The Key West Key Lime Pie Company (KLPC) is located in Key West, Florida and is owned 50/50 by Jim Brush and Alison Sloat. The couple bought the business for $1200 ten years ago. As you have no doubt guessed, the company sells key lime pies. It had sales of $1.4 million last year but no profits before Marcus showed up. It also had $130K in debt.

Products

Marcus flew down to Key West expecting to meet with a company that created its products from scratch. To his shock he discovered that it was a simple "assembler" of pies using prefabricated pie crusts and off the shelf ingredients. There was nothing proprietary about its products.

In addition to the pies, the company was devoting the majority of its retail floor space (60%) to a wide assortment key lime novelties from third parties all of which had low margins in the 20 to 25% range. In contrast, the pies hovered around a 90% margin. (Doesn't this remind you ofAmazing Grapes?)

Process

KLPChad two locations. The main one was an attractive retail outlet with a commercial kitchen in the back. The second one was leased primarily to serve as a shipping center with a shop added to help cover overhead. The place looked as if it had been furnished at Goodwill Industries. On top of all that it was a huge money loser for the company. While only bringing in about 10-12% of total revenues, it was losing $25K per year. This amount equaled its annual lease payments. Marcus decided immediately that it had to be closed.

People

Marcus liked the owners and staff. However, while Alison was calm Jim came across as a tough to deal with boss with a nasty temper that could explode at any second. As Marcus pointed out this was due mostly to his fear of the unknown. Jim knew that the business wouldn't survive unless a major course correction was made, but what was it to be? Do you just surrender 51% to a complete stranger who flew into town yesterday? Now that's stress.

Marcus, Alison, and Jim cut a deal.

Marcus's Growth Plan

Marcus's plan was to renovate the main store, dump all the low margin merchandise, and start baking pies from scratch with natural ingredients. The pies would have a proprietary recipe and still undersell the competition by $2. The floor space allocation was to be altered to reflect the new business model. According to Marcus, thenew website sold 22K pies in just one weekend. Before he arrived the company sold 40K pies in a year. Talk about hitting it out of the ballpark.

How KLPC got out of the remaining 3 years of its lease on the shipping location was never explained.

Now we get to the really interesting part of the story, IMHO.

Marcus Lemonis the Dealmaker

Marcus offered to invest $450K for 51% of the company with Jim and Alison splitting the remaining 49%. Most of it would be used to pay off suppliers with $95K left over for renovating and branding the main store. Jim immediately rejected this because he couldn't see himself as a minority shareholder in his baby. Alison had no problem with it. This is typical of situations where a founder is looking at bringing in a major investor. Both will want a controlling interest in the company although there are other ways to achieve this goal.

questions:

1. What is the basic customer need provided by Key West Key Lime Pie?
2. What is the key marketing situation faced by Key West Key Lime Pie Co. (KWKLPCo)?
3. List KWKLPCo's main strength (consumer view)
4. List KWKLPCo's main weakness (consumer view)
5. List KWKLPCo's main opportunity
6. List KWKLPCo's main threat
7. Describe the most typical type of customer purchasing KWKLPCo (target market)
8. Describe the typical behavior of customers purchasing KWKLPCo's offerings. Choose one: Impulse, Habitual, Limited, or Extended
9. How does KWKLPCo capture value by pie and by slice?
10. How does KWKLPCo communicate value?