Tire shops adjust to new way of business

CUYAHOGA FALLS, Ohio — Tire shops around the U.S. are expecting the worst but hoping for the best.

Orders for citizens to stay home amid the coronavirus pandemic have caused a reduction in foot traffic at retail tire shops around the country. Shop owners reported losses in revenue anywhere from 10% to 80% in March.

Those shop owners who have seen a slight reduction of revenue say they feel lucky but are bracing for a tough April.

While those dealers hit hardest are looking at all solutions to avoid layoffs.

"I know I won't be taking a paycheck anytime soon," said Gordon Leffler, CEO of Suburban Tire Auto Care Centers.

Based in Glendale, Ill., Suburban Tire operates five retail locations in the suburbs west of Chicago. The company employs 25.

"The first two weeks of March were just a bit off," Mr. Leffler said. "But the last two weeks of the month, revenue, car count and tire units eroded tremendously.

"April will be an unmitigated disaster."

When asked if the business was considering layoffs, Mr. Leffler answered, "Hard no."

"We trimmed everybody's hours by 37%, so everyone could put food on their tables," he said. "March was OK, but April looks like it's gonna be really rough to keep everybody working beyond 30 hours per week.

"My hope is that we can maintain a minimal acceptable standard until the end of June, and provide a paycheck for all staff members."

Gregory Mynaugh, president of United Tire & Service L.L.C., which operates 13 locations throughout Pennsylvania, said he expects business revenue may drop by as much as 60% from 2019.

“Our primary goal every week is to retain our team and make payroll first and foremost, which we have,” Mr. Mynaugh said. “No layoffs to date, although we have had some students that worked part-time while in a mechanical trade school (UTI) go back home since the recent orders by (Pa.) Gov. Tom Wolf.”

West coast hit hard early

Mark Hubbard, owner of Rick's Tire & Service, a single-outlet dealerships in Seattle, said revenue was down about 80%, and in late March, he thought of shutting down temporarily because no jobs were coming into his shop.

The business, though, recently posted on Facebook that the shop remained open and accepting customers. They also continue to service emergency vehicles for a nearby hospital.

Mr. Hubbard said his biggest worry was the effect the extended stay-at-home order would have on the economy.

"As soon as people figure out that they don't need to go into the office for work, that they can work from home, that they don't need to put those extra miles on their cars ... traffic will be down, auto repair will be down, tire sales will be down. … It's going to get really ugly," he said.

At Goodguys Tires & Auto Repair in Fresno, Calif., owner Scott Shubin described the situation as "surreal." He said the business' eight locations have seen a drop in foot traffic, but regular customers have been catching up on vehicle maintenance.

"So, we've seen a larger drop in tire sales as opposed to service and repairs," he said.

"We have not had to lay anyone off. We have adjusted work schedules with our team, and they understand this is temporary until this passes."

Mountain View Tire & Service Inc., which operates 31 locations throughout the greater Los Angeles metro area, saw revenue slip around 50% the last week of March. The company has had to lay off 53 workers so far, and Chris Mitsos, vice president, said there likely will be more, but they continue to offer service across their locations.

In their shops, they are following many safety procedures, including taping off the floors to ensure everyone is practicing social distancing.

"We are wearing gloves, constantly wiping touch points and maintaining as much social distancing as possible," Mr. Mitsos said.

Ag, commercial steady

In Billings, Mont., Harry Staley, who owns and operates two Staley's Tire & Automotive shops, said business in March was down about 10%.

"I'm really surprised we did so well," Mr. Staley said, adding that the business saw an increase in customers purchasing ATV and camper tires, and the agriculture work was steady, "as farmers want to make sure their equipment is ready for planting season."

While he acknowledged that Montana hasn't been affected in quite the same way as more populous states, he has prepared for a harder hit as COVID-19 spreads. But, he said, he has not laid off any workers and plans to do everything he can to keep the business whole.

Mr. Staley said a big hurdle is just getting the word out to customers that the business is open, they have increased inventory and put in place plenty of safety measures.

"Especially in times like these that feel so trapped, having a working vehicle gives people a sense of security that they can get out, and we want to be there for them," he said. "... Most importantly, anything we do, we want it to be a part of the solution."

In Wilkes-Barre, Pa., John McCarthy of McCarthy Tire Service said retail business has been down about 50%, but commercial work has been steady. He noted that many of his locations have seen an increase from trash companies buying tires to maintain their inventory.

He also said ag was doing well and construction business was OK as quarries in most states still are operating.

McCarthy Tire Service employs 1,300 at 60 locations spread from upstate New York down to South Carolina.

"We've never seen anything like this. … This hits everybody," he said. "We've put protocols in place for different situations a while back, like in case of bad weather, so we are adjusting those plans to fit this situation."

Those at the company who are able to work from home are doing so, Mr. McCarthy said. The company has furloughed about 20% of its workforce in a variety of departments, though not the service department, "because they have been pretty busy."

At their shops, they are following Centers for Disease Control and Prevention (CDC) guidelines, have stopped vendor visits and salesmen from making (face-to-face) sales calls. Travel has been canceled. They are enforcing a six-foot distance between people and limiting the number of people in one area at a time.

They also have installed plexiglass at the front desks in the showroom. Everyone is wearing gloves, and, at larger locations, employees' temperatures are being taken twice a day.

Mr. McCarthy said he has been sending out daily emails to staff to keep them informed, help boost morale and promote positive thinking.

"Some people are scared," he said. "When we find out what worries them, we try to address it."

Seeking PPP loans

Shane Robertson, president of Robertson Tire Co. with 14 locations throughout Tulsa, Okla., said they only started to feel the economic effects of COVID-19 toward the end of March, and revenue was down 17% because of it.

"April will be a much different story," Mr. Robertson said. "We anticipate losing closer to $1 million in sales. So it will be very difficult.

"Not to mention, our advertising co-op dollars, vendor rebates, etc., are all going to be way down. Cash flow is becoming a big issue."

He said the business has had a lay off a few workers, but they are trying to retain as many people as possible by cutting hours overall. He also said they would be pursuing a Paycheck Protection Program (PPP) loan through the Small Business Administration (SBA).

"We are constantly cleaning our stores and searching high and low for disinfectants and wipes to use," he said.

"We have a waiting area chairs spread out at least six feet apart and are encouraging customers to wait in their vehicles until we are ready for it. Some customers are also waiting outside, where we've placed chairs for now."

He said the business plans to start running radio ads to inform customers of all the steps they are taking to prevent the spread of the virus.

Bob Kellogg, president of Warren Tire & Service Center, which operates 15 shops in upstate New York, also said he would be pursuing a PPP loan to help cover payroll for his 130 full- and part-time employees. They have not laid off any employees; instead they have decreased staff to 32 hours a week and are supplementing their income to reach 40 hours.

"In March we saw a decrease in gross sales of only 2%," Mr. Kellogg said. "This is deceiving though because retail tires and service were down 20%.

"We are up significantly in commercial tires, caps and road service. Car count is down 20%. We are running at significant deficits in profit every day."

He said the shops are following CDC guidelines for a safe workplace, practicing "safe spacing," and encouraging customers to drop their vehicles off.

"We serve so many government and essential businesses, we feel obligated to be ready to serve their needs; also the general public who rely on their vehicles," he said.

Mark Rhodes, president of Plaza Tire Service with 68 locations serving parts of Missouri, Illinois, Kentucky and Arkansas, said initially his shops in metro areas were being hardest hit, but toward the beginning of April, more rural areas were being affected. He noted that change seemed to be because more metro areas adopted stricter stay-at-home guidelines earlier than rural areas.

"Around March 13, business started to curtail, but really our area hasn't been inundated like the larger East coast cities," he said.

The business employs 580, though none has been laid off. Mr. Rhodes did say his company has reduced staff hours to 30-35 hours a week.

One challenge, he noted, was that PPP loans apply only to businesses with 500 or fewer employees, leaving him with few options to maintain payroll for his 580 employees. He's hoping the government amends those rules to include more businesses as the loans are rolled out.

He said Plaza Tire Shops are taking similar measures as many other shops to protect employees and customers.

"The only problem you have is getting cleaning supplies," he said.

Thinking outside the box

Barry Steinberg, CEO of Direct Tire & Auto Service in Watertown, Mass., said business was down 42% in March. The business, with locations throughout the greater Boston area, employs 70 full-time workers and has furloughed 20 employees because of the coronavirus. They have also reduced hours at their stores.

Mr. Steinberg said the business is only accepting vehicle drop-offs. Customers are met in the parking lot and asked to hand over their keys and confirm the order. They then are sent on their way.

The dealership also is creating work orders both online and over the phone.

"We will then send our videos of the vehicle inspection to show (the customer) what repairs are needed," Mr. Steinberg said. "This process is working very well."

Throughout Colorado and New Mexico, BBAC Partnership Group, a Big O franchise group, said overall in March revenue was down around 25%, but the last two weeks of the month it was down around 50%. Franchise partner Scott Koldenhoven said the company has not laid off any employees, adding "only time will tell," if they have to do so.

In their shops, they have instituted split shifts to keep the staff separate. Half of the staff works Monday through Wednesday, and the other half works Thursday through Saturday.

"I did this to minimize exposure between crews and customers," Mr. Koldenhoven said. "We have limited the number of people in the showroom to no more than five at a time. There is no longer any coffee service or reading materials available.

"We have put barriers up so customers cannot get any closer than eight feet to my staff. We encourage appointment scheduling. As much as we can, we are asking the customer to stay in their vehicle, email or text quotes — as much touch-free as possible."

Howard Fleishmann Sr. of Community Tire Pros & Auto Repair in Phoenix said he saw business really take a hit the last 10 days of March. They have not had to lay off anyone.

The company released a video on social media aimed at informing their customers of the preventative measures they are taking to keep everyone safe. This included social distancing, curbside or overnight vehicle drop-off, vehicle pick up, sanitizing the showroom and vehicles and wearing gloves.