Setting the Pace
(Continued)

Having said that, Altizer said he is a firm believer in the fast lube industry’s viability and relevance.

“I can’t imagine a change in the market where speed of service, convenience, value and professionalism will all be obsolete,” he said. “As long as we are able to offer quality, we will still be relevant as an industry.”

Not only that, but in a market that some have described as overbuilt, Altizer sees room for expansion.

“We’re not going to see the incredible pace of growth that we saw in the 1970s or ’80s — there’s too much competition in the market today,” he said. “But there are still new areas; new neighborhoods and subdivisions, where we could see ground-up growth in fast lube facilities. Guys who crack the code on the right combination of location, facility size, number of bays, etc. will prosper.”

In fact, Altizer said he could see the industry adding from 200 to 500 new facilities each year to keep pace with a growing population driving a growing number of vehicles, all as the percentage of people who perform their own automotive maintenance continues to decline.

That doesn’t mean that all Jiffy Lube franchisee growth will be organic.

“As the market has become more competitive, we are seeing an ongoing consolidation,” Altizer said. “There are a lot of first-generation owner/operators looking for an exit strategy, and a number of our franchisees will continue to expand through acquisition. This is something Heartland Automotive does very well. It’s simply a natural market progression.”

Though Altizer said Jiffy Lube as a company does not plan on catering to low-cost oil change customers — though he admitted some franchisees do play to that market — he also said not all new lube facilities must be built to the high-end level that will allow them to compete directly with auto dealerships.

“We have seen some growth in high-end stores who compete in the dealership space with big facilities, leather chairs, big-screen TVs and other amenities, but the purpose of our re-image was to raise the standards of the average Jiffy Lube,” he said. “As an industry we’ve done a better job of making things nice for our customers with clean waiting areas, play areas for kids and clean restrooms. I see that continuing.”

Plus, Altizer said he does not believe fast lubes will have to become “one-stop shops” in order to be successful.

“Customers will always want convenience, fast service and value, and that won’t always mean a one-stop shop,” he said.

This is not to say that facilities with multiple profit centers won’t enjoy a competitive edge. “We have a number of franchisees who have invested in facilities that add carwashes or other service centers to the Jiffy Lube model, and they tend to be very successful,” Altizer said.

For JLI and its family of franchisees to be successful long term, Altizer said the company cannot stray too far from its core business model, which is why he said the company plans to only add fluid maintenance services that make sense to the menu of services provided by Jiffy Lubes.

“We need to maintain that ability to provide quick, convenient service,” Altizer said. “That said, we have a track record of innovation, and we’ll continue to look for maintenance services that are a good fit.”

Like most of the industry, JLI and its network of franchised stores are facing market pressures like falling car counts, extended drain intervals, a difficult economy, etc.

“This industry was built on the tradition of 3,000-mile oil changes, but the reality is that OEMs are no longer sticking to that standard. Our heritage is to tell customers what the OEM recommends or use a reputable third-party recommendation if there is no OEM guidance regarding a service interval,” Altizer said. “The sweet spot for us is to educate our customers and let them make their own choices.”

Which doesn’t make accepting new OEM recommendations any easier. “For some of our franchisees, it will be a bit scary to abandon the 3,000-mile interval,” Altizer said.

However, there is an upside.

“As oil change intervals extend, they become more connected with other fluid maintenance services. There could be a big opportunity for service package A, service package B and so on,” Altizer said. “In that respect, lube shops will have to compete more with dealerships.”

At least for the foreseeable future, Altizer said the industry has a bright future. The economy, at some point, will improve. The U.S. population will continue to grow. The car park population will grow. And fewer people will want to service vehicles themselves. Even new technologies like hybrid propulsion and alternative fuels won’t have major markets on the impact for at least a decade, Altizer predicted.

To that end, and with a few tough years behind it, Altizer said Jiffy Lube will remain a leader in the industry.

“We want to help re-invent the category we helped create, a business centered on quality, speed of service and convenience,” he said. “We believe our leadership will benefit the entire industry.”

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