If i cant get her to understand that she cannot do it all on her own. Erica i just love cooking on my own, without people telling me how to do it, and what to do. Lemonis . Southern culture will be cooked. Honestly, thats [bleep] up. 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. Erica hey, leyton, its erica over at southern culture. How are you . Lemonis in 2012, Erica Barrett launched southern culture artisan foods, a line of allnatural packaged food mixes, based in atlanta, georgia. Erica you and quinn are gonna be working on grits. Original grits, and then we need some truffle and sea salt, as well. Lemonis it had started as a side business, but as word of mouth spread, and the Product Offering expanded, from pancake and waffle mixes to bacon rub and grits. Erica write down what you guys produced. That way, i can put it into inventory. Woman yes, maam. Lemonis . She gave up her fulltime career to focus on this business. Erica i will wait to hear back from you on walmart meetings. Lemonis soon it was attracting highprofile admirers. Erica the Packaging Company that does preprinted . Man right. Erica this guys been calling me all week. Man okay. Erica cause he knows that we have a possibility of that walmart deal. Lemonis . And sales approached a half a Million Dollars a year. Erica [ laughs ] you get the meeting, ill make it happen. Lemonis but now the companys in trouble. Sales have slowed, and debt has mounted. Nichelle this is the quote from tlc rents, the updated one. Erica 3,249 . sweet jesus man we didnt get any samples from your company, for some reason. Erica oh, my god. Okay. Its just a mess. I mean, it really, really is a mess. Lemonis the packagedmix business is a multibilliondollar industry and growing. So, i came to atlanta to check it out. Hello. Nichelle hi. Lemonis how are you . Im marcus. Nichelle hi, marcus. How are you . Lemonis im good. I came to find out what the story is. Is erica here . Nichelle ericas here. Lemonis awesome. Can i meet her . Nichelle absolutely. Come on. Lemonis great. Nichelle this is erica. Erica Marcus Lemonis how are you . Erica good. How are you . Lemonis nice to meet you. Erica im erica. Lemonis nice to meet you. Erica nice to meet you, as well. Oh, man. Welcome to southern comfort. Lemonis this is it. Erica do you want to take a tour now . Lemonis i want a tour. I want to know what happens. Erica okay. So, this is the warehouse. Its about 3,000 square feet back here. Lemonis this seems nice. Erica yeah. So, ive been cooking since i was 9 years old. And making breakfast for my husband one saturday morning, i wanted to make these pancakes. So, i went to the store, and i go get all of these great ingredients. My bill was close to 30. And im thinking, for freakin pancakes . Why isnt there anything, like, innovative on the shelf that already has the strawberries, already has great blueberries, already has sprinkles, or whatever it is that i want to put in my pancakes so i dont have to buy a bag of strawberries and they go to waste. So, i left the Grocery Store with this idea and just kind of ran with it. Lemonis wow. Thats a lot of products. Erica yes. The first one is our pancake and waffle mix. Lemonis okay. Erica so, we have flavors like berry cobbler, bourbon, salted pecan, vanilla, sweet potato, gingerbread. Lemonis ive never had premade flavored pancakes. Erica yeah. Lemonis is this expense . Erica it sells for about 4. 49. Lemonis so, how much is a box of bisquick . Erica 1. 99 lemonis and how many of these does it take to make a box of bisquick . Erica about three boxes. Yeah, ours is more premium. You know, we have freezedried fruit. Its expense to buy that. Lemonis okay. Whats next . Erica we have a product called bacon rub. It is a seasoning blend for bacon, and Fried Chicken mix. We have spicy and original. Lemonis okay. Erica and probably one that im most proud of grits. Lemonis okay. Erica theres three flavors of that. Lemonis and who came up with the recipes . Erica i did. Lemonis all of them . Erica yes. Lemonis so, you came up with the idea . Erica yep. Lemonis the packaging . Erica yep. Lemonis the recipes . Erica yep. Lemonis the flavors . Erica yep. Lemonis the process . Erica yeah. Lemonis what did you not come up with . Erica i came up with everything. Lemonis okay. Erica and this is my mom. Lemonis how are you . Mom how are you doing . Lemonis nice to meet you. What is your name . Lamarinette lamarinette. Lemonis what is your role here, like, in the business . Lamarinette i do mail orders. Lemonis mail order. Lamarinette im a receptionist. I drop off delivery. Erica complain. Lamarinette what else she says i complain. Lemonis okay. We got to find a table to sit them down at. Why dont all three of us do it . And i want to line up all the flavors in each row, okay . All right, so. Wait a minute. Wait a minute. This is too much. Erica oh, were missing one more skew. Sorry. Lemonis okay. I mean, theres so many, you cant even keep track of them. So, 3 sets of grits, 17 types of waffle and pancake mix. Erica yep. Lemonis . 3 types of bacon rub, 2 types of chicken mix, and one type of syrup. Erica yep. Lemonis there doesnt seem to be as much thought as there could be in terms of streamlining and organizing their lineup whether its Fried Chicken with two, which maybe you dont have enough, or pancakes with 17, which maybe you have too much. I kind of scratch my head and wonder, are they a southerncompany . Are they a Breakfast Company . I dont really know what it is. How much revenue did you do last year . Erica about half a Million Dollars. Lemonis half a. Really . Erica yeah. We sell to williams sonoma, kroger, a lot of specialty stores, as well, across the u. S. Lemonis wow of the 500,000 you did last year, walk me through where the revenue came from most to least. Erica pancakes about 75 . Lemonis and how many of them make up the bulk of the revenue . About six flavors. Lemonis okay. Erica then our Fried Chicken mix. Lemonis how much was that in revenue . Erica 20 . Lemonis okay. So, you understand so far were at 95 . Erica yeah. Lemonis okay. Pancakes and Fried Chicken make up 95 of her revenue, and i think the way she developed the other products and the way she connected them together is probably why they didnt take off. Why did you choose to package them differently if you were creating a brand . Erica because i wanted to be able to distinguish the grits from the pancakes and the bacon rub. Lemonis and you did a good job with that. Erica thank you. Lemonis theyre all different. Erica thank you. Lemonis which is probably why the other ones dont do well. Can i taste the product . Erica yeah, i can make it. Lemonis im gonna make it with you. Erica all right. Absolutely. Grab the Fried Chicken mix. Lemonis and then what about the pancakes . Erica sweet potato. Lemonis okay. Well take this one. Erica hey, andre andre hey, how you doing . Lemonis how are you . Erica thats my husband, andre, marcus. Lemonis im marcus. Andre hey, marcus. Lemonis nice to meet you. Andre nice to meet you. Lemonis you here to help us . Andre yeah, sure. Every once in awhile, i come and help out. Erica hes been here, like, three times. Andre shes been running the business for five years, and the profitability is close to zero. Its not ran efficiently. And the margins are slim. Lemonis are they . Andre yeah. Lemonis what are they . Andre i dont know what they are, but i know lemonis so, then how can you say that theyre slim . Andre well, i mean, i know that she always needs some money. Lemonis so, is that the margins that are wrong . Andre i think its the mar i think she also miscalculates. I used to do this full time, so i know for a fact that erica andre, you never get lamarinette how many years ago . Erica part time. Andre no, i did it almost full time cause i worked lemonis so, your calculations are off, too. Lamarinette almost full time. Erica your calculations are off lemonis to be honest with you. Its delicious. [ laughter ] i have a little knowledge on Fried Chicken, and this was crispy. It had heat, but it was smooth and flavorful. Erica it is delicious. Lemonis i could say without a doubt that i would be comfortable putting my name on this product. I eat Fried Chicken almost everywhere i go, and this is the best Fried Chicken ive ever had. Its fluffy. I can taste the flavor as opposed to just smell the flavor, which is a big difference. Lamarinette yes. Erica yeah. Lemonis i really like it a lot. Erica thank you. Thank you. That is awesome. Lemonis so, the ingredients. Erica mmhmm. Lemonis organic flour, sweet potato, organic sugar. Erica its allnatural ingredients. Lemonis i would pay 5 for this. Erica okay. Lemonis like, a family of four could eat that. Erica yeah. Lemonis what does this packaging cost . Erica about 74 cents. Lemonis really . Erica yeah. Lemonis okay, thats expensive. Erica it is expensive. Lemonis very expensive. What does this bag cost . Erica 2 cents. Lemonis okay, so now were at 76 cents. What do the ingredients cost . Erica 44 cents. Lemonis so, were just over 1. 15 . Erica yep. Andre but once youve calculated the labor cost, its a lot higher. Lemonis so, what does how much labor goes into making this, andre . Andre i mean, i dont have the exact numbers, but the employees arent as efficient. I mean, like, when i come in here, i always get upset because i see them walking around. Lamarinette but how do you know when youre not here . Andre thats pretty much what i see. You come in here, you get on your laptop, you take conference calls, and then you leave. Andre no. Lamarinette andre. Andre yes . Lamarinette lets be honest. Erica youre not here with us. Lemonis you know when youre gonna buy Something Big and this guy comes in, and hes like, the closer, the one that reinforces everything thats happened . Andre would be, like, the opposite of the closer. Hes the guy basically saying, no, you think this is a great idea, but let me just tell you, this is a really bad idea, and the business is really screwed up. Look, its clear to me that you have a particular perspective on the situation. Andre mmhmm. Lemonis lets you and i go talk about it ourselves. Andre okay. Lemonis okay. So, why does everybody feel like you walked out . Andre well, i mean, i kind of did walk out, but i walked out because when you have a company, its so much to do. Its, like, youre never done, and i also worked full time at the time when i was doing that. Lemonis so, you have a real career that you enjoy . Andre yeah, yeah. This was more for erica. Like, initially, i was doing i was starting to do most of the sales, and i was up every single night night and day like, trying to get more customers. Lemonis did you give up . Andre i did kind of give up. I gave up because we werent seeing eye to eye. Like, im a different thinker. So, like, i always think about the future, and, like, erica, shes never really been into saving. And i want to see profitability, and if im not seeing profitability, then im gonna lose interest. Erica i mean, lets be honest. I feel like ive always supported his dreams. I just want the same type of support and respect. I almost feel like im on an island, me and my mom, and were going through this alone. Andre if youre not capable of running a business and making it successful, then whats the point of erica who says im not capable of running a business . Lemonis i dont even know when the last time you guys actually talked about this cause this stuff seems very fresh to me. Andre i feel like our relationship is not as good as it used to be. Erica i dont feel like he fully understands me and my dream and how much it means to me. And i feel like when you marry a person, youre supposed to share a dream, not be divided. Even if its just encouraging words like, hey, its gonna be okay. Ill help you work through it. Its just like, you chose that. Why dont you just shut it down . Lemonis i dont necessarily disagree with what andre is saying. What i disagree with is his delivery. If you want to make a point to somebody, you have to do it in a way that helps them be openminded to the idea. Erica i mean, he knows sometimes when i need money for payroll, and hes helped me out. He does have a heart. Hes like, okay, ill give it to you. Lemonis it sounds to me like when push came to shove, he was there for you. Erica absolutely. I love him a lot. Lemonis you have a beautiful marriage. You cannot let the business come in between it no matter what. What id like to do actually is meet at the table, and i want to go over the financials. Erica okay. Lemonis okay . Andre all right. Thanks. Lemonis have you ever seen these financials, andre . Andre no. Lemonis not once . Andre no. Lemonis 2015 shows the total sales of 616,000. Net income of 77,000. And in 2016, 500,000 in revenue, and it about broke even. So, heres the the summary of the financials over the course of five years, it basically broke even. Loss a couple years, made a couple years. So, lets go through your liabilities. On deck 25,000. Erica that is a loan. Its an alternative lending company. Lemonis whats the Interest Rate on that . Erica its at around 40 . Andre 40 on a loan . Thats, like that makes no sense. Lemonis why did you take a 40 interestrate loan . Erica i wanted to Fund Fourth Quarter orders. Couldnt get the money from anywhere else. Lemonis did you ask andre . Erica yeah. Lemonis and what did he say . Erica no. Lemonis bolsters 75,000. What is that . Erica another alternative loan. Lemonis wheres the money . Erica inventory, paying people, working capital. Lemonis that means its gone. Erica well, i believe that a lot of it is the interest that we paid on the alternative loans. Lemonis how much debt do you have . Erica its probably about half a million. Andre shoot, half a Million Dollars . Never heard that number before. I mean, thats basically owing on a 500,000 house. Lemonis was that a secret . Erica yeah. This is not a secret, though we dont talk about this stuff andre ive asked her before, and shes never told me. Erica im not a liar im not withholding information he doesnt share anything why should i share with him if he doesnt share with me . Andre we used to share. Erica why should i share information with him if he doesnt share information with me . Lemonis ask him. Erica its pointless. Lemonis andre, youve been very critical of the business. Andre yeah, but its almost as punishment for wasted money. Lemonis the solution isnt to keep telling her how stupid she is. Andre i mean, i would say as a repercussion for lemonis what a repercussion shes not your child honestly, thats [bleep] up. Erica im not a liar im not withholding information wed love some help with laundry. Spray and scrub anything with a stain. Wash the really dirty clothes separately. Tide pods with upgraded 4in1 technology unleash a foolproof clean in one step. Aww, you did the laundry its got to be tide. For all of the heroes who serve us, tmobile is offering 50 off family lines for military, veterans and first responders. 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Giving you more choice and control compared to other top wireless carriers. Save up to 400 a year when you switch. Plus, get 50 off when you buy any new lg phone. Xfinity mobile. Click, call or visit a store today. He doesnt share anything why should i share with him if he doesnt share with me . Andre we used to share. Erica why should i share information with him if he doesnt share information with me . Lemonis ask him. Erica its pointless. Lemonis andre, why do you think i want to invest in erica . What talent do you think erica brings to the table that makes her investment worthy . Andre i think she can make i mean, welemonis did you hearss intowhat he just said . Ness. Whatd he say . Erica we. Lemonis andre, your wife, who you love, who youre frustrated with right now, she needs your support. Can you two shake on that that youre willing to do that . Andre yep. [ both laugh ] lemonis the reason i want to take a shot on you, erica, is because a couple of the products youve created have real appeal, and the fact that you generated 500,000 in sales is a big deal to me. The problem here is that this business looks like its dead on arrival because of this debt mess, but perceivables are an asset. Erica yeah. Lemonis equipment is an asset. Inventory is an asset. Erica yeah. Lemonis and these are things that you can use to pay everybody off. So, the offer that im willing to make is very different this moment. Im willing to invest 75,000 to find copackers, get new packaging put together, and bring products to market if you can prove to me that you could have financial discipline and that the inventory, the assets, all get sold off every debt gets paid down, paid off, or a payment plan is put into place. Normally, when i go into these deals, im ready to invest in a business right at checkin, get equity in exchange for it, but in this particular scenario, i really feel like erica needs to prove to me that she could learn what financial responsibility is. And until she proves that to me, theres no point in talking about equity. So, that is my offer, but i need to know if we have a deal. Erica marcus. You have a deal. Lemonis a check cannot be cashed until both of us agree that these things have been done. Erica okay. Lemonis okay . Erica im up for the challenge. Lemonis okay. We have a