Thursday, July 27, 2017

Amazing Grapes From 'The Profit' Has Closed

Amazing Grapes in Rancho Santa Margarita, California, which was featured on season two of The Profit has closed.  According to the Amazing Grapes Facebook Page, they shut down in early July 2017.  The closure comes about three years after Marcus Lemonis originally invested in Amazing Grapes.

Dan Isenhart, who was a wine buyer and managing partner at Amazing Grapes, posted the following message on his Facebook about the closing of Amazing Grapes:

"Amazing Grapes closes its doors for good!
With all the speculation circulating, it is important to state the facts as to why AG is now closed.
In December 2013, Marcus Lemonis purchased 74% of Amazing Grapes from the original partnership that opened the business in 2005.
After an initial investment of $300K to pay off old debt, Marcus Lemonis, through the show The Profit, closed AG 12/28/13 and invested an additional $400K of his money to reinvent AG. We re-opened on 2/7/14 and the business continued to operate with its new look and new vibe successfully for the next year and half.
Realizing the restaurant had reached maximum production output with its limited kitchen space (it was more of a food prep space with several hot plates, and an oven that limited what we could turn out food-wise) we sat down with Marcus in August of 2015 and he verbally agreed to expand the kitchen and add two bathrooms (to bring us to code) and directed us to acquire an additional 1800 sq feet space directly to the west of our existing space. We immediately signed a lease for the new space and began the design phase of a new kitchen and bathrooms. The blueprints for the space as well as new changes that would be made to improve the existing space were drawn up in fall 2015. But this is when things started getting dicey.
For the next 18 months and after little communication from Marcus Lemonis and his team at ML Foods (believe me we tried everything to get their ear and to get them to approve the new work that needed to be done) it was becoming evident that the new improvements weren't going to happen any time soon.
Then in late 2016, a disgruntled former food server, who was let go for poor performance, filed a lawsuit against AG, citing sexual harassment and a complaint that AG management 'did not have scheduled breaks for the waitstaff' during their part time shift. After months of back and forth and $75K in paid legal bills, the sexual harassment charge was dropped (it was a complete fabrication). Now we would have to deal with the 'break' issue.
The payment of $75K that was paid to our lawyers drained down AG's operating cash. It is at this point that things began to decline rapidly.
In April, ML Foods made a decision to stop paying rent on our space. In addition, our vendors also began having to wait to get paid. The only operating cash we had on hand was cash that was generated daily from retail sales and restaurant/bar business. You can imagine the struggle to keep current. We needed an infusion of cash and we were led to believe that the infusion was in the works and we were mildly optimistic.
From April until July, we worked hard to reduce inventory and tightened things up so that we were operating as efficiently as possible. We always paid our employees and our taxes first.
In May, we learned that to settle the lawsuit for not providing scheduled breaks, it was going to cost AG $190K minimum - cash that we did not have on hand and would require an even bigger cash infusion from ML Foods. The real kicker is most of this money to settle the suit would go to the State of California (believe me, they suck every dollar they can away from small businesses) and the attorneys, but very little to the plaintiff.
Then, about 8 weeks ago, a former employee and 'creator of the nutty goat' piled onto the lawsuit siting 'no scheduled breaks'. Mind you, breaks were taken daily by ALL kitchen and service staff, they simply weren't scheduled, and in fact, the working environment was slow at times and employees would take their break often in increments longer than required by law. Anyone that knows anything about the restaurant business knows that you take breaks when you can when it's busy. But CA law is clear and we were guilty of unintentionally breaking the law.
The flow of business changes from one day to the next and so flexibility with employee breaks was always allowed. We are guilty of stupidity but not purposely abusing our staff. Did we work outside California labor law? Yes.
When the second lawsuit came forward to pile on the original suit filed by the same ambulance chasing lawyers, ML Foods and Marcus Lemonis went silent. It is also important to point out, that as of early July, and after 3.5 years of "ownership" Marcus Lemonis DID NOT legally own AG even though ML Foods had been operating the business since their takeover in Dec 2013.
He did not LEGALLY own AG because he dragged his feet and NEVER finished the necessary tenant improvements and ABC license applications, that would have allowed a legal ownership transfer to ML Foods and removed any future liability away from the original owners.
Being a savvy businessman and realizing the dire straights that AG had fallen deeper into, Marcus turned his back on AG and used the fact that he did not LEGALLY own AG to his advantage. After months of back and forth with the original AG partners and Marcus' attorney, it was becoming clear that AG was not going to be saved.
Although the original owners had tried desperately to negotiate a plan that would save AG and its employees, it is important to remember, this entire mess was dumped back on them by Marcus Lemonis. He dragged his feet for the last two years and NEVER lived up to his end of the agreement to expand the kitchen and make the improvements that were verbally agreed upon. Had Marcus stayed on schedule, he would be the LEGAL owner today and the original owners, who had a handshake deal on TV in December 2013, would not be left with the mess that was dumped on them.
Would the frivolous lawsuits mean the ultimate end of AG if Marcus actually owned the business? We'll never know.
In the end, and I know how difficult this decision was, to protect themselves from the frivolous lawsuits and growing debt, the original owners of AG made a decision to protect themselves personally and filed for chapter 7 bankruptcy protection - thus closing the doors at AG after 12 years.
Was it Marcus' plan all along, after the sh&t hit the fan, and realizing he would not be legally liable since he did not own the business, to let the dust settle and buy AG out of bankruptcy? We don't know. But one thing is certain. Marcus was never in any hurry to finish the improvements that he had agreed to 2 years ago and in the end, this bailed him out legally.
Will he walk away from his sizable investment? Only he knows. Meanwhile, 20+ employees who worked hard to save AG are now out of a job and the millionaire businessman continues to buy businesses. Many are successful, but many too, are struggling just as AG has struggled for the past 2 years, because ML Foods simply isn't organized at the level it should be. Glaciers melt faster than projects get completed at ML Foods.
Thank you all for friendship, patronage and support for the past 12 years. We are indebted to each of you and we wish the outcome were different. AG was a special place and we wanted and had plans to make it even more special.
It should also be said, that the original owners stood by us and worked through the blitzkrieg of getting all sold wine that we had in storage to our customers. They never left our side and they feel terrible for what transpired. Ironic, isn't it?
Dan Isenhart
Wine Buyer & Managing Partner"
It sounds like this was quite the saga and Amazing Grapes isn't too happy with Marcus Lemonis. The Orange County Register reached out to a representative of Marcus Lemonis for comment and they said, "At this time Marcus isn’t making any comments about Amazing Grapes."

Amazing Grapes has now been marked as 'Closed' on The Profit Updates Page.

UPDATE - Here is an exchange between Dan and Marcus on Twitter after an update episode aired announcing that Amazing Grapes closed.

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