody complies with it, why cant they get in . What i never knew i was signing up for was people that werent willing to give other people a chance who were trying to make it right. And so maybe you shouldnt have done a deal with anybody. You dont give people a chance. Giovanni hold on, we give more chances than anybody. Lemonis im only asking you to carry the ones that reach your standard. Giovanni but if the brands majority lemonis you told me that that was the most important thing to you. I asked you to write it down. Im willing to live to it like the bible. As a retailer, you have an obligation to deliver the consumer the choice to make that decision on their own and not for them. Giovanni oh, my gosh, that im lemonis oh, bbut what . Giovanni hold on a second. Lemonis have you taken the time to come here before . Giovanni no. Lemonis and so you draw these conclusions about people like that. I mean, cause if were just gonna be negative, this was just a giant waste of time. I use whats already inside me to reach my goals. So i liked when my doctor told me that i may reach my blood sugar and a1c goals by activating whats within me with onceweekly trulicity. 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Lemonis as a retailer, you have an obligation to deliver the consumer the choice to make that decision on their own and not for them. Giovanni oh, my gosh. That im lemonis oh, bbut what . Giovanni hold on a second. Lemonis my attitude is that if it meets the brand promise, were going to carry it somewhere in the system, even if its just online. If theyre unwilling to budge or be openminded, then im unwilling to move forward. The challenge with being a retailer in America Today is that the consumer wants to make the decision for themselves. I want to put it online and let the customer decide. You know what the biggest, baddest store in the world is . Your website, because you dont have anything invested in it. And you could be everything to all people inside of lisas requirements. Im not asking you to make a decision today. Im asking you just to think differently. Youve seen the drawings. Its gonna look like a totally different store. Fundamentally, we still have some unresolved issues, but construction is under way at the Arlington Heights location. Were gonna have proper displays and signage so that our customers can easily find what theyre looking for. Were also gonna change the layout of the store so that we send them in the direction that is most profitable for us. We want them to see the kind of merchandise, like clothes, toys, and the chew bar, that comes with much higher margins than the commodities, like dog and cat food. Giovanni the graphics are awesome. Lemonis even stuff like this. Lisa yes, thats fantastic. Giovanni and it actually advertises animals. Lemonis i spent about 100,000 between changing out the floors, changing out the ceilings, adding new lighting, building all new fixtures, putting in a new i. T. Infrastructure. With one week till the grand opening, we got to push it. Giovanni im looking at it now what our customers are gonna see. Lisa i know. Its amazing. Giovanni its awesome. Lemonis whats up, guys . Im flying lisa and gio to pennsylvania for a special trip. I havent told them where were going because, quite frankly, i want them to go there with an open mind. Freshpet is one of the countrys largest manufacturers of fresh, Natural Foods for cats and dogs. Its products are topnotch, but its mainly sold into bigbox retailers, like petco and walmart, making it the kind of brand that gio and lisa love to hate. Giovanni this is a surprise. Lisa yeah. Giovanni i dont know what your intention is, but out of every brand, its hard to put the Energy Behind this one. Lemonis so their foods not good . Lisa not that its not good, but theyre doing more for the grocerystore chains than the independents. Lemonis before, it was no soy, no wheat, no corn. Now its like, oh, now theres like another reason to not do business with you. Giovanni its just difficult for us to put the Energy Behind a conglomerate that dont fit our stable or our beliefs. Lemonis right, but have you taken the time to come here before . Giovanni no. No. Lemonis have you ever seen what their production process is . Giovanni no. Lemonis have you sat down and listened to what they have to say . Giovanni no. Lemonis and so you draw these conclusions about people like that. I mean, cause if were just gonna be negative, this was just a giant waste of time. If your business is in trouble and you need my help, log on to. We, the device loving people want more than just unlimited data. We want unlimited entertainment. So we can stream unlimited action. Watch unlimited robots. Watch unlimited romance. If you are into that. But we also want more like. Unlimited hbo. Can i stop dying now mark . No cant do mi amigo. Its unlimited. Besides you are really good at it james. Dont settle for any unlimited data plan. Only the at t unlimited plus plan comes with hbo included at no extra charge. P3 planters nuts, jerky and whaseeds. At . I like a variety in my protein. 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With car insurance, for when things go wrong. But also here with car loans, to help life go right. State farm. What a day lemonis if were just gonna be negative, this was just a giant waste of time. Theres no point in wasting our time. Giovanni were not being negative on the product, no. Lemonis before we even walked in the building, theyre being not openminded, not willing to change, telling me, no, no, no. This is not how we do it. If i dont start to see a flip in the way they look at things, then we got a problem. Do you agree that your brand promise and this company, freshpet, line up from a brandpromise standpoint . Giovanni yes, yes. Lisa yes. Lemonis so if it meets the brand promise, why are we having this discussion . I think what we should do is we should go in there. If we like the product, then we can build a relationship. Giovanni sure. Okay. Lemonis and be openminded. Giovanni youve got it. Lemonis richard, im marcus lemonis. How are you, sir . Scott hey, scott. Lemonis scott, nice to meet you. Scott hi. Lemonis this is lisa. Wed love to get a tour. Giovanni yeah. Scott we need to get you guys suited up. Giovanni holy [bleep] lemonis what we saw when we walked into that place is the most professional, stateoftheart foodmanufacturing facility that i had ever seen in my life. Giovanni wow. Scott this is our q. A. Lab. Lemonis so, this is chicken, beef, salmon, and egg. Scott all basically no byproducts, no corn, wheat, soy. Lemonis we saw their attention to detail, and we saw the great pride they have in making sure that pets stay healthy. I could tell this is having a real impact on lisa. Man check it out. Lisa its awesome to see it in action and how it goes from this to the actual product. Its very impressive. Lemonis what i hope lisa learned from this trip is in order to grow your business, you have to be openminded and learn and do research. Freshpet is an opportunity for them to grow their business. If they hadnt gone, theyd have never found that opportunity. Do you feel more openminded now . Lisa yes. Giovanni we have to be. Lemonis do you feel more openminded . Lisa i do. Lemonis all right. Lets head out. Giovanni awesome. Lemonis so, in order to make bentleys more consistent, from the accounting numbers to Inventory Management to just sharing data, i have installed salespad at all the locations. Matthew when you take an order on the register here, within minutes, it makes it back up to the cloud. Lemonis every store will have access to their Sales Numbers and will be able to properly track their inventory in real time. All the inventory here would be barcoded, and so as you sell on a tuesday, it would replenish on a wednesday. It allows the stores to grab inventory from the central warehouse, already up and running. And ive also had at t connect put in that allows giovanni to have regularly scheduled meetings with his managers without them having to leave their store or interrupt their business. You can see if theres a manager thats not engaged or theyre not paying attention. It doesnt get any easier than just pushing a button. Here, lets get started. Giovanni okay. Hey, guys, so, this is just gonna give us the ability to not only see each other, but to relay information right as its happening. Lemonis this is really gonna be the way i want you guys to communicate when you cant physically get to the store. Giovanni im excited, guys. Woman [ laug]s giovanni what is all this . Lisa cat litter. Giovanni i cant have this much money sitting back here. Its hundreds of dollars, and were slow. I want overcommunication now. We got to stop guessing at what works. You know, i just want to get in the habit of being proactive on stuff. Lemonis to see gio communicate with his staff succinctly and give them clear direction is really giving me a lot more confidence that i had before. Hes come a long way. Giovanni we took to heart a lot of what you said. We brought on a lowerpriced brand and have a second one on the way to really go after the grocerystore customer. Lemonis so you made that decision . Lisa i did. Giovanni lisa did. Lemonis good job. So, you guys ready . Lisa yeah. Giovanni yeah. Lemonis are you dying to turn around . [ both laugh ] what youre gonna see today is kind of the future look of what could be a regional or a national brand. Are you ready . Lisa yeah. Giovanni ill let you go first. Lisa im closing my eyes. Lemonis close your eyes, close your eyes. Close your eyes. Lisa oh, my god. Giovanni im looking at the floor. Oh, my god. Tired of paying hundreds more a year in taxes and fees on your wireless bill . Only tmobile one gives you unlimited data with taxes and fees included. 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If you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis. Lemonis are you ready . Lisa yeah. Giovanni ill let you go first. Lisa im closing my eyes. Lemonis close your eyes, close your eyes. Close your eyes. Lisa oh, my god. Giovanni im looking at the floor. Lisa oh, my god. Giovanni oh, my god. Lisa it looks fantastic. Giovanni im trying to remember what it used to look like. Lemonis bentleys corner barkery is now much more inviting and a lot brighter. Lisa it looks fantastic. Oh, my god. Giovanni wow. Lisa [ laughing ] oh, my god. Giovanni i mean, look at the graphics. Lis, look at the dog house. We didnt have one picture of a dog before. Lemonis uh, i know. Weve brought in a lot of graphics so that people could feel like theyre in a pet store. Giovanni the snack wagon . Im not kidding you i am totally blown away. Giovanni weve created a new display for the chew bars. Its our highestmargin product, and we want to make sure that customers are attracted to it. We put two of them in so that we constantly are reminding people. Highestmargin items, right . The commodity margins are on that wall, kind of impulse section. Giovanni sure, yeah. Lisa i just cant stop looking around. Its crazy good. Giovanni it feels like its three times the size. Lisa yeah. Lemonis theres less than half of the inventory. And, so, part of merchandising it this way is taking the categories that matter, stocking them properly, getting the margin, getting the turn, and letting it just pump out cash. Giovanni yeah, rather than piles sitting there. Yeah. This is beyond what i ever imagined. Lisa thank you so much. Giovanni yeah. Lisa [ voice breaking ] seriously, thank you. I cant tell how much this has helped our family and our thank you. Oh, my god, i love it. Lemonis before we open the store, i wanted to talk to lisa and giovanni about this potential acquisition. I feel like you guys have made a lot of progress. But i worry that progress can be easily derailed with overload. How strongly do you feel about the acquisition . On a scale of 1 to 10, in terms of being giovanni 10. Lemonis youre a 10 . Giovanni you created the 10. If this was not so good, it would be. Lemonis im willing to take the leap with you, okay . Im willing to take the leap with you. Lisa [ laughs ] lemonis all right . Im willing to take the leap. How are you . They cant wait. Its the grand opening of bentleys corner barkery. What do you think of the store . And who is this . Woman luke. Lemonis luke im excited that people are actually able to move around this store. Its not cramped, its not overloaded, and theres got to be 125 people in here. [ dog barks ] oh, this is bentley . Giovanni yeah. Lemonis hey, buddy. Giovanni you want a piece . Okay, go ahead. Lisa is that good . Oh, yummy. Lemonis people are picking up new products. Theyre seeing some of the new things that were added. I feel like we got it right. I think your dog is shoplifting. [ laughter ] with its limited selection of products, the old Arlington Heights store maybe covered 20 of the market. By adding more varieties and more brands at wider price points, we can now cover 60 of the market, and thats gonna have a huge impact on sales. Before, the Arlington Heights store averaged between 2,800 and 3,200 a day. And now, since the grand opening and remerchandising and the addition of more affordable products, its averaging closer to 5,000 a day. What do you think . Woman its awesome. Lemonis you like it . Woman its really neat. Lisa can we get everyones attention for a moment, please . We want to sincerely thank marcus and his team. Giovanni you want to thank marcus. Lisa . And all of our employees. Giovanni 50 stores in 12 months. Well be right there, so just come along for the ride. Lemonis when i first met giovanni, his biggest goal was providing a Bright Future for his son. They now feel that not only is their family unit strong, but their business family and their infrastructure is really strong. Dont tell gio, but it wouldnt surprise me within five years if this company had 100 stores around the country. [ dog barks ] tonight on the profit. I go inside sweet petes, a confectionary shop whose candyobsessed owner has created a huge variety of sweets. Thats the caramel. That is good. But with a horrible location. Part of location is having foot traffic. And i dont see that here. A partnership gone bad. Im calling you out on your integrity. Its crap. And an outdated kitchen that wont allow him to keep up with demand. There is a limit to the output, and youre the limit. If i cant turn this business around. I dont see how i can go forward. Sweet petes will come to a bitter end. You guys misrepresent my integrity. No, im calling you out on im sorry. My name is marcus lemonis, and i fix failing businesses. We made 10,000 together. I make tough decisions. Well change the