If the Fast Lube Fits, Add It
Research is critical to a quick lube's success
By Gail Stout

Reprinted with permission from Modern Car Care, the premier magazine of Car Care professionals.
For more information, visit www.moderncarcare.com.

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When people are in the mood for cleaning their cars, the next logical step is often a 3,000-mile oil and filter change. Many of these customers are getting this service and more at carwashes with fast lubes on site.

While the idea of adding a quick lube is enticing, operators need to carefully research the feasibility of adding this profit center to their locations. Walt Gislason, owner of Walt's Car Wash in Wilmar and Alexandria, MN, has fast lubes at both of his locations. The Alexandria carwash also has a convenience store, tunnel carwash and a Buff N' Shine machine. Though he has been in the fast-lube business in Wilmar for more than 20 years, Gislason spent about three years researching adding a fast lube to his Alexandria location.

"I went to different schools to see how to do it," Gislason says. "I visited different oil-change operations, even though we already had one in Wilmar. In Alexandria, I built a three-bay side-by-side. I wanted to be certain that it would be absolutely right for the Alexandria site. We didn't make too many mistakes when we built that one. It caught on right away, even though it's off premise, just a block away from the carwash. That was the only way it would fit."

The research necessary for adding a quick lube, according to Gislason, is similar to research done prior to adding a conveyorized carwash. "The first [thing] to ask yourself is: What is my reasoning for wanting to go into the oil-change business?" Gislason says. "Is there a real need by customer demand or is an oil company trying to influence me into building? Will I be able to finance the project through my own bank or do I have to depend upon financing from an oil company and thus be obligated to their demands and products for the next five or so years?"

Other questions Gislason suggests operators ask include:

• How visible is the proposed site from each available direction?
  
• How high is the traffic count and how slowly will cars be travelling? (Traffic should be under 40 mph so customers can spot the fast lube right away.)
  
• Is there a stop sign or light within a block of the site?
  
• How available are clean-cut, impressionable, courteous, honest and efficient employees? (They're key to increasing sales.)
  
• What are the city sign ordinances on freestanding and building signs, zoning and general building codes?
  

Seeking outside expertise

Many carwash operators turn to fast lube franchises when adding an oil-change center.

Many carwash operators turn to fast lube franchises when adding an oil-change center. Carwash operators looking to boost profits and increase traffic by adding quick lubes to their existing sites might turn to a franchise company or a supplier. Going with a major franchise company offers instant recognition, training assistance and continued support. However, it also forces an owner/operator to pay a franchise/license fee of up to $35,000 and a royalty fee of up to 7 percent. Going with a major supplier usually does not require fees, though the partnership generally obligates the owner to carry and use the supplier's products. Even though it is not a free ride, the expertise and assistance of many of these major firms can prove advantageous.

John Brant, fast lube director at Phillips 66, Bartlesville, OK, helps many owner/operators move into the quick-lube business. Brant says that part of the research involves looking at area demographics. "A fast lube typically draws its customers from a three-mile radius around the business," Brant says. "It depends on having good residential housing in the area, since 80 percent of a fast-lube business is personal automobiles; the rest is fleet business. A good site must have some destination-type shopping in the area and offer excellent visibility to the fast lube. Remember, people change the oil in their vehicles three or four times a year, so they need to see the fast lube sign on a regular basis and keep it in mind. Out of sight; out of mind."

Paul McCusker, product manager, Automotive Lubricants and Installed Programs, for CITGO Petroleum Corporation in Tulsa, OK, says the first step is to determine the viability of a potential fast-lube business on an existing carwash site. "One factor to consider would be the existing level of carwash business. Is it mature, successful and in need of site-revenue expansion?" McCusker says.

Conduct an informal survey and listen to what the carwash customers are saying. Consider the staffing resources. The same analysis that went into the carwash development should go into the fast-lube decision as well, he asks.

When choosing a site, the first step should be a physical evaluation to determine property size/availability, ingress/egress points, layout and orientation of the fast-lube building. "Next," McCusker says, "a formal site analysis should be completed that takes into account the demographic and competitive forces in the fast-lube trade area that will add to or detract from the potential of the business. The survey should include traffic count, population trends, registered vehicles and competition. All of these factors can be rolled up within designated radii and a market potential car count can be determined. From here, the operator should complete a projected income statement and make a business decision whether or not to proceed with the project."

Once an owner/operator decides to build a lube and considers the franchise vs. supplier partnership cooperative efforts, the next consideration is where to build. Gislason favors building the lube on the same property as the carwash, gas station and convenience store. First, operators need to make sure there is adequate space, that it's visible to traffic and that there's enough stacking room without causing congestion for that traffic that exists.

"The devil is in the ownership details," says Gislason. "It's awfully nice to have an oil change in the same location as your carwash and convenience store like we have here at our Wilmar location...And, for customers, to have a carwash, gas station and oil change at the same location helps because it draws customers from one to the other. People want a one-stop shop. It's a phenomenal concept. Just because you have a carwash there is a plus."

One bay, two bay, three bay, a dollar

Once an operator decides to build a fast lube at a carwash, he needs to determine what size location he wants. Brant says, "I would always start with a two-bay, and if your numbers are going to be up in the 40s, consider a three-bay. This is because when you're providing other services like transmission fluid exchanges, antifreeze flush and others, you can keep the oil changes happening without making customers wait longer than normal."

"Base the decision on property size, potential car count and the amount of value-added services that are planned for the fast lube," McCusker says. "Normally, one bay per 25 cars per day is a basic rule of thumb."

The next step is finding a builder. Brant suggests using a local builder who knows the fast-lube industry. "Any reputable contractor who can handle your specific blueprints would be fine," Gislason says. "It's often more important to ask a contractor to commit to a completion date than to a start date. Most contractors will offer to start tomorrow with only one person available just to get the contract."

The next consideration is what type of equipment to include in the new quick lube. If the basic lube, oil and filter services are performed, then at a minimum plan on having the following: bulk and packaged lubricant storage and dispensing equipment, a catwalk system for the pits, a computer system, an air compressor, water and used-oil storage, McCusker says. If an expanded service offering is planned, then consider a vacuum, windshield washer fluid and coolant recycling.

Brant suggests that operators with questions seek help from the experts. "Oil companies have national account programs with the major lube-equipment companies to help with keeping down the cost of equipment. The local oil distributor you go with will know and use a lube-equipment distributor. This equipment distributor typically helps with layout and installation. We have a preferred vendor list that covers equipment, uniforms, software, insurance and other items."

The right number of employees

"Don't under-employ," Gislason says. "Too often management worries about dollars rather than covering the needs and desires of customers. That is a dangerous answer because it is a delicate balance. But all too often I see customers neglected when management is saving on pennies rather than taking the risk to build volume."

Staffing, according to McCusker, depends on the day of the week. Thursday, Friday and Saturday are the peak days. Typically, two to three employees per bay are adequate at peak periods plus a greeter and a cashier, he says.

Brant adds that it takes time to find the right balance between full and part time. "Usually you have about half as many part-time people as you do full-time," he says. "Also, at startup you will need only two to three full-time people." As the business grows, an operator needs about one employee for every 10 cars, depending on the type of services offered and how the add-on sales are performing.

Another important decision to be made is the type of computer-management equipment to purchase. An information-management system is a critical item in today's fast-lube environment because of its many benefits, McCusker says. Inventory control, proper lubricant and filter use, billing, customer tracking, staff information and scheduling, and countless other tasks are all part of the data management offered by a computer system.

Once an operator determines what computer software and hardware systems meet his requirements for cost, ease of use and tasks performed, service separates the men from the boys, Gislason says.

"Many oil changes began without individual invoices and later determined what their needs would be," Gislason says. "If you know at the outset when high volume is imminent, ask for a reference list of long-time users from the computer companies you are considering."

Operators considering building a fast lube next to their carwash will find out that land, building and equipment may cost anywhere from $200,000 to $500,000, Gislason says. Operators should take their time and learn all they can about the potential for success. A certain volume of business is critical to survive. Thirty cars a day can provide a good profit, Gislason says. Do you have enough traffic for 50 to 80 cars a day? Eighty cars a day for a two-bay--now that's a business worth considering.