Home Blog A. Stein Meat Products: The Profit Updates in 2023

A. Stein Meat Products: The Profit Updates in 2023

by Kate Sparks
0 comment

A. Stein Meat Products co-owners, Howard Mora and Alan Buxbaum, had grown their inherited company from $4 million to $50 million over a period of eighteen years, but they were $3.5 million in debt to the bank and suffered huge losses every year. The Brooklyn-based duo blamed their woes on the cut-throat nature of the business, complaining that they had to drastically lower their margins in order to compete for their share of the national high-end restaurant and grocery market. But a laissez-faire approach to management and gross negligence were likely bigger factors in the company’s troubles. Could Marcus Lemonis help this struggling company make a profit?

Marcus Visits A. Stein Meat Products

The Profit Season 2 Episode 2

Marcus arrived at A. Stein Meat Products very early in the morning and received a tour of the facility. He learned that while the business brought in a healthy revenue, the overhead costs were sky-high. Rent and electricity averaged over $60,000/month, and there were also union labor expenses and delivery trucks. Aside from its fixed costs, A. Stein also expected to lose $400,000 that year.

Soon after meeting the owners, Marcus was introduced to the General Manager, Frank. Quickly, Marcus could tell that Frank was not running the business very efficiently. For example, Frank had never given much thought to the productivity of his employees – he just tried to get as much done as he could during the day. When Marcus pressed him for information about his daily output, Frank had no idea what to tell him. 

Marcus asked Howard and Alan what else they could do to bring in money. Alan told Marcus about a new product they had introduced called the Brooklyn Burger. They would take the prime meat that couldn’t be sold to their high-end customers and turn it into hamburgers that were then sold to three major sports stadiums in the area. Marketing the Brooklyn Burger was a $400,000 expense, and Marcus thought that sounded pretty high. He resolved to take a look at the contracts so he could understand what A. Stein was getting by participating in these corporate sponsorships. Marcus believed there was potential for much bigger sales of the burgers if he could get them into grocery chains at a national level.

While Marcus could see that the owners understood how to turn out great meat products, he was not so sure they had a handle on the numbers. So Marcus stopped by the Accounting Department where he met Donna, the office manager. She was in charge of invoices, Accounts Payable, and Accounts Receivable but didn’t have anything to do with Accounting. Howard and Alan did that, she said.

Donna was the one who had contacted the producers to ask for help. She was most concerned about Accounts Receivable, as there was almost $4 million that hadn’t been paid. Marcus confronted the owners about this and they shrugged it off. They explained that one customer had family problems and another was just slow to pay. Marcus was incredulous. If Howard and Alan didn’t figure out a way to collect what’s owed them, their company would go out of business. He notes that A. Stein owed vendors about a half-million dollars – more money than it had.

Later, at an expensive steakhouse that served A. Stein’s meats, Marcus gave Howard and Alan his prognosis: The product and people are good, but the process is broken. He asked the two what they wanted from him and what he would get in return.

Howard asked for $5 million in return for one-third of the business, but Marcus replies that he wouldn’t do a deal for less than 50% of the business since it was going to take so much working capital to lift up the company out of its hole. Marcus then offered $1 million of working capital to bring the payables into an acceptable range. Howard and Alan countered with a request for $4 million. Marcus shook his head and said he would not offer more than $1 million. The owners realized they desperately needed Marcus’s help, so they accepted his offer.

A New Direction for A. Stein

The next morning, Marcus met with A. Stein’s employees. He explained the situation the company was in and told them they need to collect money owed, cut costs, and generate more revenue. His strategy for generating revenue relied on marketing the Brooklyn Burger to grocery stores. But the first order of business was to try to collect on overdue bills. While the employees were actively calling customers, General Manager Frank was hiding in the other room. Marcus noticed that Frank lacked a sense of urgency and didn’t seem to understand that the company was in dire straits.

Meanwhile, Marcus introduced plans to shrink the workspace and reconfigure the workflow. After he presented a grocery package concept for the Brooklyn Burger, he and Alan visited one of the stadiums that featured the burger. Marcus could see that A. Stein wasn’t getting enough for their corporate sponsorships so he terminated the contracts. And when Donna later caught Frank sending out purchase orders without her approval (for the second time), Marcus’s decision to terminate Frank as General Manager. He was demoted to Floor Manager and would have to take a pay cut.

Marcus brought in an accounting expert to audit the books, and she discovered that Howard and Alan provided inaccurate numbers. The owners had told Marcus they had $2 million in payables when the real figure was almost twice that. Furthermore, the bank loan was more than what they reported and the bank was demanding payment immediately. The auditor said that A. Stein was nearly bankrupt and found it difficult to fathom how they would remain in business for more than two more weeks. Marcus realized it would be a mistake to move forward with the deal, but he didn’t want the company to go under. There was too much history, and he was worried about the employees who would lose their jobs.

Marcus confronted Howard and Alan to let them know he wouldn’t invest $1 million but said that he did want to help them. He asked what they absolutely need, and Howard told him $200,000. Marcus said he was willing to give them the money, but that it was not a gift; he wanted A. Stein to transfer over to him the rights to Brooklyn Burger. He would repackage it and get it ready for sale in grocery stores, and hopefully, that would help inject some profit into A. Stein and turn the company around.

After The Profit

It’s been very ugly in the aftermath of A. Stein’s appearance on The Profit. Although Marcus did wire the nearly $200,000 he promised Mora and Buxbaum, he never did receive the rights to Brooklyn Burger. The owners offered to repay the loan but Marcus declined, stating their verbal agreement was for Brooklyn Burger. He then filed a lawsuit against A. Stein, but New York law deems that a verbal agreement made on television does not constitute a valid contract. Marcus lost in court, but the parties agreed to a settlement that has not been disclosed.

Marcus wasn’t the only one who sued A. Stein. Office Manager, Donna Johnson, filed a $3 million discrimination and defamation suit against her former employers (she resigned), stating that she was called a “traitor” and “backstabber” after telling Lemonis that the company’s financial records were not accurate. But A. Stein went out of business in late 2014 after defaulting on its debt, so whatever was the result of the case, it’s unlikely she saw any money.

And the story isn’t over for A. Stein Meats. In September 2019, Mora and Buxbaum were arrested for putting “Prime” stamps on “Choice” meats from 2011 to 2014. They were charged with conspiracy to commit wire fraud, a federal offense that could mean up to 20 years in prison. 

It’s sad that a family business that had operated for more than 75 years was destroyed due to negligence. Bill collection is certainly an unpleasant task, but if Mora and Buxbaum had kept tabs on their Receivables on a consistent basis, A. Stein could have continued its legacy and may have potentially thrived.

Disclaimer: The information provided in this article is strictly informational; SEO Insights is not affiliated with A. Stein Meats, The Profit, or any of their subsidiaries.

0 comment

You may also like