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. Whoa. Travis in it made it. Its amazing. Oh is that traviss app . Its pretty cool, isnt it . 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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