ROCHESTER, N.Y.Monro Muffler Brake Inc. is adding 31 retail stores in three Northeast states to its networkacquisitions that significantly increase Monro's market share in these markets, demonstrating the advantages of Monro's two-brand strategy.
Monro disclosed the acquisitions27 Kost Tire & Auto Care locations in central New York and Pennsylvania and four Windsor Tire Co. Inc. locations in Norwood, Mass.in its fiscal 2016 first quarter financial results. The stores are expected to add about $31 million in annualized sales, representing a sales mix of 60 percent service and 40 percent tires, the firm said.
The Kost Tire locations25 in New York and two in Pennsylvaniawill be rebranded as Mr. Tire stores, allowing the company to fill in existing markets where it currently operates Monro Brake & Tire locations, Monro said. Binghamton, N.Y.-based Kost Tire was the 29th largest tire dealership in North America with 51 retail outlets in 2014, according to Tire Business rankings.
The deal, expected to close in August, does not include or affect 23 other Kost Tire & Auto Care locations in Pennsylvania operating under separate ownership. The Kost family set up separate corporate entities in New York and Pennsylvania years ago under the direction of brothers Michael Sr. and Erwin Sr., respectively.
We plan on growing our business, both retail and commercial, Erwin Kost told Tire Business in a telephone interview.
We have a couple of irons in the fire now, he said, referring to outlets the Clarks Summit, Pa.-based dealership plans to open in the coming year to 18 months. Kost Tire's 23 stores are located predominantly in the eastern part of Pennsylvania, with a heavy concentration in the Scranton area. Clarks Summit is just northwest of Scranton.
Business is good in Pennsylvania, he said. We're enjoying it.
Mr. Kost said he knew Monro had approached his uncle Michael Kost and cousins in New York about selling their business, but the timing of the announcement caught him by surprise. Mr. Kost said his growth plans now could include opening stores in New York.
He added that he's heard from a number of employees at the New York stores about possibly coming to work for him in Pennsylvania or in New York if the dealership were to open locations there.
Kost's most recent store opening in Pennsylvania was in Allentown in November 2013.
The dealership promotes itself in the marketplace as a family business that takes care of its customers and keeps employees happy, Mr. Kost said. Its television commercials always end with: And thanks for your business.
Michael Kost Sr. started the business in 1938, opening the first store in Forest City, N.Y. He and others representing Kost Tire in New York have not yet responded to Tire Business requests for comment.
The four Massachusetts storeswhich operated as Windsor Tire in Norwood and Stoughton, and Mass Tire & Auto Service Inc. in Brockton and Canton, Mass.are being rebranded as Monro Muffler Brake & Service outlets.
Mass Tire in Weymouth, Mass., continues to operate as an independent dealership under the ownership of Kevin Walsh. All five Windsor/Mass Tire stores originally were part of Summit Tire of Massachusetts. Summit's wholesale division was sold to the former Terry's Tire Town Inc. in 2012, but the five retail stores continued to be run by founders Ben Kravitz and Harvey Rudnick.
Mr. Walsh said he began as a tire changer for Mass Tire about 30 years ago and took over ownership of the Weymouth-based dealership about three years ago. He told Tire Business Monro had a fishing pole stuck in the water to see how many nibbles were taking place, but he wasn't interested in selling.
I'm enjoying the heck out of the tire business and I love working for myself, he said. I love my customers, I love my employees. I'm good. I don't want to change that.
In its financial results Monro also said it has more than 10 additional non-disclosure agreements signed with unidentified potential tire dealer/automotive repair facilities. These businesses range in size from five to 40 stores, Monro President and CEO John Van Heel told analysts in a conference call.
Monro operates 1,003 company-owned stores in 25 states and is the franchisor of 145 Car-X stores in 10 states. Of the company-owned stores, 534 came via acquisition, Monro said, in 33 separate deals over 14 years and represent $650 million in annual revenue.