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. 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. I put everything into my business. And i had all these points from my chase ink card. So i bought ingredients, utensils, even made custom doughnut cutters. Wow all with points. Thats how i created the ripple. The doughnut, in a doughnut, in a doughnut. Suddenly, its everywhere. I mean, it really took off. What will you create with your points . Chase for business. Make more of whats yours. [the redesigned gla suv. At a price thatll make you feel like youve gotten away with something. The 2018 gla. Lease the gla250 for 349 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Lin what products come in through the door he say that they fit in our niche. 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 kin