Biz Tips: The Profit: Corey’s NYC Bagel Deli Cooks Up a Deal With Marcus Lemonis

Biz Tips: The Profit: Corey’s NYC Bagel Deli Cooks Up a Deal With Marcus Lemonis

Biz Tip:

The Profit: Corey’s NYC Bagel Deli Cooks Up a Deal With Marcus Lemonis

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Corey and Laurie Kaplan, husband and wife from Chicago, are in a growth mentality for their successful company, NYC Bagel Deli. They have visions of expanding their locations but need assistance with capital and strategy to achieve this. That is where Marcus Lemonis comes in. Marcus is immediately attracted to this business because it’s been around a long time, people know and love it and there are tremendous margins on bagels. Corey and Laurie sell a bagel for $1.29 while it takes about $0.10 to make it in materials and another $0.10 in labor.

Currently, the business has two primary locations and a pop-up location as a third site. The two primary locations are pulling in about $100,000 per month and the pop-up site around $50,000 per month. This shows Marcus that there is great potential with this business. When Marcus performed a walkthrough on each site, he found some common themes that needed to be addressed to move the company forward. His plan for helping NYC Bagel Deli grow is to:

  • Review the product line, remove erroneous products and add in traditional NYC fare including bagel chips, coffee and cheesecake
  • Rebrand the store from NYC Bagel Deli to Corey’s NYC Bagel Deli
  • Develop 1 concept store at the Dearborn location to create a better process for the customer and a higher register ring for the company
  • Develop a commissary model that allows the business to open more locations and wholesale product

Marcus offers the NYC Bagel Deli $200,000 for a 25% share of the company. He feels that he could drive traffic to Dearborn and grow business there from $1.3 million to $2.5 million. Corey asks Marcus what he is going to get for giving up that big of a share in his company because he doesn’t feel the monetary value is all that big considering this opportunity is about growth and not survival. Marcus shares that he knows where the market is in Chicago for the product, how to properly brand and merchandise his products and what the margins should be. He also said that he may also fund two or three more times that amount if the partnership is working well. Corey decides to decline the offer, not counter and walk away.

A week later, Corey called Marcus and asked to meet again. He shares that he has been researching Marcus and his success and he feels that his business would be stronger with Marcus than without. Marcus again reiterates that in order to scale and grow, they have to have a brand that is recognizable. They also discuss the variation in their valuation of the company and come to an agreement on $250,000 for a 25% share of the company.

After striking a deal, Marcus jumps into business transformation mode with the Kaplans. He and Laurie perfected a bagel chip recipe and selected packaging from a local packaging company. They hired a contractor to completely renovate the Dearborn location to create a concept store. They also began a project to create a bagel commissary in a property that Marcus already owns, which will take 6 months to complete. They traveled to NYC to source a special blend of coffee and taste cheesecake to bring into the store to give it authentic NY fare which will help grow the average order size.

Corey still has one major discrepancy with Marcus’. He is very concerned about changing the name of his store because he is afraid of losing his following an because he believes it will be expensive and time-consuming to revamp his marketing and create new assets. Marcus discusses with Corey very candidly about how there is another NY bagel shop in Chicago and asks if they have ever been confused for each other in the past. Corey begins to understand why a rebranding may be necessary and concedes to the name change and asset upgrade.

After completing the renovation on the Dearborn location, they feel that it is inviting, bright, energetic, clean and organized for the customer. The shop has a clear flow for the customer. The store has a local feel to it but also is refined and has an NYC flare. Despite Corey’s reluctance to introduce bagel chips, they are selling very well and have been reducing waste from imperfect bagels that were originally just thrown away. Corey also adjusted the boiling time of the bagel based on Marcus’ initial feedback that they were overcooked.

Corey shares that his customer’s response to these changes have been incredible. They are seeing a great increase in add-on sales, their revenue increased 10-15% and they have landed some large and strategic wholesale accounts. Marcus has invested nearly $2 million for the commissary which will also be a big help to their business. For Corey and Laurie, personally, they have improved their communication, relationship, and marriage through this process and they are very grateful. Marcus feels that the largest transformation was not the branding or the renovations, but rather with Corey. Marcus feels that he has the heart, passion and work ethic that every small business owner in America should have.

Small Business tips from this episode:

  • Ancillary grab and go items are what people will build onto the order and increase the dollar value per order, however, they need to be things that people actually want to buy.
  • A company’s people should be greater than the product and the processes
  • Heart, passion and work ethic are essential to the success of a small business
  • In order to scale and grow a busines, you must have a brand that is recognizable

“The Profit” airs Tuesday at 10 p.m. on CNBC.

What are your thoughts on the re-branding for Corey’s NYC Bagel Deli and the other changes that Marcus implemented? How did you feel about the personal growth that Corey saw through this process? Let us know in the comments section below!

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