What Makes the Modern Quick Lube?
Longtime quick lube owners know that modernization happens in little pieces.
Software and equipment are updated here and there. The service process itself has evolved quite a bit over time, but change has come slowly—in the non-pandemic setting, that is.
The big changes often happen during a change of ownership, when a fresh set of eyes identifies some of the weak spots that may have been previously overlooked. That was the case for Jeff Perreault, who owns Mike’s In and Out Oil Change in Alexandria, Minn.
Perrault worked for years in the dealership world, but he knew he wanted a change. One day in church, he was approached by the former owner, who asked Perrault to take over the shop. That’s more or less how it came together. Perrault has kept up a successful operation since taking over in 2018.
One staff member that Perrault inherited was a clerical worker who came in to do the books on a weekly basis. She manually logged shop KPIs and service data.
He also had a shop management software program that could have done that same work. Under pressure from the COVID-19 pandemic, Perrault ended up cutting that clerical position. At that point, he realized the full potential of his shop management software system.
Broadly speaking, the software yields better numbers than manual bookkeeping.
“You had to do it manually, and honest to god, I couldn't tell you what my labor cost was per oil change,” he says. “I had a gut feeling from being in the business for years.”
Now the data come in with greater detail and in real time. The best part was that the software was already in place at the shop. It was just under-utilized. The change was small, but the impact was great.
That’s just one of countless examples of modernization steps that shops make on a regular basis. Some are major; some smaller. All are intended to boost efficiency and give owners more information to inform their business decisions.
This month, take a broad look at shop modernization from the perspectives of three owners. It’s not just technology that makes a modern quick lube. Labor, equipment, and operations also play their parts. Perhaps the most important upgrade a shop can make is modernizing the way they serve customers. It’s all here in these four fundamental areas.
When Perrault took over his shop, he found that at the time that the previous owner first purchased the software, eGenuity, it only tracked inventory. When the program expanded to perform more functions, it wasn’t updated and incorporated at the shop.
“When he [former owner] purchased it, that’s all it was used for,” Perrault says. “He wasn't looking for time management.”
Software and technology is the most obvious point of modernization, and that’s because it’s effective. After Perrault cut the clerical position, he fully implemented the shop management software. With employees clocking in and out on the program, he was able to track labor and make payroll much more quickly. With POS functions linking to the software, he was able to watch his sales information change after each ticket.
The level of detail is great. The ability to react and adjust in near-real time is where the real impact comes. If sales in a certain area become sluggish, Perrault is able to isolate the issue.
“What you’re doing is if it starts declining, you’re doing something wrong,” he says. “OK, it’s a report card. If repair averages are going down, you can go look at add-ons and see right away that the guys aren’t selling air filters.”
The learning curve wasn’t steep, either. The software wasn’t entirely new to the shop, and Perrault says that his younger, computer-adept staff members took to it quickly.
Keeping an eye on the numbers helps to manage costs and pinpoint sales opportunities, and Perrault says it’s been good for business. One metric he’s been watching is the number of new customers, which of course he can now run in a quick software report.
In fact, during an interview with NOLN, Perrault ran a report on just that to demonstrate. Over the past month, 249 of his 2,000 customers were new.
“We’ve been running 10 to 13 percent on a monthly basis of new customers,” he says. “To me, that’s huge if you can hold half of them. That’s why our car count is continually climbing.”
What’s the biggest change to customer marketing and communication over the past 20 years? It’s the tool that modernized 21st-century life as we know it: the Internet.
More specifically for the quick lube, it’s the marketing and communication conducted online through websites, search listings and social media. Once viewed as a niche side opportunity, operators are now finding online presence to be an essential part of doing business.
Ryan Frisby, who owns two Oil-N-Go Valvoline Express Care locations in Utah, says that this is one of the biggest customer service changes he’s seen. Frisby has worked in quick lubes since 1998 and took over ownership in 2004, and has been at the helm during the height of this transition.
Nowadays, Frisby knows what most operators have found out: Customers search your shop online long before pulling up to a bay.
“With technology changing and you have things like Google reviews and things that people have access to, it’s really important that you keep your online reputation up, because people are looking at those types of things,” he says. “And if people are not posting positive things about you in the online realm, that can really affect your business.”
Online reviews, in particular, are very common when prospective customers are considering auto maintenance services. They want to see what others have said about the business.
Frisby responds to all reviews himself, and he does it because he knows that he’s building a reputation. It’s digital word-of-mouth. A strong set of reviews might be the edge he gains over competitors in attracting new customers.
“Getting our online presence out there with people to where they see that and say, ‘Wow they have 250 reviews or more,’” he says.
For operators who are already deep into the social media circles with customers and are actively managing reviews, consider this added service that Frisby does for positive reviewers.
“When we get a Google review, I actually send out a letter in the mail to say, ‘Thank you for the review. We really appreciate it, and it’s something that makes a big difference in our business,’” Frisby says. “Put a little $5 off coupon in there.”
Just like that, a new customer turns into a repeat customer through Frisby’s modernized approach.
Filter Out the Old
Let’s get back to the basics. If you’re running a top shop, you’ve got engine oil and filters arriving on delivery trucks and leaving in customer vehicles at a pretty good clip.
These items are going through a period of modernization of their own. Hopefully you caught NOLN’s October issue, which went in-depth on the industry trends toward more high-tech, synthetic engine oils over the conventional varieties. In short, the change is due to customer demands, advancing oil technology, and OE recommendations for newer engines.
Most operators are already moving to a synthetic blend or a full synthetic as their main bulk oil, but have you reviewed your filter inventory?
Robert Repka, who runs Kwik Kar Lube and Tune of Crandall, Texas, saw the writing on the wall. He’s been in the industry for 21 years and witnessed the transition toward synthetic oils.
“As the other oils started coming in, like the 0W-20s, we were using them in eco boxes or quarts,” Repka says. “As we started using more gallons of that than we were using in conventional, we pumped the conventional until it was almost out. We brought the used oil people in, and they sucked the tanks dry and put the new 0W-20 in that.”
Now blends and synthetics occupy his bulk tanks, while conventionals are relegated to quart containers.
For Repka, a higher-quality engine oil called for a higher-quality oil filter. And that doesn’t go for just drivers with full synthetic oil—that goes for everyone.
“Pennzoil makes a regular filter and they make a high-performance filter. I’ve gone strictly using high-performance filters, because most cars today require semi-synthetic or full synthetic,” he says. “Customers haven’t complained a bit.”
Even on conventional oil changes, he outfits vehicles with a high-performance filter. Repka says that the cost is about an additional $4 per service, which is passed onto the customer.
He says that if someone does complain about the service price that includes the quality oil filter, he explains the quality of the product for the operation of the vehicle. That usually does the trick.
“I’ve been using high-performance filters for about two and a half to close to three years,” he says.
Frisby’s original Oil-N-Go shop was independently branded until about 2011, when he opened up a second location and signed on with Valvoline Express Care. Before and after that transition, he knew that modernization meant adding service value for customers.
That’s especially true as car counts industry-wide have waned, leaving shops to find ways to boost tickets.
“We have fewer vehicles due to additional competition and extended miles and other things that have changed,” Frisby says. “Modernizing is keeping up with the equipment needed to service newer vehicles.”
Each additional service comes with its own training and equipment needs. When Frisby added air conditioning service, he had his staff trained for refrigerant work from the Mobile Air Conditioning Society.
One area that has been a moving target is in transmission service. It was a welcomed change years ago when updated machines were able to flush fluid through the dipstick opening rather than through the radiator.
“Then these newer machines came out and we were able to do it through the dipstick, which was great because you weren't disconnecting lines,” he says. “It was much more convenient to work on. But now you’re getting back into cars that don’t have the dipstick.”
More and more vehicles are coming out with transmissions that don’t have dipsticks. Modernization in transmission flushes means more training for a longer service process, which means that Frisby once again had to update some equipment.
While that might sound like a headache at first, Frisby says that the upshot is that newer equipment generally has a more efficient design.
“Definitely, equipment is getting better because they make it more tech-friendly,” he says. “And that is one advantage of upgrading equipment.”
Worth the Wage
In 1938, federal legislators set the minimum wage at a quarter. That would be about $4.54 today, which is just over $9,400 annually.
Wages have grown substantially since then, with state and local governments most often surpassing the federal minimums. Hourly wages above $10 and closer to $15 are currently in place in lots of U.S. cities.
How does wage growth in the quick lube industry compare to overall minimum wage growth? Here’s how data from the NOLN Operators Survey compares to the federal minimum wage over the years.
Federal minimum wage
Quick Lube Industry
Average starting wage for lube techs in 2020: $11.66
Average salary for managers in 2020: $49,934.90
(Source: NOLN Operator Surveys. Thanks for Valvoline for sponsoring the 2020 NOLN Operator Survey.)
Bringing up the wage for employees is part of modernization, but in an increasingly competitive labor market, that’s no longer the only consideration.
Even at the technician level, bonus systems are becoming more common. Take Perrault for example. Once he was able to track his sales and labor more accurately, he was able to implement a sliding bonus scale.
“There’s a monthly bonus that I still have in place that pays all the employees, no matter where they are at in the ladder,” he says.
Employees can add to their hourly rate by as much as $2.25 based on sales performance of the entire team. He says it helps staff members push each other a bit more to boost tickets.
There’s another trend at play, and that’s staffing levels. It has changed a lot since Frisby took over his shop in 2004.
“Back then, we ran a three-man crew on Saturdays and a two-man crew pretty much every other day of the week,” he says. “We didn't do anything other than oil changes and air filters here and there.”
As the number of services increased, more people were needed in the shop. But that doesn’t just mean vehicle services. Frisby says that’s also due to customer services. The courtesy tech became more common in shops to establish a more informational relationship with customers as their vehicles were maintained.
“I think a lot of it is based on the customer experience, but then also the additional steps that we’ve added to the service process that we haven’t had before,” Frisby says. “So it takes additional manpower to perform a service review or to perform additional services.”
The COVID-19 pandemic threw a curveball to customer service strategies. Now instead of greeting customers with a smile, techs are learning to smile with their eyes while wearing a protective mask.
Masks are beneficial for public health during a pandemic, but they're also customer service tools. Frisby thinks of it the same way as windshield cleanings. He tells his staff that cleaning the windshield is the most important part of the service. The reason is that it has the most impact on customer perception.
“When they clean the windshield of the car, they need to make sure they do a super job,” he says, “because out of all the things we do in a service, that’s the thing they see directly.”
Trends Point to Franchises
A franchised shop doesn’t alone mean that it’s the most modernized. In fact, drawing from the experience shown in March’s “The Indy Shop Survival Guide,” an attention to trends and the ability to adapt is a hallmark of a successful independent operation.
At the same time, it’s true of the modern quick lube industry that the field is becoming increasingly franchised. The most drastic change came just after the Great Recession of the late ‘00s.
1990: 69% Independent, 31% Franchised
2000: 67% Independent, 33% Franchised
2010: 61% Independent, 39 % Franchised
2015: 30% Independent, 70% Franchised
(Source: NOLN Operator Surveys. Thanks for Valvoline for sponsoring the 2020 NOLN Operator Survey.)
Shops with fewer locations have been overwhelmingly independent. In 2010, just 19 percent of operations with fewer than 30 stores were franchised.
The Repair Question
There have been lots of shops doing repair work on the side through the years. But upon announcing its Multicare initiative in 2018, Jiffy Lube made a statement as the biggest brand in quick lube.
Today, Jiffy Lube boasts 580 locations that can do axle replacements and 453 that can do driveshaft replacements. Some 612 locations offer windshield chip repair, and 556 offer “engine services.”
The piecemeal approach to repair services reflects the step-by-step approach toward modernization, as well as the search for ticket boosters in a time of depressed car counts.
To be clear: Moving toward mechanical repair services doesn’t work for all shops. NOLN has talked to lots of operators, for whom modernization means a stripped-down, low-overhead strategy focused on oil change volume. That’s a model that can work in various markets.
For others, it’s been a process of incorporating repair services to be more of a one-stop-shop for customers’ repair and maintenance needs. That’s what Repka did at his Kwik Kar Lube and Tune. In January, he hired an ASE-certified manager and another mechanic at his shop.
With an investment in those positions and in some tools and equipment, he has been doing front-end repair, brakes, shocks and more.
“It was kind of a challenge for a while,” Repka says about adapting his shop. “About two weeks ago, we kind of rearranged everything. Moved the air filters. Moved tool boxes along one wall and got a lot more space that way.”
His is a three-bay shop, which is a good size to start in repair work while still having two express bays. With new residential subdivisions going up in his area, he wanted to make the most out of a new crop of potential customers.
The change has worked for Repka. While the repair work launched just before COVID-19 hit, he says it helped him get out of the slump and doubled his revenue from his low during the pandemic.
“Within my area, we’ve got five full-blown mechanic shops, and we’ve still got all the work we can handle,” he says.