Annual Rapid Lubrication Survey, Is It Still Viable?
I want to comment on Fast Lube Business and the annual survey conducted by Auto Laundry News, one of the few industry magazines for the car wash industry. In this 2001 survey, we see an increase in the number of locations. However, the industry leader is by far Jiffy Lube. We see variations on the theme, but we can safely say that the Jiffy Lube has been better suited to the American public and their desires when it comes to oil changes.
This survey showed that the average customer would drive 5.7 miles to get an oil change. If 50% of customers drive 5.7 miles and 80% of customers usually come from a three mile radius to get a car wash, I see additional synergy. These oil-lube center car washes are achieving greater reach than the industry average. This is great news for those car washes that add oil lube bays, but it also takes up space, and if it’s not marketed properly it won’t work. The survey quickly showed that oil change facilities perform best in middle-class areas, not high-end areas. They do poorly in low-income areas. This all makes sense. Self-contained car washes were the most likely to have oil lubrication facilities on their properties. It is also interesting that the minimum wage did not prevail, normally companies pay $ 8.00-10.00 per hour. It makes realistic sense and I think good help starts in this country at $ 10.00 an hour in most metropolitan areas and $ 8.00 an hour in rural areas.
Only 23% of the quick lubes had a website. Only half had internet access at the locations. The average employees were 5 full-time and 3 part-time. Luckily for the image of this industry, 74% had specific uniforms. The average store had 3 bays, not enough to make volume if proper lightning marketing and community-based marketing were being carried out. Average income was $ 32.00 per car. That’s a lot of upsells, as the average advertised price I’ve noticed is around $ 19.99. Less than 30% were open on Sundays? Bad mistake as there is no time to change the oil and wait in line for most Americans. Was the gross monthly average $ 2,400.00 per month per bay?
This is bullshit, this is not even a viable business, these people are wasting their time. Think about it, does it also cost oil and filter and labor? Forget that news. I question the viability of the entire oil change industry. The largest Jiffy Lube franchisee in the country with 180 units was delisted by NASDAQ and so was another prominent auto care and lubricants company recently. I like Kwik-Lube Company and I feel like they are doing well, but I also question the ROI of such an effort looking at these results and the cost of constructing the building and the time to construct it. One good thing oil lube bays have going for them is the upselling, but as the consumer dollar tightens and credit card debt rises and falling rates rise, where do Will this additional impulse income and cash come from the sell-up? next form?
The industry is still expanding and new entrants to the market are hurting existing units and I question the saturation point, not out of necessity, but out of desire. Nobody wants to spend money on oil changes, it is necessary. People buy what they want, satellite TV and beer. It’s not what they need, so I see a frequency problem brewing and people waiting five to six thousand miles between shifts. So I think if an oil lube bay isn’t already attached to another reason for frequenting the facility, you’ll soon be in trouble. The survey also showed that 93% OF OIL LUBRICATING BAYS USE ADVERTISING TO GET THEIR CUSTOMERS? WHY? We do not advertise, word of mouth and happy customers advertise us. There you have again more cost.
Also 60% of respondents said that the competition was discounting. MMM? Do you have high labor costs, the frequency is low, new car technology on the horizon, is the cost of oil going big, and you launch a price war? I see the problem when non-expert traders leave the premises for sale and go off the market. By eliminating setup and moving to mobility with the existing customer base of, say, a mobile truck repair business that can co-band and available fleet services, you could beat these other companies as they run red lines. on mail coupon overruns and phone book ads and not websites. Many businesses are not looking at demographic changes in their locations and costs of renting or owning and are unable to sell or borrow more due to their lousy profit margins. And what can an oil change bay become? Plugging the hole in a tire store? What happens when the hydrogen cell arrives and nobody changes the oil? Can it be converted to a filter type operation? Not really, as often the tires and wheels are offset and will land the modular car in the lube bay hole. We have the solution and we can beat them in almost every aspect. Some consultants have said; “Lots of dolls imitating each other.”
Listen to this part of the survey, money was spent on advertising, this is where respondents said they were advertising; TV 15%, Direct Mail 51%, Radio 38%, Newspaper 35%, Billboards 18%, Yellow Pages 53%, others only 13%. Scary, all of that costs money and everyone is copying each other. This is what happens when people can no longer think and cannot adapt and do business at the speed of thought.
[http://www.speedofthought.com]
81% of those surveyed said they would accept competitor coupons. Whatever it is, why print them then? Let everyone else spend the money and take theirs? 80% said they have tried to use the discounts to attract customers from other lubrication locations to their own. Wow, this sounds like the carpet cleaning industry to me.
Breakdown of costs by job. 10% rent or ownership, 3% facility maintenance, 26% labor, 30% materials, 4% utilities and many reported expecting it to double with some already in the west seeing a tripling. Insurance 4% and is expected to continue to rise and some said 8%, customer claims for damages 1%, this is inexcusable, advertising 10%. You want to add them up for me. Why do they do it?
The average costs of the new facilities were; Land $ 206,000, Improvements $ 505,000, New Equipment $ 36,000. WOW all that for little or no return? Average number of competitors within a 10 mile radius? 36% said 3, 19% said two, 19% said 5, 7% said 5 or more. How can someone invest this amount of money per location when we can build a couple of units totaling $ 65,000 and almost equal the number of potential vehicles to repair? Plus, with AAA building oil change facilities and Wal-Mart getting into things, the competition will be bloody and that’s a lot of money to invest in a business with an uncertain future. Not a good bet, if you were a gambling man.
We really like this industry because we know things that the industry doesn’t know and we can hit them because they have lost the boat. We have seen some companies that are looking for ways to change their yacht water oil. What’s even better is that they all lost the boat at the same time and are struggling on shore to get a few small boats to reach the ship that is leaving the harbor. Who will survive this oil change war? The one that best serves the customer, in the way the customer wants to be served.