MEMPHIS, Tenn—A highly diversified petroleum cooperative with substantial involvement in retailing will plant Big O Tires Inc.'s flag in Missouri—new territory for the nation's largest tire franchiser. TBC Corp., Big O's Memphis-based parent, has formed a joint venture with one of its wholesale distributors, MFA Oil Co. of Columbia, Mo., to build and operate more than 30 new Big O stores in Missouri within the next six years.
Founded in 1929, MFA has been in tire retailing at least 15 years. It currently operates one retail tire store in Arkansas and seven in Missouri under the MFA Tire and Auto name, and three wholesale tire warehouses.
The co-op is the exclusive distributor of TBC's Multi-Mile private brand tire in Missouri, with customers ranging from small ``mom and pop'' operations to large dealerships.
MFA's other operations include: 60 ``Break Time'' convenience stores; seven Jiffy Lube outlets; a petroleum, propane and gasoline distribution business; and one-third ownership in a 75,000 barrels-per-day oil refinery.
MFA Oil President Dale Creach, 56, said the company has no immediate plans to convert its existing retail tire outlets to Big O. He would not disclose how much MFA anticipates spending on the Big O project.
TBC and MFA will be 50-50 financial partners in the deal, with Kevin Martin, MFA's manager of tire operations, overseeing the new retail tire stores. The co-op already is scouting locations, and Mr. Creach said he expects construction will commence on at least two stores this year.
Because of MFA's nearly 30-year relationship with TBC, he called the Big O venture ``a natural.''
The decision to partner met both companies' needs and interests to expand, Mr. Creach said, as well as MFA's desire to continue to stretch its retail tire operations.
The company plans to continue to emphasize its wholesale business, Mr. Creach said. ``But the number of tire dealers is diminishing. In order to support our wholesale and the total volume of business it takes to be successful today, and to spread the expenses out over more dollar sales, we've got to be in retail.''
Nor is MFA content to expand only its tire business.
Mr. Creach said it plans to build a minimum of 10 new convenience stores per year and possibly two new Jiffy Lubes annually. Conceivably, some Big O store sites might eventually contain all three and a car wash ``to offer more services in one location.''
MFA currently has 1,200 employees, and realizes approximately $350 million in total sales annually, $17 million of which come from wholesale and retail tire sales, Mr. Creach said.
MFA's tire and auto division contributes more than $20 million in annual sales. Its stores perform repairs including tune-ups, brakes, exhaust and ride control, but no major overhauls.
The convenience stores add another $90 million in sales, Mr. Creach said, while the Jiffy Lube outlets chip in $3 million.
The majority of the co-op's revenue comes from its oil and gas businesses.
Though it's too early to tell where MFA may build Big O stores, Mr. Creach said the company likely will have stores in its hometown of Columbia and in Springfield, Mo.
``We'll work with Big O's development people and rely on their experience a lot as to where we'll build,'' he said.
Louis S. DiPasqua, president and CEO of TBC, said the company hopes ``this joint venture with MFA Oil will point the way to other similar endeavors with existing TBC distributors.''
TBC, which acquired Big O in 1996, has set a five-year goal of adding at least 175 locations to the current total of 415—not including any joint ventures similar to MFA's, or future conversions of tire dealerships to the Big O system.