tv The Profit CNBC September 2, 2019 3:00pm-4:00pm EDT
a federal agency will determine that. i've seen enough to know one thing -- this guy does not know how to treat people. at the end of the day, i saw his true colors, so i'm out of here. ♪i head back tos ice cream parlour in california. mike: welcome to farrell's ice cream parlour. are you celebrating anything today? lemonis: i put up almost $1 million to save this beloved brand from collapsing. now i need to save my investment. your license agreement here is terminated today. i can't do this anymore. the owners are once again mismanaging the funds. travis: we got notified from the landlord that you're behind on rent, and... lemonis: you guys were not aware of it? travis: no. lemonis: the flagship restaurant i got, basically, a big f you, and my $700,000 is gone. to revive it, i'm going to need rely on some old friends... we want to do it? allison: let's do it.
lemonis: ...try some new approaches... travis, allison, pete, and myself, we'll be partners in this business. ...and make some painful decisions. you want me to work a deal out with the landlord so it lets parlour off the hook? paul: yeah. lemonis: great. no. because if i don't, both farrell's and my money will be gone... forever. my name is marcus lemonis, and i risk my own money to save struggling businesses. we're not going to wake up every morning wondering if we have a job. we're going to wake up every morning wondering how many jobs we have to do. it's not always pretty. everything is going to change. everything. but i do it to save jobs, and i do it to make money. this is "the profit." ♪ last year, i visited farrell's ice cream parlour... hi. ...a once-thriving national chain that closed its doors in the '90s... this place is awesome. ...and was reopened in 2010
by mike fleming and paul kramer. this is really what you guys are known for, giant ice cream sundaes. paul: it is. lemonis: the new owners wasted no time in opening up new locations. when i arrived, there were five -- buena park, brea, riverside, sacramento, and rancho cucamonga. paul: farrell's is part of families. it was part of mine, and it's part of millions. lemonis: but while the restaurants generated more than $17 million a year in revenue, they were starved for cash. mike and paul were sucking out the cash from the two profitable locations to prop up the three that were losing, and to pay down massive debts. the total amount of debt -- $1,940,000. equipment was failing, the food was lackluster, and the key iconic feature of farrell's, the candy store, had disappeared. i'm not really sure that the theme is clear to me. so i made a $750,000 investment to revive the brand.
part of the money went to me buying 51% of the trademark, with the other 49% held by mike, paul, and other investors. the rest went to remodeling buena park, the most profitable location. with the help of mike's daughter, shauna, who is the marketing director, we revamped the store... man: this place looks great. lemonis: the candy store is over here. ...with another key team member, travis... travis: i'm in my dream job. lemonis: ...streamlining the menu. tell your friends farrell's is back. during the process, we closed two of the unprofitable locations, and i left full of excitement for the future of the farrell's brand and the three restaurants that were remaining. my deal was to receive 5% of all the revenue from the remaining locations. travis: we appreciate you having the belief in us. lemonis: but here's the problem. i haven't received a dime. and right around the time that i was scheduled to come back to talk them about my royalty, i get a call from mike
telling me the landlord locked them out of buena park... mike: hey, marcus. lemonis: ...so i'm heading over there now. mike: nice to see you again. lemonis: so what's -- what's the deal here? mike: we're closed. lemonis: i can see that. mike: we have a lot of infighting, and i ended up resigning as ceo. lemonis: mike had already told me that he resigned his position as ceo of the business, but he's the guy that got me into this deal, and hopefully he's the guy with some answers. but this location was the best one. you did $4 million last year. it made $300,000, $400,000. so why didn't you guys pay the rent? mike: there wasn't any money in there. lemonis: but, mike, this place was making good money. let's take a look inside. mike: you know, it wasn't because there wasn't any money. ♪ it's pretty painful, isn't it? lemonis: well, considering that it was all my money, more than painful. it pisses me off. what happened to the booth here? they just ripped furniture out? mike: the landlord was looking for other options. lemonis: i mean, i spent a couple hundred thousand dollars here.
mike: i'm still hoping you're gonna be able to do something. lemonis: do what? what do you want me to do? i invested in the trademark. i did not want to get invested into running these locations. that was what you and paul were supposed to do. it makes absolutely no sense to me that buena park is shutting its doors. this is the location that did over $4 million in revenue, plenty of room to pay its vendors, pay its bills, pay its rent, and pay my royalty. the place is literally destroyed. look at this booth. mike: we had to close it down immediately and get out. lemonis: what'd he do, just kick you out? mike: yeah. lemonis: did they bring the sheriff here? mike: yes. lemonis: it literally looks like you guys just walked away from this place. mike: i made mistakes. i mean, there's no getting around it. i made mistakes. lemonis: it was a family fun center where people old and young can come and share good times and build memories. well you know what, my memories aren't so good, and i got, basically, a big f you, and i have to decide whether i just want to cut my losses and move on because i don't want to throw good money after a bad situation.
now i got to call the landlord, work out a new lease, deal with all the... he's going to tell me about that you guys did because, honestly, if i was the landlord, i wouldn't want you back in here. the place looks like absolute... ♪ all right. let me have a few minutes, okay? let me just... i'm going to walk away. i'm not an actual owner of the operating restaurants, and so i technically have no obligation to do anything to keep them open, but my investment in the brand... well, if these restaurants close, that goes to zero. mike, you guys made ice cream not so fun. mike: don't give up on it yet. lemonis: i normally am the easiest guy to persuade with a good story, but the story here isn't a good one. negligence and mismanagement of funds. i'll let you know what i want to do. ♪
i want to get more information about what's really happening, so i'm heading over to the brea location to get the real inside scoop from travis and shauna. where did the money go? shauna: to help pay bills for other stores. travis: buena park kept stores like rancho cucamonga, and sacramento and riverside afloat. lemonis: we told paul he was not permitted to do that anymore because we wanted them to live or die on their own. the whole brand was at buena park. we put all that money in there, we put the candy store in there, and he wasn't communicating to you guys on what he was paying or not paying? travis: no. lemonis: not telling you anything? travis: no. lemonis: just blindsided by it? shauna: right. lemonis: i was very clear with paul and mike that the best locations stand on their own feet, and if the other ones can't survive on their own, they shut down. they did exactly what i told them not to do. i've gotten some comments from people that the new menu actually never got installed. travis: the new menu never did get installed, so... lemonis: why is that? travis: paul was very resistant to change.
as i tried to bring in new product, as i tried to get new things on the menu, it was just line red the line item. lemonis: and who was saying no to it? travis: it was paul. lemonis: i called paul because i think it's only fair to give him a chance to tell his side of the story, and i want to see these financial statements. i want to understand what really happened. paul, i appreciate you coming by. so, wow. business is way worse than i thought it was going to look. there's buena park, there's riverside, and there's brea. buena park, the landlord is threatening eviction, right? riverside, the landlord is $200,000 past due, and your vendors are $75,000 past due. and brea is hanging by a string. farrell's international is up here, this is where marcus is, and parlour enterprises was the manager of these three locations. parlour enterprises is the management company that actually operates and manages the individual location.
along with paul and mike, there are other employees that make up that group, but essentially it's the two of them leading it. well, let's look at the revenue. buena park, $4 million, did pretty good. riverside... paul: $2.77, yeah. lemonis: and brea? travis: $2.9. lemonis: by the way, these are not small numbers. buena park makes money, brea makes money, and riverside broke even. paul: correct. lemonis: okay. so why are you past due on all your bills again? paul: it's coming into parlour as management fees, and parlour enterprises still had to pay the investors. lemonis: when i look at the financials, it looks like buena park makes money, riverside breaks even, brea makes a little bit of money, but then there's no money to pay bills? were these "investors" basically scraping off some of the cash so they can take whatever profits the businesses are making and pay themselves back? and so you are pulling money out of buena park, pulling money out of riverside, pulling money out of brea. the way the books were run,
buena park was essentially the sacrificial lamb. now, somebody had to make that decision, and so who would do that ultimately? paul: i would, but updating mike on a monthly basis of what was going on. lemonis: well, technically you're the cfo. paul: yeah. lemonis: so the checks that got released, who made that decision? paul: yeah, me. it was me. lemonis: the bills that got paid, who made that decision? paul: it was me. lemonis: why? paul: there are other shareholders involved that have been with us for a long time... lemonis: yes. paul: ...that i wanted to protect. mike: yes. you wanted to keep it together for the sake of parlour and parlour shareholders, but it was evident to me that we were on so opposite sides of the fence on this thing. that's why i resigned. i'm not going to stand around and be part of something when the decisions that were being pushed i was totally in disagreement with. paul: so why not pose those questions and have us make those decisions? why just step out? mike: because it had more to do about the direction of the company.
everything that i said with regard to going forward with marcus, i got pushback. i got pushback, i got f-bombs, i got... yes. paul, come on. paul: what was i disagreeing with? mike: the whole deal with marcus. and i got fed up there because every time i'd come in and it would be, "well, if we didn't have to do this because of marcus, then blah, blah, blah." paul: ultimately, i was in favor, and i signed through it and went through it. lemonis: just to be clear, mike has a well-documented history of blaming others, including paul, for everything that goes wrong here. mike: some of the areas that paul was in, he is not good at. that said... lemonis: why are you blaming everybody else? mike: i'm not blaming everybody else. i said... lemonis: well, you said paul should have done this. what about you? and so as he's telling me things, i'm taking it all with a grain of salt. the two of you, your relationship is no longer? you guys have no relationship anymore? paul: not really. no. lemonis: how come, paul?
paul: all the tension and stress of locations and closing, and that all fell apart. lemonis: it didn't fall apart on my end. my money got spent. i haven't gotten one license fee of any kind, not a penny, not a nickel, not a dime. paul: we're trying to hold this together. lemonis: what do you want me to do? i need you to give me some direction. paul: work with craig on a temporary lease agreement. lemonis: you want me to work a deal out with the landlord so it lets parlour off the hook? yes or no? paul: yeah. lemonis: great. no. paul: what you brought up a couple of days ago was not true. i didn't have the proof. and you do this to me time and time again. mike: paul, i'm not going to go back 6 months and try to remember. i don't know. paul: that's a lie.
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what do you want me to do? i need you to give me some direction. paul: work with craig on a temporary lease agreement. lemonis: you want me to work a deal out with the landlord so it lets parlour off the hook? yes or no? paul: yeah. lemonis: great. no. the licensing fees have not been paid, and there's termination letters that have been sent out, and while i'm not permitted to lock the door, i am permitted to actually yank the signs and all the trademarks. your license agreement here is terminated today. i can't do this anymore, and this is, like, making me crazy. the challenge that i have is that i have 750,000 bucks invested in the brand, and if i want to preserve my investment i don't think i have a choice other than to chase buena park
and try to reopen it myself. look. i wish mike and paul a ton of success with brea and riverside because i want my 5% royalty, but buena park, that's mine, and i'm going to get it right. here's the good news. farrell's is not going away. i own 51% of the brand. it's going to exist in some form or fashion. parlour enterprises will no longer run buena park. i'm going to solve the buena park thing. thank you. ♪ hello. allison: hi. lemonis: long time no see. pete: hello. lemonis: thanks for meeting. a few years back, i invested in a small candy shop in florida called sweet pete's, and the owners, pete and allison, well, they've actually killed it. today, it's a multi-million dollar business. i've flown them out to california because this farrell's situation, it's a giant mess and i need their help. about a year ago, i invested in farrell's.
to say that it's a disaster is an understatement. i think when i look at our partnership over the last 3 years, i write the check and i have no worries. i wanted to talk to you guys about the idea of us putting farrell's inside of sweet pete's. farrell's, to me, is a sweet brand, and sweet pete's is a sweets brand. so we would take the location in buena park and we would put a sweet pete's and a farrell's there, but it would really be owned by all of us, and so you'd have jacksonville, chicago, atlanta, chattanooga, and buena park. i need the infrastructure that we have, the human resources, the accounting, everything we spent the last 3 years building. allison: mm-hmm. lemonis: i'm not willing to do this without you guys. allison: you know, we don't have any experience in the restaurant industry, so that's a little intimidating, like, making sure that if we're going to take this on, we're going to figure that out. to work well next to a sweet pete's, we have to modernize it a little bit, make it a little cleaner. what do you think? pete: i mean, we're kind of in a place where do need to grow. you know, that would help us, as well.
i'm open to try, absolutely. lemonis: so we want to do it? pete: let's do it. allison: let's do it. lemonis: oh, my gosh. allison: [ laughs ] lemonis: what are we doing? do i have to hand you a check now again? i think we got one last shot, and let's see what happens. all right? we're on? allison: yeah. we're on. pete: let's do it. lemonis: let's try it. ♪ water expenses are huge here. what is our rent now, $27,000? sarah: it's $27,385. lemonis: now that i have pete and allison on board, i think i'm ready to move forward by bringing buena park back to life. and so if we're going to do this, i got to cut a new deal with the landlord, and we have to put money into here. travis: yes. lemonis: all right. let me go talk to the landlord. travis: okay. lemonis: i'm gonna call him. in order to get buena park opened up, i had to negotiate separately with the landlord and sign a 5-year lease with a personal guarantee for almost $26,000 a month, but i also managed to get a few months of reprieve so we can get all the work done. ♪
lemonis: paul, how are you? paul: hey, marcus. lemonis: how are you doing, buddy? paul: good. doing all right. lemonis: i've been getting some messages from paul, and i decided it was a good idea for us to talk. mike had been blaming paul for taking all the profits out of these businesses, but paul said he had some information that he wanted to share with me. you know, the last time we talked, we talked really about all of the financials and them being all over the place, and things closing. as you can see, this place closed. i finally got ahold of the landlord, was able to get it reopened, but, you know, mike has said some pretty damaging things about you. paul: i know. lemonis: i got word that the money was taken out of the account, and when i called mike and asked him about it he told me that you, on your own, unilaterally... paul: bull. lemonis: ...decided to take the money out of the account... paul: that's a lie. paul: ...and take it to parlour to cover bills. paul: and he's done that so many times, where he creates this thing of false belief that he has. lemonis: yeah. paul: it's a lie. lemonis: okay. paul: and i have a letter from the bank of him authorizing me to close that account. lemonis: do you have that letter? paul: i do. the day before he resigned,
and i have some e-mail backups, too. what he presented to you a couple of days ago i knew was wrong. lemonis: hello. so, mike, you know, paul came by and brought me a bunch of files and a bunch of paper. paul: and what you brought a couple of days ago was not true. i didn't have the proof. you do this to me time and time again. mike: well again, you've got documents there. i've got e-mails. let's take a break. lemonis: no. mike: i've got e-mails. lemonis: just deal with this issue, please. well, i'm just saying. all i can tell you, paul, all i can tell you -- paul: first, it's not the financial stuff. you brought that up again on monday. that's a lie. mike: paul, i'm not gonna go back 6 months and try to remember... there was so much that's happened. i don't know. lemonis: he did not defend himself, as usual. he's bringing this letter to the table now showing proof, because he kept his records, that you gave him the instruction to move the money. that's why he's standing here.
so the problem that is existing between the two of you is you're saying one thing about him, you're saying one thing about him, and the two of you need to work it out because the 15 years of friendship is now resolved to a piece of paper saying he said, she said. so i need you guys to clean this up right now because i don't know how to move forward. paul: we need to work together to get through this. lemonis: okay. i, for some reason, always want to give people a second chance, and it seems like in this case i'm going to give them a third chance. paul and mike are owners of parlour enterprises, and parlour enterprises owns a small percentage of the brand, so technically they're still my business partners. the history of farrell's is built on ice cream, and it's built nationwide. so the task that i'm going to give you guys is for you to help launch farrell's ice cream at retail. mike and paul, you want to prove to me that you're committed? here's a test for you. and i will allow you to make the first $300,000
to pay your debts off. mike: wow. paul: thank you. lemonis: and then after that, i'll earn 75 and you'll earn 25. mike: ah, marcus. put my left hand out. paul: okay. lemonis: are they really committed to what the company is doing, and are they really committed to helping me get my money back? anna: hey, guys. how are you? lemonis: have you met shauna? anna: i haven't. lemonis: this is anna. anna: hi, shauna. nice to meet you. i'm anna. lemonis: this is travis. travis: hi, anna. anna: hi, travis. nice to meet you. travis: nice to meet you. lemonis: i want to change the entire look of the place to create a new concept. since this is the first time that farrell's and sweet pete's are going to be combined into one location, i want to give it a brand new look, and i want to make sure that there are different elements from both brands that are combined, so i'm bringing in anna from pacific hospitality. it's a business i invested in in 2016. she's helped me with designs in the past, and i thought she could really help with this one. anna: you know, i was thinking about the wallpaper, maybe replacing that. more like a chalkboard type of wallpaper that has all the farrell's memorabilia sketched in.
obviously new seating, for sure. definitely the lighting. i love some of these. i think we can still use them again throughout the restaurant. lemonis: so you're intermix? anna: yeah. lemonis: while the team works on design, i've authorized them to start demolition. ♪ this will be the first location, a prototype, of having sweet pete's and farrell's put together. we have about 2 months to get this project done. ♪ you know, a lot has changed in the last couple of weeks, but i wanted to make sure that everybody understood who's who, and what's what going forward. now that we have all the parts and pieces moving and the demolition has started, i wanted to get everybody together so people know their lanes, they know what their roles are, and there's no confusion on who's doing what. we're at this very odd crossroad in the business where i had to make a decision to put more money in, and i felt like i couldn't really move forward without an infrastructure in place, so i've asked pete and allison, and their whole organization and their whole infrastructure,
to really come in and help. travis, allison, pete, and myself, we'll be partners in this business. mike: well, i guess this is a probably a good time, you know, for me to talk to you, marcus. this past year was, you know, it's been a tough year. lemonis: yeah. mike: the last week or two has been pretty tough, too. you know, i've been doing a lot of praying about it, and really what that's come to is for my family, for my health, it's time for me to move on. you know, to me right now, it doesn't... lemonis: can we go inside? literally in the middle of it all, mike interrupts me to tell me that, "ah, excuse me. i don't think i should be here anymore." not after, not on the side, while everybody is standing there. mike: at this juncture, marcus, you know, i didn't know where we were going with this, and it just became very evident to me i'm... lemonis: so this is very similar to you walking away from farrell's before when you did, right? mike: at times in people's lives,
sometimes you have to take a different turn. lemonis: i'm fine with you not wanting to do this anymore. mike: okay. lemonis: i find it interesting the way you got here, and there's a pattern. you start something and you really don't finish it. you walked out on parlour. you quit. you left a lot of people -- me, paul, the landlords -- holding your bag. mike: that's not true, but... lemonis: of course it's true. mike: no. it's not. it's not. lemonis: you didn't leave paul holding the bag when you walked out? mike: marcus, you know what? lemonis: paul? paul: i was the one responsible for continuing. lemonis: and now i'm the one responsible for continuing this. mike: i understand that, marcus. i really do. lemonis: no. i don't think you do. how much is all of it going to cost? travis: about $480,000. lemonis: i think we're making a mistake by trying to keep this thing alive.
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i had a funny feeling that mike was going to resign at some point. i don't know if he wanted to grandstand or make a scene, but to do that in the middle of a conversation with people you've never met before was completely unprofessional. mike: i think i've done as much as i can for this company. even after i left this company, i continued to work with the landlords. you know that. lemonis: but you had a financial... mike. hold on. mike: you know what? no. lemonis: you had a financial stake in the business, yes or no? mike: well... lemonis: yes or no? mike: yeah. i got a small... i agree. lemonis: so you weren't here because you were doing charity work. mike: but you have to understand. i could have just walked away completely at that point, marcus. lemonis: you left because you had no control, and you are leaving here today because nobody is paying your bills. thank you for coming. mike: i wish you the best. lemonis: yeah. good luck to you. ♪ mike is now gone for good, and so is paul, by the way. he hung around for awhile and tried to work on little things,
but in the end, it didn't work out, and candidly, it's probably for the best. now, they're still technically investors and my partners, but that's in the name only, not the operations. ♪ travis: so this is where we're standing here. this is gone now. lemonis: in an effort to drive more traffic to farrell's, we are redoing the entire floor plan to allow customers that just want to enjoy ice cream without food to come. we're expanding the entire candy store to improve the retail area, and we're adding a candy-making space, and we're also extending the ice cream bar. ♪ if everything goes according to plan, we'll be open in the next two weeks. ♪ hey, guys. how are you? shauna: hey. shauna: good. how are you? lemonis: good to see you. travis: how are you doing, marcus? lemonis: i wanted to bring you to pacific hospitality because anna wanted to present her ideas for redoing the whole space, and so we got to get started.
and then how are you guys working together? travis: we've realized the mistakes that we've made in the past, learned from mike and paul and the mistakes that they made, and we're designing everything from the uniform to a brand-new menu, to a brand-new look and feel of the restaurant. shauna: where i come with ideas more in terms of the marketing side and how to bring people in, travis helps me really execute those logistically and operationally. lemonis: okay. so what do we have here? anna: okay. so my whole concept with this was keeping the vintage feel that they have. we have to honor that, obviously, in the design. then we started kind of playing with palettes. currently, it's red, black, white, like that's very prominent, so then i went into, like, the syrups that they have in farrell's, the butterscotch, the pineapple syrup, like all those other colors that they have in their food, and so we eliminated the whole black-booth idea and went with this butterscotch-y color. travis: i actually love the color. shauna: it's taking a little bit of getting used to
because i've also liked the black. i don't know if it's going to fit in the restaurant with how the walls are and the wallpaper. all that busy-ness is going to clash with this color, as well. anna: so these were a couple ideas in working with the furniture. my thought on this was to kind of do a drip effect, like if it was sort of, like, dipped in syrup, and this was kind of dripping. shauna: i actually really like the gold. i just don't want people to walk in and feel like it's this clash of kind of random colors, and i'm terrified that people are going to walk in and say, "nothing about this says anything of the farrell's that i remember, and because of that i don't want to come back." lemonis: but that nostalgia doesn't pay the bills. i heard all of that when i came to see you guys the first time. i understand why shauna wants to protect the brand. she's been around it for years, particularly with her dad being involved. and now that her dad is gone, maybe the tension is a little higher for her. but honestly, we're moving forward.
travis: we have to risk it because we know we failed, and we have a failing business model. the food, the ice cream, the decor, everything about it has proven to be a failure, and i'm willing to run with this and give it a shot. lemonis: and so how much is all of this renovation going to cost? how much is all the furniture, the renovation, how much is all of it going to cost? travis: so we're looking at about $480,000. lemonis: a half a million dollars. i think we're making a mistake by trying to keep this thing alive. ♪ it doesn't look like you guys are collaborating. it's not farrell's and sweet pete's, it's sweet pete's and farrell's. honestly, allison, it looks like [bleep]
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lemonis: but it hasn't worked. travis: it hasn't worked under the old regime. i can tell you this much, marcus. i know for a fact my operational model is successful, and can be successful for both of us. lemonis: i think part of the reason that i really love working with travis is that it's always about the business. it's never about him. okay. let's get to work. travis: all right. ♪ pete: i noticed we sell a lot of these in jacksonville. allison: yeah. they sell really well. lemonis: the team is prepping to get the buena park location open, but one of the things that i want to see is travis, allison, and pete working together to prove that these two businesses can create one cohesive location. travis: hey, guys. allison: travis. travis: we just stocking shelves? allison: yeah. travis: i remember that marcus clearly pointed out he really didn't like the soda-flavored licorice and the really heavy bacon theme, like cotton candy and those type of things. allison: those sell really well for us, and they have really good margins. travis: i know that we're really trying to pull sweet pete's and farrell's together, but i feel like we need to be really cautious. allison: i mean, we'll just have to, kind of, play around with it
and rethink how we're merchandising it. ♪ lemonis: hey, guys. allison: surprise, surprise. lemonis: surprise, surprise. today, i'm at buena park. i wanted to check in to see how the remodeling was going. allison: i guess because they were so cash strapped they haven't taken care of anything, so the a/c is not working, the grease trap was jacked up. lemonis: you're not going to open this week, are you? allison: i mean, right now it's so hot we can't even touch anything that's chocolate or it will melt. lemonis: so the a/c is not working. travis: we're running into all kinds of old maintenance issues that weren't taken care of. lemonis: i feel like i'm living in a real money pit. first it was a couple hundred grand, then it turned into $480,000, and now i'm standing here and i'm hearing that i'm going to have to fix the air-conditioning. like, how much neglect did paul and mike actually put this business in. you guys are not utilizing the space enough yet. it doesn't look as good as i know we're capable of. the candy store doesn't look right to me. allison: it doesn't look over the top enough.
lemonis: no. it doesn't look... honestly, allison, it looks like... allison: well, it's not all put together. lemonis: maybe it's because it's in the original package, and i literally feel like i'm at 7-eleven. allison: we can make it a little more upscale looking. we can get, like, old-timey candy jar type of stuff and put it in there. lemonis: i mean, it's not pete and allison work. i'm just going to say that lightly. when i first met you guys, i loved, like, the whimsicalness of it. it was all creative, and it looked amazing. this looks like the old farrell's. we're better than this. i still can't see that if they come in the sweet pete's store, what else can they buy, and if they come in the farrell's door, what else can they buy. i don't see that glue yet. pete: is it, like, a functional thing, or is, like, something physical? lemonis: it's not a layout issue. it's not a flow issue. it's a product selection, merchandising issue. i would take this floor plan of 2,000 square feet and start moving stuff around. barrels here... on the walls, tables packed everywhere, every shelf just... allison: mm-hmm. lemonis: so when people come in, they're like, "wow." i'm trying to maximize
the revenue per square foot, and i'm not going to compromise. the only way that i'm going to get any return on my investment is if this place is a home run. and then i would actually like a toy store because if you have birthday parties, how many people come in and they forget gifts? travis: it happens. pete: all the time. lemonis: we got to be able to solve that problem. they walk in... "did you forget your gift? come to the toy store, get a gift and go to the party." in order for me to really get the final cherry on the top with profitability, i feel like the toys are going to give you the margin and the revenue. it doesn't look like you guys are collaborating. it looks like you guys are just, "okay. farrell's, check. sweet pete's, check." but it's not farrell's and sweet pete's. it's sweet pete's and farrell's. the number one brand attribute of sweet pete's is the visual. allison: back here, they are making candy, which i think helps increase sales here, and that's not something we've done... pete: ever. allison: ...before, and it's, like, right here. they're pulling lollipops, fresh apples on the countertop.
those are things that naturally cross over. like, to me, a fresh-dipped apple is it makes sense, so i think that's the cohesive thing. lemonis: this has got to be truly an integration of brands, all about the experience, all about the cross promoting of the two brands in the same space. we got one shot to do this. the store is not -- it's not ready. ♪ hey, shauna. do you want to grab your laptop? let's go up front. i'm back at the brea location because i want to rev up the marketing efforts for the launch, and i also want to pick shauna's brain. so what i want to do is... shauna: actually, can i talk to you really quick for a second? lemonis: you can talk to me about anything. shauna: i, actually, i'm really glad we're able to connect, and i wanted to thank you so much for the last several months, and for this opportunity, but i'm actually going to move in a different direction. so effective immediately, i'm going to be resigning. lemonis: if your business is in trouble
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super emma just about sleeps in her cape. but when we realized she was battling sensitive skin, we switched to tide pods free & gentle. it's gentle on her skin, and dermatologist recommended. tide free and gentle. safe for skin with psoriasis, and eczema. so effective immediately, i'm going to be resigning. lemonis: out of nowhere, shauna's telling me that she's quitting. well, what drove you to that point? shauna: you know, i don't really think there's much to say, so... lemonis: you don't think there's much to say? shauna: yeah. i'd like to just leave it at that, and honestly this is... lemonis: well, there's obviously something to say, shauna. shauna: this is my decision, and so i'm going to just leave it at that. that's all i have to really say about it. lemonis: yeah. okay.
no explanation. i think that shauna realized that farrell's is now a different business, and that it was unfortunate that her dad left, and that was bothering her. well, that's a bummer. shauna: thank you for everything, and travis is fantastic, so i hope everything works out with him because he's fantastic. lemonis: good luck to you, shauna. shauna: thank you so much. lemonis: take care. ♪ so that's mike, paul, shauna. the last man standing is still travis, isn't it? and what's he doing? working. you had no idea that was coming? travis: no, honest. i asked her to come in and to help me with hr, marketing, and revenue-generating pieces. it's not what she wanted to do with her life, and that was her general response. i don't see how you could walk away from a business like this, a name like this. she must have a reason in her mind. lemonis: the only reason that i am standing here today and going down this rabbit hole one more time is because of you. get back to work, okay? travis: all right. lemonis: all right. see you in a bit. ♪
how are you, buddy? travis: morning. how are you? lemonis: good seeing you. allison: you, too. lemonis: i asked travis and allison to meet me in atlanta to go to the toy expo. woman: we have all kinds of fun jewelry, puzzles, apparel, anything that you might want to buy. lemonis: really concerned about the margins. ♪ can we find things that are 60% margin? woman: sure. lemonis: this whole setup is great, $3 and you sell it for $6? the more toys that they can have retail for under $10, the higher the success rate is that they can attach a toy to an order. oh. look at the wings move. i love this setup. woman: a nice, small footprint, as well. lemonis: it is. this is 1 square foot. we need to find more stuff like this. for every customer that walks through the door, what is our expectation that one is going to leave with a toy? the lower the price point, the higher the attachment. all right, so you'll build us a big assortment of all of this. woman: okay. lemonis: thank you so much for taking the time. woman: i appreciate it.
♪ lemonis: travis is finally finishing the menu that we had agreed to do several months back, and guess who's in his way? nobody. how many items are on here? travis: 21, but... lemonis: compared to what it used to be, which is what? travis: close to 50. we've been able to really increase the quality of the product... lemonis: yeah. travis: ...and lower the food cost by about 1.5%. lemonis: let's taste some of that. travis: great. lemonis: he's also vastly improved the quality of the food. what's the weight of this? travis: six ounces. lemonis: is it more expensive per pound than what you used to use? travis: it is 7 cents more expensive per pound, but we increased the quality. lemonis: and while the cost in some cases have gone up, he knows that he's banking on returning customers. that's what drives revenue. and where's the french fry process? travis: french fries are over here. these potatoes are farmed strictly for french fries. lemonis: what did you used to use? travis: frozen french fries. lemonis: it's, like, perfect. what's the difference in cost?
travis: we're saving about 20 cents per order. lemonis: wow. so you're saving roughly 70%. travis: yep. lemonis: and it's fresh. travis: yeah. ♪ lemonis: today is the day that the new farrell's and sweet pete's concept opens up. i've been through a lot with this brand in a short amount of time. any time you merge two businesses together that have their own history, and their own legacy and their own style, it sometimes takes a while to get them to mesh. in my mind, this is a make-or-break situation for farrell's. unbelievable. for exclusives, extras and business advice, visit theprofit.cnbc.com.
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lemonis: good to see you. unbelievable. it looks like it should have felt from the beginning. really well thought out, properly planned, a nice assortment of food, toys, candy, ice cream. it speaks to travis' commitment to this business. ♪ look at everybody at the bar. travis: that's our new party area and classroom. this is our retail area, so we have everything from socks, to mugs, to pajamas, to hats. lemonis: how are the toys doing? travis: on the retail side of things, our number one sku is toys. lemonis: it feels the way i wanted it to feel. you come in here and it genuinely comes to life. travis: it's a very common sight to see people walk through this door and instantly smile.
lemonis: the old farrell's was overly loud and terribly lit and kind of half-assed in terms of of its overall presentation. the new space is bright, and it's welcoming. it has a great energy about it, and an amazing retail display. travis: i was actually able to take a full freezer and turn it into a chocolate storage facility, temperature controlled, labeled, and dated. lemonis: how is working with pete and allison been? travis: we have a really good, open working relationship. lemonis: for travis, it's always about the customer, and it's always about the employee. it's always about the company. he was smart enough to recognize the success that allison and pete had and not try to overshadow them or supercede them. he tucked very nicely into the organization, and just wanted to be a contributor. hi, guys. woman: hi. lemonis: how are you? boy: good. lemonis: how is it? boy: i like it. man: we grew up with farrell's, so we remember it growing up. you know, it brings back a lot of memories. i mean, it looks very similar
to what i remember growing up. woman: but it's less chaotic. man: yeah. oh, yeah. lemonis: does it still have the nostalgic feel? man: yes. absolutely. woman: yeah. for sure. lemonis: look. not every customer is going to love all the changes. there are people that have come here for years that do like the banging drums once a year, and all the horns and the sirens, but we're trying to build a business that can allow people to come on a weekly or monthly basis, not an annual basis, and it has a cohesive offering that is fun for families. okay. so what is this? travis: this is just our beef slider. so it's a smaller version of our classic hamburger. lemonis: this is ridiculous. what are your overall food costs? travis: right now we are running at 23.7. lemonis: that low? travis: yeah. lemonis: how much revenue do you think this location can do? travis: right now i have it forecasted at $4.2 million. lemonis: really? travis: for the first year. lemonis: and what do you think the net profit will be at $4.2 million? travis: we should be dropping about 18% of that. lemonis: so like 700 grand? we're sharing in that, buddy.
a typical restaurant would be hitting it out of the park if it could net 10%. travis is a rock star. thank yous are necessary, but let's be honest, they're not everything. so i want to give you a bonus. never have worked without you. never. this check for $50,000 comes from me, personally, not from the business because the sleepless nights that i didn't have, you had. travis: it's not necessary. lemonis: yeah, it is. travis: i wish it wasn't so tight in here so i could give you a hug, but you have no idea how much this will help my family, but the recognition is what means more than anything. i spent 6 years trying to fix this concept and got pushed down and pushed away, and felt like i was nothing, and to have this and to be recognized by you and... lemonis: you're my guy. travis: ...by the staff... lemonis: you're my guy. travis: ...it means the world to me, marcus. lemonis: you have not only
earned my trust, but you have earned my respect. and you don't work for farrell's, you're my partner at farrell's. you are not an employee. this is your business, your family's business with me, and don't you ever forget that this is your business. travis: thank you. ♪ lemonis: now, didn't the stadium used to be on the other side of town? allison: yes. lemonis: now that our concept in california is done and running really well, i want to expand into the southeast. gary: gary lewis. nice to meet you. lemonis: what would this place look like on a friday night? gary: game day it's mobbed. there's people coming in really from all directions. lemonis: today i brought the team to the atlanta braves stadium where we're opening up a new sweet pete's and farrell's concept. ball games, concerts, public events, friday nights, saturday nights, bars, restaurants, the expectations i have on this location are $8 million to $10 million a year. allison: that's going to be the stairwell. it's a grand staircase. lemonis: i wanted to revive this brand in a way
that had staying power for the future. travis, allison, pete, and we're in control of our destiny, but have the right people, the right product, and the right process. ♪ i visit swansons fish market, a multi-generational landmark located in fairfield, connecticut. is it always this busy? gary: yeah. lemonis: but after a tragic fire, these owners are struggling to keep their heads above water. how are you surviving? gary: we'll take money out of the deposits. i'm put against the wall. lemonis: and morale is at an all-time low. larissa: i've just been through a lot trying to help everyone, and i just don't know how much more i can deal with. lemonis: if i can't throw them a line, this historic institution may close forever. gary: it's the only hobby i really have. sue: it's ridiculous! lemonis: my name is marcus lemonis, and i fix failing businesses. if you don't like money, don't follow my process.