Billion Dollar Buyer

Billionaire restaurateur Tilman Fertitta: Turn your employees into salespeople

You can have the greatest product in the world, but if you're not out there selling it, it will go nowhere.

That's the lesson Peter Papadatos, owner of Southern California-based shower drain company Designer Drains, learns on this season's premiere episode of CNBC's "Billion Dollar Buyer."

The custom-made luxury drain company, which has operated since 2009, is struggling. Despite its artful designs, which are made of stainless steel to serve as "jewelry for your showers," as Papadatos puts it, the business brought in only $200,000 in revenue and $50,000 in gross profit last year.

The major bottleneck: too many employees and not enough sales, observes billionaire businessman Tilman Fertitta, who comes to visit the company in the hopes of using its drains for his Houston hotel, The Post Oak.

When Fertitta analyzes the business' financial statements, he finds that labor costs the company 50 percent of its sales, 10 percent more than he says it should.

"What if he loses a big account, and his labor suddenly becomes 60 percent? 70? 80? He won't survive," Fertitta explains.

“You make a great quality product but you have to motivate your team to work harder to sell it because that’s what's holding your company back,” billionaire businessman Tilman Fertitta tells Peter Papadatos, owner of Designer Drains.
“You make a great quality product but you have to motivate your team to work harder to sell it because that’s what's holding your company back,” billionaire businessman Tilman Fertitta tells Peter Papadatos, owner of Designer Drains.

To ameliorate the problem, Fertitta instructs each of Papadatos' four employees to devote part of their workday to selling drains.

Only one employee is currently involved in sales. And all four employees have been exploiting Papadatos' laid-back managerial style, using their spare time at work for leisure and to attend yoga and spin classes.

"Y'all need to manage your time better when you're here every day," Tilman says. "I don't think this business is going to survive with y'all working here until y'all increase your sales."

"Ya’ll' job today is going to be to generate as many leads as possible. Were going to count up how many business cards  each of you bring back,” Jeff Cantwell (R), vice president of business development at Landry's explains to the employees of Designer Drains.
"Ya’ll' job today is going to be to generate as many leads as possible. Were going to count up how many business cards each of you bring back,” Jeff Cantwell (R), vice president of business development at Landry's explains to the employees of Designer Drains.

To hone these skills, Fertitta sends the team to Irvine, California, for an interior design expo. The challenge: gather as many business cards as possible and then use those business cards to turn prospective clients into actual ones.

Even after one employee opts to leave the company, the team ultimately collects 50 business cards and secures 30 new clients.

With 20 percent more in revenues from those new sales, Designer Drains brings itself back onto steady ground.

And even better, it retains one more client: Tilman Fertitta, who offers to buy 275 drains for $90,000, nearly half of Designer Drains' total revenue from last year.

CNBC's "Billion Dollar Buyer" airs Tuesdays at 10 p.m. ET.