I, Fast Lube
(Continued)

We also divided our “additives” question by category. As we’ve done in past years, we asked lube shops whether they sold additives. However, this year we also added questions about the main additive types (we realize there are types we omitted, but we focused on the most common products offered by additives manufacturers and blenders). What we discovered is that pour-in cleaning products like oil system cleaner and fuel system cleaner are the most popular (offered by 87 and 78 percent of shops, respectively). Also popular are ATF supplement (offered by 68 percent of shops), gear oil supplement (51 percent), coolant treatment (47 percent) and diesel fuel supplement (46 percent).

Finally, lube operators report that their most popular additives (oil system cleaner and fuel system cleaner) are, not surprisingly, popular with customers: 4.9 percent of customers purchase oil system cleaner and 3.1 percent of customers purchase fuel system cleaner, on average.

INSURANCE
Technically he’s an android, but we can’t imagine a robot more suited to handling warranty claims and insurance issues than Data, from the “Star Trek: The Next Generation” TV show and movies. After all, Data has no emotions, so he’ll be unflappable when angry customers are berating him, and his positronic brain would allow him to gather reams of, well, data on insurance rates, allowing your shop to pick the very best company.

Which could be a good thing, as our survey shows that the average cost of insuring a fast lube facility climbed to $6,341 from last year’s figure of $5,636. Plus, Workers’ Comp rates climbed to $5.81 per $100 of payroll, up from last year’s average of $5.01.

As we noted, Data the robot would come in very handy when dealing with warranty claims, which rose last year. Industry-wide, the average LT30 store paid $1,155 in claims, while the average MT30 store paid $1,742 in claims.

ADVERTISING
You want customers to notice your shop, right? Well, try employing a 300-foot-tall mechanical super-lizard with a mouth-mounted laser beam. That’s right, put Mechagodzilla (from the 1974 classic “Godzilla vs. Mechagodzilla”) out in the street in front of your shop and customers would have no choice but to drive through your bays. (Check your local sign ordnances to see if this is a legal option first; don’t say you weren’t warned!)

When it comes to what works in the advertising realm for lube operators, reminder cards continue to be popular, employed by just more than half of all shops. Nearly three-quarters of those cards are discounted, as well, which could help explain why operators report that nearly one in four customers redeem a coupon of some sort.

Finally, the lube industry is slowly but surely catching up to the digital age, as 54 percent of shops now report they have a presence on the World Wide Web, an all-time high and up from just 38 percent last year.

THE FUTURE
So what does this year’s survey tell us about the industry? Well, though car counts were down, they were down only slightly. Statistically, the difference was within the margin of error for the data, essentially meaning car counts were unchanged, the first time in a long time we’ve been able to say that, and possibly indicative of a stabilization in industry car counts.

Even though lube operators didn’t raise their LOF prices much in the past year, they added more and varied services and pushed their average ticket up a respectable amount. Combine that with stable car counts, and it made for record per-store gross sales across the industry.

Not only that, operators appear to have cut both labor and COGS expenses significantly, allowing them to recoup higher net profits. At the end of the day, the survey speaks of a lube industry that has not only weathered the storm, but experienced positive growth during the preceding 12 months.

Finally, there’s one more statistic we would be remiss in not mentioning, one that speaks volumes about how operators themselves view the health of the industry. In 2000, we began asking operators if they would consider selling their shops during the next year. Between 2005 and 2008, no fewer than 10 percent of operators responded they wanted to sell, peaking at 11 percent in 2006. However, last year only 7 percent of operators said they plan to sell their shops soon. And this year, the number was down to 5 percent, the lowest on record. Perhaps this signals a sea change in the industry, with many first-generation operators having retired and sold their shops. Certainly we know of much anecdotal evidence that supports this contention, and we can hope that this new generation of owners will bring a new level of energy, creativity and inventiveness to the industry as it prepares to face a new era.

Which is where our last robot comes into play. No, you wouldn’t want the T-1000 from 1984’s “The Terminator” working at your shop. No point in scaring off customers, now is there. But let’s use it symbolically, to look past the difficulties the industry has endured and peer into the future, where we can tell whatever challenges that arise — “You’re terminated!”

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