Gilbert Martinez came to the United States from Mexico in 1979, settling in Southern California. He began Pacific Hospitality, a furniture manufacturing business in the suburbs of Los Angeles, building an impressive commercial client list.
Gilbert’s daughter, Ana, grew up with her father’s business, developing a deep passion and talent for commercial furniture design. The father-daughter team created the kind of quality furniture that enabled them to land big company accounts with Caesars Entertainment, MGM, and the Coffee Bean. Ana oversees their furniture designs, while Gilbert is in charge of the production end of the business.
The majority of Pacific Hospitality’s business consists of manufacturing commercial furniture for restaurants, public spaces, and hotel guestrooms. Just 10% of the company is devoted to residential and retail furniture orders.
A severe dip in quality saw a decrease in cash flow and a significant drop in sales. The bills were accumulating, and orders were seeing long delivery delays. Following a year where Pacific Hospitality lost $46,000, revenue had been projected to reach close to $2.8 million with no guarantees; they would make a profit. Ana and her husband had personally invested $75,000 in the business.
Pacific Hospitality needed help and looked to Marcus Lemonis and The Profit for help.
Pacific Hospitality Design Group on The Profit
The Profit Season 4 Episode 7
Marcus arrived at the Pacific Hospitality showroom. In taking a look around while he noticed a lot of residential furniture and very little of the commercial products the company primarily sells. Gilbert and Ana met up with Marcus, who was impressed to hear that the pair had been making commercial furniture in the same location for the past 13 years.
While giving Marcus a tour of the showroom, Ana shows him a 400-piece order in process for Planet Hollywood. She expresses her passion for furniture design and explains how other responsibilities of the business have taken her away from the design side of the company.
Marcus Gets Down to the Finances
Marcus understands the furniture manufacturing and distribution business after investing in Grafton Furniture; a successful Florida company previously featured on The Profit. He looked at Pacific Hospitality and Grafton Furniture as a potentially good match that could help both companies succeed.
In looking in the books of Pacific Hospitality, Marcus found Ana and Gilbert did not have a full grasp of their financials. Ana and an accountant were in control of the cash flow. It is tempting to underbid to move product, but Ana admitted that her father would allow customers to undercut them to get the business. Their profit margin stood at 28%, which Marcus felt needed to increase to at least over 50%, even in the highly competitive marketplace. He wanted the two to understand that to reach profitability, they needed to cover the losses they have accrued to that point.
Marcus was disappointed with the way the physical operations were run. The production area was chaotic, and there was no flow to the furniture manufacturing process. He realized it would take a little effort to make the entire operation for effective and cost-efficient.
An Offer is Made, Accepted
In going through the finances of the business, Marcus discovered they had over $400,000 in liabilities. Ana tearfully explained that the company was such a significant part of her life and that designing furniture was what she was meant to do with her life. Marcus appreciated Ana’s sincerity and passion. Being an immigrant himself, he has always had a soft spot for business people from other countries looking to be a success in America.
Marcus wanted to pair Pacific Hospitality with Grafton Furniture. He made Gilbert and Ana an offer of $300,000 in exchange for a 45% share in the business, with 5% of Grafton’s equity going to Pacific Hospitality to balance out the deal. The father and daughter thought it was fair and accepted the deal.
Pacific Hospitality, Grafton Come Together
At the first group meeting with the staff of Pacific Hospitality and Grafton Furniture, Marcus explained the details of the deal and let them all know that he was in charge of the operations. During the process of determining which inventory was to replaced, Ana expressed how emotionally attached she was to some of the pieces. Ultimately, she understood that purging old inventory was an essential part of the process Marcus had set up to save the business, and remodeling of the facilities was begun.
Marcus wanted to involve another one of his investments, The Simple Greek. With both of them wanting creative control, Steve Grafton and Ana were each given two weeks to come up with an effective furniture design plan for the Greek restaurant.
Steve was up first. Sam, the owner of The Simple Greek, was not impressed with his design, feeling they lacked innovation and vision. Steve did not take kindly to the criticism and was unwilling to budge on his ideas.
Ana appeared confident and focused, presenting designs that more accurately reflected the restaurant’s character and style. Sam was thrilled and made a deal with Ana. Marcus was so taken by Ana’s pitch skills and design talent that he wanted to merge Pacific Hospitality and Grafton Furniture into one business. Ana would run the design department, while Steve would handle the business management and finances of the company.
Pacific Hospitality After The Profit
Marcus told Ana that he had been looking for a long time for someone with her abilities and talents. He put her in charge of the creative sides for all of his businesses, handling both sales pitches and furniture design.
Appearing on The Profit and beginning a business relationship with Marcus was the best thing that could have happened to Ana and the 40-year-old business her father started. After striking a deal with Marcus, Ana devoted the majority of her time doing what she loved, designing high-quality commercial and residential furniture.
Marcus created a state-of-the-art showroom in New York to house all of the creative elements of his investments. Ana designed the furniture and created the office layout design, as well. She has expanded her value with Marcus by doing design work for his other investments, including
Pacific Hospitality, or PH Designs, has an expansive online catalog featuring residential furniture design options and was featured in the industry style publication Modern Luxury. The business updates their redesigned website and social media properties regularly.
Disclaimer: The information provided in this article is strictly informational; INSIGNIA SEO is not affiliated with Pacific Hospitality Designs, The Profit, or any of their subsidiaries.