Author: admin (Page 3 of 3)

Profit Plan

“PLAN” CAR COUNT/ NET DOLLARS                    1000 CARS

SALES                                                                                         = $50,000 NET
NET W/DISC                                                                                                                    $50,000

COST OF PRODUCT                                                          24.00%                       $12,000
SERVICE SUPPLIES                                                                  1.00%                     $500
TOTAL COST OF GOODS                                                 25.00%                      $12,500

HOURLY WAGES INCL O/T                                                 18.00%                  $9,000
SALARIES MANAGER                                                                5.00%                   $2,500
SALARIES BONUS (MGR)                                                        0.00%                   $0
HOURLY BONUS                                                                           3.80%                   $1,900

EMPLOYEE GROUP INS                                                            1.50%                   $750
PAYROLL TAXES                                                                             3.20%                   $1,600
401 ETC                                                                                                0.20%                   $100
LAUNDRY & UNIFORMS                                                          1.00%                    $500
TOTAL LABOR                                                                                32.70%                 $16,350


MGR CONTROLLED CASH LONG/SHORT                      0.10%                 $50
DAMAGE CLAIMS                                                                            0.50%                 $250
TELEPHONE                                                                                        0.20%                 $100
ELECTRICITY/UTILITIES                                                              1.25%                 $625
REPAIRS & MAINT                                                                           1.25%                 $625
MISC COSTS / PIZZA ETC                                                           0.50%                 $250
COMPUTER COSTS/ OFC SUPPL                                          0.75%                 $375
TOTAL MGR CONTROLLED                                                      4.55%                  $2,275

NON MGR CONTROLLED ADVERTISING                         4.00%                $2,000
ALARM                                                                                                      0.20%                $100
CREDIT CARD SVC FEE                                                                 2.40%                $1,200
DEPRECIATION                                                                                  2.10%                $1,050
LICENSE & PERMITS                                                                        0.00%
ROYALTIES                                                                                              4.00%               $2,000
TRASH SERVICE                                                                                  0.18%               $90
BUSINESS INSURANCE                                                                  0.33%               $165
REAL ESTATE TAXES                                                                         0.45%               $225
RENT                                                                                                           6.00%               $3,000
SNOW REMOVAL                                                                               0.15%               $75

NON MGR CONTROLLED                                                           19.81%              $9,905

TOTAL SITE EXPENSES                                                                  24.36%              $12,180


PRO FEES (CPA, PAYROLL CO, ETC)                                         5.00%               $2,500
CAPITALIZED COSTS (NEW EQUIP ETC)                             2.10%               $1,050

ADMIN SUPPORT TOTAL                                                                7.10%             $3,550

MISC INCOME (POP MACHINE) –                                                                         $25

TOTAL OVERHEAD                                                                            89.16%            $44,555

NET OPERATING PROFIT                                                                 9.82%            $4,910

TOTAL OVERHEAD                                                                             85.16%           $42,580
NET OPERATING PROFIT                                                               14.84%           $7,420


Ask the question of a room full of Do It Yourselfers (DIYers) as to why they choose to do their own maintenance and most likely the answer is going to be they donʼt trust anyone to take care of their car. The second most likely reason is cost. DIYers know the cost of the oil and filter is $10 at the most and have a hard time justifying the additional cost charged by fast lubes when they can do it themselves.

So why are there more DIYers coming into fast lubes now than ever before? If they donʼt like the cost and donʼt really trust anyone else to do the work why are they appearing at our bay doors for service?

I believe there is one primary reason DIYers are coming into fast lubes. Every time a DIYer buys a new car they get further and further away from what they are comfortable with servicing. With the advent of the onboard computer, canister oil filters, lack of dipsticks for automatic transmissions (and even a few engines now have no oil dipstick) the DIYer is getting less comfortable doing service and/or showing his/her children how to do service work. Resetting a “change oil soon” light is are getting so involved these days that I heard they are now offering college courses on how to reset them.

So, how do we tap the DIY market?

When you get a DIYer in the shop it is reasonably easy to spot. The upper bay tech is inputting a lot of extra information to get a “new” customer in the computer with the customer looking over the techs shoulder, or perhaps the tip off is when you pull off a reminder sticker off of the windshield from a parts store. However you figure it out, you figure it out. Maybe the customer tells you straight out they usually change their own oil. However it is you get to that point, you find that you have a DIYer in your store. This isnʼt an average customer; donʼt treat them as if they are. This customer is watching closely and is more likely to be interested in the hows and whys of your service.

Most customers are interested in the benefits of your service, what the service does for them. The DIYer is as much interested in the features of the service, which is how you do the service and why you do it a certain way as they are the benefits of the service. The DIYer is typically more informed than the Do It For Me (DIFM) customer.

So, what to do when a DIYer comes in your shop?

1. Engage them in a conversation
2. Ask them open ended questions about their approach to car care
3. If they appear interested take them on a tour of the facility
4. Point out special tools, additives, filters, etc. that allow you to do the job
5. Point out the built in features of the building itself, built to do only one job, service cars
6. Show the DIYer the quality of parts used and the guaranty of quality each comes with
7. Introduce the DIYer to your crew, specifically your senior techs

You want to make the DIYer feel at home, or at least to lighten up the natural anxiety they bring with them when they decide to try something new.

Change is sometimes a difficult thing for people to do. You may be talking to a DIYer of 20 or more years. This is a guy who has changed the oil on his and his wifeʼs cars every 3,000 miles, year in and year out. This task was his Saturday, first thing in the morning job; he had the specific tools left out in a specific place so the oil change was easier to do. Getting away from that habit is not an easy task. You are hoping to modify that habit; coming to your location, every 3,000 miles for the oil change. How you greet and communicate with this customer will make all the difference in the world. I have found that oftentimes the converted DIYer is one of your best promoters and they stick to a strict maintenance regimen of 3,000 mile oil changes. Your seemingly perfect customer! It just requires a little of your time. Former DIYers tend to take a little extra time while they are there, but leave happy and tell all their DIYer friends what a great place you have.


Lube managers, like lube techs need an effective bonus plan. But just as managers have different duties at the lube, they also need a different bonus plan that highlights and emphasizes those different responsibilities. An incentive plan can be used as a training tool. A good manager incentive plan will do just as the name implies, and give the manager an incentive for a job well done. The manger will quickly learn what you as an owner want and expect. By carefully constructing the bonus program clarity is given to the manager as to expectations and requirements.

Pick the areas that you deem important such as volume, extra service sales, and human resources management. By setting goals and a dollar figure associated with that goal you are giving your manager his “marching orders.” As an example if you want an average ticket of $50 per car, the incentive should reflect a healthy bonus associated with reaching that goal while giving no bonus for anything under your decided minimum of for instance $45 per car. An example below shows a ticket average that is multiplied by the volume of cars for the month, thus emphasizing the importance of car count as well as ticket average.

TICKET AVERAGE                                                         Bonus (x # of Vehicles Serviced)

$45.00 – 45.99                                                                $ .10
$46.00 – 46.99                                                                $ .15
$47.00 – 47.99                                                                $ .20
$48.00 – 48.99                                                                $ .25
$49.00 – 49.99                                                                $ .30
$50.00 – 50.99                                                                $ .35
$51.00 – 51.99                                                                $ .40
$47.00 – 52.99                                                                $ .45
$53.00 – 53.99                                                                $ .50

By using this example a manager operating a lube with a volume of 1000 cars in a month would receive an incentive of $350 for reaching the desired ticket average of $50 per car. Many of you have experienced a declining car count at your lube in recent years. The manager can be very effective in increasing car counts.

By lowering bay times and ratcheting up the customer service levels, car counts can be positively affected. If you have a car wash on the premises, your manager has the opportunity to siphon some of the wash traffic into the lube bays, thus increasing car count. Having your manager compete against the previous yearʼs monthly volume you reward him for positive growth. A caveat might be the volume increase must be met with the aforementioned minimum ticket average of at least $45 per car.

Volume Increase                                                          Bonus

+ 20                                                                                     $2 X the # of additional cars serviced
+ 30                                                                                     $3
+ 40                                                                                     $4
+ 50                                                                                     $5
+ 60                                                                                     $6
+ 70                                                                                     $7

A manager who controls shop labor saves the company money. A very common drain in profits is in the human resources department. Just like the ticket average, the manager has direct control of the labor. Below is an example of what a manger might be expect to see for human resources bonus.


% of Payroll                                                                   Bonus

Over 25%                                                                       —-
24.0 – 24.99                                                                $ 10
23.0 – 23.99                                                                $ 20
22.0 – 22.99                                                                $ 40
21.0 – 21.99                                                                $ 80
20.0 – 20.99                                                                $ 100
19.0 – 19.99                                                                $ 125
18.0 – 18.99                                                                $ 150

Some operators are so serious about labor that they include a penalty for excessive labor that negatively affects the managerʼs incentive pool when they fail to reach minimum goals. The amount of deducted bonus is not as important as simply declaring the importance of the labor percentage. The clarity this stipulation brings is the significant factor.

If our manager reached the goals of $50 per car, increased car count over last years monthly numbers by 28 cars and achieved a labor percentage of 20.3% his monthly bonus would be $490. If he succeeded in doing this every month he increased he yearly earnings by $5880.00! That is a significant amount and would certainly get the attention of a manager stuck getting a straight salary. Of course simply giving the manager your expectations will not automatically make this happen. Training of the manager and his crew is imperative to success.

Incentive programs should be reviewed annually and be revised according to the needs of the company at that time. It should go without saying, but the purpose of revising any incentive program is to improve performance, not decrease earnings. Needs of the location may change and revising incentive plans yearly gives you the opportunity to address those needs. Before attaching dollar figures to each goal, make sure you can live with the results if the manager tops out the goals. You should be happy to write the incentive checks and if you assume the manager will not get the goals and set the bonus too high for your budget or your liking it will be a serious de-motivator if you change the program in midstream. A well designed manager incentive bonus plan both motivates the manager and satisfies the needs of the company. Bonus programs need to be a win/win situation. When the plan cannot a minimum accomplish these goals, a new plan is needed.

The Importance of Training


By Greg Byler

I have been known to go on and on about the importance of training. I do so because of the need I see on a daily basis and, unfortunately, it seems overall itʼs getting worse instead of better. True, there are more companies realizing that training is simply a cost of doing business, putting training in the yearly budget. Some of the better operators have gone as far as putting together a training department. Unfortunately, this is overshadowed by overwhelming number of other operators whose idea of training new employees is to simply assign them to vacuuming and tires their first month, hoping they will ʻcatch onʼ to the process. I refer to this as training via osmosis.

This brings me to the title of the article. The lube I started at many years ago had just opened when we encountered our first diesel with a canister oil filter. Canisters were not common back then, so when a canister filter was coming in the bay, the manager on duty would simply key on the filter and it was his job to complete the oil filter change. As we began seeing more canister oil filters, more people began getting trained on doing the canister oil filters. The manager trained himself out of the job, which left him to do more essential duties.

At that time, dealers saw oil changes as a waste of their time and gladly gave the oil change business away to fast lubes. Since then, there has been a shift in the mood of car manufacturers. In an attempt to get car owners back to dealers and away from fast lubes, auto manufacturers have made a concerted effort to make cars less serviceable to the average ʻdo it yourselferʼ. This sounds like a good thing for fast lubes, right? Doesnʼt fewer DIYers and more do-it-for me people mean more customers for lubes? Not necessarily. Here are a few things the dealers have done over the years to slow down DIYers and later fast lubes too.

First, there was the ʻcheck engineʼ light that seemed to go on and go off inexplicably. Soon after came ʻin-panʼ canister oil filters and oil filters that were located so that it made removal next to impossible unless you were double jointed. Vehicles that didnʼt need tune ups or coolant changes until 100,000 miles; ʻsealed for lifeʼ automatic transmissions, with no dipstick to check the level and no service intervals. Then there are the ʻdealer onlyʼ gear oil and lubricants. One of the latest variations is ʻchange oil soonʼ lights that are triggered not by the actual condition of the oil, but instead by algorithmic calculations.

The manufacturers are doing these things for the benefit of the dealers and for themselves as well. The more often a car (and therefore its owner) gets to the dealer, the higher the likelihood that the car owner will become a ʻnewʼ car owner. So whether itʼs the parts the manufacturers sell the dealers for repair or the new car that gets sold, big car manufacturers are winning by getting your customers back into their repair bays.

Many dealers have even taken matters in their own hands by building fast lubes into the service bays or even gone as far as constructing stand-alone lubes on the dealership property.

So what does this all have to do with training? By making regular maintenance harder for DIYers, manufacturers are forcing DIYers to become DIFMʼs banking on the consumer coming back to the dealer for service. These changes also make it harder for fast lubes to service cars. Training lube techs on proper procedures for servicing new makes is critical and practice makes perfect. This will pay off in customer confidence, as well as lower damage claims. When a DIYer brings in his new and seemingly complicated ʻhigh techʼ car to your shop, he will be paying close attention to how well you negotiate the service of his vehicle. When the lube tech proceeds very quickly and efficiently under the hood without hesitation, the car owner is put at ease and will feel comfortable and return again for service. Fumble through the service and he will search for other places to service his car. Chances are he will opt for the dealer. If we are going to keep up with the changes manufacturers are making, training is the only answer.

With flat or declining car counts, we cannot afford to lose a single customer.

Newer posts »

© 2024 Pit Stop Consulting

Theme by Anders NorenUp ↑