Running a Shop Finance+Operations

How I Did It: Extreme Makeover, Quick Lube Edition

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SHOP STATS: Allied Lube  Location: 95 in Texas and Iowa  Operator: Richard Paek

Why do people renovate their homes? Not only do they want an attractive look, as they will be staring at it every single day, but it also helps to increase the home’s value. People don’t just renovate to make it attractive for them, but for buyers, too. 

A home is more likely to draw buyer interest if there’s no work to be done and it’s an attractive design. The same goes for drawing customer interest to a small business. You want to increase the business’s value and attract customers to your door. It first starts with the outside, but what makes them stay is the service and the indoor customer space. Allied Lube, a franchisee group of Jiffy Lubes located in Texas and Iowa, makes sure to do just this. As Jiffy Lube began adding its Multicare Centers to operations in 2012, Allied has not only been working to streamline the operation, but update the facade in the process. And with 95 locations to date, there needs to be a process and budget in place.

“We want to make the buildings look new, inviting, and customer-friendly,” says Bob Seidmeyer, the company’s vice president of operations.

Seidmeyer has worked for Jiffy Lube since 1991, where he started out part-time in the company’s co-op program in high school. Since then, he’s moved into bigger roles with Jiffy, and even bigger ones with Allied Lube. And throughout his career’s progression, he’s seen it rapidly grow, too.

“We have a long view to our investment criteria,” Seidmeyer says. “We’ve fortunately had the experience of getting to see stores develop over a many year period.”

Overall, Seidmeyer and his team want Allied Lube to be a customer’s one-stop shop for full vehicle maintenance solutions, and their long-term rejuvenation plan aims to do just that.

Here’s how Allied weighed its options, updated its locations and grew as a business from their renovation decisions.

Up to Par or In Dire Need?

First thing’s first: Does the current location even need a major update at all? When looking at each individual location, the most important thing to Allied Lube is making sure the location has the equipment it needs to be a Multicare location—offering tire rotations, alignment, and brake repairs, among other things. 

Some older stores were never equipped to repair equipment like brakes and alignment. The company even looked at updating the shop’s signage if the word “multicare” wasn’t included. If these things aren’t already in place, it’s an easy “yes” for Allied Lube to get to work.

Renovate or Re-do?

Everyone has heard the saying, “Location, Location, Location.” It’s all about location, and Allied Lube locations are no exception to the rule. But what does the location have to have in order to be deemed worthy of a renovation? 

First, they look at the growth of the area. Seidmeyer and his team make sure it’s an improving, vibrant area that is constantly growing and seeing investment. Even traffic counts and trade area synergy—making sure businesses haven’t closed down in the area—are hugely considered.

“If it’s a good site in a growing area, build it and they will come,” Seidmeyer says.

Once the team determines if the area fits the bill, that’s the main deciding factor if the business needs a simple facelift, or if they need to start from scratch. Seidmeyer says it’s a good tell-tale sign that if businesses are closing have shifted to a new part of town, it’s time to invest in a new location. And with this also comes two options: they could either close down the existing location for the new one; or let the building stand and have two locations in the same town. Seidmeyer says this all depends on the rent of the old location and the overall profitability of the store. If neither of these things are an issue, they may just keep it open and update what’s needed.

Comfortability or Amenities?

Seidmeyer says Allied Lube applied both to its current and future locations. The main goal is to make a building look and feel new, inviting, and customer-friendly. To make it more comfortable, Allied Lube adds in comfortable seating and a clean palette to the lobby walls. Once this is established, the amenities come into play. 

Since a customer is usually stuck and has nowhere to go during their service, Allied Lube wants to make the visit as convenient and comfortable as possible. The team adds in charging stations, a Keurig, massage chairs and a TV for a little entertainment. Allied even updated it’s bathrooms from paper towel dispensers to hand dryers and added baby changing stations for customers with small children. Overall, it’s all customer-focused for a more enjoyable visit.

Allied Lube has avoided the full facelift. They don’t want to get the stores to a point to do a full-on renovation. It’s more economical to do it on an update-as-needed basis. This way, the customer experience is never interrupted.

The Takeaway?

So, what has the investment done for the Allied Lube locations? An increase in car count, ARO, and a huge return on the company’s investment. Seidmeyer says adding Multicare to the shop’s additions has made a huge difference. On average, the shops’ car counts have increased by 5 to 10 percent, and they have seen a 10 to 15 percent increase in each shop’s ticket average.

“Our development financial platform allows for a low-capital investment and, therefore, results in an excellent return,” Seidmeyer says. “We have a strong balance sheet that allows us to have a very long-term view on our strategic decisions—we’re looking out years ahead instead of tomorrow.  And don’t forget the ROI on employee morale and company culture—growth is good.”

Along with the shops’ overall sales going up, it’s also provided a growth path for many employees. Allied Lube in general doesn’t look for outside hires for management positions; they all come up from the store level. Since starting out as a lube tech part time, Seidmeyer rose through the ranks from assistant manager to manager, district manager, director of operations and finally to his current position of vice president of operations. And since long before Seidmeyer’s arrival, this is how Allied and Jiffy Lube still grows their culture today.

“We’re not just about profits, but carefully cultivating an employee culture that provides for advancement for those who seek it,” Seidmeyer says.

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