“The Profit” with Marcus Lemonis gets back into the furniture business at Pacific Hospitality, which is a familiar place for him. In season 3, Marcus helped a family owned furniture company in Miami recreate itself. That would be Grafton Furniture, a business that turned from producing strictly custom pieces to adding a ready-to-ship line of goods. RECAP posted below.
Pacific Hospitality in Los Angeles has a ton of old inventory, quality control problems, slim margins and a founder whose health is deteriorating. Lemonis is all about his three “P’s”: people, product and process and after taking a look at this company, he found that process was non-existent.
Tonight on “The Profit”, Marcus spends a lot of time with Ana Maria Martinez-Stumpo, Pacific Hospitality’s designer and the daughter of the ailing founder. He was diagnosed with Parkinson’s some years ago and the stress of a struggling business only makes matters worse.
Martinez-Stumpo does not fear hard work and doing what it takes to save the company, as Marcus learns. That’s something that always energizes him and he appreciates sacrifice, but it has to come with the ideas that will make the effort worth it. Lemonis listens to Ana talk about the toll it takes on her when she sees her father worrying about the company, and the enormous pressure it puts on her to keep from disappointing him.
When Ana tells Marcus that she and her husband invested $75,000 of their own money to meet payroll, he says the magic words, “You need help”. The question is whether the help will be received in the right way and if bringing in the Grafton people ends well.
We got a true first on “The Profit”, as Marcus Lemonis chose to merge the operations of Pacific Hospitality (Los Angeles) and Grafton Furniture (Miami) to create offices on two coasts. Pacific’s specialty was commercial product for hotels and other businesses, while Grafton supplied retail stores with ready-to-buy and custom pieces for end-user customers. Both left opportunities on the table because of shipping coasts.
He even made the investment deal reflect his decision by giving Pacific a 5% interest in Grafton so that there would be a true incentive to make a combined business successful. Ana and her dad were a bit skeptical about Grafton’s involvement and that helped ease the concern. While it worked splendidly for Martinez and her father, it was Grafton that experienced the most change.
Lemonis invested $300,000 for less than 50% of Pacific, but as always, he was 100% in charge, making an exception for the elder Martinez, who he admired for building a business that survived for 40 years after he came to the U.S. as an immigrant.
Marcus saw Martinez’s passion for design and knew that he could get her help with her process, systems and business models, which he did. He upped their margins from a slim 28% to something closer to industry standard, paid for a complete re-design of Pacific’s warehouse/manufacturing facility and brought in Grafton to evaluate their quality-control needs.
It was when he pitted the two designers, Steve from Grafton and Ana from Pacific, against each other to pitch his fast food business The Simple Greek, that the fireworks began, and not from the west coast. They each came up with samples and drawings and showed them to the man in charge of making those purchasing decisions for the fast food chain. There are more than 200 people signed up for franchises and they all needed a look that was fresh and scalable for all retail locations.
When Ana’s won over Steve’s he didn’t take it well, trying to explain why his was better and more functional. Lemonis disagreed as did the exec from The Simple Greek. Insult was piled on top of injury for Steve when Lemonis chose to give Ana the chief designer role for both Grafton and Pacific. Steve was stunned, argued, but fell in line.
He was given total control of sales, marketing and customer contact, while Ana designed the furniture. After she took Marcus’ ideas for how to transform Pacific’s space, Lemonis saw her true talents. She was relieved from having to run the business side of the company and with the new process and pricing, she was off and running to be as creative as she ever wanted to be.
Even better for Ana was her promotion to the chief designer across all of Lemonis’ businesses, something he said he always wanted. Seemed like a win for all.
CNBC airs new episodes of “The Profit” Tuesday nights at 10 p.m. ET/PT Image credit: CNBC, used with permission