Damien Merry and Simon Johnston learned the craft of making custom gazebos in the UK before moving to the states and opening up Kensington Garden Rooms in California. They manufactured a premium quality luxury item hand-crafted from the finest materials. The high price tag was inhibiting sales and they looked to Marcus Lemonis and The Profit for help. Marcus felt he could implement strategies that would improve the process and bring down prices.
Kensington Garden Rooms on The Profit
The Profit Season 3 Episode 12
Lemonis first met up with Damien and Simon at a craft fair in El Paso, California. The pair had attended the fair every summer, but Marcus was not impressed. It seemed more like a carnival to him, which was not the right venue for the high-priced luxury products available at Kensington Garden Rooms.
One thing Marcus could not deny was the quality of the product. The gazebo on display was fully furnished with a couch, a rug, a heat lamp, a fan, and even a flat-screen television included. The price ranged from $25,000 to $32,000, which included the manufacturing and installation. Marcus thought it was a beautiful piece that was built like nothing he had seen before. If the quality of the product was the only factor in partnering with Damien and Simon, Marcus was in.
If Marcus could help lower the production costs and bring down the retail price, Kensington Garden Rooms would have a wider appeal. Lowering the price would get the gazebos into a larger market share without sacrificing their 45% profit margin.
Damian and Simon had only sold seven gazebos their first year in business and tripled that output the second year. They were anticipating topping $1 million in sales in the current year, which would net them about $250,000 in profit. They owed no debt to suppliers and in addition to the two of them had four additional employees in the workshop.
Simon acted as the shop foreman, putting in 10-hour days, seven days a week and supervising the shop crew. Damien handled the sales and marketing side of the business, as well as customer relations. When each of them started to take the credit for the business, Marcus insisted it was not about taking credit. He tried to impress upon them that the important thing was to do what was in the best interests of the business.
Touring the Warehouse
Next up was a tour of the warehouse facilities at Kensington Garden Rooms. Marcus knew there was trouble the minute he walked in, describing it as a “garage on steroids.” The building was surrounded by almond fields far from civilization. The warehouse didn’t even have a bathroom, forcing employees to drive a mile to use the toilet.
Simon and the rest of the carpenters were using standard table saws and planers to create the gazebos for sale. They had no modern tools or equipment. The working space was cramped and there was no air-conditioning or proper ventilation. Supplies were purchased through retail outlets instead of at wholesale prices. The entire operation was in need of a new inventory system.
Marcus told the pair that they needed to loosen up the horse reins in the name of productivity and efficiency. Simon said that Damien had been tight with the money and would not allow for it to be spent on upgrading the tools and other equipment used in the manufacturing process.
Damien and Simon were constantly bickering in front of the staff, arguing on just about any issues that came up. It set up an awkward workplace environment. Jack, one for the workshop technicians, told Marcus that he and the other employees are regularly put in the middle of their fights. The crew universally felt unappreciated working for Kensington Garden Rooms. While Marcus still loved the product and was impressed with the overall financial outlook of the business, he was not sure he wanted to invest in a company that was run with so much dysfunction at the ownership and management levels.
When Marcus met with Kad, the third investor of Kensington Garden Rooms, he was informed that they were making plans to add a location in Washington. Marcus felt this was a terrible idea for a business with so many issues in the manufacturing process. All three investors had visions of building up factories throughout the country. Marcus knew that was the wrong approach and strongly suggested they put on the brakes. A lack of professionalism and customer service standards would need to be put in place before they would be able to expand the business to multiple locations.
After discussing the finances and goals, Marcus came to the conclusion that the guys were looking to have him finance their fantasy business. Damien took offense to this and walked out of the room. Marcus and Damien sat down by themselves in one of the gazebos for a heart-to-heart. Damien let Marcus know how hard he had worked to get on the show. He had been watching since the beginning and had begun to look to Marcus as a mentor, trying to emulate his methods and successes. Through it, Marcus had become a sort of father figure to Damien, and it was difficult to think that he had let Marcus down in such a great opportunity.
Marcus was affected by Damien’s honesty and vulnerability. He gave them three weeks to get their act together. If after that time, an effective process had been implemented at Kensington Garden Rooms, he would consider making a deal with them. The three weeks passed and when he returned, Marcus saw a completely different operation. An effective inventory system had been put in place and the two working partners seemed to have found a way to co-exist without arguing about every aspect of the business.
Marcus offered a deal where he would invest $150,000 in Kensington Garden Rooms in exchange for a 12% share for himself and Kab, and the rest split between Damien and Simon.
After Damien was able to secure a deal with True Value hardware stores, Kab came back and disputed the terms of the deal, feeling he did not get enough equity in the business. He asked Marcus to buy him out of the deal for $250,000 and wanted his son to be paid for work he did on the website. Marcus rejected this notion, stating that he was going to stick with the original deal.
Kensington Garden Rooms After The Profit
Since appearing on The Profit and parting ways with Marcus, Kensington Garden Rooms continued selling high-quality gazebos. Regular social media posts display beautiful pictures of spectacular product examples. Kensington Garden Rooms has installed gazebos throughout the country.
Damien and Simon were never able to get their gazebos into all True Value stores, but they were sold at the one Chicago location where they met the company’s executives. They have several 5-star reviews on Yelp complementing the business’ customer service efforts, which is at least something Marcus can take pride in.
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