Marcus Lemonis Vs Swanson’s Fish Market
The Company: Swanson’s Fish Market
The Owner(s): Gary Swanson Jr. and Wife Sue
In this episode of the profit with Marcus Lemonis (Click here to learn more about Marcus Lemonis if you are not familiar with him.) visits Swanson’s Fish Market, a multi-generational family run fish business located in Fairfield Connecticut. This Fairfield institution founded over 40 years ago, was a very successful sea food business until a fire ravaged it causing a hundred percent loss of inventory.
With moral at all-time low, the owners are struggling to keep the business running and Marcus is here to find out if that’s possible.
Specializing in fresh fish, catering and hot soups, Swanson’s Fish Market was a thriving stable business providing a good life for owners Gary Swanson Jr and wife Sue. That is until July 4th 2009, when a fire destroyed their original store. Not only did the business lose income for an entire year, the Swansons lost a good portion of their customer base.
When the store finally reopened a year after the fire, Gary found himself over $900000 in debt and his wife Sue is so demoralized by this that she started spending less time at the store forcing their daughter Larissa come home to work and help pick up the slack. With their financial situation at an all time low, Swanson’s Fish Market is running out of time and look up to Marcus to help get them out of trouble.
Marcus believes that with a direct injection of money and with a small change in the business model, Swanson’s fish market can once again become the big fish of the community.
Episode Main Review.
Marcus Lemonis arrives at the Swanson’s Fish Market business location and immediately likes what he sees. The business is located on a very busy road, in a beautiful building with two other businesses beside and this is good.
He walks into the shop and meet Spencer the business manager. Marcus quickly finds out that the shop is not fully stocked and clients are finding it hard to get some products simply because sometimes there is no inventory.
Speaking to one of the employees, Marcus finds out that the financial situation is so bad that most times the employees had to wait for their paychecks and incredibly, sometimes they have to pitch in a couple hundred bucks to help in acquiring inventory for the business.
Mark was finally meets Gary Swanson Jr. the owner of the business all explained to him what happened when the business burnt down to the ground. Swanson’s Fish Market total loss due to the fire was $1 million but the insurance company paid $1.2 million.
There is a current mortgage on the property in which the business resides around $3800 a month. The other businesses located beside Swanson’s Fish Market are tenants of his and pay a rent of around $3000 a month which more than covers the mortgage payment of Swansons fish market and even generate an income of $2200 monthly.
Gary tells Marcus that the most profitable part of the business is prepared foods. Swanson’s Fish Market sells around $18,000 per week of fresh fish with the margin of around 30%. They also sell around $18,000 of prepared foods and soups with the margin of around 60%. Marcus find out that the costs of running the business on a monthly basis is around $18,000.
Based on this calculations, Swanson’s Fish Market should generate around $60-$70,000 gross profit per month. But this is not the case as Gary confesses that the business has a lot of outstanding debts owed to people he borrowed money from, loans as well as contractors and vendors. Marcus just doesn’t understand how the business makes so much profit and yet the money is nowhere to be found. The numbers don’t seem to be adding up correctly.
So in the next scene, Marcus takes the soup tour to taste Swanson’s prepared foods. He is really interested in expanding the prepared foods part of the business since it generates more than double the gross profit of fresh fish section. Especially since most of the clients enjoy the prepared foods and soups and wish Swanson’s would open a restaurant.
In the next scene, Marcus meets Larissa, Gary’s daughter and finds out that she left a good paying job to come and work in the family business that she lives 1 hour away from.
Next Marcus meets with Sue, Gary’s wife and she tells him that the way the books are currently being done is driving her crazy. She says the business struggles to pay its vendors, she is behind on mortgage at home and her phone gets frequently disconnected by Verizon.
The financial situation looks very tight. Marcus reassures her and tells her that as long as the business has the amount of clients they have currently, they just have to find out the way to squeeze out a profit.
So Marcus brings the family together to speak about the current financial situation and find out that the Swanson’s Fish market has already had a fire in a warehouse which took around $30,000 to rebuild. The insurance paid them $220,000 in damages.
If you add all the insurance payments for both fire damages all up, we quickly found out that Gary got in excess of $390,000 from the insurance company so Marcus just can’t understand why the business has financial troubles now.
The family also tells Marcus that wife Sue left all the burden of the bookkeeping on daughter Larissa so Marcus asks her if she will dedicate more time to help the business and she says yes.
Marcus gets a spreadsheet detailing all the debts of the company and is shocked to find out how a company that got fresh start from the insurance payment just a few years ago, could be over $900,000 in debt. Here below is the list of the most important debts owed:
Well we soon find out that money is leaving the business for private purposes like paying for the house bills/needs and to run expensive cars like wife Sues BMW. This is specially disgraceful for a company that can hardly pay its vendors or employees. On paper the company makes quite a healthy profit, but in reality, there is a lot of sticking hands in the till and these results in the loss the company is making.
Problems/Issues In The Business Found By Marcus
- Total lack of accountability from the owners of the business.
- Too much debt.
- Mixing private and business expenses together
- Emotional instability in the family
- Fuzzy business numbers
- Sue’s lack of determination to see the business survive.
So Marcus sits the family down to discuss the potential to help save the business. He is however worried of the business numbers and is not ready to invest in the business if that is not cleared up.
Marcus however is ready to put up $1 million investment to buy the building from the Swansons which will allow the company to get rid of all its debt and own 100% of its business but with Marcus becoming the landlord.
Gary says no, he is not interested in selling the building and feels that giving up the building will be a mistake.
Marcus offers to sell them back the building at a future date when Gary is ready to get back the building or decides to sell the business. Gary is very interested in this and the deal is done.
He asks Marcus when does the deal be finalized and Marcus brings out his checkbook and signs them a million dollars on the spot like a boss.
This check however goes into escrow until Marcus’ attorney do their due diligence on the business and building. If the due diligence goes through, then the money goes directly to the bank to get the debt paid off and to everyone owed money by the Swansons. Only then will the Swansons be able to get whatever is left which will be a bit more than $100,000. This ensures Marcus that there is no fuzzy business and no risk to his investment.
Solutions Suggested/Implemented by Marcus To Improve The Business
- Fix the business process.
- Focus more on the prepared foods part of the business.
- Take advantage of the shop’s square footage to make the most revenue.
- Negotiate on debt repayment to get a reduction.
- Bring in new equipment to replace the old unused units.
After The Deal…
Soon after Marcus shakes hands with Gary on the deal, he gathers to employees and tells them what the developments. Sue however is nowhere to be found and not responding to the phone when called. We start to see that she is just not motivated to help run the business to succeed. She walks in a couple of minutes later and says that yes she is motivated to help time around the business. We will see how true that is.
In the next scene we find out that Black Rock Cafe, one of the current renters in the Swanson’s business building is falling behind on payments and has racked up over $15,000 in rent unpaid.
Since the owner of Black Rock Cafe has a 75000 dollar guarantee on its equipment and lease, Swanson has the right to collect on personal assets to recover its rent if the owner fails to pay up. Marcus however decides to speak to the business owner and see if they can come to an agreement to use the bar as a mini grill for Swanson’s fish market prepared foods.
This is the true genius of Marcus Lemonis, he always finds a way to make things work. By creating the restaurant part of the Swansons fish market business, Marcus believes that they will end up sale selling more fish and generating an even bigger profit especially since clients have been waiting for a Swanson’s fish restaurant for a while now.
Sue on the other hand, is still not committed to the business and always comes to work late. She’s the only one in the family that doesn’t pull her weight when it comes to running it. Marcus asks Sue if she can change her BMW to another car in a bid to lower the monthly payment of $500 to maintain it.
Sue gets offended. Marcus reminds her that the fact that she is driving a BMW sends the wrong message to her employees who sometimes have to take money out of their own pockets to help to purchase business inventory. Gary and daughter Larissa fully agree with Marcus but Sue wants to hold on to the car.
In the next scene, Marcus meets Joe, the owner of Black rock cafe to discuss getting Joe off his $75,000 liability with a small nominal fee of $10,000.
Since Joe is no longer interested in putting money into the failing cafe and is owing over $15,000 in rent, this is the perfect opportunity for him to cut his losses. The employers of the cafe will remain part of the business which will now be owned by Swanson’s fish market and will be its prepared foods subsidiary. Joe agrees to the make the deal and cuts his losses.
In the next scene, Marcus asks Larissa and Gary to call all the vendors they still owe money to negotiate a reduction in payback price. The less money Swanson’s fish market have to pay back, the more money will remain to run the business.The first call is a success as Larissa is able to cut of $20,000 from $55,000 debt repayment.
We find out in the next scene that Gary Swanson Jr. has a freaking BOAT at the marina costing $5000 a year just to dock. Sue wants him to sell the boat or she gets to keep the car as she feels safe in it and doesn’t want to go around driving in a Smart car. Gary and Sue argue about this and they both want to keep their guilty pleasures. Marcus finds them arguing and asks what this is about. He finds out that Gary has a boat he didn’t know about. Marcus is pissed but is more bothered with the fact that Gary hid this information from him and tells them that the BMW and the boat have to go.
I personally still don’t understand how the owners of a failing business get to keep very expensive to maintain properties like BMW or a boat. In this case Gary is more guilty because the boat is a super luxury item for someone in debt.
Conclusion and Updates on the Business
So Marcus spent $17,000 on new equipment for the shop in a bid to get more out of all unused spaces, the sale of prepared foods. He also added some fresh product shelves for those clients that will want to get some fresh vegetables to go along with the fish increasing the amounts they spend per visit.
The Black rock cafe next door will now prepare seafood specialties for sale to clients therefore increasing the sales Swanson’s fish market inventory.
In the past Swanson’s was nothing more than fresh fish store. Now you can buy prepared foods, you can buy fresh produce, you can buy lunch or dinner next door in the grill, you can buy soup to go, fresh or frozen. All this is going to double the business revenue Marcus says.
Sue on on the other hand, is still driving around in her BMW. When Marcus confront her about it and the fact that she has to make sacrifices when the business is not going well. She tells him she doesn’t want to speak about this and walks away.
Sue says she’s going to punch someone in the face if she hears one more time about her BMW.
It slips from her mouth that she came late to work because the contractors and painters at her house probably remodeling it.
Marcus is fed up with the fact that just trying to help them rebuild their business but all the family can think about is to maintain luxury items, remodel their house while their daughter Larissa does all the work.
All this crappy uncaring behavior reminds me of the episode with Hank Maarse from the episode with Jacob Maarse flowers.
The Swanson family is living a lifestyle that people in financial problems don’t live, so Marcus goes to the town hall to find out from the public records if there is any information still hidden from him.
Incredibly, we all find out next that the Swansons are actually in foreclosure. The bank is actually just about to take back the building Marcus offered to buy in his deal with Gary. This episode is actually more screwed up than the Jacob Maarse one and the fact that hiding this type of information from Marcus is shameful.
All this new foreclosure action information makes Marcus feel the need to re-neg on his deal and goes to confront Gary about his misinformation and lies.
Marcus is FURIOUS, in fact I am sure all the viewers are. I dont think I ever saw Marcus Shout this loud.
The Swansons say they didn’t know about the foreclosure documents served. Gary tells Marcus he was supposed to do the background checks on him instead of taking him at his words. Everyone is screaming and Gary tells Marcus to GET THE F*** OUT !!!
So Marcus gets burnt once again trying to genuinely help people. The Swansons didn’t need his help. They have all the money they need to run the business successfully. But they prefer to spend it on themselves while the poor employees wait for salaries and pitch in to buy product for the store.
Marcus dumps the deal with Swanson’s Fish Market and we are glad he did. This business didn’t deserve neither his time nor his investment. It doesn’t deserve the exposure it got being on the profit.
So that’s it folks. I hope you enjoyed this episode as much as we did.
Don’t forget to let us know what you think about the episode and its characters in the comments below. We hope to get a good discussion on this and maybe an explanation from the Swansons.
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Thanks again for visiting.
UPDATE: Here is the family’s side of the story http://www.swansonsfishmarket.com/#!the-profit–please-read/c24el
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