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tv   The Profit  CNBC  February 7, 2016 4:00am-5:01am EST

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>> tonight, on the profit, key west key lime pie company, a pie company nationally recognized for their award-winning desserts, run by a temperamental owner... who micromanages his selfless employees. >> i call bull[bleep] to that. is there anybody that does anything competent down in the florida keys? >> with resources stretched thin at multiple locations... >> you want me to order it even though there may or may not be enough money to pay for it? >> don't worry about that. >> u.s. key lime pie company has failed to make a profit on $1.4 million in sales. if i can't get this owner to focus on his core business of pies... if we don't make, we don't sell it--end of discussion. this business will crumble. >> i really don't want to filmed during this. i really don't. >> my name is marcus lemonis, and i fix failing businesses.
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2.5 million people visit key west a year, and you only sell 40,000 pies. i make tough decisions. we're closing the store. we're done. i'm not talking about it anymore. and i back them up with my own cash. >> check that out. >> it's not always pretty... >> tired of this bull[bleep]. >> but this is business. >> we're gonna have a battle on this one. >> i do it to save jobs... i got to get some stuff done and you're gonna be our leader here. and i do it to make money. this the profit. [theme music] ♪ u.s. key lime pie company is a pie maker located in beautiful and sunny key west, florida. jim brush... >> jeff! >> and his girlfriend, alison sloat, bought the company, recipes and all, over ten years ago for just $1,200, and have grown the business from selling pies on the side of the road to having their key lime pie named the nation's best pie by the american pie counsel. even though they generate $1.4 million in sales, they have
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yet to turn a profit. >> we really are a victim of our own success right now. damn it, i'm tired of this! >> and they've stretched their resources over multiple locations, including a shipping facility that's not making any money. >> today, i'm losing $1,000 by not being able to deliver pies. i can't do this every week. >> jim and alison have a staff of employees that are beyond dedicated. >> order it today, 'cause we need to get it into stores, 'cause we're very low on that [bleep]. >> i know, i know. >> with increasing debt and mounting losses... >> there's, like, three weeks of outstanding bills here. you owe 2,400 bucks. >> key west key lime pie company is facing major cutbacks. >> i don't want to see the company destroyed. at 56 years old, what do i start over with? >> but with the right process in place and a product that you can't get anywhere else, i know this business will be successful.
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[parking brake cranks] >> hi, how are you? >> hi, i'm marcus. >> amber, nice to meet you. >> nice to meet you. is jim here? >> yeah. do you want me to go grab him for you? >> that'd be great. >> sure. >> the first thing i noticed about key west key lime pie company when i walk in, is there are a ton of random brands taking up most of the store. where's the pie? >> greetings. >> jim! >> marcus. >> how you doing? >> good, nice to meet you. >> good to meet you. >> pleasure. >> well, there's no shortage of everything key lime here. >> no. >> and so is all this stuff-- as an example, is this yours, or-- >> no, that's not our product. there's a lot of companies that do carry that. >> how about this one, floribbean? is this yours? >> no, that's not mine. >> it seems like a bit of a key lime grocery store. >> it is. one thing people come to the florida keys for are key lime products. >> what kind of margin do you make on all this stuff? >> these cost me about--i think they're $2.30 and i sell 'em for $3.25. these are $4.50 and i sell 'em for $5.50. >> the retail margins on these products are not great.
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they're between 20% and 25%, but they take up the vast majority of the floor space in the store, which is supposed to be a specialty pie shop. can i try the pie? >> sure. >> this is just a--this is the basic deal? >> just basic slice of key lime pie. >> what are the ingredients? >> we have the sweetened condensed milk. second ingredient would be the key lime juice. comes in 1-gallon pails. it's already reconstituted, and we put a wet topping in there, which gives it the creaminess. it's actually the same topping that's on top of the pie. we put that in there and it fluffs-- >> in the actual-- >> in the actual pie itself, yes. >> and what is that made of? >> that is a powdered product. >> i was really surprised to find out that jim's pie is made with a pie filling from powder. i would have thought that an award-winning pie would have natural ingredients. >> our retail price for the pie is $18.99. cost us $3.75 to make a key lime pie. >> and how many slices can i get out of that? >> typically, you get about eight slices out of it. >> uh-huh. >> and a slice is $4.50. >> margins are good. >> margin's very good. >> are you the only owner? >> the business belongs to myself and my girlfriend, alison.
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we're both 50/50. >> is she here? >> she's in big pine. >> what's in big pine? >> big pine, we have a retail store there, and we also do all of our shipping fulfillment. >> okay. so how much will the business do in total revenue this year? >> the whole company, $1.4 million. >> oh. >> non-branded product will generate probably about $250,000 in gross sales. we still have payroll taxes that we're past due on. >> how much is that? >> 70. >> $70,000 in payroll taxes? >> yeah. >> so how much do you have in total payables? >> $66,000. >> whoa. it's about $130,000 that you owe people? >> yes. >> between the--and how much cash do you have to--you have $130,000 in the bank? >> no. >> no cash? >> we run on a day-to-day, but-- and it's almost been like that since day one. >> of their total revenue of $1.4 million, 80% of the revenue comes from selling pies, which has fantastic margins. the retail store generates 20% of their total revenue, which has terrible margins. i can't figure out why they think it's important to dedicate
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more than 60% of their space to a part of the business that generates no revenue and no margin. i'd love to see where the pies are made. >> sure, come on in the back. jeff, you got pies rolling? >> yeah, i just started 'em. >> you can't use that on the-- >> yeah, you can. >> okay. >> but what is this? >> we're gonna run out of shrink wrap today. >> why? >> 'cause they're out of stock because we waited to order until-- >> why did we wait to order? >> i don't know, i brought it up before. >> jeff, do you have an answer for that question? >> when did you tell me to order it? uh, i call bull[bleep] to that. is there anybody that does anything competent down in the florida keys? i want you to order it today. if they have any problems with it, then they can call me. >> you want me to order it even though there may or may not be enough money to pay for it, and-- >> don't worry about that portion. okay? i'm tired of this bull[bleep]. >> jim, what's going on? >> well, every time i walk back here, i mean, things just don't get done. you unfortunately have not known me, except for a short time now. >> yeah, i just got a little
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preview. >> and i just want things done, that's all, and i want it done my way. >> how we doing? everybody happy? you're not gonna have that baby today, are you? >> two weeks. >> you excited? >> well, i have eight-year-old twins already, so-- >> you do? >> tami's probably the only one that i say, "okay, you're right," and i let it go. she's a great employee. she does everything that needs to get done, and she works 2 1/2 days a week at her other job. >> she works two jobs? how much do you pay her? >> about $300 a week right now. i mean, she's got two kids. she's got rent, every--i wish i could pay her more money, but i can't afford it right now. >> i'm very worried that somebody who seems to be a key employee is only making $300 a week. i need to really understand tami's role. can i chat with you for a minute? >> okay. >> the inventory, are you managing that? >> yeah, and every week, it's a fight to find out what they need, which is just ridiculous. >> and what else are you managing? >> staffing, any human resource issues... >> right. >> any customer complaints, scheduling, special events. >> employee issues? tami really impressed me. for $300 a week, she's doing
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everything. how do you get it all done? >> i don't. >> have you talked to jim about this? >> yes, but he believes that everybody should work really hard, and so it's disheartening. it's hard. >> how are you? >> good, how's it going? >> i'm marcus. >> stefanie. >> nice to meet you. what are these for? >> for the key lime pie that we sell in the store. >> you guys don't make your own crust? >> no, we don't. >> why would somebody buy from you when they can buy the crust? jim, has that--have you ever gotten any complaints about that? >> we've never had complaint one about the product that we have. i mean, we've won numerous awards with these key lime pies. we sell to macy's, we sell them thousands of key lime pies every year, and the customers in new york love it. >> and i think what that proves is that you're a great marketer. the challenge that i have is, i can't invest in something that isn't proprietary, and here's why, if you make a pie and there's no secret ingredient or secret recipe, the next guy down the block can make it.
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i want to be able to look people in the face and tell them that i have something that's special and that's unique. i'm on my way to big pine, the company's other retail location. i'm gonna meet alison, jim's 50/50 partner. i want to find out how this store is doing. >> the big pine key store. >> big pine. hello. >> hey, how you doing? >> how are you? i'm marcus. >> david. >> nice to meet you. >> nice to meet you. >> i'm alison. >> nice to meet you. >> it's an honor to meet you. >> nice to meet you. so what makes this location different from the one that i was at earlier on greene street? >> this store is a small percentage of our business, but we also do all of our shipping here. >> how much business will this store do, this location right here, a year? >> retail sales as opposed to the whole company? 10, 12%. >> okay. so what will i find in here? i mean, pretty much the same kind of stuff we saw at the other place? >> this has pretty much the same stuff. >> so you--how many pies do you make a year? >> 40,000.
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>> do you make pies in this-- >> we do not make pies in this location. we only make pies in our greene street location. and this is our shipping area where david packs up our packages to ship. these are our products that we use for shipping, and we have dry ice here for shipping. this store costs more to run than it brings in, in revenue, but we need it because of-- because we're doing our shipping out of here. >> oh. the big pine location has two functioning separate businesses, a retail location, and the other is their shipping department. the retail location accounts for less than 10% of the total revenue, but after you add rent and labor and utilities, well that accounts for a lot of the loss. but when you have high rent factors, every one of these tiles, which is a square foot... >> has a dollar on it. >> costs money. how much are you losing a year? >> this store's probably losing about $20,000, $25,000 a year. >> and how much is your rent? >> about $25,000 a year. >> so it's the same. so that's what you have to really be thinking about. >> okay.
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>> key west key lime pie company does $1.4 million a year in sales, but it's losing money operating multiple locations. i know that if i can improve the product and consolidate all the operations to one location at greene street, we'll stand to make a lot of money. you guys should be very proud of yourself. i mean, you have a $1.4 million business. >> yeah. >> thank you. >> here's the problem. you guys know that i'm a people, process, product guy, and i'm a little disillusioned by the product. i thought, when i came down, i was coming to see a proprietary recipe. that's why i came down. >> okay. >> but i'm not impressed that i walked in to the kitchen and i found keebler pre-made pie crusts. >> well, those products-- >> i'm not impressed that it's pre-bought key lime juice. i want to partner with people that have the best product, that have a good process, and they're good people. >> well, right now, the process and the people we have.
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>> well, who determined that you have the process? >> i do. >> i can tell you, you don't. when's the last time you took a paycheck? >> six, seven months ago. >> okay. so your process has to be a little broken. you're $130,000 in debt. your business doesn't make any money today, but it generates $1.4 million worth of sales. you can't produce more than 40,000 pies or the system really breaks. >> correct. >> things have to change. >> oh, it all depends on what you propose. >> give us your offer. >> so my offer is, i will up to $450,000 to satisfy the payables as needed, build out the greene street location, but the recipe has to be proprietary. i will have 51%. you will have 49%. >> no, that's not gonna happen. never would i do that. >> okay, so what are you opposed to? >> giving up control of the company. >> i'm not opposed to that. >> no, no, no, no. i-i just am. i-i am.
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i just don't like giving up what i started to somebody else. i'm not interested. this is a bunch of bull[bleep]. >> coming up... >> box it up and get it out. >> i don't agree with that. >> everything's a dollar! come on in! then later... we're closing the store. >> i don't like surprises like this!
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>> i will have 51%. you will have 49%. >> i'm not interested. this is a bunch of bull[bleep]. >> all right, so let me ask you
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a question. what if we make for a wage $1 for every pie that we sell? if we sell 400,000 pies, you make $400,000. you make a million pies, you make a million dollars. you will have 49% of the stock and you will have a dollar for every pie that we produce. >> for the rest of my life? >> for the rest of your life. >> i just don't like giving up what i started to somebody else. >> you want to be in control. what if we flipped it and you were 51 and i was 49, and i got a dollar a pie and you didn't? i would be more than happy to give up 2 percentage points for a dollar a pie. if that control is that important to you, it's not that big of deal for me. >> i-- >> sounds different. >> i'd be glad to work for you. >> i think it's a-- >> but you're gonna pay me first. >> no, i think it's a control-- i-i-i'm sorry to say this, but i think it's a control issue for you. >> i guess i just don't want to wind up... >> yeah, we've met in our-- >> being the face of the company and that's it. >> i want the dollar of the pie.
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i think you need to let go of the control issue. >> this is the way i've been my whole life. okay, maybe it's time to change. >> and how is that working for you? >> oh, stop it. >> take the offer. the original offer is better for us, and i like it. i think this is the right decision. take my hand and take a leap of faith. let's do it. >> okay. >> yes? >> yes. >> yes. >> we have a deal? >> we have a deal. >> we have a deal. >> we have a deal? good. so believe it or not, i'm actually gonna write you a check today. >> right now? >> right now. >> okay. >> you're kidding. check that out. salud. [laughter] >> tami? >> yup, yup.
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>> everybody come on out here for a minute. >> tami? >> yup, yup, yup. >> okay. i wanted to get you guys together to let you know that yesterday, alison and jim and i made a deal. i agreed to put $450,000 in this business. the purpose of that is to take care of all the bills, put some working capital in the business. i'm 100% in charge. what i say goes. i believe in people, i believe in process, and i definitely believe in product. we're no longer gonna be pie assemblers. we're gonna be a pie-making company. if we don't make it, we will not sell it. jim, how's this sitting with you? >> yes? >> yes, i agree with you. >> in addition to that, we're gonna change the way this store looks. i actually think it looks awful. we want a flagship store where there's plenty of places to sit and that people walk an extra mile just to come here. the other thing is, we're gonna pay a little bit better than
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everybody else in town, i have to be honest. we're gonna have high performance, high reward. it's my job to make sure that people feel like they can have one job, not two. and we're gonna come up with a small incentive plan, just like i gave the two of you an incentive plan. the team is gonna get a piece of every pie we make, because every one of you brings something to the table. tami, what i've noticed that you do for this business is overwhelming, dealing with employees and dealing with vendors. you don't make a lot. you work your fanny off. all of you work hard. we're gonna operate like a family. >> how soon? >> tomorrow sounds good. >> [laughs] >> i'm ready. >> i've been ready. [laughter] >> it's time to clear out the small-margin generic items from the store. the pies come with a huge 80% to 90% margin, but the retail stuff, it drags along a 20% to 25% margin, and so every square foot that we utilize to sell low-margin product isn't gonna help us make money. what i need to do is to convert that space into faster-moving
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products like pies. so here's what we need to do, box it up and get it out. >> all right, box it up, get it out. >> yup. >> no, we haven't made a final decision on that. have you done your demographics on people who want to come in and get slushies and pie bars and key lime soda? >> i'm gonna get you whatever you need for amnesia. remember what i said, if we don't make it, we're not selling it. we all agreed on that. >> tami, you don't think people should have opportunity to buy these things? >> not here. it's all this same [bleep] that they have everywhere. >> i don't, uh--i don't agree with that. >> if we don't make it, we don't sell it. period, end of discussion. i mean, we need this to get done, like, today. >> where are we gonna put it? >> we're gonna liquidate it, but we need to start-- >> but why don't we leave it on the shelves and mark down the pricing? as people come in, we get rid of it that way. >> well, 'cause i don't want to wait till next christmas. >> sort that. >> well, marcus, what are we gonna do with this stuff now? >> sell it. why don't we put up a couple signs? and let's start working on that. >> tami, make up signs.
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everything's a dollar. >> if we don't make it-- >> we don't sell it. >> everything's a dollar! come on in! >> get all of your souvenirs and save an amazing amount of money. >> how you doing? how you doing? everything's a dollar. >> we're gonna make it easier for people to buy stuff. >> we have a store full of customers. people have been coming and buying stuff like it's going out of style. i'm gonna make you a millionaire, but you have to trust the process. [cash register dings] what i want to do is, i rented out this commercial kitchen and i hired three chefs. we've got to figure out this recipe thing. key west key lime pie company has been using powdered mixes and pre-made crust in order to save money. i hired three of the best pastry chefs in the key west area to help me come up with a new and
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better product. what we really want to do is come up with a proprietary recipe and know that we have a recipe that will last for the ages, something we can pass on. >> well, i got to say, marcus, my recipe has stood the test of time too. this has been around for decades. >> when people come into the store, they expect to get the pie that was from scratch, and they're not getting that, so we can't do that anymore. >> that is a tried-and-true product. >> would you use a keebler crust? >> no, i would make my own. >> 2.5 million people visit key west a year. you only sell 40,000 pies. all right, guys, well, listen, can we get started? >> oh, yeah. >> sure. >> that'd be great. >> absolutely. >> what is this base? >> this is 50 graham crackers, 50 oreos, and macadamia paste. >> it's all well and good to experiment, but-- >> you bake the crust. once the crust is set, then i have a pot here of chocolate. that gets poured across the bottom of it. >> very laborious. >> so-- there's no sweetened and condensed milk in this. yeah, it's just straight eggs, sugar, and lime juice.
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>> i don't see it working. >> all right, so i'm doing a cereal crust. it's half honey nut cheerios, half graham cracker. for the filling, my secret ingredient is vanilla ice cream. now, with the ice cream going in, i upped the number of eggs. >> that one's good. >> the crust--i don't get a whole lot of flavor from the crust. it's all pretty and everything, but you can't do that for 100. you can't do it for 20. >> mine was taken, like, right out of here with the scoop. >> yeah. >> the idea is to have some of the crust on the side. my idea behind it, just let people play. to me, it's key west in a jar as well. >> it's a pain in the ass. >> well, jim, we can have our own preferences. i have mine, you have yours, but what matters is the consumer's opinion, right? they sign our paychecks. they pay our rent. so i'd like to take these pies back to the store and let people taste 'em and see what they think. >> we're gonna have a battle on this one. >> coming up... we're closing the store. that's it.
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>> i can't put up with this [bleep] anymore. [glass breaking]
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>> let's bring this other table together. with the help of three professional pastry chefs, we've come up with three original takes on the key lime pie. i've asked the employees to not only taste but give us feedback on the creative process while we develop new recipes. let's try this one. >> no. >> tastes like a cereal, um-- >> um, it is, it's, um-- >> yeah. >> i like the crunchiness, but the flavor of the crust isn't that exciting. >> all right, let's go to the next one. >> okay. >> it tastes like lemon meringue pie. >> it's too sweet. this, you could put the lid back on. >> it's all on social right now too. >> yeah. >> everything in a-- >> mm-hmm, in a jar. >> salads in a jar, and-- >> oh, boy. >> okay, did you like that crust as something different? >> i like when jim makes his crust, like, for special events and stuff like that. >> jim, i didn't know you made a crust. >> yes, he do.
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>> i do, for special events, sometimes we'll make 'em. >> i like his crusts. >> do you like his crust? >> absolutely. >> tami, do you like his crust? >> yeah, yup. >> why am i just finding out now that you make your own crust? i did not know that. >> i can't mass-produce my own. >> it's my job to figure out how to mass-produce it, so i want to taste your crust. >> okay. >> today, i'm headed to hogfish bar where tami works her second job. it is shocking to me that she's able to hold all of her managerial duties at key west key lime pie company and do this. tami's one of those amazing employees who goes above and beyond. without tami staying involved in this business and staying dedicated, we'd be in real trouble, and i have to figure out how to keep her motivated, not just financially, but emotionally. hey, tami. >> marcus! >> how are you? >> good! >> both: good to see you. >> can i get a iced tea? >> no problem. >> how long have you worked here? >> a little over three years. >> hard with having the kids?
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>> it is. >> how many days a week do you work here? >> two nights. >> wow. hey, thanks. >> i try and take one day off a week. a nine-hour day on my feet is hard. i'm not 25 anymore. [laughs] >> so you're gonna have three kids and two jobs? >> yup, got to make the money, pay the bills. >> i-i hate to ask you this, but if you could make good money here, why wouldn't you just quit that job? it's 300 bucks a week. i think you could probably make that here. >> i could make that here in a night, but-- >> you could? >> yeah, absolutely. >> so why do you stay there? >> because i love the people. i love the idea of the company growing. i think that it's got the potential. >> you're a trouper. >> [laughs] i am. >> one of the biggest problems facing key west key lime pie company is the losses that it's incurring from their big pine retail location. i've asked jim and alison to meet me here so we can over the numbers and the plan of action. >> hi, marcus, what's going on? >> how's it going? >> good, what's going on?
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>> okay. >> well, i wanted to dig in the financials of this location. how much business do we do here? >> this store does about $85,000 to $100,000 a year. >> and you did how much last year? >> the whole company? $1.4 million. >> so it's less than 10% of your business? >> correct. >> big pine is doing $85,000 a year in sales, but the cost of operating the store is more than the gross profit that's generated on that $85,000. between rent, utilities, labor, et cetera, they're losing $25,000 a year. to have a store open that doesn't make any money, it just doesn't make any sense. so we're gonna close it, and we're gonna close it today. >> what am i gonna be doing? >> you're gonna make a pie crust. you're gonna go out on the road and you're gonna help us sell pies commercially to grocery stores and other people, and you're gonna be the face of the business, but i do not need you making decisions, 'cause i don't want another store that loses 25 grand-- >> i've got a three-year lease left on this, how-- >> uh-huh, well, we got to sublease it, we got to figure it out. this business doesn't have the working capital to withstand it, and i'm not putting up to $450,000 in the business so i
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can fund losses. >> uh, david, you're out of a job right now. how do you feel about that? >> what am i supposed to do? i took the bus up here. >> david, you're not out of a job. you got to finish the shipping over there, and then we're gonna figure out the transition plan. >> you're coming in here, and you're telling me-- >> look, jim, we're closing. >> no, wait, you're coming-- you're coming in here and you're telling me you're closing the store. >> that's right. >> okay, what are you gonna pull next? i mean, what--what--what's gonna happen tomorrow? >> whatever it takes to be very successful. >> yeah, but are we-- >> whatever it takes, because the plan that you guys have had didn't work. >> so i get to-- >> but, our-- >> i-i-i get to go to sleep at night and, you know, it's, like, lay there in bed and go, "what the hell's gonna happen-- >> here's what you get to do, you get to go to sleep at night and know that your i.r.s. bill's paid. you get to go to sleep at night and know that your payables are paid. you get to go to sleep at night and know that you're actually gonna make money. i'm gonna do whatever it takes to put a manager in charge that meets my standards so that you don't have to be there seven days a-- >> i don't like surprise like this! >> well, you know what? you're gonna continue to be surprised. you're also gonna be surprised when you get a check at the end of the year and you can actually put it in the bank. >> that's enough, you're out of
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here, you're gone. it's my company. >> yeah. >> you don't like it? get out. okay, if i-- >> you're a minority partner. i'm 100% in charge. when you took my check and you agreed that i'd have 51%, and i told the employees that i was 100% in charge, i wasn't kidding! >> you better be right. you better be right. you better be right. >> i know i'm right. >> because if not, ali and i are [bleep]. we-we--walking back on the street. we lose our home. we lose our cars. we're done. >> so let's get this-- >> he's--he's--he's the one--is responsible for the rest of our lives right now. you understand that? >> well, no, you're responsible for the rest of your lives. >> no, but if--if you're take-- >> i'm responsible for your key lime pie business. >> okay-- >> i am not responsible for your life. >> but-- >> if we want to shut something down, you're gonna go with it. that's it. we're closing the store. we're done, i'm not talking about it anymore. >> i can't put up with this [bleep] anymore. [glass breaking] >> if your business is in trouble and you need my help, log on to
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>> we're closing the store. we're done, i'm not talking about it anymore. >> i can't put up with this [bleep] anymore. [glass breaking] he better be right. >> jim is really struggling with the fear of the unknown. in order for this business to be successful, i need him to trust me and get on board with these changes. >> even the fact that i am a control freak, i know we are
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hemorrhaging so [bleep] bad, it hurts me to see this. it really, really does, and when i wake up every day and i know that this [bleep] store is losing this much money, and i walk into duval street, i'm like, "this place looks like [bleep]." because i'm very proud and passionate about what we do, it [bleep] hurts. >> it's below your standards. >> it is, but because of the resources that we've lacked, i get up and go, "why can't i fix this? i'm a smart person! i'm not [bleep] stupid, but i can't fix it." >> and so the way you do that is that you shrink things down. what we have to do is bring it all back together and tighten it down and go to one facility and really refine the process, and honestly, jim, you're not a failure. this location's a failure. this business idea was a failure, but that doesn't make you a failure. okay? i know you're struggling. you'll be all right.
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okay? >> mwah. >> i know. >> start packing this [bleep] up. >> i'm gonna want to have reclaimed wood everywhere. >> okay. >> 'cause that feels to me a little more natural and island like. >> i like that. >> we have cypress, aged. it's readily available. we can get it on a truck tonight. >> now that we've liquidated the low-margin generic products and closed big pine, it's time for me to renovate the greene street location so that we have 100% of our focus on selling fresh, hand-made, all-natural pies. and i want the half drywall to go all the way down, and the difference between here and here... >> yup. >> is glass. when we get down to here... >> yup. >> i actually want to do a counter of just four seats. >> okay. >> the glass will stop wherever the production stops. >> right. >> i'm changing the layout to maximize the floor space for pie sales. i'm also bringing the kitchen up
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front so the consumers can see that it's hand-made and all-natural. by expanding the seating and adding a viewing station, i want consumers to be able to have a unique experience watching us make pies and understand what goes into each one. with the change in our product and the change in the process, key west key lime pie company will start to increase revenues dramatically. with our margins being between 80% and 90%, we're gonna start to see big money on the bottom line. this all gets blown out 'cause all this will be gone. you're not gonna have the dry goods. look at all the space you just picked up. >> right. we'll put coolers and refrigerators along that back, so it'll be pies, pie bars, whatever we want to do. and then along that back wall, derek, is the menu wall. not only are we changing the look and feel of the store, but we're also changing the pie so that it's all-natural and proprietary. i learned from the employees that jim actually makes his own crust. i want to taste it. so you know, it costs $1.30 to make it fresh... >> mm-hmm. >> versus 98 cents. it's 32 cents more.
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>> mm-hmm. >> on a product you sell for $19.00. a guy like you, who knows how to make a crust, doesn't need a 98-cent piece of garbage when it's 30 cents more. with the extra cost of labor and materials, the new pie crust is gonna cost $1.30, 32 cents more than the pre-made one, but our product will now be a real stand out. because of that, i know we'll sell more. that was good. the issue that i had before is that the filling had a powder substance. our pie filling also has to be revamped. i want an all-natural pie filling that tastes amazing. so this is the big difference. >> this is the big difference. a dairy, all-natural whipping ingredient, okay? >> more expensive? >> it is more expensive. it's about three times the cost. >> okay. oftentimes in business, people think you can make money by raising prices. in this case, we're gonna make money by raising volume. i'm actually gonna lower the price of the pie. everybody in town sells their
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pie for $18.95 and everybody's crust is pre-made. ours is homemade, our ingredients are all-natural, and our pie is $16.95. i'm gonna beat 'em on all fronts. >> i think we're almost there. >> i think that's good. >> okay. >> okay, thanks. >> all right. >> what are you doing? >> [laughs] inventory. >> inventory? so you take the inventory too? >> of course. >> is there anything you don't do? >> no. >> look, i continue to be amazed by tami's work ethic. she's making $300 a week working two jobs, two kids at home with a third on the way, and she has to deal with jim, which is no picnic. i need to make sure that she knows how much we appreciate her, and although a pat on the back is often good, giving somebody financial stability goes a lot further. i have to tell you, we need you here, and this is more important than any pie we'll ever make, but i'm gonna need your help before you leave, 'cause i gotta get some stuff done and you're
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gonna be our leader here. okay? >> okay. >> but in order for you to be able to have good peace of mind, i wanted to give you some money. i'm gonna give you six months worth of pay. okay? >> [laughs] >> can--can i sit down for a minute? seriously, no, seriously. i really don't want to be filmed during this. i really don't. i'm not feeling good right now.
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>> in order for you to be able
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to have good peace of mind, i'm gonna give you six months worth of pay. okay? >> [laughs] >> when you come back, you will be fully in charge of this location, and i'm gonna pay you $1,000 a week so you don't have to bartend, okay? >> [sobs] >> okay? i'm gonna give you a check and it should help you just kind of--just be able to rest, take care of your baby, and then, when you come back, you're gonna bust somebody's ass. >> [laughs] >> all right? okay? >> [sniffles] wow. thank you. i won't let you down. >> i--listen, you haven't let anybody down. just... >> wow. >> take care of the oven. >> okay. it means everything. knowing i have a salary when i come back, a salary that i can live on... [laughs and sniffles] and still save money, like,
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that's--i've never had that. >> hey, what's up? >> marcus wrote me a check for $15,000 so that i can have some time for maternity without being stressed out over my bills, and i'm gonna be the manager, and that i will be paid $1,000 a week so that i don't have to have a second job. >> [sniffles] >> uh-- >> how many times through the years did i tell you i wanted to do that for you? >> i know. >> [sighs] all this time you put up with all my [bleep], i was hoping one day, it'd pay off for you. >> yeah. >> [sighs] [kiss] >> you've stuck with me all these years. >> i haven't killed you yet. [both laughing] >> day's not over. >> i know. [both laughing]
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>> i brought in a team of workers to completely gut this place. this is one of our biggest renovations to date at just over $200,000. we're renovating all the walls and floors at just over $38,000. >> well, we can also run it along there. >> since we now make everything from scratch, i want to showcase the kitchen with a sheet of glass. >> this is where it's all gonna get set because this is where the customer pick-up area's gonna be. >> the kitchen has been totally renovated and updated with new equipment and new appliances at a cost of $95,000. i know these changes will draw in more customers, which ultimately means more dollars. [indistinct chatter] >> wow. tami!
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you're back. >> [laughs] >> and the baby. congratulations. >> thank you. >> do you like my green sweater? i'm thrilled with the renovations. i've spent over $200,000 to convert what used to be a key lime mini-mart to now a key west one-of-a-kind destination. the cluttered retail space has been replaced with a comfortable seating area to accommodate more customers and more profits. i brought the pie-making process to the front of the store to put on a show for customers while they're being made. no more keebler crusts and no more powdered mixes. the biggest change are our products. no longer do we sell any product made from other companies. instead, we've added a new dessert station and a beverage bar, using only the freshest ingredients. if we don't make it in the store, we don't sell it. and as far as our pie is concerned, jim has spent weeks perfecting our proprietary
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recipe with all-natural ingredients. no more keebler crust, no more powdered filling. it's really good. your original pie wasn't bad, but the fact that we didn't make all the ingredients was an issue for me. >> do you think that's an award-winning key lime pie? >> i do. >> what happens if macy's says, "it's not the same pie, we don't want it anymore." >> then i'll take the 600 pies that macy's bought and sell 'em to somebody else, because i think there's a bigger market for an all-natural dessert than there is for a chemically-infused dessert. i know that change is hard, but the new pie tastes great. our all-natural ingredients are gonna translate into real revenue increases. >> these look good. >> yeah. >> so what is happening? >> the window panes to go up on the front doors here. >> oh, these came out great. jim, what do you think? >> what's that? what is that? >> it's the new logo. >> really?
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>> yeah. >> okay, that-- >> you obviously don't like it. >> uh, that's an awful big persian lime. do i have any say-so in whether or not we can use the old logo? >> uh, sure, we could talk about it. >> well, just talking about it's not gonna do anything. >> well, it's right there. >> yeah, i know, it's right there. >> and so there's a little bit of history, right? >> oh, it's a lot of history. it's a lot of history. >> and a little bit of new. i want people to know we don't have keebler pie crust-- >> can--can i sit down for a minute? seriously, no, seriously. i'm looking at you and your hands are turning red on me. seriously. i really don't want to be filmed during this. i really don't. >> okay. >> i'm not feeling good right now.
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>> i really don't want to be filmed during this. i really don't. >> okay. >> i'm not feeling good right now. >> okay. >> do you want some air? >> want to go get some fresh air? >> yeah, let me walk outside. >> okay. >> walk outside with me. >> i know that change is tough, but to jim, it's absolutely terrifying. i've turned his world completely upside down. hey. you're putting yourself under too much stress. >> yeah, i know. >> okay, and so here's the deal--and i know you know this. you put yourself under a lot of pressure. you remind me a lot of my dad. i think the place looks pretty darn good. >> i think it looks beautiful. >> and i think you should be proud of yourself, so let it go a little bit, and take a deep breath. we're gonna make a lot of money, and everything's not perfect, but that's okay.
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>> but i want it that way. >> i know you do, but i'm very proud of you. i tell you that from the bottom of my heart. you guys excited? >> all: yeah. >> today's the grand opening and if jim can just let go and enjoy it, it's gonna be great. are you guys ready? >> i'm ready. >> okay. >> let's do it. >> let's open. yes, we're open. >> we are, come on in. >> come on inside. we're officially open. >> whoo! >> how's everybody today? >> i would like a piece of key lime pie. do you want one too? >> yeah, a slice. >> looking good, looking good, guys. >> so far, the opening is going great and the team is working very hard. more importantly, people love the new pie, especially the filling and the crust.
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>> this is great pie. >> best key lime pie ever. >> mmm! that's good. >> we've had to make adjustments here and there. >> this counter can be moved back just a little--come out this way a little bit more. i'm gonna do that right now. go. >> and we're gonna get it right, but it's a model that will become a key west destination forever. how's this feel to you? >> it's a lot. it's, you know--it's awesome. i have a hard time believing that i deserve it. >> [chuckles] you do. >> [laughs] thank you. >> i'm proud of you. >> thank you. >> i am really proud of you. >> i am so incredibly grateful to marcus. having one job and being able to spend more time with my children, it's unbelievable. i can't. [laughs] [sniffles] >> kids are working well together. >> you know, they are. >> they are. >> it's a good vibe. >> your idea of having this, i mean, it's not a new concept, but i have to agree with getting
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rid of all the other stuff. 20% of our sales was 80% of inventory. >> yeah. >> which i--every time i looked at that, i'm like, "i have to keep buying this stuff." >> it's like a dead weight. >> it was--it was a vortex that i just couldn't get myself out of. >> yeah. >> but now, it's like people are coming in and they're going, "this is all i want." >> i really believe that in this particular business, we've changed the product, and it's now fantastic. we've really improved the process, but we've probably had the greatest impact on the people. >> bye, guys, thank you. >> bye, thank you so much. >> see ya. >> thank you so much! >> take care. >> jim's a totally different person, and he realizes that if he lets go, things will always work out. i would say this one's a success. >> i'm extremely excited. >> i haven't had anybody tell me what to do for 20 years. >> yeah. >> [laughs] >> well, now, tami's telling-- >> now tami tells me what to do. >> we have work to do, guys. >> no, no, no. >> come on! >> you are a pain in my ass, you know that? [laughter]
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>> tonight on the profit... i go inside sweet pete's, a confectionary shop whose candy-obsessed owner has created a huge variety of sweets. >> that's the caramel. >> that is good. but with a horrible location... part of location is having foot traffic. and i don't see that here. a partnership gone bad... >> i'm calling you out on your integrity. it's crap. >> and an outdated kitchen that won't allow him to keep up with demand... there is a limit to the output, and you're the limit. if i can't turn this business around... >> i don't see how i can go forward. >> sweet pete's will come to a bitter end. >> you guys misrepresent my integrity. >> no, i'm calling you out on-- >> i'm sorry. >> my name is marcus lemonis, and i fix failing businesses. >> we made $10,000 together. >> i make tough decisions... we'll change the recipes. >> i mean, that would be the last thing i'd want to do.


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