Tires a golden opportunity for Midas franchisee

KINGSTON, Ontario — Franchisee Jeff Hall operates the two busiest Midas Auto Service stores in Canada by offering an extensive tire inventory, low-priced oil changes and a lot of "extras."

Midas franchisor TBC Corp. said Mr. Hall's two stores in Kingston are the most successful in the brand's 148-store Canadian chain and rank in the top 10 for sales among Midas' 1,300 stores throughout North America.

Mr. Hall's stores rack up three times as much business from tires as they do from mufflers and exhaust, items Midas originally built its business on when it was founded 60 years ago.

TBC, which acquired Midas in 2012, launched a "tire sales initiative" in April 2016 to begin shifting the sales mix at its franchised Midas auto repair network more toward tires.

The two-year initiative is aimed at making the chain "a significant player in the tire business," the company said at the time.

Mr. Hall, however, had been pushing tires long before that.

"We got on the tire bandwagon about seven years ago in a big way. We had a pretty good business in tires before TBC," Mr. Hall said. "So when TBC said they were rolling in tires, we were already there. It's absolutely a crucial element to our future, for sure."

Tire sales make up about 40 percent of his business in winter months but averages close to 20 percent for the year.

After he opened his first outlet in a closed storefront 10 years ago, Mr. Hall grew his business with a mixture of tire sales and automotive service from $650,000 Canadian in annual sales to $2.8 million two years ago.

At that point, he decided to build a second, state-of-the-art location in the same city.

The 6,400-sq.-ft. Gardiners Road store, which opened in 2015, features 40-foot ceilings, a 900-sq.-ft. tire showroom, four express drive-through bays and six traditional service bays.

"With my focus on tires, I wanted a retail presence on a main street," said Mr. Hall, who built the store in a high-traffic retail area next to a new McDonald's restaurant.

"I want customers to think of us when they think of tires, and with our location, we take advantage of drop-in business. We have the showroom and the location to help us sell, and customers can't believe the tire selection we offer."

Both stores service 70 to 80 cars a day, he told Tire Business, noting, "Selling tires has been a huge customer acquisition. If we weren't in the tire business, we wouldn't have the sales that we have."

Mr. Hall, who advertises heavily on radio and TV, displays about 50 tires in his newer flagship store and another 25 in the older store, "so when you walk in, you know we're in the business.... We're always drawing attention to the fact that we're in the tire business."

About 55 percent of his tire sales are premium brands while 45 percent are opening price-point tire brands.

"We usually carry between 1,000 and 1,500 tires in stock between the two stores, and we can access them pretty easily."

Beating the competition

One of the key competitive advantages for Mr. Hall's Midas stores is that he offers free tire storage for his customers. In a market that has two distinct driving seasons, many customers want a place to store their winter or summer tires in the respective off-seasons.

"So when you buy four tires from us, we store your tires for free. That definitely gives us a competitive advantage in the tire business. Most people in our market charge for it. So we built a compound to store customers' tires," Mr. Hall said, noting that he stores about 3,000 tires for his customers.

He said he once heard industry analysts advise tire businesses to offer free tire repairs and rotations to build sales, "and we just took it to the next level. So, you know, we'll store your tires for free, too. It's definitely been a competitive advantage for us against your Canadian Tires and your dealerships....

"So we positioned ourselves that not only are we going to have great pricing, we going to give you more value after the point of sale."

Aggressive prices

He uses that strategy for an oil change service as well.

"We have very aggressive prices. We know an oil change is the most inexpensive way for a customer to try us out if they're thinking about leaving a dealership or thinking about leaving their current service provider," Mr. Hall said.

"We want to make it really easy and palatable for the customer to try us. That's why we've been pretty loyal to the $29.95 oil change in our market, which is probably the lowest in our marketplace and, also, nobody does what we do with an oil change.

"It's like the tire program — we're willing todo a little bit more when you buy tires from us than our competitors. So that certainly helps, I think," Mr. Hall said.

Building car counts

A typical tire store will see a customer two or three times a year between seasonal tire changes and oil changes, he said, noting the national average car count for Midas stores is about 12 cars a day in Canada.

"Between the two stores, we're like 30 to 40 (vehicles) per day in each store. It's that extra frequency we get from oil and tires that really helps us. But it's a lot of work, too," he admitted.

"When we do the $29.95 oil change, we check your alignment, wash your mats, vacuum your floorboards, get you an electronic tire reading with a 3D camera...."

Mr. Hall said his business generated close to $5 million in sales last year, noting that the average Midas store in Canada generates about $1 million in sales annually.

"We are doing the volume of what four stores would do right now, maybe five. It's not getting any easier. We're always trying to stay ahead of the curve."

Educating the public

The Midas chain has been promoting the fact that its stores offer tires in addition to their traditional portfolio of undercar services, including brakes, maintenance, exhaust, steering and suspension services.

For his part, Mr. Hall said he believes the Kingston market already knows he runs a tire dealership.

"We do heavy advertising here. We advertise 52 weeks of the year. We never go off the air. We run 103 radio spots a week and 35 TV spots a week. And we do at least one massive tire campaign," he said.

While the Midas brand has strong market recognition, Mr. Hall said, he believes it is the job of an owner/operator to educate the community on what the store offers.

"That's something we've been able to get across to the community.... We do a lot in the community. We donate a lot of money to charity. Usually a dollar from every oil change goes to charity. So we are very heavily involved in the community, which is a key," he said.

"Obviously, we're excited to see some of the things TBC is doing to expose the consumer to Midas as a tire destination," Mr. Hall said, adding, "I think it will only bring great things for us."