Marcus Lemonis isn't known for being a restauranteur, but he does know a good burger when he sees one.
When the host of CNBC's The Profit met the founders of Staten Island, New York-based Standard Burger, one of the first things he noticed was the company's sub-standard product made from frozen meat patties. Behind the business's lousy food were four co-founders who could barely get through a meal without fighting.
"I've been in business where controlled chaos exists," Lemonis said during the episode. "This place is chaos without the control."
A textbook example of having too many cooks in a single kitchen, the partners all had other jobs outside of Standard Burger, and had fired the only person they knew with restaurant experience: co-owner Sammy Lazoja's brother Fuji. Trust issues between the partners had even led to one co-owner installing security cameras throughout the back office.
Upon meeting the founders, Lemonis discovered Standard Burger was generating nearly $400,000 in annual revenue but losing roughly $60,000 a year. To turn the business around, he agreed to invest $130,000 for 30 percent of the company, but only if each partner kicked in an additional $15,000.
"Show me that it's not just a hobby and put your money where your mouth is," Lemonis said. Standard Burger did not return a call for comment.
Here are four steps that Lemonis took to save the company from itself.
1. Put people first. Perhaps the most important change Lemonis made to Standard Burger was establishing order among the partners and not tolerating infighting. Lemonis gave Fuji Lazoja complete control over the kitchen, designated co-owner Joseph Tranchina as the full-time managing partner, and eased mistrust by removing all the security cameras from the back office.
2. Rethink the recipe. Switching from frozen ingredients to using fresh ground beef, gourmet cheese and artisan bread resulted in a high-end burger that the company could sell for as much as $14. "Not only is [Fuji] using fresh meat, but he's taking the time to use the right spices and right blends," Lemonis said. "That's how a specialty burger is supposed to be made."
3. Grow the margins. One of the ways Lemonis increased profitability was by introducing higher margin items like baked potatoes and ice cream and offering sweet potato fries and yuca fries in addition to traditional french fries.
4. Revamp the restaurant. A month-long renovation gave Standard Burger what Lemonis called a "warmer and friendlier" space and more than 100 total customer seats, up from 52 before the rebuild.
With Standard Burger on track to hit more than $1 million in annual sales--triple its previous revenue--Lemonis decided to use the Staten Island location as a prototype for a national restaurant chain.
"What I've ended up investing in is a national concept that I think is working," Lemonis said. "My investment was definitely worth it."
Stay tuned for more recaps every week.