Tire Discounters expands on multiple fronts

CINCINNATI — Tire Discounters, the sole family-owned-and-operated retail tire dealership among the nation's 10 largest retail chains, has been on a growth tear the past few years, and management has no plans to slow down.

As the calendar year ticks toward 2023, Tire Discounters' management is finalizing a six-store acquisition in Virginia that will bring to 39 the number of new points of sale added this year.

The dealership has every confidence it will match or exceed that total in 2023, President and CEO Jamie Ward told Tire Business recently, as the company's growth-by-acquisition strategy is hitting on all cylinders.

• This article appears in the Dec. 5 print edition of Tire Business.

Should the dealership keep up that pace, it would vault Tire Discounters solidly beyond 200 points of sale.

In addition, the business is branching into the allied fields of auto glass repair/replacement and car washes — which represent dozens of more locations, some co-located with Tire Discounters retail stores — and has branched into the commercial end of the business with six locations skewed heavily in that direction.

The firm's growth curve is not growth for growth's sake, according to Ward and Anna Wood, vice president and managing director, who discussed the dealership's strategy recently with Tire Business.

Instead company management evaluates each move resolutely for its impact on the firm's business footprint as well as the bottom line.

"First and foremost," Ward said, "we look for a good family-owned and -operated business. Otherwise is just a real-estate transaction, something we don't want to consider offering."

"Part of the reason we're in the acquisition business is because we're family owned. We want to make sure those same core values are there," he said, listing things such as high employee- and customer-retention rates. "We don't want companies with the wrong ethics or style of treating employees."

The dealership, founded by Chip Wood in 1976 in Cincinnati, didn't anticipate being quite as aggressive in the growth-by-acquisition route when it announced in early 2021 that it was going to start offering franchises.

That strategy actually was three-pronged plan, Ward said.

No. 1 was franchising; No. 2 was an offer to take over operation of a business with the owners retaining ownership of the property; and No. 3 was outright takeover.

"We anticipated six out of 10 deals would be in the No. 2 and 3 category," Ward said. "In reality, it's been overwhelming for the latter two — 100 out of 100."

That's not to say the franchising idea is dead.

"The juice just hasn't been worth the squeeze yet," Ward said of the franchising concept.

Integrating acquired businesses into the Tire Discounters' realm is a multi-layered exercise, Ward and Wood said, starting with the personnel, then moving on to the acquired company's physical assets (shop equipment, etc.), and then the location's physical appearance, both outside and inside.

The primary focus is on the people, Wood said, noting that the top reason most companies cite for accepting Tire Discounters offer is the family-orientation aspect.

While some business owners who sell to Tire Discounters see the deal as an exit strategy, allowing them to retire or move on to other matters, Ward said a significant percentage point to being able to ensure that family members — sons or daughters primarily — continue as part of the business post-acquisition.

"In a number of cases, we've been able to hire, retain and promote family members in our organization," Ward said, stressing that quite a few second-generation family members are keen "to continue working IN the business, but not so much ON the business."

In several instances, the owner of an acquired dealership stays on for a prescribed transition period, Ward said, and on multiple occasions the son or daughter stays on as service manager or store manager or some other position, and they flourish in those roles.

"What they often don't want," he continued, "are the headaches of payroll or dealing with attorneys or accountants, etc. They don't want to deal with the things their parents went through in running the business on multiple areas."

Once the personnel issues are settled — more often than not, Tire Discounters is able to improve benefits, raise pay, etc. — the dealership looks at each location's physical assets and invests in upgrading the shop equipment and bringing all employees up to speed on a common point-of-sale practices, including software, etc., Wood noted.

Depending on the business acquired, that could represent hundreds of thousands of dollars, Ward said.

While Tire Discounters growth the past couple of years has been largely acquisition-driven, building greenfield stores is still an integral part of the strategy.

Is there a measurable difference in the cost of opening a store versus acquiring one?

Ward said while the greenfield route might seem more costly up front — especially considering that construction costs have risen 40% to 50% in the past few years — longer term the costs even out as acquired stores are brought up to Tire Discounter operating standards.

In some cases, Tire Discounters will opt to replace or relocate a particular point of sale for various reasons. In a number of cases, Ward and Wood noted, the owner(s) of an acquired dealership dealers already has acquired property adjacent to the store location anticipating growth.

"That allows us the opportunity to rebuild on the same site," Ward said.

One transaction this year, Butler Tires & Wheels in the Atlanta area, stands out, Ward and Wood noted.

That business, owned and operated by Craig Dobrin, Dani Freedman and Gary Port, stands apart from Tire Discounters' traditional business in that it's lower volume but higher average ticket, Ward said, and has a strong track record in selling wheels and wheel/tire packages.

"When Chip started, (Tire Discounters) was wheels and tires only and catered more to the high end," Ward said. "Over the years we've grown the tire and auto service side of the business. What was missing was a wheel component."

Because the Butler business model is distinct from Tire Discounters', the brand will continue to stand alone, and there are plans to expand it both within the existing Tire Discounters' footprint and in areas adjacent, Ward said.

"When you have a Lamborghini or Ferrari in your service bay," he added, "you have a lot more invested. We (Tire Discounters) were missing out on a lot of higher-end tire/wheel packages."

Anna Wood — who recently was recognized by the Cincinnati Business Courier as one of the leaders in the region in its annual class of Women Who Mean Business — is overseeing the integration and growth of one of Tire Discounters' complementary acquisitions, the auto glass repair/replacement business.

That business, acquired in late 2021, is being renamed Chip's Auto Glass in a tongue-in-cheek double-entendre kind of way, Wood said, paying homage to her father and the business' main function.

That business is expanding rapidly, up to two brick-and-mortar stores with one more under construction and 28 mobile vans serving varioius markets throughout Tire Discounters' footprint.

A key element of this business, Wood said, is ensuring that that its technicians have the proper tools and training to carry out recalibrating vehicles' ADAS (advanced driver assistance systems) after a windshield repair or replacement.

Because vehicle alignment often comes into play in this exercise, Tire Discounters sees significant potential for business overlap between the auto glass and traditional tire service areas of its business, Wood and Ward noted.