Transcripts For CNBC The Profit 20240712

And gain some perspective. You just made it about money. Thats how it makes me feel. You just made it about money. Or her beloved business will die on the vine. Christina i dont want to be that person that cries on tape. I really dont. Lemonis 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. Lets go to work. This is the profit. In 2010, Christina Stembel planted the seeds for Farmgirl Flowers, a unique ecommerce florist located in san francisco. Originally a farm girl herself, christina first got the idea while working at stanford where she saw firsthand how much businesses spend on floral arrangements. Christina get some of these. Dont just put the pale ones in. Lemonis researching the industry further, she realized how much florists rely on imported flowers. And that their huge selections often lead to lots of waste. And thats when she decided to start a streamlined Daily Delivery Service that exclusively uses american flowers. Christina that looks gorgeous, kim. Lemonis while farmgirl generates millions in revenue, other online startups are hot on its heels. And christina needs more than just money to stay ahead. There are plenty of opportunities to make a floral ecommerce business grow into a national presence, not only in the residential sector but also in the commercial and hospitality markets. With her unique twist on the domestic based flower company, im excited to get a closer look at what christina does and help this business grow to its fullest potential. Do you know where Farmgirl Flowers is . Farmgirl flowers is in the heart of downtown san francisco, at the flower market. Nobody else had the sort of signage that she had. It was made of carnival letters. It was bright, and you could really feel that it had some energy to it. Is christina here . Christina i am lemonis nice to meet you. Christina nice to meet you. Lemonis why is you place a little jazzier than everybody elses . Christina cause were a hip, young flower startup. Lemonis is that what you would call yourself a startup . Christina yes. Were an Online Flower company. 99. 9 of our business goes through our website. Lemonis okay. Well, take me inside. I want to see what it is that you do. Christina let me take you on a tour. Christina this is veronica. Sasha. Katie. Katie hi nice to meet you. Allie and im allie. Lemonis allie. Christina and this is tati. Lemonis how many work here . Christina 30. Lemonis are they all women . Ian man coming through. Lemonis man coming through [ laughter ] ian tada lemonis i was like, holy. Im in trouble. Christina so, this is our assembly line. We run it like a manufacturing facility. Our lead designer puts the recipe here, so the designers will all know what goes in each one. We have quota systems for the designers, so when they come in, theyre given a quota they have to do each day. Lemonis i thought flowers were supposed to be fun. Christina they are fun. Lemonis sounds intense. Christina we have a very fun environment. We take a lot of pride in that. Lemonis you started this business, when . Christina november 7, 2010, was our launch date. I quit my job at stanford. Lemonis what did you do there . Christina i was a director of Alumni Relations and Campaign Outreach for the law school there. I wanted to do something that actually did something good in the world. My numberone mission is to support american flower farmers. Competitors of ours, their quality i believe is subpar. Ours look much better. Lemonis what do you do thats more innovative than them . Christina domestic product. Lemonis nobody has domestic product . Christina none of the big guys. Were able to provide designerquality arrangements at generic ecommerce prices. And instead of having 40 waste like industry standard, we have less than 1 waste. We use everything that we buy because we only do one daily arrangement. So you dont get to pick what any of the flowers are. We pick for you. Lemonis i cant pick my flowers . So if i want something for my mother thats orange or pink christina well let you do that for our extralarges. But if you just want to order off our menu, you dont get to pick. Lemonis i have to hand it to christina. Shes on to something with this one daily arrangement. Think of southwest airlines. It became one of the most Profitable Airlines by offering one type of plane, one type of seat, and one type of inflight service. That allowed it to keep its operating costs way down and passing those savings on to the consumer. The same goes for farmgirl offering just one arrangement eliminates a lot of waste, allowing her to sell highquality american flowers at affordable prices. Even better, it keeps customers coming back, and they can be pleasantly surprised by whats in the next delivery. Small, medium, and large. Christina you pick if you want a vase, our trademark burlap wrap which is reused coffee bags or if you want a living plant. Lemonis nine variations. And thats the basic business . Christina thats the basic business. Lemonis of the nine, whats the most popular . Christina small burlap. 38. 30 . Lemonis thats 30 of your business . Christina yes. And medium vase, 78, and medium burlap, 58, are about tied for second. Lemonis that would make up how much of your business . Christina between these three, about 65 of our business. Lemonis okay. Christina yep. Lemonis good. Christina greens are the hardest part, actually. Were gonna make a fan shape. So im gonna put some here. You got to cross them in your hand more. Remember the fan shape . Yours is gonna end up looking like a pancake. Lemonis im not thinking that yours looks that much better. Looks like you just basically picked up a bunch of stuff and threw it together. Christina really . So then youre gonna take two of these. Lemonis what if theres a bunch like that . Christina they will all be bunches. What we try to do is we keep walking. Lemonis well, youre in my way. Christina then you wouldnt have to stop as much. Lemonis whats the cost of all these . Just flowers. Christina 11. All right. And were gonna take it over to the chopping block. Youre gonna be really careful, and youre gonna have to go really hard, okay . Like that. Hey, what do you guys think between marcus and mine . Lemonis its not a contest. When you train people, youre supposed to motivate them. Christina i think it looks great. Lemonis do me a favor. Nobody take credit for that one. [ laughter ] christina this is our shipping center. This is stephanie. Shes our new manager here. Stephanie its nice to meet you. Lemonis nice to meet you. How long have you been here . Stephanie three weeks . Lemonis how many orders will you process a day through here . Christina its, on average, 250. Lemonis what does it cost to ship . Christina its 16 to about 39, depending on where its going in the country. We Just Launched national shipping. And, so, thats how we get to a billiondollar company, is by shipping national. Lemonis its obvious to me that christina has started to crack the code with this flower delivery model. But the problem really comes in when you have to ship them. If you just ordered a 39 arrangement, and youre shipping it across the country, you have to add another 39 for delivery. Now the arrangements 78 not so affordable. One way to fix that is to add a distribution facility on the east coast, allowing the shipping costs to be cut in half. But the problem with that is that it takes money and expertise. What is your role here . Ian my role is that im the courier manager. So i manage all of our deliveries. Lemonis okay. Ian were grabbing them out of here, and we wrap it in a piece of burlap, which is our, kind of, signature. Christina you can see they pack up their bikes and their pack thats on their back. Lemonis holy moses. Christina you want to try to put it on . Lemonis and now im gonna get on a bike . Christina and now youre gonna get on a bike. Lemonis [ laughs ] here we go. Ian all right. I think weve got a new hire. Christina yep. Lemonis this is a hard job. Christi not eng trouble placing something online, on our website. Lemonis so, let me look at that. Lauren yeah. Yours . Pick any of the goodies or anything if they want any. Lemonis add. Okay, now i want to check out. Checking it back after i was checking out. Lauren yeah, i saw that. Lemonis its not a great website. Its kind of ironic to be in Silicon Valley and have the website sort of be. Average. Well, i was hoping that i would find an unbelievable Technology Platform that would allow any product to be delivered through that infrastructure. I placed an order online. Christina mmhmm. Lemonis it wasnt easy. Christina yeah, its definitely too many steps and too many clickthroughs. Lemonis whyd you call me here . Christina weve completely changed the way customers buy flowers online now, from the burlap to not getting to choose, to the bike courier delivery. But the benchmark for success here, in Silicon Valley, is if youve raised money. I did spend a good year of my life pitching to v. C. S. And to not be able to raise capital, and then to see competitors come in and rais and beat me to market, that does affect me. Everything i do, i try to do it the right way keeping all the employees inhouse and giving them medical benefits. [ voice breaking ] so it is frustrating. I dont want to be that person that cries on tape. I really dont. Do you mind if i just go calm down really quick . Im really sorry. Just let me [ sniffles ] okay. So, heres the thing. I want to do things that make a difference, and i want to do it the right way. Lemonis why havent you been able to raise money . Christina because im a woman. I have less than a 5 chance. Lemonis of what . Christina of raising capital. Its just stats. Ive been told by female v. C. S to take my husband in with me. Why . So i can answer the questions . Lemonis i can sense that shes frustrated about the difficulty in women raising money in a very maledominated world. You can tell that its sort of taking its toll on her. Christina like, my dream job is to build a couple businesses, sell them for a lot of money, and then i would love to just invest in female entrepreneurs. Lemonis at the end of the day, your goal is to take your success and give other people a chance that you werent given in your mind. Christina yes. And i did think about this in reaching out to you. Do i really want the message to be that this guy had to come in and save our company . Lemonis theres nothing broken. Christina youre right. Lemonis except your ecommerce christina i just need money to be able and im very aware that i can get that. Lemonis ah, you need more than money. You need knowledge. Christina i think im aware of my limitations. Lemonis okay. Thats good. So, if i was a woman. Christina mmhmm . Lemonis . Would you have a totally different perspective . Be honest. I was the same person but a woman. Coming up. Christina i think we have a phenomenal company. Lemonis did i say you didnt . Christina well, earlier, it felt like you were interrogating me. Lemonis i am. Im doing due diligence. Save without even leaving your house. Just keep your phone and switch to Xfinity Mobile. You can get it by ordering a free sim card online. Once you activate, you only have to pay for the data you need, starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. 5g is now included with all new data options. Switch and save hundreds. Xfinity mobile. Christina mmhmm . Lemonis . Would you have a totally different perspective . Be honest. I was the same person but a woman. Christina if you were a woman, i probably would have reached out earlier. Lemonis the fact that christina admits that she considered my gender before reaching out to me is troubling. Im not sure how that makes her any different than the Venture Capitalists shes criticizing. The fact that she went through these issues is terrible, and im sympathetic to it. But i dont want to be indicted for it. And i dont want it to affect her business judgement. Thats gonna be even a bigger problem. You dont want to be dismissed cause youre a woman. Christina yes. Lemonis i dont want to be dismissed cause im a man. What matters to me is that you have a business, youre open to change, and youre willing to work hard. And so you cant play the gender card with me. Christina mmhmm. Lemonis cause im blind to it. Christina yep. Lemonis plenty of men and plenty of women would invest in you, by the way. Maybe i just know cooler people. Or something. Christina maybe you hang out with lemonis non ass bleep . Christina maybe not on san hill road, here. Lemonis okay. Now that ive gotten a sense of her process and her Business Model, i want to dig into her financials and find out how well shes really doing. So, what do you want to take me through first . Christina do you want to talk about overall numbers . Lemonis i do. Lets look at revenue. 2011 56,000 in sales. 2012 276,000. 2015 on your way to 4. 2 million. 2. 9 million as of now. Wheres the net profit . Christina here it is zero. [ chuckles ] lemonis zero. Christina we have about 80,000 in debt right now. Lemonis how did you fund the 80,000 loss . Christina credit cards. Lemonis your personal ones . Christina no. Business credit cards. Lemonis and the reason that youre showing a loss is why . Christina is because we decided to launch national shipping. Lemonis so, wheres your wage for 2015 . Christina i dont pull a salary. Lemonis zero . Christina zero. Lemonis you make no money . Christina no money. Lemonis how do you pay your bills . Christina my husband is very understanding, and weve decided to reinvest it into farmgirls growth because we think well get it at the end. Lemonis the fact that she doesnt take a salary not acceptable. But im impressed by the growth that shes had, and im even more excited about how easily some of these problems can be solved. She has some debt. Its not terrible. Its easy to solve by paying it off. So, on a small burlap, retail of 38, cost of 27. 79, gross margin, 10. 21, 26. 8 profit. Christina mmhmm. Lemonis and thats 30 of the business. Christina yes. This is with delivery. Lemonis but where have you actually put your delivery collection fee in here . Christina so, thats an extra 10. So that would bring our margins much higher. Lemonis right. Instead of saying 38 , total revenue collected for this column isnt 38 . Its 48 , taking the margin from 26. 8 exploding to 46. 6 . Christina thats great. So that will help significantly. Lemonis its gonna help. Christina told me that she struggled to raise money because she was woman. But the fact that shes going in with margins that are lower than they really are mistakes could be a big contributor to why she wasnt able to raise money. And this is what i thinks exciting. When i look at your projections july, 133,000 is what you did last year . This year, youve already done 337,000. Christina mmhmm. Mmhmm. Lemonis so youre generating the top line. Christina like, next year, i know were gonna hit 6 million. And if we actually had Investment Capital wed be doing 8. 4 million. Lemonis not in this space, you wouldnt. Theres not enough labor and hours in the day. And so when when you say, i know were gonna do it, somethings got to change, right . Christina ill figure it out. I think we have a phenomenal company here. Lemonis did i say you didnt . Christina well, earlier, it felt like you were interrogating me. Lemonis i am. Im doing due diligence. Christina yeah. You are. You are. Lemonis right . Shes, like, annoyed that im asking her questions about her financials. Did she think that somebodys just going to walk in and say, oh, you have a beautiful flower arrangement. Heres a check. I mean, no. Christina i called you here because. Im really scared. [ voice breaking ]. That our competitors are gonna beat us. I cant believe im crying. I dont cry. Lemonis who cares . Christina im not a weak woman. Lemonis i dont think youre a weak woman. Christina im worried that theyre gonna beat us to market because of the money theyve raised. Lemonis and why do you think they got it . Christina i know that part of it is that im a solo female founder. Lemonis are you a man hater . Christina no, im not. Im married im not a man hater. Lemonis okay. Your confidence in your numbers makes me a little nervous. But i leave here today impressed. I am very impressed by her Business Model and even more impressed by her tenacity. But what im unimpressed by is the way she glosses over the issues that exist in her business, and some of the amateurish math mistakes shes made. This business is not as tight as she thinks it is. Good morning. Christina good morning. Lemonis how are you . Christina good to see you. Lemonis good to see you. First of all, i have to compliment you. The idea that you came up with is fantastic. Christina thank you. Lemonis you didnt walk in with a huge checkbook and a huge pot of money, and you have been able to do one hell of a job. Christina i really appreciate that a lot. I do have one quick question. I do know im not willing to negotiate on imports. Im very confident in this area. Its not something im willing to negotiate on. And i hope that you would respect me. Lemonis its never a good way to start by saying words like nonnegotiable. Thats not the greatest way to lead into a productive discussion about doing a deal together. Lemonis at any point in our time together, have you heard me talk about bringing flowers in from china . Christina no. Lemonis i havent even talked about that. I think that the help that i bring to the table is different than you walking into a Venture Capital. Its just, how much money can you bring, and what do you want for it . Christina yeah. Lemonis and, so, im not that person. Christina mmhmm. Lemonis and im a guy, by the way. Christina i do believe that part of not being able to raise capital is because im a woman. I have no bitterness over it. I really dont. Lemonis but you have resentment. Christina you know what i have . I want to share my story. Wanting to be a champion for women is part of me. Lemonis i care about you and me. Christina yes. Lemonis im a guy, and im interested in investing. Lemonis christina doesnt want to let this gender thing go, and im trying to be sensitive to her feelings. But im here to focus on her business, not her personal hangups. I want to make an offer. Christina okay. Lemonis you have a business that has a good idea. Christina 900,000 is what i need in the next 12 months. 5 million is what i think that im gonna need in the next three years. Lemonis how many of the Venture Capital firms that you met with actually spent the day with you and asked you all those crazy questions . Christina none. Lemonis how many of them actually got on a ridiculouslooking bike . Christina none. Lemonis i do it because i want to build a relationship with you. I also really give a crap about whats happening. And, so, please dont respond to me as if youre sitting at a Venture Capital meeting. Respond to me as if it would be good for you to have a partner who has the resources to grow more than just writing a check. Coming up. You want me to really give a. You want me to use every resource. But i can tell you that the lower i have, the less excited i am. Christina 900,000 is what i need in the next 12 months. Lemonis im not a Venture Capital fund. Respond to me as if it would be good for you to have a partner and have the resources to grow more than just writing a check. Christina yes. I know that you can definitely help. But im building this amazing brand, so my ask. Is 1 million for 5 . Lemonis uh, excuse me . Christina i lemonis did you say. Christina yes. Lemonis did you say 1 million for 5 . Christina yes. Lemonis so you think your business is worth 20 million . Christina yes. I know what were gonna do in the next five years, bootstrapped on my own. And, so, i do know that were going to at least double every year without any investment. Lemonis if were gonna make it about dollars and cents, lets do that. Your business isnt worth 20 million. You know, i knew your valuation would be high because you live in Silicon Valley. And so youre giving me a technologybased valuation. Everybody that thinks they have a technologybased company their companys worth a billion dollars. Lemonis thats how i feel. Christina okay. Lemonis and thats why, typically, i never invest in technology, because i think their valuations are preposterous. I dont like to burn money. If you were operating this business in indiana, i believe your valuation would be much different. Are you willing to admit that . Christina i dont know. Lemonis if i make a small 1 Million Investment, and i have 7 , and it goes well, im gonna make a little bit. If it goes bad, i lose a ton. Christina yeah. Lemonis and so for me to make an investment in a business, i want to invest capital, i want to invest my resources, but i want to also be interested. Christina mmhmm. Lemonis and 5 just just isnt interesting to me. I cant make a 1 Million Investment and feel insignificant. So my offer is a 1 million for 25 of the business. Christina 7. 5 is the end. Lemonis i was sort of annoyed by her request. This isnt some Software Company where its gonna solve something in the future. This is a real ecommerce business that has real revenue and real losses. You have no Technology Platform to speak of. Why would you not want to bring on a partner who has resources, who is gonna respect your personality . Christina i see your point. I do see your point. But coming into this, i had very clear boundaries myself. I can go 10 . Thats double what i thought i was gonna come in here. Lemonis you want me to really give a. You want me to call everybody, pull every string, use every resource. But i can tell you that the lower i have, the less excited i am. I cant be there making flowers with you every day, but christina i dont want you to. No offense. Just joking. I was trying to lighten the mood here, okay . Your value is in other areas. Lemonis i feel like shes sort of looking at me like, can you write a check, yes or no . Im not really interested in what value youre gonna provide. I am putting value on me, just like youve put value on you. I cant i cant just minimize this as if im just, like, a piece of. I just cant do it. Christina um. Lemonis and so my final offer is 1 million for 20 and a half a Million Dollar credit facility. Christina and you need to know now . Lemonis i need to know now. For exclusives, extras, and business advice, visit theprofit. Cnbcprime. Com. Lemonis and so my final offer is 1 million for 20 and a half a Million Dollar credit facility. Christina and you need to know now . Lemonis i need to know now. Christina im sorry. I cant do it. Lemonis you know what the challenge for me, christina, is . And this is maybe the disappointing part, is that basically you just made it about money and not the partnership and not the resources and to expose you to new things and to come up with new ideas. You didnt see any of that. Christina 20 is too steep for me. Lemonis you probably would have done anywhere from 5 to 10 for 1 million with a lot of people. Christina no. I wouldnt have gone over 5 . Lemonis well, okay, so, you just said, well, ill just throw you a little extra 5 points, basically saying that you see no value in me, after i just told you how much value i see in you. Christina im really sorry it seems that way. Lemonis well, it doesnt seem that way. It is that way. Nice meeting you. Good luck to you, by the way. Christina thank you very much. Lemonis i think what i didnt necessarily feel with christina is that she really wanted a partner. If you sort of let go of your pride, and you have an open mind, youre gonna experience success. Like youre experiencing at the simple greek. Just over a year ago, i met mike ference and his wife, kathleen kamouyerou, the owners of a fastcasual greek restaurant just outside of pittsburgh called my big fat greek gyro. They opened their flagship restaurant 11 years ago. And when i met them, an additional 4 franchisees had opened in the Greater Pittsburgh area. Andreas what can i get for you . Woman the gyro, fries. Lemonis kathleens two sons, michael and andreas, were in the process of buying their original location. Andreas if you could just sign that for me. Lemonis and though the family had dealt with tragedy. Michael i was 15 when our father passed. Lemonis oh, my gosh. Michael they were ran off the road by a semitruck. You were in the car . Kathleen yes. Lemonis . They were extremely tightknit. Andreas come on, mikey. Michael come on, mike. You can come in. Lemonis the business on the other hand, was in absolute chaos. I quickly learned that the franchise model had never been properly established. Mike we just set up the llc. Kathleen it was a mess from the beginning. Lemonis every restaurant had its own look and feel. And there was zero consistency for the customer. Mike im more proud of this than ive ever been proud of anything. Lemonis you shouldnt be proud of this right now. Its a disaster. The companys name was in contention. Mike there was a company in california that trademarked my big fat greek. Lemonis the menu was all over the place. I was gonna take a trip to greece this summer, and im looking for tater tots, cheese sticks, cheddar balls. And hardly any of their food was fresh. My aunts and uncles, theyre not getting spanakopita out of the freezer. Theyre actually terrible. All of this had infuriated the franchisees. They felt like mike had sold them a bill of goods and then left them high and dry. Woman we have yet to make money. The only help we ever got from them was on the first of the month, they came and picked up their royalty check. Man ive lost respect for mike as an individual. Lemonis i had major reservations. But my big fat greek gyro had no debt and made a good return on capital. This location did 300,000 in sales and made 100,000. The concept can work. I knew if i simplified the menu and reimagined the branding, this fastcasual franchise could really take off. So i made deal. For 350,000, i bought 55 of the business, a controlling stake. Kathleen im waiting for new beginnings. Lemonis we have a lot of work to do. We overhauled the entire concept, from the look of the stores to the food we served, even down to the name of the business. It wasnt always easy to get everyone on board. Kathleen i hate this name. Lemonis but youre not a branding expert. And i was never quite sure that i could really rely on mike. I need to get convinced that youre the right guy to lead, or ill have to fire you. But we ended up with a new concept that uses fresh ingredients and has cohesive branding. Well, i want to get the greek flavors up in all the food. Man more dill, less cucumber . Lemonis i think its perfect. Man opa kathleen thats it. You got that. Lemonis after the episode aired, we received thousands of franchise applications from all over the country from people looking to have a piece of the simple greek. But i wanted to perfect the concept and the food before launching more locations. Mike heres to mr. Lemonis, and heres to the simple greek. Lemonis today, all of the simple greek locations are making money, and i spent more than 400,000 renovating all of them. And now were getting ready to open up our first location in chicago, driving toward making us a national brand. Today, though, im heading back to pittsburgh to see our latest conversion in Market Square. Mike whats happening, my man . How are you . Lemonis it looks good in here. Mike it does. Yeah. Lemonis it came out a lot better than i thought it would. Wheres sasha at . There you are sasha good to see you. Lemonis look how packed your restaurant is. Sasha yeah, i know. Its doing well. I think its a testament to the fact that we set up a really good concept with fresh food that allow people to eat a good, balanced meal during lunch. Its the middle of winter. Its freezing outside. And you cant fit any more people in here. Rich, how are you, buddy . Good to see you, my man. I dont want to get your hands dirty. All right. Lets see the process happen. Sasha hi. Would you like a bowl or a pita today . Lemonis bowl . Im gonna give you a lot of protein. What type of meat would you like . Man can i do the traditional . Lemonis we need more gyro meat, please. Sasha its coming. Lemonis all right. Lets pick it up. What type of meat do you want . Lets knock these out, guys. Come on. Does everybody like the food . Man its awesome. All yeah lemonis chicken . Need more chicken im going a mile a minute serving food, but i cant help but notice mikes just lounging around at one of the tables. The last time i was here, i told him he need to step up. I hope this isnt his definition of stepping up. I want to ask you a question, and i want you to be as brutally honest with me as you can. Sasha mmhmm. Lemonis how often is mike here . Sasha its kind of the same. They pop in. Hell come here probably three times, i guess, a month. Lemonis pick up their check. Sasha well, yeah, but, i mean, actually, sometimes i bring it to them. Lemonis do you think hes here right now cause im here . Sasha i mean, i dont know. Maybe. Lemonis whether or not mike showed up because of me, well, im happy that he came. Theres something ive been wanting to talk to him and kathleen about. You know, i thought it would be good for us to sort of talk about whats transpired, how we sort of move the ball forward. Were now at the point where were gonna invest in the chicago market. Your son andreas is gonna sort of help get us open and off the ground there. Mike excited about that. Lemonis and thats a big investment. Kathleen yes. Lemonis and so, since the mt. Lebanon store has converted, since the mcmurray store has converted, and since the Market Square has converted, i have 410,000 out im sort of getting no return on that investment, as we speak, like literally nothing. I asked rich a couple weeks ago why he hasnt been paying his royalty fees, his franchise fees, and he said he has been paying. And i asked andreas, and he said that him and mike were paying them. I asked chase, and he said theyve been paying them. Kathleen right. Lemonis so, you sort of caught me off guard. I thought that the deal i had with mike and kathleen was very straightforward. Once all the original locations were converted to the simple greek, i would start receiving my share of the royalties from those locations. Well, theyve been converted. And im still not receiving anything. I put all this money out, redid all these stores, and im collecting, like, literally. Like, nothing. Coming up. Mike you question my integrity a lot. Lemonis i do. You could see why people dont want to work with you. Mike i get it. Im the bad guy. Lemonis this isnt about you being a bad guy. Its about you being a dick. Lemonis i put all this money out, redid all these stores, and im collecting, like, literally, nothing. Mike its a bad decision on our part. Lemonis the challenge that im having is how do we resolve it Going Forward . The way were gonna normalize that is cash goes into the Holding Companys bank account, and it pays for whatever expenses exist to operate and run the franchises. When i did the deal with mike and kathleen, all of the locations would be remitting their royalty fees, and we would take those fees, and we would split them 55 45 . Instead, mike and kathleen have been keeping 100 of it. That was never our arrangement. Mike i think that we need to kind of, i dont know, maybe assume roles that that there may be compensation attached to. Lemonis you have to work to get paid for it. I have expectations that for your 45 of equity, you are required to do more than nothing. Its not a gift. I didnt just give you 45 . You have to show up on time. You have to be present. You have to help with recipes. You have to act like workers and owners. Lemonis lets move forward. Kathleen lets do it. Lemonis and make sure that you support andreas. Mike absolutely. Kathleen absolutely. Lemonis how you doing . I invested more than 400,000 in the pittsburgh locations. And with the new chicago location, its about 240,000. So as of now, i have well over 600,000 invested into this concept. There is a lot riding on it for me. This is a beautiful store. You should be proud of this. Andreas thank you. It was a team effort, for sure. Lemonis do you know where your parents are . Andreas yeah, theyre on their way. Lemonis one of the Silver Linings in going to pittsburgh initially a year ago was meeting mike and andreas, kathleens kids. Ive asked andreas to move to chicago, because he had seen the magic work in pittsburgh. And he knew exactly what i was looking for. He breathes and lives the greek culture. And it was a perfect fit. What time is it . Sam quarter after. Lemonis theyre an hour late. You know what sams job is, right . Hes the head of the operations in the franchise. And do you know why he was brought in . Andreas cause it wasnt getting done. Lemonis i didnt initially plan on having a guy like sam on board. That job was supposed to be mikes. With the amount of money i have invested, i couldnt take that risk anymore. Mike was letting things fall through the cracks during the renovations, and he wasnt keeping me informed on a daytoday basis. Really, what prompted me to hire sam was all the nonsense that went on with mike. Sam every day, were in this store. They should be a part of that. Andreas yeah, i mean, for owning 45 of the company lemonis for doing nothing. This is not their idea. Its now a scalable model. Did they design the concept . Andreas no. Lemonis did they spend any money . Andreas no. Lemonis did they build out the franchisees . Andreas no. Lemonis have they been here helping you get open . Andreas no. Lemonis so, for 45 , i wouldnt expect them to all the lifting, cause im 55 , but damn. Andreas they should be here. Lemonis mike and kathleen have never been to chicago. That was new information to me. I expect them to be involved in the process. They havent been involved. Id like them to have a little better attitude about coming here and not acting like i inconvenienced them. Sam its a grand opening. Its embarrassing. Lemonis i hate the fact that theyre late. Im gonna literally blast them to the moon. Hi, guys. Kathleen sorry. We got a little lost. Lemonis when they finally do get there, theyre late, not by five minutes by over an hour. Its more hurtful than upsetting to me, because i invested in them as much as i invested in the business. So, what do you think of the place . Mike its, um. Kathleen i dont like these. Mike im not a fan of the kathleen the way theyre sitting. Mike yeah, they just stand out a little bit too much, and it looks like every other gyro shop in the country. The pictures, the santorini i think if there was more pictures of foods and maybe people and places that, you know maybe even, you know, grayscale instead of color. Lemonis you know, i havent seen this scenario very often where people feel entitled. But i go from being disheartened to angry. And so i want them to sort of understand the magnitude of the opportunity and the severity of how im feeling about it. Im angry at you. Kathleen okay. Lemonis i built your mcmurray store with my money. Kathleen yeah, you did. Lemonis okay. I built the Market Square store. With my money. Kathleen right. Lemonis i paid for him to come here, paid all of his expenses, paid all of his salary, hes making more money now than he was making in pittsburgh, right . Andreas than ive ever made. The issue is that you guys should trust marcus at this point and appreciate what hes done. What this guys done for us is incredible. Kathleen yes. I totally agree with you. Mike we know that. Lemonis but hes been here for. Four months . Andreas 3 1 2. Lemonis why is this the first time that youre coming here, to see this the store, to see a business that were supposed to be building together, to see your son . Why have you never been here before this week . Sam you own 45 of this company. I shouldnt be here. All this stuff could have been done without me. How come im here . Mike to be honest with you . My gut feeling . Sam i hope so. Mike i think, originally, that marcus and his team looked a gift horse in the mouth. Lemonis are you the gift horse . Mike no. I just think there are resources that i have. Kathleen he has a lot of resources. Mike . That i was told not to contribute. Lemonis can you and i, just you and i, take a walk . Mike sure. Lemonis mike, im gonna ask you this question, and try to be as honest as you can. You remember the conversation we had, when i said to you, if you couldnt do the things that i thought you needed to do, i would get somebody else . Mike yeah. Lemonis thats sam. Mike yeah, but, initially, i wasnt sure what sams role was. Lemonis is there any part of you thats a little resentful that hes doing the job that you thought you were supposed to be doing . Mike yeah, but, out of all fairness, i was told to kind of step back. Lemonis step back was a polite way of saying, youre pissing people off. I mean, honestly . [ chuckling ] come on, man. The frustration that i have, is that i cant keep having these conversations with you. I need you to be more supportive of what other people are trying to do. I need you to turn into a cheerleader and not a skeptic. Mike i get it. Im the bad guy. I dont know. You question my integrity a lot. Lemonis i do question it a lot. I waited for you guys for an hour. Youre criticizing everything. Mike what am i criticizing . Lemonis you walked in there. I would have done this differently, i would have done this. The pictures arent right. This isnt right. You could see why people dont want to work with you. And so this isnt about you being a bad guy. Its about you being a dick. Let me ask you a question, cause i brought my checkbook. Do you want to be part of the simple greek, or do you want me to buy you out . cause ill write you a check. Mike im sure you would. Lemonis if your business is in trouble, and you need my help, log on to theprofitcasting. Com. You say that customers maklets talk data. S. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept 5g, everybodys talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item, corner offices for everyone. Just have to make more corners in this building. Chad . Your wireless your rules. Only with Xfinity Mobile. Now thats simple easy awesome. Lemonis let me ask you a question, cause i brought my checkbook. Do you want to be part of the simple greek, or do you want me to buy you out . cause ill write you a check. Mike im sure you would. Lemonis that would be a very painful check to write, because im buying him out of something that he did nothing to contribute to. But im not gonna move forward and allow him to share in 45 because he happened to be in the right place at the right time. This isnt the lottery. This is business. Mike im not here for a check. Im here for the long haul. Lemonis mike, i think in order for us to move forward together, i need you to be more supportive of what other people are trying to do, and whether thats sam or andreas or the other franchisees. Mike sure. Lemonis i need you to turn into a cheerleader. Get enthusiastic. Get behind the counter. Help the guys out. Give them a pat on the back. Because your approval, to andreas, it means something. Mike sure. Lemonis he doesnt have a dad. He has you. Any sort of encouragement that you could give him would help. Its important for mike to be present, to help andreas out for two reasons one, hes a 45 owner of the franchise concept. And so he should be showing support to any new store opening, to any existing franchise. The second thing is, its his wifes child. And so its important for him to show support, because, quite frankly, you know, this whole concept was developed by their family, not just mike. How do you feel about seeing andreas here . Kathleen i think its great. Its a good feeling. I love seeing him interact with his employees. And hes just, like, so excited about it, and it makes me excited to see him so excited. Andreas is so much like his father. Lemonis how proud would his dad be right now . Kathleen if i could go to heaven tomorrow, and tell him and show him what his kids have become, hed be so proud. He loved, loved, loved his kids, so. Lemonis i mean, ill just tell you, andreas doesnt maybe hear from you enough or feel that youre supportive and proud of him. He shared that with me. Kathleen he doesnt . Lemonis no. Kathleen okay. Lemonis i brought up the fact that you havent come, from two perspectives. One is, im annoyed that you havent come. But i also feel bad that his mom hasnt come see him. Kathleen right. Lemonis a mother telling her son that shes proud of him goes a long way. Kathleen i should go do that. Lemonis lets go back inside. Kathleen thank you. Lemonis so, i wanted to talk to you guys about the yogurt bar and why i like it and the concept. As we kind of looked at the economics and the cost to build out, we werent getting enough hours in the day of business. And so this yogurt concept really came out of, we already have the rent, we already have the labor. We already have the lights. We already have the management. We already have everything. What else could we add to the ticket, add to the lineup that would allow people to spend a little bit more or get to them to come earlier or later . The idea came to me based on the recent phenomenon of greek yogurt to introduce yogurt onto the same line with the same rent factor, the same staffing, but bring people in the morning for breakfast and bring them in at night for dessert. Youre seeing an average of 1,500 a day. And im looking to get to 2,500 a day 400 in the morning for breakfast, 300 in the middle of the day for snacks, and another 300 in the day and evening for dessert, taking that total day from 1,500 to 2,500 without adding any additional expenses. So, we wanted to test it here with andreas, cause he can kind of tell us whats working and not. And i think the next one were gonna do is Market Square. Mike i love it. I think its a great addition. Andreas i think the only issue is that were not really making our margins, because i eat so much on a daily basis. [ laughter ] sam thats the truth. Every day. Lemonis he does . Sam every day. Lemonis make him pay for it, sam. Lets take care hi, folks. Come on up. Would you like a bowl, or would you like yogurt . Man bowl. Lemonis okay. Lets go. Lets get going. Andreas lets get this guy. Lemonis okay. Yogurt . Small or large . Woman small. Lemonis theres a lot of businesses that ive invested in on the show. My chips are allin on this concept. Are you guys sharing . Okay, great. How you doing . Lunch is on me. Thank you for your service. Appreciate it. Dont charge him. Chicago went unbelievably well. And i want to give the credit to andreas and sam for getting all of that done. Ive never really seen lines out the door. How is it . Man very good. Lemonis its good . The future of the simple greek is measured and steady and stable growth. This is a learning process. Youve made a ton of progress. Im very proud of you. Andreas thank you. Lemonis i also know that weve perfected the model. Wouldnt surprise me if there was 500 franchises in five years. Would not surprise me. Its about being focused. Andreas yes, sir. Lemonis okay . You feeling good . Andreas i feel good. Lemonis good. Im proud of you. Andreas thank you, man. Lemonis get back to work andreas all right. Lemonis fill up the rice. Andreas [ laughs ] lemonis tonightlori hey. Rofit. Lemonis two years ago, i bought an interest in mr. Green tea ice cream. Young man this is actually amazing. Lemonis and while weve been able to increase sales by nearly 100 . Is that your car . Michael thats my car. Lemonis . Success has spawned a whole new set of challenges. Michael the entire future of the brand is based off of my vision. Richard thats something im not so sure of. Lemonis the owners son is pushing for a piece of the pie. Michael i think 7 to 10 would be more than fair. Lemonis but his cavalier attitude isnt helping his case. Michael who cares about a 10,000 upfront cost . Lemonis i think we all kind of care about the 10,000. And now a family feud is brewing in the business