The Profit TV Show Season 3 Episode 10 – Post Show Commentary
I’m so happy to have new episodes of “the worst show on television” upon us. I’m talking about The Profit which honestly after having gone to business school I feel like I have learned more about how to run a successful business in the 2 and a half seasons of watching the show than I did in 4 years in college.
Tonight’s premiere ran right after the GOP debate. It featured Marcus Lemonis visiting the company Bentley’s Corner Barkery. They are a pet foods and accessories store that promises to only sell all natural pet foods.
The owners of the company Giovanni and Lisa Senafe had turned their start up idea into a successful store in just a couple of years. But like most mom and pop shops the lure to expand too quickly too soon was more than they could bear.
Without an established process in both how the store is run or how management works, half of the seven stores were losing money.
Examining The Risks
There were several major red flags that Marcus was going to have to look past in order to feel comfortable doing business with the Corner Barkery.
1. No Consistency
The first was that there was absolutely no consistency in any of the seven stores they owned. Each one looked different, each one had their own manager and without true leadership in the company they all operated separate from each other. It seemed to be a classic case of someone without real business experience starting a small business, running into success and not truly understanding the right steps to grow the business successfully.
If you’ve seen past episodes of The Profit you know like I know that Marcus will have no problem putting in the right process to make each store and management run like a well oiled machine.
2. Stubborn Owners
The genesis of the Corner Barkery stems from an experience Lisa and Giovanni had when a pet they owned got sick and died and they attributed the death to chemicals and preservatives in the food they gave her. This sent them on the mission to provide clean pet food to everyone.
Because of this emotional investment in their mission statement, they seemed very unwilling to even allow any dog food brand into their stores if they currently or ever sold pet food that didn’t meet their standard. Even if the pet food brand had changed their ways and was now offering all natural pet foods you could see in their eyes the blame they placed on these types of companies for the death of their pet.
The problem with this strategy is the cheapest bag of dog food was $70 which alienated most of the market. Marcus had to set out on a mission to make Lisa and Gio more open minded to companies they had hard feelings towards. After taking them to the manufacturing facility for Fresh Pet and showing them the state of the art facility and the painstaking levels they went to in order to keep their food fresh and organic Lisa and Giovanni were finally willing to admit that not every pet food company that sold to grocery chains was the devil.
3. Reckless Expansion
As I mentioned before, the owners at the Corner Barkery quickly expanded to 7 stores. Giovanni admitted to Marcus that he was always looking for acquisitions, even when they had no money to pay for them. This was further evidenced when they sat down to make “the deal” and Giovanni along with their silent investor told Marcus about another chain of 7 stores they were in talks to buy for $1.3 million.
For anyone else this probably would be a huge red flag but you could see the wheels turning quickly in his head as he processed the information and realized that with his new process in place, the ability to expand quickly wasn’t such a bad idea. As long as he was 100% in charge.
So Marcus made them an offer of $1.7 million dollars. This was broken up into 2 separate offers. $400k for 25% of the company which was used for store overhaul, operating fund, and IT infrastructure.
The second offer was for $1.3 million to pay for the acquisition of the 7 new stores. In return he wanted 15% more equity in the company until they paid back the $1.3 million. They agreed to the deal after a little persuading of Lisa that Marcus had the final say so on products that came into the store.
Once the deal was made Marcus went directly to work shutting down the flagship store in Arlington Heights so they could do a complete overhaul to the store and create the template for all future stores to follow. The biggest changes included raising the ceiling and adding more appealing lighting to the store, adding easy to follow signage and redesigning the layout to direct customers to the higher margin products.
After the overhaul was complete the store went from making $2800-$3200 per day to grossing almost $5000 per day. The template was complete and now expansion seems like a lot more realistic strategy.
I’m always impressed at Marcus’ willingness to so quickly forgive people who seem too stubborn to make changes in their business. It would be so easy to just say, this person is too unwilling to allow me to be 100% in charge and just move on to the next business. But he seems driven to help people overcome their issues and make them successful. I guess maybe he see’s it as a good thing to have people that give a little pushback in business because your ideas are not always going to be the best ones and you need people that will question you and make sure that you’re making the best business decision.
So in answer to the question “Did The Profit make a huge mistake in investing in Bentleys Corner Barkery?” early results from the revamped store point to a solid investment although the rate they are expanding does make me a little nervous.
About The Author
Adam White is the founder of Website Rocket, a web based software service that helps small businesses do their own website promotion – get a free SEO analysis. He is an avid fan of The Profit and has also written and directed a feature film. He lives in Arizona with his wife and 6 children.