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March 15, 1999 01:00 AM

TUFFY, MONRO OPEN SHOPS IN BJ'S CLUBS

Chris Collins
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    AKRON—BJ's Wholesale Club Inc., a warehouse shopping club with 96 locations in 13 Eastern states and annual sales of about $3.5 billion, has signed agreements with two national chains to offer tire and auto service to its customers. TASC Development Co. in Doylestown, Pa., a franchisee of Toledo, Ohio-based Tuffy Associates Corp.—already is operating Tuffy Auto Service Centers at 11 BJ's locations in the Mid-Atlantic states, with four more due to open by April.

    Similarly, Rochester, N.Y.-based Monro Muffler Brake Inc. has opened two company-owned Monro Muffler/ Brake & Service outlets at BJ's stores in the Worcester, Mass., area.

    These operators will mount, balance and install tires purchased by BJ's customers and offer a full range of undercar services.

    ``We consider this to be kind of in the testing phase,'' said Julie Somers, a spokeswoman for BJ's. ``We're always looking for brand names,'' she said, ``and we're always looking for ways to add value to our membership.''

    TASC President Paul Eckert said he came up with the idea of opening auto service centers at BJ's five years ago, while he was an executive with Midas Inc. (He previously had spent 10 years as a regional manager with Speedy Muffler King Inc.) He'd observed that service bays used for mounting tires purchased at BJ's were empty much of the time.

    He said he pitched the idea to Midas executives, but was unable to get that company to implement his plan. He left Midas two years ago and has since spent time working to link Tuffy dealerships with BJ's. The first Tuffy location in a BJ's opened about a year ago.

    TASC now has Tuffy shops, including two stand-alone franchises, in New York, New Jersey, Pennsylvania, Delaware and, most recently, the Baltimore area.

    The alliance with BJ's has allowed Tuffy to expand into a new geographic area, said Roger Hill, vice president of operations for Tuffy.

    ``We didn't have a presence on the eastern seaboard. It's an entirely new market for us,'' Mr. Hill said. ``Overall, we're happy with the agreement.''

    There are about 230 Tuffy locations in 14 states, with the majority located in the Midwest. All but 15 are operated by franchisees.

    TASC leases the space from BJ's in each store and installs tires purchased at BJ's at no additional charge to the customer. BJ's agrees to let Tuffy put signs outside the store and inside at the purchase point for tires. And, while customers must purchase a membership card to shop at BJ's, anyone can use the Tuffy store.

    Monro has a similar arrangement covering its two BJ's locations. Mike Cox, executive vice president at Monro said,``We get a customer we don't usually see.''

    The two Monro/BJ's facilities are installing tires on about 200 vehicles a week, Mr. Cox said, and performing other services on many of them. The locations have only been open for about a month, so the percentage of BJ's tire customers purchasing other auto services is not yet significant, he said.

    Mr. Eckert said that even at locations that opened in the traditionally slow months of January and February, technicians installed tires on about 100 cars a week at each location and were able to sell other services such as alignments to about 75 percent of these customers.

    ``In our business, what's most important is having cars to inspect,'' said Mr. Eckert.

    Each Tuffy/BJ's location has five bays and about 10 employees, and Mr. Eckert has developed a system of ``bay management'' totally different from that of a conventional auto service shop to accommodate both BJ's tire purchasers and other customers. However, he declined to give any further details.

    The Monro locations are similar in size, staff and services offered. Both the Tuffy and Monro locations open before BJ's stores open on weekdays and remain open evenings for added customer convenience.

    As part of the agreement, TASC has access to each BJ's club mailing list, which averages about 100,000 households per store. Mr. Eckert plans to do mailings about once a quarter to offer exclusive discounts to BJ's members.

    ``We see down the road, as long as the stores perform, opening many more locations,'' said Mr. Eckert.

    Mr. Cox said Monro is looking at the arrangement ``pretty favorably'' so far. He said the risks involved are minimal: about $40,000 for equipment and minor renovations at each location. The rent is based on a percentage of sales, and if the venture fails, Monro can move the equipment to another location.

    Monro expects first-year sales at each of the two BJ's locations to be about $500,000, the same total expected in the first year of a free-standing shop.

    After aquiring 205 Speedy Auto Service/Speedy Muffler King locations last September, Monro now operates about 530 locations in 17 states, with 1998 sales of about $180 million.

    The company still has a lot of work to do in assimilating the Speedy locations, Mr. Cox said, so the company is proceeding slowly in its joint venture with BJ's. He said Monro doesn't have plans to make any other acquisitions now, but ``will continue to look for opportunities.''

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