It’s that time again. The thousands of heady quick service competitors capturing a ton of dealership maintenance service business have published the annual survey of their business models. The informative National Oil & Lube News (www.noln.net) poles their constituents with a variety of noteworthy business-related questions and answers, and then they conveniently publish the results while showing the results’ trend over a five-year period. Cool, huh?
Da fun da mentals
Since most surviving dealers own less than a dozen franchises, I will concentrate on the answers provided by the “less than 30 locations” quick service crowd. It was interesting to note the differences between these two segments (over & under 30 locations), as shown on the survey (i.e. cost of goods/avgerage transaction – less than 30, $15.33 (30.5% of the sale), more than 30, $12.85 (26% of the sale) – huge difference.
For comparative purposes, I will show current stats, but I will place the figures from 2007 (5 years ago) in parentheses for easy trend comparison.
The respondents averaged a noteworthy 13.2 (11.2) years in business, with 2.6 (2.5) locations, 3.4 (3.1) bays, six (6) employees, with techs averaging 3.4 (2.3) years employment, earning $9.75 ($8.70) per clock hour plus bonuses. Individual location managers were paid $40,650 ($39.020) per annum after 6.8 (5.5) years on the job.
The survey found 66% (47%) tested for drug use, 50% (42%) utilized surveillance cameras, 28 (28) hours of training was conducted per year per tech, and yearly sales were $601,164 ($551,337) – $176, 812 ($177,850) per bay, which is $14,734 ($14,820) per month, and $590 ($593) per day. The average ticket was $56.29 ($47.18) for 30.5 (34.5) vehicles per day, while breakeven vehicles per day was 23.6 (24.9).
Even more fun
Average pricing for an LOF/multipoint check was $35.03 ($31.12), or an oil-change-only for $28.06 ($25.19) upsold into a premium synthetic service for $65.86 ($55.49) respectively. The survey found 66% of the operators had increased their prices in the past 12 months, but 74% (67%) offered some type of discount also. 52% (52%) of the customers were female, and just over 26,600 (21,000) drove by the location each day. Customers continued to increase the oil change intervals to 4,520 (4,352) and 11% (12%) of the volume are fleet accounts. Customer vehicles with oil change monitors added a few miles to their visit, 4,895 (4,685), and domestic versus import vehicles remained stable at 55%/45% – 35% light trucks.
As a percent of all income, payroll including benefits 27.1% (27%), lease mortgage 11.8% (11.5%), cost of goods including: supplies 30.5% (29.8%), operations and other, all expenses less employees and rent, 19.3% (18.7%) and finally net profit 11.3% (13%) of sales. That calculates to 12.7% net to gross versus 14.9% five years ago. That partially explains the drop in owner salary from $52,976 in ’07 to $51,700 in ‘11.
Regarding oil and equipment, 77% (77%) of the customers accepted the “house” brand of oil (Note: 38% -50% over 30- offered re-refined oil). Operators were now receiving $.94 ($.54) per gallon for used oil sold and 91% (84%) welcomed used oil from DIYers (I guess so). Only 28% (30%) charged “environmental fees” at an average of $1.88. The cost for a gallon of oil was $8.65 ($6.45), which equates to $2.16 ($1.61) per quart (34% increase here). This escalation over five years was the prime reason for the dropping net profit. The operators were charging an average of $3.85 per quart. Half of the oil sold was in the 5W-30 category, with most of the rest at 5W-20. Pennzoil was the number one volume oil and oil filter, with Mobil and Mighty following a close second.
Additive sales were provided by 84% (down from 89%); however, the installation of brakes rose to 34% from 26%. Other add-on services which grew substantially were fuel filters, fuel injection cleaning, coolant refill, engine flush, minor mechanical, nitrogen tire fill, power steering flush, tire rotation, tire sales and glass treatment. Air filters were the most commonly purchased followed by wiper blades, transmission flush, fuel injection cleaning, coolant flush and tire rotation.
Regarding business generation, 70% said word-of-mouth was best, followed by a measly 16% with direct mail. However, 53% (48%) send reminder cards, claiming a substantial 29% (26%) response rate. Internet advertising rose from 44% to 62%, and some 52% had a Facebook page, while 80% had a web site. Glass repair was the number one add-on for next year (26%) and the average time for completing a service currently was 14 minutes utilizing three employees.
Obviously this industry has its own struggles, but one can’t help but notice the continuum of additional services each year. If the trend continues, quick service outlets will become more like the Meinekes, PepBoys and Goodyears of the world in a couple years (offering all maintenance services and light repairs too). Just another reason to “lock” every customer into the dealership using the Fun Da Mentals of customer service I recently wrote about – if you need that column just write to me at firstname.lastname@example.org and put on the subject line: Gimme Da Fun Da Mentals. Don’t get lubed yourself.