One of my favorite TV show is CNBC’s “The Profit,” where Marcus Lemonis invests his own money to turnaround failing small businesses. I saw the premier episode while attending the Las Vegas Star Trek convention last year, fell in love with the show, and can’t get enough of it on the Internet. Alas, CNBC has locked down the episodes when the second half of season two started a month ago. Since I’m not a cable subscriber, and the episodes aren’t available on Amazon or iTunes, I had to watch the sneak preview videos, and read the reviews on Previously TV, The Profit Fans, and Tycoon Playbook. A recent episode showed up on Hulu.
Over 40,000 businesses applied to get on “The Profit.” According to an article in Inc Magazine, there’s a fine line between the businesses that Marcus wants to turnaround and the drama that the producer wants to turn into good TV. In short, there are winners and losers. Swanson’s Fish Market was an obvious loser from the get go.
The businesses that Marcus favors are either products or stores that have the potential to become national brands. As I’m not aware of any national fresh fish markets (the only fish I eat are frozen fish fillets from the supermarket), I couldn’t see him turn this 41-year-old family owned business in Fairfield, CT, into a national brand. With the family name being Swanson, a national fresh fish market and/or prepared food line might get confused with a national frozen food brand despite being in different markets.
Marcus discovers that the business is $900,000 USD in the hole despite doing $150,000 USD in monthly sales. The numbers are hard to figure out. Gary, the father, is laid back. Sue, the mother, has checked out of the business. Larissa, the daughter, struggles with the bookkeeping mess she inherited from her mother, and reached out to Marcus to help her family.
Marcus offers $1 million USD to buy the building to pay off the debt and put working capital into the business, giving the family an option to buy the building back at a later date. Since he didn’t request his usual 50% of ownership, I don’t see what his return of investment was unless the building has significant real estate value and/or appreciation. As he stressed in earlier episodes, he doesn’t do real estate play—and this is a real estate play.
This fish market has a fishy history. A fire on Fourth of July 2009 gutted the original store, which was rebuilt for $1 million USD and the insurance company paid out $1.2 million USD. A warehouse fire that same year cost $30,000 USD to rebuild and a $220,000 USD payout from the insurance company. And, later in the episode, a $35,000 USD boat swamped during a hurricane got bought out by the insurance company for $70,000 USD. All that extra money supposedly went back into the business.
Many people on various comment boards believe that the owners have committed insurance fraud, as insurance companies aren’t renowned for generous payouts. Larissa in a special post on the business website disputes that accusation of fraud and how the episode humiliated her family. If anything, the owners were guilty of using the business as a piggy bank for a luxury car, boats and the remodeling of their house.
No surprise that Marcus walked away after he discovers that the building was under foreclosure proceedings. Unlike earlier episodes where circumstances became deal breakers, this episode felt like it got set up to fail from the beginning. Based on the available public records, the production company—and perhaps Marcus—must have known about this before setting up the cameras.