Case Study: How Time Dictates Shop Capacity
SHOP STATS: Einstein's Oilery Location: BOISE, IDAHO AREA. Operator: Michael Meuret and Stephen Taylor Average Car Count: 45-50 Staff Size: 105 Shop Size: 12 locations; 2 bays each Average Ticket: $80
Time is money. The idiom is as fundamental in the quick lube world as the oil itself. Optimize bay time and you can increase car counts. Increase car counts and, well, you’ll be doing just fine in this business.
But the constraints of space and time have their limits. Oil must be drained. Services must be checked and double checked for quality. On a good day, cars must wait in line.
At a certain point, time dictates another part of the business: capacity. Sure, operators would love to have exponentially larger car counts. But customers don’t see it that way, particularly if there’s always a line to slog through.
“What’s your point where the customer says, ‘I just can't wait longer than 30 minutes?’” says Michael Meuret, co-owner of the Einstein’s Oilery network in Idaho.
Operators have variables with which to play. Adding labor can help with speed or overcrowd a bay. Adding a shop is an expensive proposition. How can those forces be balanced?
Meuret and his team have considered these questions and have a case study in capacity management.
Think of the most steady times of the week at your shop. It’s probably between Thursday and Saturday, 10 a.m. to 4 p.m. or sometime nearby. How long is the average customer waiting?
One challenge is always to get a quicker experience for the customer without sacrificing quality. But that’s just scratching the surface. More specific to your operation, the real challenge here is how you can manipulate your variables to gain speed.
“In those times, if you can't move those cars or keep them under a half hour wait, you’re probably going to get to a point where you’ve got to do something differently,” Meuret says.
You can shift staff or add staff. Add a bay or add another location. Improve your process to reduce service time. Each shop has its own variables, and Meuret says there are a few things to consider.
Meuret says that some operators might look at him sideways when he schedules at least a dozen people for a busy two-bay shop. That’s two pit techs for each car, two hood techs for each bay, two running customer contact in the line and two more doing courtesy services in that queue.
“On a busy day, we bring enough personnel and do enough things in advance as far as queuing the car that once you’re on bay, it’s five minutes,” Meuret says. “The customer doesn’t feel that they got any less because they were receiving all the attention in between while they’re waiting.”
To accomplish this, Meuret pays close attention to his process to make sure there aren’t bottlenecks with that many people. Management must keep a sharp eye on that efficiency.
But while his labor cost might be a bit higher, there’s nothing like a smooth operation to keep customers happy.
“I'd rather pay a little bit more in my labor costs in order to create a higher top line and, ultimately, a better bottom line,” he says. “While you might be losing some margin on your labor cost, you obviously just increase volume in gaining margin in your other fixed costs.”
Consider Options for a New Locale
Expansion is a good thing, as long as the operation is ready. Meuret’s 30-minute rule is a factor that led him to consider adding a location, though it shouldn’t draw car counts too much away from the first shop.
If you’ve manipulated the variables in one shop and customers are still waiting too long, then it might be time to consider another location. Of course, competition sometimes dictates this as well.
“I’ve opened some locations that are taking 30 percent from existing locations,” he says. “Our intent in that expansion wasn’t necessary to remove cars from shops that were too busy, but there were markets that were growing, and if we didn’t move into those markets, our competition likely would.”
Einstein’s has expanded to 12 locations in the same number of years, and some are in close market quarters with each other. But the growth has been sustainable for the brand.
Which KPI to Chase?
There’s a philosophical debate over which key performance indicator shops should chase: car counts or ticket averages. It’s baked into the time-as-capacity idea, because the theory is that higher car counts typically mean quicker service times. Higher ticket averages often mean longer service times (and lower car counts). The debate intensified as car counts have suffered across the board for most of the industry. Which maximizes profit?
For Meuret, the core of the business is the quick, simplified service.
“I think a lot of people are trying to offset longer oil change intervals and drops in car counts for a variety of reasons,” he says. “They’re trying to supplement with ticket averages and supplemental services, but I think you’re ultimately reducing car count even more.”
It’s always going to be a balance, because techs can still recommend additional products that will help customers. But if the customer is the focus, Meuret says that the short service time should be as well.
Einstein’s Oilery shops offer additional transmission, radiator and other services, but Meuret says they account for less than 15 percent of sales.
There’s still room for a quality ticket average. That’s come in large part from the types of cars that are more often coming into the shop. Newer vehicles are more often coming along with more specific manufacturer recommendations.
“We’re at a point now where so many cars are requiring full synthetic oil and customers opting for high mileage oil,” he says.
Those synthetic oils have grown to be 75 percent of oil sales, and it has helped keep his operation’s tickets strong, even though car counts are the priority.
“I understand it’s hard. You’ve got to incentivize employees to offer your products and services,” he says. “But that’s not your purpose. That should just be a byproduct, in my opinion.”
Customer time underpins Einstein’s commitment to car counts as well as its capacity and expansion strategy, and it has worked as the company looks to expand its geographic reach.
If the system can handle it at the same level of quality, there isn’t necessarily a car count limit to a shop’s capacity.
“I don’t know that I've ever reached a capacity at any shop in over 23 years,” Meuret says. “And I’ve had shops that get up to 60, 70 per day.”
While there isn’t a limit to a shop’s appetite for cars, the limit lies in the customer’s appetite for wait times. An expectation forms, and retention is earned when a customer expects to get in and out in a reasonable amount of time.
One of the big secrets here is that Einstein shops really focus on maximizing the time before the car reaches the bay, and employees are doing that role all day. Then the actual bay time is minimized.
“I don't think there can be enough said for getting things queued,” Meuret says.
However you measure success in your shop, the conversation of capacity should start with a measurement of customer time.