tv The Profit CNBC December 31, 2016 1:00pm-2:01pm EST
that's pretty good. ...a tortilla makerfit"... has overcome incredible odds... george: i mean, if this guy was a boxer, he'd be world champ. lemonis: ...only to risk it all with his reckless behavior. was there a fire here? adelo: it's not so illegal. lemonis: he cuts corners without regard for the consequences. you can't buy this machine? adelo: here, they're not so much allowed. lemonis: he sweeps serious problems under the rug. i didn't know to ask, "oh, by the way, are you getting evicted?" and now his beloved business is on the brink of failure. the place is bleeding. he owes people money. it's just not gonna work. if i can't get him to change his habits, this american dream could become a nightmare. adelo: everyone told me i was never gonna be somebody. i'm not gonna give up. i don't want to give up. lemonis: my name is marcus lemonis.
and i risk my own money to save struggling businesses. we're not gonna wake up every morning wondering if we have a job. we're gonna wake up every morning wondering how many jobs we have to do. it's not always pretty. everything's gonna change -- everything. but i do it to save jobs. and i do it to make money. this... let's go to work. ...is "the profit." in 2000, after years of working multiple jobs, adelo ramirez used his life savings to open up los gemelos, a small mexican eatery in port chester, new york. woman: plantains and tortillas. lemonis: authentic family recipes drew crowds. but most popular of all were his freshly made tortillas, so popular that in 2006, he started manufacturing them for sale to local grocery stores. adelo: we're making lots of money. as you can see, we have 22% of the tortilla market here. lemonis: and before long, revenue was approaching the $500,000 mark.
man: very good taste right here. lemonis: but then a much bigger tortilla brand expanded to the east coast, putting adelo on his heels. adelo: like, right now, i'm out of cash. lemonis: helpless to compete with their marketing dollars, he's seen his sales plummet and his dream of a national business tossed into jeopardy. adelo: [bleep] lemonis: this company came to my attention in a slightly unusual way. i happen to have a friendship with the comedian, george lopez. one day, he said to me, "would you be kind enough to sit down with a guy that could really use your help?" now, i'm happy to do george a favor. but i also know that the hispanic food market is huge, around $18 billion just in the u.s., and it's only getting bigger. so today, i'm meeting adelo at the restaurant where it all started. how are you? i'm marcus. yeni: hi. lemonis: nice to meet you. yeni: nice to meet you. lemonis: hi. nice to meet you. leticia: hi. my name is leticia. lemonis: i'm marcus. nice to meet you. adelo: mr. lemonis, i mean. lemonis: no, marcus.
adelo: oh, marcus, okay. lemonis: nice meeting you, adelo. adelo: nice meeting you. lemonis: this is a big place. adelo: it is. lemonis: what's all the wood for? adelo: we actually cook carne asada ribs and chicken. this is the wood oven. lemonis: oh, so you literally do it like a straight-up campfire. adelo: yeah. and this is it. this is our kitchen. i have this passion to cook. and i've been in the cooking business since i was 14 years old. i love it. you know, we're -- we're not the tex-mex kind of place. lemonis: yeah. adelo: we're more authentic. and we want to keep it that way. lemonis: yeah. adelo: the articles always talk about how authentic it is. this. this is when we first opened. lemonis: where did you get the money to open this? adelo: i worked 3 years. lemonis: saved up money. adelo: and saved all that money. i used to sleep for 4 hours. i had my route at 18, my produce route. lemonis: so you were delivery. adelo: yes. then i also had a full-time job as a deli clerk from 6:00 a.m. to 7:00 p.m. lemonis: so you were working two jobs.
adelo: and then one on sunday. lemonis: so three jobs. adelo: yeah. i thought i was rich. lemonis: and you saved how much money? adelo: $40,000. lemonis: that's a lot of money. it's not hard for me to imagine the amount of sacrifices that adelo's had to make along the way to achieving his dream. but as he's describing it to me, he's doing it with a real smile on his face, not one ounce of self-pity or bitterness. shows me a lot about his strong work ethic and his attitude. so you took the $40,000, you opened your place, and you're doing business. adelo: yes. lemonis: making money. adelo: and it's awesome. lemonis: okay. adelo: it's three tables. then we bumped it to 20 tables. so i bought the tortilla machine. all of a sudden, it starts booming. you know what? let's open a tortilla business, but a bigger one. lemonis: okay. adelo: i'm gonna be the biggest tortilla manufacturer in the world. lemonis: so, before, you had a small restaurant, small tortilla manufacturing. everything's small and tight. you're making money. and then all of a sudden you wake up one day. you're like, "i'm gonna be..." adelo: mission. lemonis: mission, the tortilla manufacturer? adelo: yes. lemonis: it's like saying wonder bread.
adelo: even bigger. 2006, we opened the factory. everything's going well. in 2010, mission comes to the east coast. they weren't here. holy crap. they knocked us out big time. the first order that any supermarket ordered was free. lemonis: because that's marketing expense for them. you buy one, become your friend. then you buy 1,000. adelo: right. when i went that week, they were telling me, "listen, you got to give us free stuff. this guy's giving us free." so i'm like, "dude, how can i do that, man? they're mission." and they all started just... lemonis: going away. adelo: yeah. lemonis: what were you doing in total tortilla sales? adelo: like 400,000. lemonis: and it went from 400,000 to... adelo: last year was 220,000. lemonis: still doing 220,000? adelo: thank god. lemonis: 220,000 in tortilla sales separate from this. adelo: yeah. lemonis: think about it. a bigger name competitor with many more resources powers into his market. and he's not even down 50%. this guy must be one hell of a salesman.
make any money in the restaurant? adelo: yeah. but it all goes to the factory that's losing money. lemonis: these are the tortillas? adelo: that's it. lemonis: corn. adelo: corn. lemonis: flour. adelo: corn. lemonis: that's pretty good. it's really good, actually. corn tortillas can be very mealy if they're not done right. they can be sandy and gritty. adelo: yes. lemonis: yours is way better. by the way, the food's fantastic, fantastic. adelo: thank you. lemonis: i've had a lot of tortillas in my life. and you can tell that the product just had a lot of character and authenticity to it. the texture and the flavor tastes less processed. who's that? adelo: my munchkin. lemonis: i'm marcus. nice to meet you. is that your dad? your only child? adelo: yeah. lemonis: do you work here now and help out? rachel: i help, but i don't work. adelo: oh, yeah, you don't work but...
lemonis: she helps. well, nice meeting you. adelo: okay, go change so you can go to school. lemonis: you're a single dad? adelo: no. she's with her mother. we're 50/50. lemonis: when you have her, you're raising her by yourself. adelo: yeah. lemonis: is it hard? adelo: you know what? it's the most awesomest thing ever. i love it. lemonis: what's your connection to george lopez? all of a sudden, i started getting messages from george. he's like, "you got to invest in this guy. he's a great guy." adelo: i invited him to the restaurant. lemonis: how did you get a hold of him? adelo: twitter. he was performing right around the corner. he comes in. he's like, "yeah, where's my tacos?" so i'm like, "yeah, we'll make 'em right now." [ both laugh ] so we're making them. lemonis: well, he sends me a note. he said, "you got to help my guy out." so what i told george is i don't have a ton of interest, if any, in investing in a restaurant just because it's not scalable. it's really the tortilla business. adelo: okay. like, we could do more. we could do 10, 15 products of flour tortillas. we could do cheese. we could do mexican cheese. we could do mexican sodas. we could do cheese ceviche. no one's -- lemonis: maybe you start with tortillas.
adelo: of course, of course. [ laughs ] lemonis: i like the fact that he has a lot of enthusiasm. but i'm not really sure if i would lead my product offering with raw fish. that's just me. here's what i'd like to do. i don't know if there's any partnership opportunity. but i want to head over to the factory. adelo: okay. man: [ shouts in spanish ] lemonis: how are you? adelo: all right. lemonis: why don't we take a tour? adelo: so this it. lemonis: how big is the factory? adelo: 2,200 square feet. lemonis: so show me the process. adelo: all right. lemonis: how do you mix this? here? how do you know how long to mix it? adelo: just by guessing. lemonis: guessing like, "uh, it feels like 5 minutes?" adelo: yeah. lemonis: flour and water. and so what makes this so different? adelo: right there. this is our secret. lemonis: so why is this the secret? we can't buy this machine? adelo: mexico. lemonis: only in mexico? adelo: yeah, here, they're not so much allowed.
lemonis: why aren't they allowed? adelo: because they don't have safety. see that thing that -- lemonis: people get their hands cut? adelo: but no one has. lemonis: i've seen some pretty careless operations in my time. but this one, it's up there. first, he tells me that he uses guestimates to make his dough. and i can't imagine it makes for a very consistent product. then he tells me that his machinery's not compliant. he could be shut down, sued, who knows what. and he just brushes it off like it's no big deal. adelo: not so illegal. we could fix it. lemonis: and by the way, this place looks like a disaster zone. adelo: this is where i store equipment that we have. lemonis: was there a fire here? adelo: fire? no. lemonis: are you sure? adelo: yeah. lemonis: ceiling just looks like that? adelo: it's the sweat of the tortilla. lemonis: i understand that he's a guy that doesn't get discouraged by things. but i didn't think that included running your business the proper way or following the law. how many can this thing make in a day? adelo: 6,000 an hour.
lemonis: let's say you're gonna produce for 5 hours a day 'cause you got setup time and cleanup time. adelo: we do about 6 hours. lemonis: you should be able to make 36,000 pieces, right? how many go in each package? adelo: 30. lemonis: that's 1,200 bags a day. you're gonna sell the bags for... adelo: $2. lemonis: that's $2,400 a day. where's your loading dock? adelo: oh, right there. lemonis: a semi can come there? adelo: well, no, not that. lemonis: we have a factory with an illegal machine. we're not really clean. you can only make a certain amount a day. and if you make more, you can't distribute them anyway. no way in hell any distributor of mine would ever allow a product to come out of here. the fact that he's doing $250,000 worth of business out of this place, look, i'll give him some credit for that. but the fact that he's ignoring any standard business practice or ignoring all the codes or any compliance with any food safety, well, that's a problem. and even if all of that gets fixed, this place really isn't set up to do any volume.
how you doing? i'm marcus. johnny: i'm johnny. lemonis: nice to meet you. what do you do here? johnny: so, i do the tortillas. lemonis: what's it like working for adelo? johnny: oh, it's been great. lemonis: is he a hard worker? johnny: oh, yeah. lemonis: what's the worst part of working here? johnny: the worst part? he owes me from the past days. lemonis: he does owe you? johnny: yeah, he still owes me for the back. lemonis: nice meeting you, my man. i was under the impression that the tortilla business was doing at least good enough to pay people. so what i want to do is i want to dig into the financials because where there's smoke, there's fire. so how much revenue can this place generate in a given day? $2,400. adelo: $2,400. lemonis: now, what have your margins been historically? adelo: 40%. lemonis: so take 40% of that. adelo: $960. lemonis: $960 in gross profit. what are the things that go into operating? adelo: electricity. lemonis: how much is that a day? adelo: $60. lemonis: how much is the rent? adelo: $3,000 lemonis: put $100 in there. adelo: insurance is about $50. lemonis: that's workers' comp insurance, making sure -- okay. adelo: yeah. payroll. lemonis: so four people. what do you pay them on average an hour?
let's say $12. so that's $48 an hour times 8. that's $384. plus taxes, add another $40, and $100 in packaging. you have automobile expense, $900 a month. so $764 a day to run this place. the gross profit was $960 a day. so what does that leave you with? adelo: $196. lemonis: $196 in net profit a day, assuming that everything went perfect. adelo: no, no, no. lemonis: and by the way, you are not in that payroll number, just so you know. what i'm trying to show adelo is that this place takes more to operate than it generates in gross profit. and if that's the case, it's really only a matter of time. do you ever miss a payroll? adelo: yes. i owe $50,000. lemonis: how much did this cost to open? adelo: $400. lemonis: what was it before? adelo: it was nothing. it was just an empty spot. lemonis: so how many investors? adelo: none. lemonis: how many people lend you money? adelo: my sister. lemonis: how much?
adelo: that was $150,000. lemonis: i mean, she must love tortillas. adelo: ah, she loves me. she raised me. lemonis: what do you mean she raised you? adelo: she brought me from mexico when i was 5. my dad -- i was 2 years old when he passed away. and my mother abandoned us. and she just brought us here, me and my brother. everyone told me when i was a kid i was never gonna be somebody. and... i-i'm not gonna give up. i don't want to give up. lemonis: coming to this country, not having resources, having a not-so-great upbringing, and then working every day, bell to bell, to provide for his family and have a brighter future -- this guy, in my opinion, represents the true american dream. so what i have to figure out is what am i actually being asked to invest in? what is it? adelo: distribution.
lemonis: you can't invest in distribution. adelo: you could invest in me. lemonis: okay. adelo: and i will work my butt off. lemonis: your tortilla was amazing. the food was good at the restaurant. i think you have a lot of character. and i think you have a lot of fight. and clearly, you have a work ethic. and that's hard to find. so i'm willing to think about it, okay? adelo: thank you, marcus. lemonis: all right, my friend. good seeing you. adelo: all right. lemonis: hi, buddy. how are you? adelo: marcus. lemonis: good to see you. adelo: good to see you. lemonis: about a week's gone by. and i felt that i needed to give adelo a chance to understand exactly where my head was at. and so i asked him to come in to my office inside the city. in order to fix this business, it would take about $500,000. the tortilla factory loses money. and it's not compliant. it's a bad idea for you. it's a bad idea for me. adelo: marcus, i mean, i've seen you fix manufacturing.
lemonis: i know, buddy. but i just -- it's not something that i think is a good idea. we did the math. i think that you have a lot of heart. i think you're a kick-ass salesperson. i enjoyed my meal with you at the restaurant. i thought the food was great. but i also am a businessperson. i can't throw money into the wind. adelo: i know i could be someone, marcus. lemonis: so do i. i know you can be somebody, too, 'cause i already think you are somebody. and i am willing to take a chance on you. but the kind of partnership that i'm willing to invest in is different than i've ever done. it's not me investing in the tortilla factory. that factory will need to close. the place is bleeding. it owes people money. it's just -- it's not gonna work. adelo: so what's the idea? what's the plan? lemonis: i'm gonna go get the idea. i'll be right back. adelo: now? lemonis: right now.
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adlemonis: i'm gonna goea? wget the idea.n? i'll be right back. adelo: [ laughs ] george: [ speaks spanish ] all right. lemonis: george sent me a lot of notes and took a lot of his time saying, "take a chance on adelo." george: you know what i liked? what you saw -- i liked his determination. i liked his heart. food's delicious. i mean, if this guy was a boxer, he'd be world champ. there's nothing that could stop him.
lemonis: so here's my idea. my offer is to put $150,000 into a new hispanic food company. adelo, you'll have 1/3 of the business, i'll have 1/3 of the business, and george will have 1/3 of the business. two amigos and a gringo. [ laughter ] adelo: okay. lemonis: two amigos is creating a new entity that's a food consumer products company in the hispanic space. adelo has a real knowledge about hispanic heritage food. george has the ability to market the business. but he doesn't really have the time to work on it. and i bring the business experience to the table. what i need from you, george, is i want to be able to use your likeness and your endorsement in exchange for equity and a royalty on the packaging. you'll have full approval. and we're gonna ensure that the people who enjoy our food know that it's the best quality coming from the best places, and it was authorized by you with all of your talent, all of your assets, all of your knowledge. with adelo's expertise, i know we could develop some amazing products.
but if he's gonna throw his hat in the ring on this one, he's gonna have to be 100% dedicated. and that factory's gonna have to close. i'll be glad to take care of the employees out of the company's money, $50,000 for your employees. adelo: okay. but my sister, i owe her money. george: she put her money up when it mattered. adelo: yes, when it mattered. that's the money i owe her. lemonis: okay. and you have equipment. figure out how to sell all that equipment. sell every chair, every plate, every table, every picture, every tortilla so you can pay your sister back. adelo: okay. lemonis: we're gonna go find three or four authentic products that we think both the mexican community and non-mexican community would love. and we're gonna create a whole brand. george, what do you think three or four things would be? george: you got to look at salsa, you know, chips. i'm gonna have you write up, what are some other other products that you would put out there? what's the history of them? why do you think it's gonna sell? george: and you want to sell to everybody, not just the neighborhood. lemonis: i'm still gonna want to review it and approve it. it's not a done deal, slam dunk.
he's got his brand and his reputation. maybe he doesn't like any of it. it's possible. you have to be prepared for that. george: i feel a little unsure, to tell you the truth. lemonis: you do? george: yeah. lemonis: of him. george: yeah. it's a lot of work and a lot of sacrifice in the beginning. lemonis: it's the details for me. you have to do your research, okay? adelo: you're taking a chance on me. and i'm not gonna let you down. lemonis: okay. do we have a deal? adelo: deal. lemonis: okay. do we have a deal? george: we have a deal. congratulations. lemonis: we got a lot of work to do. it's been about a week since we made the deal. and i've asked adelo to meet me in los angeles. there are a ton of key food manufacturers here that we're going to have to meet with. so what's happening? give me an update. but before we do that, i want to meet with adelo at my office. i want to go over the product research i've asked him to do. adelo: last time we spoke, i know you wanted mexican products.
i went online, and actually, no one's manufacturing tamales. lemonis: do you think it's odd that nobody makes tamales? or do you think it's a complicated product? adelo: if we were to freeze 'em, it'd work out great. lemonis: have you ever had a frozen tamale? adelo: no, not really. lemonis: so how do you know? adelo: i don't know. lemonis: and so unless you've actually gone through the process of putting them in your freezer, driving 'em around in your car like a distributor would, that's the kind of research that i'm asking about. and then what told you that they would sell? have you gone to a grocery store and done any research? adelo: yep. lemonis: which store did you go to? adelo: i called the mom and pops, the authentic mexicans that actually cook. lemonis: that sounds like we're opening up a local business, not that we're trying to create a commercial product that we're gonna ask george lopez to put his name on. so what are the other products you came up with? adelo: mole, pan dulce. lemonis: as i told adelo when we made our deal, i want him to work on products that are authentic, yes. but i also want him to focus on products that have mass appeal. and that means we want to focus on the meat of the market,
right in the core, not on the fringes. by the core, i mean the products that appeal to hispanics and non-hispanics like tortillas, tortilla chips, and salsa. we know there's big competition here, but we think we can capture a chunk of it with george's branding. what we don't want to do is focus on products on the fringes like adelo is suggesting. while there may be little competition there, there's also very little demand. adelo: marcus, i understand i got to do more research. but i didn't have a strict kind of an idea of what you were looking for. all this is new to me. lemonis: i can live with that, too. i was pretty clear about some stuff. but it's my job to partner with you and give you a road map. i'm gonna show you what research looks like, all right? we're gonna do it together. adelo: yeah. lemonis: all right? adelo: okay. lemonis: so, let me tell you what i wanted to accomplish here. after my last talk with adelo, i thought it was important to do some actual market research.
so i brought him to gelson's in los angeles, a huge grocery chain. i want you to go through the store. and i want you to find mole, pan dulce, and tamales. adelo: oh, okay. lemonis: find your list. and what i want him to understand is what product categories are gonna give us our best chance for success, and which ones aren't. adelo: do you have any pan dulce? woman: pan dulce? adelmexicano. [ conversing in spanish ] do you have any, um, tamales, sir? no. lemonis: out of the three things that you were looking for, what did they have? adelo: nothing. but this is a gringo market. so maybe this particular market is not gonna cater to the hispanic community. lemonis: they have a lot of latino products here. i mean, look at all the salsa that's here. so is this typical of what a hispanic person would buy? adelo: yes. lemonis: okay. the fact that there's no pan dulce here doesn't necessarily make this a gringo market. what it means is that there's not a lot of people looking for it.
but you know what a lot of folks are looking for? chips. if you look at this whole section of chips, what does it say to you that 1/3 is made up of tortilla chips? adelo: that there is a market. lemonis: what do you think a tortilla chip with the george lopez brand would do in this section? adelo: it would sell, because people would see the name brand, which is george lopez. and it would also be authentic. lemonis: so brand recognition like tostitos has... adelo: right. lemonis: ...and authentic. so it's got, really, a double threat. adelo: yes. lemonis: so i know that you told me earlier that this is not a hispanic market. so we're gonna do more research. we're gonna go to a hispanic food distributor. they distribute all kinds of things. but they specialize in hispanic foods. adelo: sounds good. lemonis: okay. so i brought my buddy, adelo, to come learn something about food distribution. erik: of course. come on in. lemonis: we're at tapia brothers, a huge food distributor on the west coast and one of four or five around the country
that i'm hoping carry our brands. erik knows that market really well, the hispanic food market. when i set up the meeting with erik, i asked him to go through his sales numbers and pick out things that he thought would penetrate the market and that george's brand would translate nicely onto. what are the three products, if you can only pick three? erik: chips, salsa, tortilla. the majority of the population in the u.s., i think you got to lead with a milder salsa. lemonis: if there were two products that were equal, one has george attached to it, and one doesn't, as a distributor, which one are you taking? erik: i would go with the brand that people know. and everybody knows who george is. lemonis: tortilla chips, salsa, and corn and flour tortillas would be a good starting point. adelo: thank you so much, guys. erik: thank you, man. appreciate you. adelo: take care. erik: nice to meet you. lemonis: thank you, erik. now that we're headed down the right direction, i want to spend a minute with adelo to make sure that the other loose business ends that i gave him clear direction on have also been tied up. so i had asked you to take care of the employees.
have you gotten that done? adelo: yes. lemonis: and you sold off all the equipment so that you could pay your sister back? adelo: no. i left it there. lemonis: why did you leave it there? adelo: i still had to pay rent. the agreement was with the landlord. "listen, i'm gonna leave the equipment." lemonis: why didn't you tell me that? adelo: that was the deal. lemonis: what deal? adelo: the eviction deal. lemonis: i don't understand. never once did you tell me that the landlord was foreclosing on you. you never told me that. that's an important detail. adelo: okay. but we didn't focus on that. and -- lemonis: it's not about focusing. i didn't know to ask, "oh, by the way, are you getting evicted?" the fact that adelo had already gotten an eviction notice before i had even been to his place is a huge problem. talk about skipping details. why didn't you tell me about it right then and there? "marcus, i can't sell the equipment. i already gave it up." adelo: because you never asked me about the equi-- listen. when you said, "close the tortilla factory," i said okay. lemonis: but what was my next sentence? adelo: sell the equipment. lemonis: and you said, "okay."
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why didn't you say to me, "i can't sell the equipment. i agreed to give it to the landlord"? why didn't you tell me that? adelo: because i had the other equipment to sell. lemonis: adelo, what equipment did you think i was referring to? the stuff that was piled up in the back? adelo: yes. lemonis: no, i wanted you to sell all the equipment. adelo: that wasn't my equipment, marcus. the equipment that i'm gonna sell is -- lemonis: but you didn't tell me that, adelo. and you never told me that there was a petition for foreclosure. you never told me any of that. adelo: but i didn't mean to hide it from you. lemonis: but you did hide it. or you conveniently left it out. you just need to be transparent about everything all the time. adelo: i will, marcus. i will. lemonis: what really concerns me about adelo is there seems to be a theme here where he just brushes stuff under the carpet.
his machinery's not compliant? brushes it off. he's getting evicted? he forgets to tell me. he can't sell the equipment because he's in the middle of getting evicted? these details matter to me. and him brushing them off, that's not gonna fly with me. adelo: i didn't want to lie to you. i didn't mean to lie to you. maybe i didn't fully communicate. i'm sorry. i got to be transparent. and moving forward, i will. lemonis: that's all i ask. bad news, good news. that's all i ask for, okay? let's go to work. hey. adelo: hey, what's going on, marcus? lemonis: how you doing, my man? adelo called me up because he said he wanted to go over some ideas he had for the salsa. so i'm gonna meet him. and we're gonna do a taste test. what i hope he remembers is what erik told him at tapia brothers. yes, we want these products to be authentic, but we want to make sure they appeal to everyone
all over the entire country. so tell me what everything is. adelo: now, we got cilantro, limes, onions, garlic. these tomatoes are very sweet. so they're not gonna be so acidy. and these are chili guajillo. these are used because back home, we didn't have refrigeration. lemonis: so if i eat this, my mouth will be on fire? adelo: very, yes. lemonis: okay. spicier than jalapeño. adelo: yes. lemonis: and so where did you get this recipe from? adelo: my sister. i used to watch her make it. lemonis: so is it her recipe? adelo: my sister got it from my grandmother. lemonis: so passed on from generation to generation. adelo: yes. and hopefully my daughter's gonna keep on cooking it. lemonis: do you have a recipe? are you making it up as you go along? it's in your head. so you really don't even know the timing on this. you're kind of just by your eye. adelo: by your eye, yes. lemonis: uh-huh. in order for this product to be mass made, the people that make it have to know what the heck you put in it. adelo: i see where you're going. lemonis: where am i going? adelo: that we need to make a recipe that we write down.
lemonis: at least he's starting to recognize the fact like, "i got this. you wanted me to write it down, didn't you?" [ chuckles ] little bit of garnish. adelo: garnish. mm-hmm. good stuff. really good. it exceeded my expectations. and i'm feeling like he's really starting to listen because he balanced it out. it had a real richness to it with a little bit of a kick, but not so much kick that it would alienate people. we just got to george on board. big facility. adelo: big. lemonis: let's check it out. adelo: [ conversing in spanish ] lemonis: i'm marcus. ramiro: ramiro. lemonis: ramiro, nice to meet you. david: marcus, david. lemonis: david, nice to meet you. adelo: adelo. lemonis: are you guys brothers? ramiro: that's correct. lemonis: well, thank you for having us in your factory. i arranged for adelo and i
to take a ride to la fortaleza, one of the largest tortilla and tortilla chip manufacturers in the united states. what i liked about them more than anything is that they're family-owned and operated, and their process is truly authentic. david: right here is about 4,500 pounds of corn. lemonis: raw corn. david: raw corn. and we add water and a little lime. we cook it. lemonis: and so that's 100% corn. ramiro: yes. lemonis: so did you have this in your mix? adelo: no. lemonis: so your tortillas are only corn flour. and theirs has corn in it. adelo: yes. ramiro: it gives it more of a traditional flavor. adelo: i don't agree with using the corn because we eliminate one step. and the corn reduces the shelf life of the tortilla. lemonis: what's the difference between the way you make it and the way they make it in shelf life? adelo: we get about 2 months. they get about, what, 15 days? ramiro: 30 to 45 days. adelo: without preservatives? ramiro: the tortillas we make have zero preservatives.
lemonis: i don't think you want to enter a relationship doubting people. these guys are legitimate manufacturers. and this is a science for them, not a hobby. this has got a lot of research, a lot of science. adelo: okay. right. lemonis: what about the flavor? adelo: how 'bout we taste it right now? it's good. lemonis: so this is the chip line. ramiro: yeah. we do fried chips. david: we also make flour tortillas. lemonis: what does it typically cost to make a tortilla? ramiro: 7 cents a dozen. lemonis: that's your cost. ramiro: yeah. lemonis: and what does it cost you to make a dozen? adelo: about 50 cents. lemonis: if we were to run our own production facility, not only would there be high operating costs and high food costs, but more importantly, there would be limited capacity. the place is small. and there's only one machine. we'd never get any volume out of there. if we went with a food manufacturer like la fortaleza, it would be much better for us,
because we'd have no operating cost, lower food cost, and there'd be unlimited capacity, and, oh, by the way, a damn good product. as far as i'm concerned, there's no question about the decision. i'd like to figure out how to all work together. 'cause your factory couldn't be any more impressive. ramiro: thank you very much. lemonis: thank you so much. while we have the tortilla chip and the tortilla manufacturing locked down, we are a long ways away from being able to present to george our ideas. our first order of business is finding somebody who can manufacture our salsa. so i took adelo to maglio. this is no mickey mouse operation. adelo: yeah, i noticed it. lemonis: i want you to start working with them right away. and they're just as on point as la fortaleza. we now know that there's salsa, tortillas, and tortilla chips. that's the lineup. now we need to start executing. now that we have our products, we need to come up with our packaging.
appreciate you. so adelo met with a designer to develop some mock-ups. adelo: i figured we could do the logos... lemonis: okay. adelo: ...like this. then we got the chips and tortillas. lemonis: you keep having ta loco. what does that mean? adelo: it's crazy. ta loco. that's a phrase george uses a lot in his comedy. lemonis: the mock-ups are eye-catching, charming, and, as far as i'm concerned, pretty much perfect. i like that. you think george will like it? adelo: yeah. lemonis: and i have to admit that ta loco is a heck of a lot better than two amigos. adelo really aced this one. all right. adelo: okay, good. lemonis: i'll see you in a little bit. adelo: okay. lemonis: i called george and told him that adelo and i were ready to show him the three products that he had come up with. so he asked me to meet him in his old neighborhood where he grew up at his favorite restaurant. give him an update on what's happened. adelo: george, this is what we have.
we went to a grocery store, a gringo grocery store. george: and those stores got a mexican aisle. and i would just stand there in the mexican aisle. and my friends would be like, "where are you?" and i'd go... i can't leave. the mexican aisle. so, gelson's covers so many foods. lemonis: it's not just a gringo store. george: it's not -- no. adelo: we bumped into three main mexican things, which was tortillas, chips, and salsa. lemonis: so we want to start with the basic ones that we know clear the market. adelo: can i just say something? lemonis: yeah. adelo: i don't think that going with la fortaleza would be a great idea. lemonis: why's that? adelo: because if we want to go worldwide, we should definitely reach out to mission and let them be our private label. lemonis: wait a minute. i thought adelo was, like, mr. authentic. now he wants to side with the huge competitor that actually knocked him out of the market? adelo: distribution is huge with mission. lemonis: la fortaleza, did you feel like they were authentic? adelo: yes. lemonis: like, their product,
did that feel authentic to you? adelo: it did. lemonis: so then why in the hell do you want to leave authentic? i have a meeting set up with the buyers from sam's club. do you feel like you're prepared to make a pitch? imy moderate to severeng crohn's disease. i didn't think there was anything else to talk about. but then i realized there was. so, i finally broke the silence with my doctor
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that opened up their doors to us, family-owned and operated, because you wanted to jump to mission, which is the people that you told me were too big and too corporate. adelo: the reason why is because distribution is huge with mission on -- lemonis: right. but when they private label for you, you're not guaranteed distribution. they don't sell it for you. adelo: that i did not know. okay. lemonis: which is why you have to do what? adelo: research. lemonis: okay. look, i've spent a lot of time with adelo. and i know he's coming from a good place. he's excited. he wasn't really thinking through the consequences. but george hasn't really spent that much time with him. so he's a little thrown off by it. and now that we're going into this taste test where george is gonna make a decision, you want to talk about pressure, i'm feeling it. george: i'm not a favorite green guy. but let's see. lemonis: george lopez verde salsa. george: that's delicious. lemonis: it's good? george: it's delicious. right there.
you know what? this is a rare instance that i might like the green better than the red. lemonis: good. you feeling like we hit it? george: oh, good, absolutely. that's great. adelo: wow, yeah. lemonis: the fact that george approved not only one of the products but all of the products, that's the momentum that i was looking for. adelo: all right. so, george, i came up with a couple of designs. can i show them to you? george: all right. adelo: we came up with the name... george: ta loco. adelo: ta loco. george: i love it. i love the name. adelo: well, i stole this idea from your show. george: yeah, ta loco, that's crazy salsa. lemonis: so what do you think? you think he's made some progress? george: i think so. yeah. i got to tell you. we're making good progress. we're making progress. i tell you, man, i'm -- lemonis: good job, brother. george: i'm pleasantly surprised. i'm happy. like my grandmother would say, "i'm as proud as i can be at this particular moment." now show me some more. [ laughter ] lemonis: now that george really likes the products, we have one more challenge. that's convincing big retailers to carry it. so what do you think? adelo: awesome. this is sam's club.
coming in here, this is, like, what i've been working for, to be in companies this big with this -- ah, it's awesome, marcus. this is the real deal. lemonis: today, we're going to sam's club. and candidly, there doesn't need to be a big explanation of who they are. they're big. and they could be a game-changer for this company. i actually have a meeting set up with the buyers from sam's club. and you're gonna get a chance to actually pitch them. i know that you have the tenacity to sell because you sold me. adelo: right. lemonis: do you feel like you're prepared to make a pitch? adelo: i'm 100% sure. lemonis: i can't get us across the goal line. you have to do that. and i'd be lying to you if i told you i wasn't nervous. adelo: i'm ready. i've been waiting for this sales pitch for a very long time. and i think i've got what it takes, marcus. lemonis: all right. let's head to the meeting. going forward, adelo has to be the one to head up sales because i'm not gonna be able to be at every sales presentation.
so this meeting has a lot riding on it for adelo's future just as much as the company's. heather: hi. lemonis: how are you? heather: i'm good. how are you? i'm heather. nice to meet you. lemonis: nice to meet you. this is george lopez. heather: george, nice to meet you. george: heather, i'm already eating the stuff. heather: hi, adelo. heather. adelo: thank you so much for this opportunity. my name's adelo ramirez. i have this passion to cook. i started a restaurant business 16 years ago. and 12 years ago, i opened a tortilla manufacturing. i wasn't really running a professional tortilla manufacturing. and that's when i met george lopez. george: i wasn't responsible for it not being professionally run. just so you know. [ laughter ] don't drag me down. "yeah, it wasn't professionally run. then i met george. and then we went all the way down, man." adelo: but i got this great opportunity now to start all over but the right way. i believe in people, process, product. so the people, guys -- i'm right here, 24/7.
our process -- our manufacturers have all the certifications that you require and will make any size that you desire. if you tell me that we don't need 48 ounces, we need 64, we'll do that for you. our product, we would like to offer you a corn tortilla, a flour tortilla, and chips in combination with our salsas, green and red. louie: um, i would challenge you to look at brand awareness. and you got some great partners that are gonna help you with that. but today, it's not there. it's not known. heather: i would add to that authenticity and the freshness of the product is important. those are the two things that our members really look for when they're purchasing an item at sam's club. how do you convey that freshness and authenticity? what would drive a member to pick up this versus another brand that they might be more familiar with? lemonis: for exclusives, extras, and business advice, visit theprofit.cnbc.com.
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heather: authenticity and the freshness of the product is important. those are the two things that our members really look for when they're purchasing an item at sam's club. what would drive a member to pick up this versus another brand that they might be more familiar with? adelo: now i want to point out all that little black stuff is the actual corn that all the other brands won't have, because fortaleza cut the corn raw. they do the milling, which makes our tortilla extra authentic.
george lopez, his comedy comes from that mexican heritage. and everyone knows ta loco. george: i used it like, "no way," "ta loco." my daughter would say, "i want $4,000 to go skiing." "$4,000 to go skiing? go down that hill right there. ta loco, $4,000." so... [ laughter ] lemonis: have you had a chance to taste the chips? george has had a bunch. george: i love 'em. heather: they're both great and have very different flavors, which is great 'cause they can be incremental purchases. one person likes one, they're more apt to pick up the other. louie: i'm actually impressed with the quality of the salsa. it tastes authentic. adelo: so we got an order? heather: yeah. and i think the la market is probably the best place to start. adelo: great. thank you so much for this opportunity. lemonis: not only was adelo a great listener, not only did he create a connection
with the buyer, he knew exactly the right things to say. he did a great job. and i think that, if you can nail sam's club, the sky's the limit. heather: thank you for coming to see us today. lemonis: thank you very much. we're looking forward to it. we're excited. louie: adelo. lemonis: george and i will be at the first store launch. when i first met adelo, he lacked the polish and the structure and the discipline it takes to run a good business. and now he understands that the details matter. also, he doesn't mind selling products to gringos now, a lot of gringos. adelo: since i was a kid, i've been a salesperson. but no one saw that but you. from the bottom of my heart, thank you so much to both of you. lemonis: you should take a chance on people when you least expect it. they'll surprise you just like he did me. good job, buddy. good job.
trevor:: we're flex watches.fit"... we make watches that give back. lemonis: at an l.a. watch business with a powerful mission... travis: each color represented a different charity. lemonis: ...the owners have lost their way, and now they're losing time. how much longer could you keep the business open? travis: another few months. [ sighs ] lemonis: their branding is unfocused. this is a total mess. there's no signage. there's no point-of-purchase material. there's nothing. their process is rushed. feels like a high-school art project. and a painful tragedy has them questioning their purpose. travis: you're allowed to talk about the fact that we did charity and -- trevor: that is not our direction. travis: let's be honest. trevor: stop cutting me off. travis: this is who we are! lemonis: if i can't help these guys return to their roots...