Case Study: Where Others Failed, This Operator Succeeded
SHOP STATS: Mr. Oil Xpress Lube Location: Sebastian, Fla. Operator: John Malek Average Car Count: 70-80 Staff Size: 12 Shop Size: 1,800 sq. ft. Average Ticket: $55
There’s an idea of the cursed location in the commercial real estate world. It’s the perception that, for some unknown reason, despite a busy site and healthy market, businesses are doomed to failure there.
It’s common in the restaurant business, which can be a bit more turbulent than others. There’s a building on a popular street in Minneapolis that has seen six different eateries fail in seven years, for example. The latest closure was in late 2019.
Boston Globe food columnist Beth Teitell wrote in 2016 about the apparent location curse in the restaurant biz, saying that it’s less supernatural and more situational. Sometimes, the exact wrong set of circumstances coincide to a punishing degree for owners.
Some of Teitell’s points might be familiar to shoestring quick lube operations.
“In a business with notoriously tight profit margins, where seemingly surmountable things can become significant,” she wrote, “one failure makes the next more likely.”
This is how things looked for one quick lube shop in Sebastian, Fla. Situated right off the state’s well-travelled U.S. Highway 1, with ample signage, multiple operators came and went and just couldn’t seem to get it going.
“Nobody could make a difference in the facility,” says John Malek, the shop’s current owner.
In those days, Malek leased the shop and saw operators come and go. First, it was a mechanic who lasted five years. Two more operators came and failed after that.
In all, it was 15 years of sputtering.
Fast forward to today, and the shop routinely sees more than 70 cars in a day. Malek has found the reasonable conclusion that locations aren’t actually cursed. They just need to be successfully managed.
What exactly did he do to turn the location around? Well, that’s for Malek to know—and for you to find out here in NOLN.
The change for Malek when he sold the self storage and quick lube properties in 2015.
Even after 15 years of slow-to-nil business, Malek was intrigued by the quick lube shop. He thought he could turn it around. Plus, it helped sweeten the self-storage sale to have somebody ready to run the quick lube.
“Made more sense in the sale,” he says.
On the first day, Malek says they saw fewer than a dozen cars. He wondered if the curse was true for the site. But steadily, things started to pick up for his shop, which he named Mr. Oil Xpress Lube.
“We watched it grow in the last almost four years, and on the first day we had 11 cars when we opened up,” Malek says. “And I said, ‘OK, we’re going to go from there and take it as far as we can get it.’”
Hire for personality
Malek doesn’t hire primarily for technical automotive acumen. For those 15 years of slow business at the site, mechanics were the operators.
“These mechanics really don’t want to sell,” Malek says. “They want to change the filters, drain the oil and top things off and go. They’re not sales people. I didn’t hire salespeople, but I hired for their personality.”
Malek says that hiring for personality was the biggest change he made at the shop. He looks for people who can work well with customers and brighten up the place.
“We want people who have a smile on their face, number one,” he says. “Number two, they have to really relate to the customer, whether it’s the first time or the fifth time.”
The strategy pays off, both for his business and his employees.
“We kill them with kindness is what you do,” he says. “And they respect it. We have two tip jars in there. I put ’em up from day one and said, ‘Listen, you guys are going to make these tips.’”
Malek says the average daily tip haul is $20 for each employee.
Rethink the product
As Malek contemplated the business of quick lubes, he thought about the product itself. Ostensibly, the products are oil changes and similar quick maintenance services.
But he thought about how the customer views that product. It’s preventative. It’s not like a tire falls off and so it needs fixing—cause and effect. It’s really just a mileage number or an oil life indicator that justifies the need, and it’s really easy for customers to ignore.
Moreover, when the customer leaves, they might gain a little piece of mind about the health of their vehicle. But they aren’t coming away with anything tangible.
“Customers don’t have that ability. They can't see, taste or feel the thing that we do for them,” Malek says. “I have to give them my credit card and spend $35, and I’ve got nothing to show for it.”
Malek changed his view and focused on the takeaway as being the customer experience. All operators consider the customer experience, but consider it as the core product and it might change some business priorities.
The service component always has to be there, but the customer should take away an experience that they will tell someone else about. That’s a more tangible result.
“If you can't give them something in a bag or a box, you have to treat the customer right,” he says.
Follow car counts
The top operational metric at Mr. Oil is car count. Malek says that the focus on volume and speed has been a good mixture for this location.
“The car count starts number one,” he says. “The more cars you can get in, the more revenue you’re going to generate.”
There is some debate over whether to focus on exclusively quick service and high car counts or lower car counts with higher-ticket services that take longer to perform.
It’s the former that has worked for Malek. Speed is the name of the game, and he keeps customers in the car during service with that in mind. It also lets customers interact with the techs, who, if Malek followed his hiring strategy, have cheerful demeanors.
The car count strategy is also reflected in Malek’s pricing strategy. That’s how he won over some customers in the early days.
“We came in with some good prices, low prices to start off with,” he says.
In 2015, Mr. Oil started by offering a $19.95 oil change. It has gone up a couple times since then, but the basic oil change service stands at $29.95 today, and he says there hasn’t been much customer drop-off. The full synthetic AMSOIL oil change is advertised starting at $59.95.
The quick lube business has been good to Malek. He’s seen his business grow where others have foundered.
“I think it shows, obviously, on the daily sales,” Malek says. “That’s what’s improving it. We don’t jam anything down their throat. If we need something, we show it to them. And we let them know that you’re supposed to have your rear end differential changed in x amount of miles”
He says he takes the trust factor very seriously. It’s the trust from a customer, who might not know how or when a differential fluid needs changing, and putting them more in control of that decision.
Besides sales, Malek points to another metric that makes him proud.
“Our average, on repeat and new customers, I’m looking at last month,” he says. “We run about 28 percent daily of new customers coming in and 72 percent repeat customers.”
That’s proof of the trust, he says.
Why Malek took over a quick lube site that had 15 years of operator turnover is perhaps something only he knows. He had the confidence to see it through.
“I’d been in a lot of different businesses, and I knew that a lot of them could work,” he says. “It’s just a matter of taking care of your customers.”
By taking a true customer service focus and using an enticing pricing scale to start off, Malek turned it around. It’s an example of the oft-repeated saying that quick lube operators are in the people business—they just happen to change oil.
As for Malek, he says he’s just warming up.
“I’d like to open up two more. I love this business.”