SCOTTSDALE, Ariz. (Sept. 29, 2008) — Few people know it, but Bruce Halle, founder and chairman of Discount Tire Co. Inc., started his career in the tire industry with a failure.
Borrowing $5,000 from a friend, he bought a minority stake in a tires and accessories business that went belly-up after about two and a half years. “A brilliant decision,” he now jokes.
But the defeat had a positive side. It led him to the industry that became his passion.
After splitting the liabilities and assets of the failed business with his partner, Mr. Halle opened his own retail tire store in Ann Arbor, Mich., with a lofty goal to sell five tires a day and to pay back Uniroyal the debt he owed. He had one employee.
“Initially when I was starting the company, I was 30 years old,” he said. “I was married. We had two children. I was just trying to make a living, you know, trying to buy bread and milk and pay the rent. That's all. I started that way.”
Today, just about everyone in the tire business knows the name Bruce Halle and Discount Tire Co., which operates more than 700 company-owned stores, has 10,000 employees and generates sales exceeding $2.3 billion.
From the opening of that single store in 1960, Mr. Halle, 78, has created arguably one of the largest and most successful independent tire dealerships in tire industry history.
In an interview with Tire Business at the company's Scottsdale headquarters, the firmly in-command chairman shared the story of how Discount Tire Co. came to be and spoke about some of the principles and philosophies he has followed in building the company into what it is today.
'Everybody wants a deal'
Mr. Halle chose the name Discount Tire because “discount” implied a deal.
“Everybody wants a deal,” he said. “If you go buy a new car, where do you go? You go to a car dealer. He's a dealer. He's giving you a deal. Or if you go to an appliance store, it's an appliance dealer. If you buy a new suit, you want a good suit, but you want a deal on it…. So the name Discount Tire has been helpful in many ways.”
And while the word “discount” can have negative implications, such as implying low quality, he said the dealership overcame any potential stigma as a result of its good reputation and the way it treats people.
Now when people think of Discount Tire they “think of a fine company with good service and quality,” he said.
In starting the dealership, Mr. Halle said his natural instinct was “to treat people fairly and to just be nice.”
This philosophy served him well right away in Ann Arbor, where there was ample competition from the likes of Firestone, General and Goodyear tire stores.
These outlets didn't take the upstart Discount Tire too seriously and were telling people not to patronize the dealership because it sold seconds, rejects and low-quality tires, Mr. Halle recalled.
But the effort backfired. It only inspired people to come and find out what Discount Tire was all about.
“If they would have kept their mouths shut and not talked about it, I probably wouldn't have gotten off the ground,” he said. “But they were sending people up to me and people would come in the store and I would take good care of them, give them a good deal and they would tell other people. And that's kind of how we grew.”
Is this business approach—a good deal, good service—still valid today?
More than ever, Mr. Halle said, noting that at most places you go today it's hard to find good service. This can be true even at “good” companies where “you find people with bad attitudes, people not ready to smile and thank you and ask you to come back and do all the right things for you.”
Discount Tire, he said, gets “many good letters from people on an ongoing basis complementing us on the service and the quality of the gentlemen and ladies in our stores.”
In fact, during a tour Mr. Halle gave Tire Business at one of his Phoenix-area stores, a customer approached him, asked if he was the company's owner, shook his hand and complimented him on the quality of the outlet. This theme of treating people well comes up often in conversation with Mr. Halle.
When asked what it takes to be a good leader, he said: “Live a decent life yourself and set good examples. Encourage people (and) carefully use the two magic words…yes and no. Carefully use those. Treat people fairly and just be honest and nice.”
Tires and wheels only
From the start, Mr. Halle focused on selling only tires, later adding custom wheels to the mix.
Unlike many independent tire dealerships today that have taken on service work—such as brakes, alignments and tune-ups—to boost sales and earnings, Discount Tire has stayed true to its core business: selling tires and wheels, including mounting and balancing.
Why hasn't Discount Tire followed other dealerships into automotive service?
Those dealers thought they had to add on those services to survive, according to Mr. Halle. “As you know, the services are fine, but you need mechanics to do it, you need qualified people to do a lot of services.”
Automotive service work, he explained, doesn't mix well with Discount Tire's approach of getting customers in and out quickly.
“Now if I had service, like alignment, brakes or tune-up, while my guys were hustling changing tires, my mechanics are sitting over there, they don't have a job right now, they are resting while the other guys are working,” he said. “I never felt it created a good atmosphere. It was contrary and the groups don't blend together. They never did mix very well. So we stayed with just changing tires. That's all we sold.”
But Discount Tire does provide one service that has helped attract and retain customers. It offers free flat repairs, fixing as many as 5,000 flat tires a day at its vast chain of stores.
What if the dealership charged $10 for this service? It would generate a lot of revenue, Mr. Halle's financial people often point out.
“But I say, 'Wait a minute.' I might be able to collect some money for that, but I couldn't begin to advertise and market and promote as much as we get from fixing flat tires for free.”
By repairing customers' tires at no charge, they are very grateful, he said. “We've made a customer for life, probably.”
Initially, Mr. Halle had no strategy to build Discount Tire into a chain of 50 or even 100 or more stores. It was just a job to him. But he and his late wife Gerry did have a plan for their personal finances.
She would get $100 a week and use that money to take care of the children and run the house. And whenever she had saved $1,500—which was enough money for the family to live on for three or four months should the business fail—she could buy something for the house.
“We didn't know what was going to happen so we kept doing that,” Mr. Halle said. “And little by little we got a little more successful and we opened another store. Then I hired some people to help me and some more. Basically it's been the same concept all along.”
When expanding, Mr. Halle said, “you just have to use some judgment as you're going along to when you open a second store.”
“There's been some times over the past, like when I had maybe 20 stores and maybe I was opening three or four stores a year, I'd quit. I'd stop. We're not going to open any stores this year. And I've done that several times over the years. It wasn't financially a sound thing to do at that time.
“It's OK to grow and get big,” he continued, “but you've got to do it on a financially sound basis. I was always careful about that.”
Promote from within
Mr. Halle said the secret to opening stores is finding good people and trusting them.
“Most people are very trustworthy and they'll do a great job,” he said.
He believes in treating everyone, including employees, fairly and with respect.
“All of the years I've been in business, none of my employees have ever heard me raise my voice and they've never heard me swear,” he said. “And I know how to do that, but they don't hear it. After three years in the Marine Corps, you know how to do that.”
He also said he believes in promoting from within, which is why nearly all of the firm's 10,000 employees, with the exception of some in the legal, financial and information technology departments, started out changing tires in the company's stores. This includes most of the company's top executives and Mr. Halle himself.
This is important, he said, because people who come to work for Discount Tire and work hard for a few years will want to move up the ladder to become an assistant manager or a manager. And they know they are only competing with their contemporaries because, “I will not go out and hire some MBA graduate from whatever college and stick them in some place,” Mr. Halle said. “I never have and I won't.
“If I were to do that, if I were to bring somebody in at a higher level without having worked in the stores, I may as well get in my car, drive around to 700 stores and slap every one of my guys in the face—that's literally what I've done to them. And I would never do that and neither would any of my people. That's part of our core, that's our spirit. That's our attitude.”
When graduating from high school, Mr. Halle said he was asked to give a speech on behalf of the athletes of the school. He was not, he stressed, the school's valedictorian. “No, I was way down the ladder,” he said. His talk was on the American Dream and the dreams all young people have of what they want to do with their lives.
“I said to my classmates, 'As you graduate take your dreams with you. Take your heart and take your imagination and go out into this great country of ours and make your dreams come true, if you can.'”
Mr. Halle had his own vision for the future, too, but he said he didn't dream big enough.
“I never dreamed that I would be sitting here…and that we would have over 700 stores and I would be the founder of those. I never dreamed that,” he said. “But I've talked for years with all my people about dreams. Chase your dreams, work together to make them come true. And I think we do.”
This philosophy helps explain why Discount Tire has little employee turnover. Citing members of the company's executive staff, Mr. Halle noted they've been with him 25, 30, 35 and 40 years.
“I could count them on two hands, in all these years, the people that have left,” he said. “Because why? We trust each other and we're helping to make their dreams come true.”
As Discount Tire grew from one store to two and then three, Mr. Halle found he had to rely on others to help him manage the growing chain.
“It was terrifying to leave the first store and go to some of the others as I was doing,” he said. “That was terrifying because I was in there hands-on every day and I was so worried and so scared. So I would go to other stores but then I would come back here (to Ann Arbor) and work at the other one as much as I could. I always did that. And so, little by little, as we went along again I was acquiring some good people—some nice young men to work with me.”
Early on Mr. Halle took on a partner, Ted Von Voigtlander, a “bright young guy” who was working for a General Tire dealership in Ann Arbor. He would see Mr. Von Voigtlander occasionally at a restaurant next to his store and, at the time, Mr. Halle needed some help at the dealership.
“I talked to him and convinced him he should join me and I made him a partner, a minority partner, in the company,” Mr. Halle said.
The two worked together for nearly 30 years until Mr. Von Voigtlander's death in 1999, and Mr. Halle acquired his interest in the dealership from his estate.
Would he take on a partner again today?
“Now in later years, like the last 20 to 25 years, I'd never take in another partner,” Mr. Halle said. “And I'd never dream of it today. But it was fine then and it worked out good. I needed help and he needed a job.”
A family business
Even with 10,000 employees, Mr. Halle said he views Discount Tire as a family-owned business. Two sons-in-law work at the company as well as his wife Diane's son. His own son Bruce Halle Jr. also has worked for the dealership.
Beyond his immediate family, though, is his other family—the company's employees. “They're my family next,” he said.
When traveling around the country, Mr. Halle said he makes it a point to visit as many of the company's stores as possible and meet all of the employees in each outlet.
“I'll go in there and I'll say to the manager, I want to meet every one of your guys and shake hands with them. And I do,” he said. “I meet them and I thank them when I'm seeing them. I thank them for joining us, ask them how long they've been with us and what else they're doing, if they're in school or college. I talk to them. I'm very interested in all of my people and what they're doing.”
Mr. Halle also said he believes it's important to support the charitable activities in the local communities in which the company operates.
“I might be living here in Arizona, but in Texas we have over 100 stores,” he said “That's our community, too. And so are Colorado and Michigan and all the different states around. Those are our communities, our people live there. It's our responsibility to support that community and their needs the best we can.”
Mr. Halle said one of his biggest concerns in running Discount Tire today is the rising cost of living expenses felt by the company's employees.
Take the issue of driving to work. Last year, he said, it might have cost an employee $100 a month for fuel to drive to work. Today, it's $400 a month. Where does this extra $300 come out of the family budget? he asked.
“Food, fuel and everything else right now. That's a big concern of mine. My big concern is not the company continuing to go forward and be successful. We will do that. But my concern is my people.”
Could someone start a dealership today, like he did in 1960?
Yes, Mr. Halle answered.
Discount Tire stores, he noted, have lots of overhead expenses including having to help pay for key executives and information technology systems that are immense.
Without those costs, “You could walk across the street from one of our most successful stores, sit there and compete with us on a regular basis and make a very, very good living,” he said.
And if someone is able to do that, then he thinks they could expand the business and then grow it some more.
“So... I think young people today could open a store just as I did many, many years ago and be successful and make it grow.”
In June, Discount Tire hit a new milestone, opening its 700th store in the U.S. That growth trend continues, with several more locations added since then.
So how big will the company get as it approaches its 50th anniversary in 2010?
Back in 2004 when the dealership reached 500 stores, the company's employees threw a surprise party for its founder and chairman. At the time, Mr. Halle said he made it “pretty plain” that he wanted 750 stores.
“Now everybody really knew I wanted a thousand, but from 500 to say I want a thousand, it's almost unreachable so I never said that. I said I want 750. Well now that we've got over 700, I'm going this year to start talking a thousand stores because that's what I really want.”
But that's not the end either.
“Now knowing myself and this company and the drive we have, and as I approach a thousand stores, I'm probably going to say something else, and I will.” Mr. Halle said. “And, of course, it's what I want to do and it's back to what I initially said.
“It's for my family and all the people that work in the company. It's their future, their life, their family's life, their children's education, their children's future.
“It's my responsibility to keep this company growing and going and making it successful, and I intend to do that. And I'm still doing it.”