Category: Uncategorized (Page 2 of 3)

Integrity means dollars at the lube

With corporate scandals mounting, lube operators need to shower customers with honesty and trust.

As corporate scandals mount and consumer trust wavers, the Golden Rule is the silver bullet for fast lubes.

Almost every day, headlines are full of companies whose actions are under investigation and they are all linked with a common problem – a lack of integrity.

The automotive fields have had their own scandals, too. There were national reports of Sears doing unnecessary repairs and overcharging for real repairs, and there often are local exposes on oil-change facilities and repair shops.

News shows donʼt just make up stories to investigate – they are usually tipped off by customers who felt they have been misled or lied to.

The whole truth?

Obviously there is some truth to these news reports and headlines.

There are fast lubes out there that do take advantage of a trusting customer. Their businesses are driven by profit, rather than by customer service.

There are others, however, that get media attention and have no idea why.

While some operators are conscientious of their actions, the majority of operators who have unhappy customers are oblivious to what they are doing wrong.

These shops are simply not spending enough time educating their customers.

Most lubes either ignore the customer or go to the opposite end of the spectrum and use pressure sales techniques.

Why they come

People wait in line to get their vehicles serviced at your oil-change facility. Your customers range from the husband who wants the mini-van serviced correctly so his wife and children wonʼt be stuck on the freeway, to a single parent or college student who need their cars to last a long time.

A good lube shop will serve customers correctly by educating them on the needs of their vehicles every time they return.

Have you ever left a store where you just purchased a service or an item and felt great about the transaction?

Conversely, have you left a store feeling cheated with the purchase and vowed to never patronize that establishment again?

How you present extra services and achieve ticket averages has a direct impact on the customerʼs feelings and where they decide to have their cars serviced next time.

If we educate customers adequately about the services we offer, they wonʼt feel buyerʼs remorse or like they were “taken to the cleaners” at your facility.

Customer satisfaction

We are not in the oil change business; we are in the customer satisfaction business.

Within three miles of your facility there is likely a tire or brake shop that does an “oil change” for $12.99.

If your customers really only wanted an oil change, why would they come to your facility — especially if you charge more for your full-service oil change than $12.99?

Your customers care more about comfort and integrity than they do about price.

They are comfortable at your shop because they know your personnel are professional and will treat them right.

Our surveys indicate price is #5 on the list of a typical lube customerʼs most significant concerns.

Remember, the higher the integrity, the higher the trust level.

The higher the trust level, the higher the ticket average. Go out of your way to make your customers comfortable and you will be rewarded.

Reprinted with permission from the December 2002 edition of Professional Carwashing & Detailing magazine.

 

Is Adding a Lube Worth it?

How much money can I make from adding a fast lube to my wash? What does labor cost at a lube? What are the construction costs for a lube?

Wash operators often ask these and a host of other questions when considering whether or not to add a lube to their existing car wash.

We are going to cover as many answers to as many of those questions as possible in the next few paragraphs.

First lets quickly cover what benefits exist that might persuade wash owners to add a lube to their wash.

If you are looking to expand and add a lube you have no doubt already thought about the cross marketing possibilities. Wash and lube customers are very similar in their buying habits/preferences where their cars are involved. And in theory you will see this customer more often by offering additional services for their cars. Consumers universally have said they want one stop shopping; this includes a pharmacy at their neighborhood grocery store and a lube center at their car neighborhood car wash.

When you “build on” to an existing wash as opposed to building a whole new site you will take on less risk and lower your total cost to build the lube since you already own the land you are building it on. This lowers your break even point and therefore makes the upside better than a new build. And since you are zoned for car wash, the existing zoning will very likely allow for a fast lube with out special zoning permits.

Construction costs.

Costs for the actual shell of a building will vary greatly depending on the part of the country you are and the type building you have planned. There are several places around the country that can be particularly expensive to build. Whether it is local building code requirements or covenants, local building inspectors seeing things a particular way, required union workers, limited building season etc, etc. there are lots of reasons but one reality, it simply costs more to build in some places than others. The construction cost of the building will run between $175,000 and $200,000 per bay. That is the cost of a typical lube including typical site work, paving and landscape. This does not however include the land purchase price. Keep in mind that if you want to build a Taj Mahal, that will be extra.

The building is of course not the only cost involved. As I mentioned you need to budget your land costs plus lube equipment, computer system, inventory and pre opening training costs.

The equipment will run roughly $20,000 per bay installed depending on the equipment package you choose. It is important not to cut corners in the equipment. Just as in the car wash the better the equipment the more you can save in man hours/labor costs and throughput of cars. The difference in transmission service machines might be $500 when buying the equipment new but the right machine will decrease average service time by 75%. The right transmission machine will also reduce training time, cost less to maintain and can eliminate damage claims. The same goes for coolant service machines. One might cost a bit more but it will help you in ways other machines simply cannot. The right machines do not COST you more money they MAKE you more money. So do your home work and look at several machines as objectively as possible and try your best to tune out the sales pitch you get from the person selling you the machine. In addition to service machines the rest of the equipment is comprised of cat walks, tanks, pumps, guns, consoles, pit covers, lifts for tire rotation, compressor, filter crusher, hand tools, tool boards, specialty hand tools, computer, etc, etc.

I consider a good lube computer as important as any hand tool at a fast lube and as necessary as a filter wrench. Computers range in price and believe me when I say, “you get what you pay for.” Software packages start at under $4000 but you provide hardware. Complete packages, that is hardware and software both start at around $8000 and go up from there. Everyone benefits from a good lube computer. The lube manager and technicians enjoy an easier/faster service procedure because of computer and the reports a good lube computer produce are absolutely vital to the lube owner. A note for car wash owners, it is generally best to stick to computer companies that specialize in lube software instead of simply adding onto the car wash software. Some car wash software companies have good lube software but that is the exception rather than the rule. And yes, you can service cars with out a computer just as you can run a tunnel car wash without a computer, but do you really want to deal with that!? The cost of the computer is quickly paid for in speed of service, inventory management and tighter financial controls it encourages. A good computer will provide you with solid inventory control.

Besides being a necessary tool for your lube techs, your customers expect computerized records and detailed information on their cars. The computer even affords you an air of professionalism as well. Not many legitimate businesses exist these days that do not use computers in some way. Adding a computer will also assist you in establishing a healthy ticket average. The computer you choose will have automotive manuals and you current/needed inventory built right in to the database. Because you have all this information at your fingertips, you are better prepared to present necessary and profitable services to your customer.

Probably the biggest distinction between wash and lube at an operational level that car wash operators mention that is different when they add a lube is the inventory. Inventory at a car wash is relatively simple in most cases. Car wash chemicals deplete at moderately slow and predictable rates. Running out of a specific greeting card in the wash lobby is typically trouble-free but running out of a certain oil filter can cause utter chaos in a fast lube. There are a myriad of automatic transmission fluids and gear oils to keep on hand not to mention the many viscosities available in many different brands of oil. Dozens and dozens of oil filters to keep in stock. Hundreds of air filter part numbers you can choose from to keep in stock. Which ones should you carry and how many of each? When should you reorder and from whom should you be ordering? Once you decide the answers to those questions the computer will help you keep track and produce reorder reports for you at the appropriate times.

The inventory itself will run you in neighborhood of $15,000 to $20,000 including oil. Of course if you have larger oil tanks and you have them filled up, inventory can be higher. The computer is the ownerʼs best connection to the financial health of the fast lube. Just be sure not to rely on computer reports alone. Nothing beats a first hand, in-person look at the operation on a daily basis.

Below is an example P&L I will use to illustrate the appropriate/expected costs at your new lube. Please note that you costs may be on the higher end or lower end depending on several things. For example, the “heat, light and power” or “snow removal” categories will be higher in the winter months especially if you live in the Great White North. Of course if you are able to surf after work then the snow removal will probably not be of concern to you at your location. I think you get the idea.

The figures used in the above P&L are from actual operating fast lubes. Use the numbers as a benchmark when doing your pro-forma. Royalties are put in strictly for your information and removed on the bottom. If you can include the lube into your current insurance then your cost will be reduced. If your CPA and payroll costs are less then you will obviously fare better in that category.

I believe we have answered the lionʼs share of the normal questions most future lube owners ask. If you have any further questions let us know and we will do our best to answer them.

 

OIL BRAND PREFERENCE: IS THERE REALLY ANY SUCH THING?

In my line of work I travel a lot and tend to meet a lot of new people. One of the rituals frequent travelers are accustomed to is introducing yourself to the other frequent traveler seated next to you on the plane. After the person next to me has given me the standard quick synapses of his name, line of work, destination and length of trip I follow suit and report my required information. When people hear that I do training for fast lubes they invariably have a story about their local fast lube or a question about their cars service. Getting your oil changed is nearly as common as going to the dry cleaners or grocery store. Getting your oil changed is an everyday thing to do, commonly found on momʼs to do list, so it is no wonder people find it an easy topic to discuss.

One of the most common questions I am asked consistently asked is “Is there any real difference in oil.” My automatic response is always a question as to what kind of oil they prefer to use; and the answer, 9 times out of 10 is simply “No, I use whatever they use at the place I get the oil changed,” Nine of ten clearly indicating a lack of brand preference. With the one of ten who indicates they do have a brand preference and always use a certain brand I ask what that brand is and why they prefer that particular brand. It is invariably “it is what my dad used” or “are you kidding? That is (insert name of race car driver) race car sponsor.” The effectiveness of a particular brands advertising is most likely responsible for a personʼs preference rather than a research of quality. Old mechanicʼs tales are occasionally mentioned as a reason for a preference. “Brand A sludges up so I use Brand B.” Of course if you leave Brand B in the engine without changing it like the guy did in the mechanics story it will sludge up as well, they all will.

With all the consolidation going on in the oil industry the lines that separate brands are getting fuzzier and fuzzier all the time. I was speaking to a national oil company representative after a recent consolidation and he told me about two oil companies who split up a brand; one got the “name” of the brand and the other got the actual formula that made that brand. In other words, after the consolidation the name brand oil will have a different formula but retain the same name and the original formula will be marketed under a different, already existing name brand!!!

I started in the fast lube industry in 1986 as a lube tech, and since then as a manager, owner, trainer and consultant I have greeted thousands of customers and have found this to be true. If you offer Brand X to your customers 90% to 95% of the people you speak to will take Brand X. If you offer Brand Y to the same people the next time they come in, they will consent to Brand Y. If you ask what kind of oil the customer wants, a higher percentage will respond with a specific brand because you have asked them to give you a specific brand.

With the increasing complexities of newer vehicles the average car owner feels less in control of their vehicles maintenance, more now than ever. The average customer is more interested in the level of integrity your shop has more than the name brand of oil you install. If you show the customer poor quality service, the brand oil you installed while giving her this poor service is irrelevant. By the same token, if you do a great job of customer service the brand of oil you use is OK with the customer because she trusts your judgment.

You as an owner/manager are obligated to give your customers a good high quality oil to meet their manufacturerʼs requirements. Our government sets the minimum standards for oil to assure quality. You nor your customer are required to give way to a large oil companies advertising. Choose oil that best suits both you and your customerʼs needs. Marquee brands cost more money. This affects your bottom line and your ability to serve your customers in the long run. If you cannot justify staying in business because of low margins you cannot serve your customers.

Primetime: Company Culture

Did you catch the February exposé of the fast lubes on ABCʼs Primetime. It was entitled “Lube Shop Pitfalls: Tips on How to Avoid Being Taken for a Ride.” And it was embarrassing.

Essentially the fast lubes and their employees in the program were caught doing dishonest things to the investigators cars. I could drone on and on about the details of what they did and why it was wrong but the long and short of it is the story of wrong doing in a lube they visited was accurate and that hurts us all.

Offering additional services is not what was wrong with this service.

The problem in the report is systemic attitude and it starts at the top. This often referred to as a companyʼs culture. I had long believed that the companyʼs culture had much to do with profitability. And we have proven this to be true.

Lack of a good, positive company ethos is detrimental. And I believe the Primetime segment shows just this.

A good company attitude can have very positive effects. Take lube volume for instance, has your volume reached a plateau? The fast lube industry as a whole has matured around the country and operators are facing different challenges now than they did 10 – 15 years ago. But then why are there operators out there who have experienced the same competition pressures and had little or no effect on their car count. Some continue to expanded and add locations.

These operators who continue to thrive and grow seem to have several things in common that I would like to discuss. The interesting thing is that some of these commonalities have nothing to do with the fast lube industry. They have to do with life and how people live it. The companyʼs culture is key. Because the way people approach life has so much to do with the way they operate their businesses. While speaking to successful operators I have found several shared traits among them and it is really quite simple. For one, they enjoy what they do. And they create a corporate culture that shows it. They get up in the morning enjoying and looking forward to going to their respective operations. These same people hire people who will embrace the culture they have worked so hard to create. They also search out and hire people who will enjoy what they do; they enjoy life and have great attitudes. They have created a culture of learning and exceptional customer service. The people who do this are sometimes seen as difficult by some, but are simply insisting on there vision being promoted on a daily basis, customer by customer.

How can you do this?

Root out bad seed employees — Be direct and very clear about what you want and expect from employees. Write it down. And start with the manager – he will set the tone. The manager must get the correct and consistent signals from you. He must see you “doing the right thing.” Just like raising a child, you as the owner set the tone. You need to back him up on decisions to clean out bad employees and encourage this behavior.

Dress code – dress for success; insist employees wear the uniform correctly. If they look the part they can play the part. How can they play the part of a competent lube tech if they look like a thug? They canʼt be both. Your employees self image is, as it is in life, very important. Get the little things right. Show the employees they are going to be held to a higher standard than their last job. Invest your time in these employees and it will pay off.

Daily meetings every morning and at shift changes – this only takes 3 minutes and it allows you enough time to cover the benefits of a certain service or specials you may have. It keeps the things that are important to your culture top of mind with employees. Think of it as a huddle before the game.

Twice monthly training meetings 1 hour x 5 employees = 5 hours x $8 = $40 X 2 (two meetings per month) = $80 for the continued education of your front line employees. If you do 1000 car per month you gain $500 by increasing the ticket by 50 cents. It is well worth the time and energy.

I believe that a positive company culture that embraces training is the answer.

Profit & Loss: The idle Tool at the Lube

Lube techs have many tools to help them do their jobs; many are new, innovative tools that are made specifically for the fast lube industry and have truly made servicing cars faster and more efficient.

However, one of the best tools lube managers and owners have to manage their facility is already there and is underused 99 percent of the time. Sure, you look at the monthly profit and loss statement (P&L) every month, but the real value is often overlooked. The P&L is a very powerful tool.

The necessity of goals

Successful people agree that you need goals to succeed at business and I could not agree more. Goals are absolutely necessary and no goal is useful without a scale with which to measure progress.

So with which kind of goals will a P&L help you? You may have long-term goals, but smaller goals at the store level are invaluable. Managing a successful lube has a lot to do with setting and reaching these small goals, and your P&L statement is a great report card for goals.

Think of your P&L statement as a physical you get for the business every month, much like you get a physical once a year for your body. The whole idea of the yearly physical is to intercept any possible problems that might go unnoticed. The monthly P&L is a timely check-up on the business health of your lube.

Goal formulation

Goals can be formulated from your past information, as well as industry standards in “Cost of Doing Business” surveys in industry and association magazines. Every line item of your P&L should have a goal or norm for reference.

If no goal or target is identified, the numbers become meaningless. Realistically, the P&L statement is only as good as the information that is gathered to put in it, so strive for diligence and accuracy.

Another important piece of the P&L puzzle is that you must put correct line items in it. I typically divide operational areas of a lube into three areas:

1. Cost of Goods (COG) – includes all items used during the service of a vehicle.
2. Labor – with hourly, management, bonuses, taxes, and overtime all having their own line.
3. Sales – with coupons and promotional items having their own line.

Classification

Many other areas with their individual line items are necessary and all outgoing expenses and sources of income need a classification and need to be listed on the P&L. Even things as seemingly minor as trash removal need to be accounted for every month. How else are you going to know when trash service prices go up? You cannot be expected to remember what the monthly cost of trash service is, right?

The P&L is a way of keeping track of those types of month-to-month expenses. It simplifies things for both a quick look, as well as more in-depth research of your companyʼs health.

Lines of communication

As the owner, you can sit down with the manager to discuss each line in depth every month; like it or not, your manager is your business partner. Teaching them what each line item on your P&L means and how you arrived at that number is important.

This brings an ownership mentality to the manager and that attitude is half the battle. It is amazing what managers can do to lower your costs and increase profits if they are simply given the chance.

Is your water bill too high? Your manager has known for months that the toilet needs fixing and runs nearly all the time. How about your electric bill? What better incentive for the manager to take one last look at the thermostat before leaving at night than to give him a bonus based on the numbers on the P&L, including the light bill?

Repairs and maintenance should have its own line. The toilet repair bill might be reduced to cost of parts and the manager doing the labor instead of a $50/hr plumber being called.

Sharing your P&L may not be for everyone, but I know for certain that setting goals for each line item on the P&L and giving it a meticulous examination every month will pay off. Donʼt let your most valuable, but overlooked tool lay fallow; get your hands on it and make it work for you. A carefully thought out P&L can become your best tool for managing the fast lube.

 

 

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