As Gatto's Tire & Auto Service closed its store in Melbourne, Fla., for the day on Dec. 31, 2020, the company thought it had finally shut the books on a financial roller coaster of a year.
Then, a few hours later, a car crashed into the store's showroom, causing $50,000 in damage.
That event would make an appropriate meme for 2020.
Several tire dealers around the country described the year of the COVID-19 pandemic as a uniquely chaotic period for sales.
"I think we fared OK (for the year)," Richie Howard, president of Bruce's Tire & Auto in San Jose, Calif., said.
"I'll tell you one thing: I've never felt so appreciative of being in this industry. Looking at other businesses, like restaurants and gyms, bowling alleys, things like that, I've never been so appreciative of being in the tire industry and automotive industry."
Because the automotive industry — including retail tire and auto service shops — was deemed "essential" by most states, Mr. Howard, as well as most tire and auto service shops, didn't have to shut down during state-mandated business closures and stay-at-home orders.
But Mr. Howard did have to close one of his eight stores for two days in August because an employee tested positive for COVID, and all the co-workers had to stay home and quarantine. He said after other employees sanitized the entire facility, he and a technician from another store ran the shop until the quarantine was over.
"This is the first week in a year that we've had everybody back to work," Bud Luppino, owner of Bud's Tire Pros of Riverside, Calif., told Tire Business in mid-February.
Of the dealership's 44 employees at three locations, two tested positive for COVID last year and 30 had to be quarantined at various times because of exposures over the past 12 months.
"There was a time where we were barely able to stay open. One time we had 44 employees and during a two-week period we had 20 of them out for quarantine," he said, noting this was in addition to employees taking vacation time and regular days off.
But the dealership ended the year with about a 3% increase in sales over 2019 as an uptick in auto services offset a drop in tire unit sales.
Mike McHenry, marketing and inventory manager for Gatto's Tires, said the dealership experienced a 50% drop in business from the second half of March into May at its six retail stores. The company had to furlough a third of its 63 employees, the first layoffs in the dealership's 50 years.
By the end of May, Gatto's brought all its furloughed employees back and since then, sales have been almost back to normal, he said, although 2020 annual sales were down from 2019.
The opposite was true for Bruneel Point S Tire & Auto Service in Boise, Idaho.
Owner Craig Bruneel said his 2020 sales exceeded 2019 due to "a lot of COVID refugees" moving into the inland Northwest and contributing to a booming economy.
But he said he approached the onset of the pandemic the way he approached the 2008 Great Recession: "We really curtailed expenses, and we tried to make sure our labor lined up with the sales and profitability. So we got aggressive back in March."
Optimistic outlook
Scott Monteith, vice president of retail and partner, Best One of Indy in Indianapolis, said the dealership is upbeat about 2021 after tightening its financial belt and weathering the financial ups and downs of 2020.
"We're still dealing with the fact that there's going to be a new normal. But we can live with the new normal. Our goal is to get back to 2019 levels, because we had a fantastic 2019. So if we can get back to 2019 levels, we'll be satisfied," he said.
"We're also looking at growth and acquisitions at this present time. So we're looking at 2021, and moving forward, will be good years for us. ... It will be challenging but we're optimistic," Mr. Monteith said.
"We're in a process now of rebuilding, bringing back that 10% business that we lost (from people moving out of California last year), with new customers," Mr. Luppino said.
"We're actively looking for new customers in our advertising program because there are a lot of people moving into the area."
Bud's Tire Pros is using direct mail advertising and offering people moving into the area a free oil change as an incentive to visit the dealership's three stores.
"We're optimistic. We always like to shed a positive light," Rick Benton II, vice president of sales, Black's Tire & Auto Service in Whiteville, N.C., said.
"The biggest thing we have as far as a big concern is the tariffs (on tires from Asia) which are driving the costs up. Consumers don't have much spendable income. If the tariffs drive that cost and fuel prices and stuff like that increase, it will drive all costs up."
Pandemic fatigue
Last year tire dealerships, like most businesses around the country, implemented Centers for Disease Control (CDC) recommendations for sanitizing, social distancing and wearing of face masks. But there are signs that some areas of the country are growing fatigued with the requirements.
In the rural Midwest and Northwest, where social distancing has always been a fact of life, customers are less apt to wear face masks, according to dealers there.
For a number of months last year, Fat Boys Tire & Auto, with five stores in Wyoming and Nebraska, offered home pick up and delivery of customers' vehicles and would disinfect the inside of the vehicles as a way to provide customers peace of mind.
"We've had customers who were coming in to us and telling us they didn't want that to happen anymore," owner Kirk Lenhardt said.
"They don't want to wear masks anymore. They wanted to go back to normal. ... As time wore on, we saw more and more customers getting frustrated with the mask mandates and what was going on. ...
"We don't require people to wear masks in any of our establishments. It's truly their decision if they want to do that."
He said employees will accommodate those who still want to adhere to CDC guidelines by continuing to sanitize their vehicles if they want or meet them outside the store so they don't have to go inside.
"We've really tried to bend to what the customer wants. But out here, 99% or better of people want to get back to normal," Mr. Lenhardt said.
Gatto's Tires in Florida offers pick-up and delivery of customers' vehicles or a curbside drop-off option so customers can avoid physical contact, but few took advantage of the service last year, Mr. McHenry said.
He said customers are coming into the stores to conduct business. The showrooms are large enough for social distancing, and only a third of customers wear masks.
"People are over it," he said.
But other tire dealers believe plexiglass barriers, chairs spread out around waiting areas and surface sanitizing will continue for the foreseeable future until the public is confident the COVID-19 pandemic is over.
Lessons learned
Several tire dealers around the country, large and small, said their business experiences during the pandemic taught them a few lessons:
- "One of the biggest lessons from this that I learned is not to take it for granted," Bruce's Tire's Mr. Howard said. "We've had a good, healthy business. I was fortunate to start in the business after the Great Recession. I started in 2012, and business wasn't too bad. … For the last eight to nine years I've been in the business, it's been great. Business has been strong. …
"This (pandemic) made me realize it could change in an instant," he said.
"I'm so blessed and grateful that we, as a company, were able to survive and keep everybody on board and still be able to do OK and get by when there are other companies now that have had to close their doors or they will be closing their doors or they are just barely making it. We're doing OK, and we are able to survive."
- "You look at stuff you may have taken for granted before, you learn a lot," Black's Tire's Mr. Benton said.
"We took a lot of our relationships for granted. We took a lot of activities for granted. … I look at 2020 as a blessing. It was tough, but it was a blessing, making you appreciate some of the most important things in life."
- Bud's Tire Pros' Mr. Luppino said the need for patience and flexibility were the biggest lessons he learned.
"Be a good listener (to employees' concerns and exposure fears). Empathy: be aware of what's happening to their families. Adjust schedules to make sure they are be able to fulfill obligations at work and at home."
- Fat Boys' Mr. Lenhardt said 2020 showed him "how the paradigm can change on a dime.
"As an independent dealer, such as ourselves, we really need to be reactive to the market and to what's going on," he said. "The customers are our bread and butter, so we need to make sure they are taken care of. ... It's being able to change direction and hopefully not miss a step. I think that was one big lesson we learned this past year."
- Best One of Indy's leadership team cut expenses to the bone in an effort to offset reduced sales when the pandemic started, Mr. Monteith said.
"As business owners, we don't delve into our expenses like we probably should when times are really good, because when times are really good, you take your eyes off the ball, so to speak. But when you are faced with these types of circumstances, you really dig into your expenses," he said.
"It's amazing how well you can do without those additional expenses."
Those expenses included overtime, dues/subscriptions and unnecessary repairs/maintenance. The dealership also renegotiated for lower rates on service contracts with its vendors.
- "The things that we did well were we were positive and optimistic. I tend to stay optimistic," Mr. Bruneel said.
"When challenges come, look for opportunities that those challenges are going to create. When COVID hit and everybody else was starting to worry about their lack of sales, we got aggressive and said now is a great time to call all these commercial customers and white-van fleets and say, 'You're trying to cut costs, now listen to us.' — where they might not have listened before and been comfortable with their current service provider or tire supplier.
"We might be able to knock open some doors. When things are going rosy, no one is listening (to our lower-cost proposals.) ... It's an example of trying to be opportunistic when there are challenges around us."
Payroll protections
Despite the independent spirit of independent tire dealerships, the government subsidies, by way of the federal Paycheck Protection Program (PPP) loans, last year went a long way toward helping small businesses keep their employees paid when sales tanked last spring.
When the business slowdown started last March, Bruce's Tire cut its 70 employees' work hours 30% instead of doing furloughs.
But by early April, the dealership received its PPP loan and used the funds to reinstate all its employees to full time and reimburse them for the pay they lost when their hours were cut.
"So we paid them for hours that they did not work," Mr. Howard said. "We felt that was what (the PPP loan) was intended for. I think a lot of our employees really appreciated that ...
"That for me was one of the biggest wins for the company was to be able to keep everybody full-time and back pay them for the time that we had cut them. We didn't let anybody go. For me that was one of the biggest victories for the company."
Likewise, Bud's Tire Pros cut employee hours last March rather than do furloughs. When its PPP loan came in, the dealership returned employees to 45 hours a week and gave bonuses for the amount they would have been paid if they worked their regular hours in March and April.
"So they never lost any money," Mr. Luppino said.
"We were really lucky. We didn't lay anyone off. We didn't furlough anybody. The guys responded by sticking with us and we just paid everybody with the money we got from the PPP."
Best One of Indy furloughed about nine of its 130 employees and reduced labor hours until it received its PPP loan.
"For those technicians (paid a flat rate), because business was down and they were concerned about their weekly paycheck, we guaranteed them a certain percentage of their average hours in 2019. We gave them a little peace of mind," Mr. Monteith said.
