2011 fast lube operators survey

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In other words, one million miles is, in the human scale of things, a loooooong way. Yet more and more vehicles these days are turning up with that magic number on their odometers. And I’m not talking about over-the-road trucks, either, since those big-rigs are built to endure such long distances. I’m talking about the very same passenger vehicles most of us drive every single day.

So how does an individual amass one million miles on a single vehicle, especially when a typical vehicle’s lifespan is around 145,000 miles? Obviously you have to drive. A lot. But beyond that, most of the people who have accumulated seven figures on their vehicles’ odometer insist that regu-lar maintenance is the key to making a car or light truck last and last. That’s where fast lubes come in, providing a valuable service to millions of vehicle owners — some of whom may very well have their own mil-lion-mile car or truck someday.

Despite what could at best be described as a challenging past half-decade, the lube in-dustry continues to enjoy strong, albeit flat, overall sales. This year, the approximately 16,700 shops that make up the “quick lube” category (which we define as any business that earns more than half its revenue from automotive maintenance) will sell an esti-mated $9.04 billion in automotive services,

a mark bested only by the $9.23 billion sold in 2008, a time when the average lube shop was servicing nearly four more cars per day than this year.

In 2011, we estimate the industry will perform nearly 161 million oil changes, an average of nearly six oil changes every sec-ond of every day!

We know these statistics because of our annual Fast Lube Operators Survey, a com-prehensive study of the fast oil change in-dustry. Every year for the past 24 years, we’ve asked fast lube owners, operators, managers and corporate chiefs to anony-mously share information about their op-erations. Once again, the response has been

overwhelming, as nearly 300 companies representing an astounding 4,451 facilities responded to our survey, either via mail or online. We know it isn’t the easiest ques-tionnaire in the world to complete, but the data it contains is vital for the industry, and we offer our most sincere thanks to those who gave of their time and effort in order to make this survey as complete as possible.

Before we analyze the results and attempt to interpret any trends apparent in the data, we have to discuss how the survey is sorted. Each year, we receive responses from more than a dozen companies that operate, on average, hundreds of individual facilities. If you combine data from these question-naires into the survey at large and then weigh the data (as is our survey’s typical methodology on select questions), it can create rather sharp statistical swings. That’s why we divide the results of our survey into two categories. The first represents those lube companies operating less than 30 stores

(henceforth known as LT30 operations) and those operating more than 30 stores (hence-forth known as MT30 operations).

The data from the LT30 category provide a real-world glimpse of the per-store aver-ages for a “typical” independent fast lube, while data from the MT30 category provide a unique perspective into how larger cor-porations are faring in their own attempts to speed ahead of the competition. Taken together, the data yield a clear picture about the state of the industry.

We have to note, too, the contribution of CITGO in presenting this survey. In some years past we have only presented a por-tion of the data collected, distributing the

rest solely to our paid subscribers and oth-ers willing to pay a premium for the sur-vey. Thanks to CITGO’s sponsorship of this year’s survey, however, we’re able to present all the results from this industry study.

Read on to find out how the industry is far-ing this year, along with taking a glimpse at some notable vehicles whose odometers have turned past that magic million-mile mark.

OPERATIONS

The Car: 1990 Honda Accord The Driver: Joe LoCicero; Norway, ME

The most recent vehicle to join the “million-mile” club is this Honda Accord, which was

ne million miles. It’s like driving 10,000 miles a year…for 100 years straight. It’s like driving around the

earth’s equator…40 times. It’s like taking a round trip to the moon…twice. It’s so far, in fact, that it takes light a little more than 5.3 seconds to cross one million miles.

SERVICE WORTH

a MILESby Garrett McKinnon • NOLN Staff Writer • [email protected]

MILLION

OIf you want to know more about the Fast Lube Program, contact us at

800-331-4068 or [email protected]

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expected to hit that magical mark as this is-sue went to press. LoCicero purchased the Accord in 1996 when it already had 74,000 miles on it and averages 4,700 miles per month in his job as an insurance adjuster. He credits religiously following the car’s rec-ommended fluid maintenance schedule for the car’s longevity. The only parts he’s ever replaced on the car are the fuel pump, both cooling fans and the radiator (twice).

As we look into how the “typical” lube shop is faring in 2011, it becomes clear that the fast lube industry could use a few more drivers like Joe LoCicero. LT30 lube opera-tors reported performing an average of 30.5 oil change services per day, down nearly a full car from last year’s figure of 31.7 cars per day and continuing a decline that first began in 1995, when car counts peaked at 47.9 cars per day. (MT30 operators re-ported servicing 34.6 cars per day, a slight increase from last year’s figure of 33.2.)

The saving grace for lube shops has been ticket averages, which continued to climb into uncharted territory. LT30 operators, in fact, reported an average ticket of $56.29 per vehicle, up more than $2 per car from last year. As recently as 2007, average ticket was $47.18, which means in a four-year span the average ticket has increased nearly 20 percent.

That increased ticket average comes part-ly as a result of lube shops offering more au-tomotive services. As this has occurred, the percentage of business that is comprised of oil changes at a “lube shop” has dropped, from 72 percent in 2007 to 67 percent last year and all the way to 63 percent this year. That means that nearly two of every five dol-lars a lube shop earns in sales comes from services beyond oil changes, a metric that is significant any way you slice it. Clearly the lube shop of today is much more than the simple oil change shop of two decades ago.

Fortunately, the increase in ticket average has offset the decline in car count to keep estimated sales stable. To estimate annual sales at a lube shop, we take cars per day, multiply by ticket average, then multiply by 315 (the historical, long-term average num-ber of days a lube shop is open each year).

Last year, that estimated annual sales figure was $540,015; this year, the estimated an-nual sales figure was $540,806, a difference of less than $800. Clearly, by raising prices (something we’ll get to later) and offering more services, lube operators have been able to keep overall sales healthy despite facing significant challenges.

One of the most significant of those challenges was a dramatic increase in cost of goods. As crude oil prices skyrocketed earlier in the year, lube operators endured as many as four separate bulk oil price in-creases. That helped push the average cost of goods for a full-service oil change (or LOF) to $15.33, a 16.8 percent increase and the highest dollar figure ever recorded. (MT30 shops weren’t immune to the price increases, either, as they saw their average COGS price jump to $12.85 from $10.95 last year, an increase of 17.4 percent.) As we’ll see later, that increase has eaten into profits for lube operators.

Finally, just for grins we wanted to find out what percentage of lube shops ser-vice hybrid vehicles. The results? Fully 96 percent of LT30 companies reported they service hybrid vehicles, and 100 percent of MT30 companies reported servicing hybrids. Clearly lube shops are not intimi-dated by these high-tech vehicles.

PRICES

The Car: 1995 Dodge Ram 3500 The Driver: Robert Swan; Arlington, VA

When Swan accomplished his feat in 2006, Chrysler CEO Tom LaSorda gave him a personal phone call — and an autographed copy of a Chrysler history book. Swan used the Ram to deliver travel trailers from the manufacturer to dealerships across the coun-try, averaging about 110,000 miles per year.

Faced with rising prices for the fluids and filters they install on customers’ vehicles, nearly two-thirds of lube operators report-ed raising prices during the past year, doing so by an average of $2.51 per full-service LOF. That helped push the average full-ser-vice LOF price to $35.03, the first time that price has cracked the $35 barrier. (The Fed might think inflation is nonexistent, but those of us in the real world know better!)

The average full-service LOF price at MT30 shops was up only slightly, climbing 11 cents to $36.56.

Despite that price increase, more opera-tors began offering a basic, low-cost LOF (generally consisting of the oil change only, minus the full-service inspection and fluid top-off that generally accompany the full-service LOF). This year, nearly four in 10 (38 percent) of LT30 operators reported offering a low-cost LOF, compared to 34 percent last year and 26 percent as recently as 2007. (Contrast that with MT30 compa-nies, where only 8 percent of respondents offer a low-cost LOF.) The average price for that “low-cost” LOF was up, howev-er, climbing to an average of $28.06 from $26.69 last year.

Prices increased for other oil change services, as well. Average price for a spe-cialty/high-mileage motor oil change? Up to $48.71 from $45.86 (and up to $54.86 from $53.60 for MT30 companies). Aver-age price for a synthetic motor oil change? Up to $65.86 from $62.39 (and up to $70.26 from $66.14 for MT30 companies, crossing the $70 threshold).

More companies turned to discounting, too, as 92 percent of operators reported that their competition discounts oil changes, an all-time high. Further, nearly three-quar-ters (74 percent) of LT30 operators report-ed discounting their own oil changes, doing so to the tune of $5.25 per LOF. (All MT30 companies reported that they discount oil changes, doing so by an average of $6.48.)

If you want to know more about the Fast Lube Program, contact us at 800-331-4068 or [email protected]


Article continues page 36.For survey results, see pages 26-34.

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* insufficient data to calculate n/a: question not asked

LT30 LT30 LT30 LT30 LT30 MT30

Independent/company-owned facilities 79% 80% 85% 81% 73% *Franchised facilities 21% 20% 15% 19% 27% *Member of fast lube trade association 67% 55% 59% 69% 77% 85%Years in the fast lube business 11.4 11.7 12.4 13.8 13.2 24.3Number of facilities per response 2.5 2.2 2.0 2.3 2.6 288Number of bays per facility 3.1 3.3 3.2 3.6 3.4 3.1Cost of goods for standard, full-service LOF $11.55 $12.75 $13.24 $13.12 $15.33 $12.85Average ticket total $47.18 $50.80 $52.04 $54.08 $56.29 $66.91Number of days open per year n/a 315 311 318 317 346Number of cars serviced per day 35.4 33.9 32.4 31.7 30.5 34.6State inspections per day (by facilities that offer) 15.7 11.2 7.5 12.1 10.2 *Total number of cars you service per day (including inspections, repair work, etc.) n/a n/a n/a 38.0 37.3 36.8Break-even car count 24.9 24.0 22.4 23.3 23.6 22.1Operators who own their building/land 60% 56% 52% 56% 40% 10%Operators who lease their building/land 31% 23% 26% 18% 30% 30%Operators who both own and lease their buildings/land 9% 21% 22% 26% 30% 60%Building/land costs for most recent fast lube (if owned) $578,781 $584,430 $552,545 $604,372 $634,774 $800,000Cost for leasing building/land (per month) $4,817 $4,619 $4,472 $4,552 $4,349 $6,287Equipment costs for fast lube $62,879 $64,398 $60,196 $68,219 $64,485 $60,625Number of stores operator will open in next 12 months 0.3 0.3 n/a 0.2 0.3 11.4Operators planning to sell their facilities next year 10% 10% 7% 5% 5% *Operators who have customers enter their lube: From the front (street side) 51% 49% 49% 54% 52% 25% Back 49% 51% 51% 46% 48% 75%Percentage of business that is oil change 72% 69% 69% 67% 63% 58%Percentage of operations that refuse to service at least one vehicle 36% 32% 33% 35% 33% 27%Operators who offer a free fluid top-off n/a 86% 88% 89% 81% 83%Operations that service hybrid vehicles n/a n/a n/a n/a 96% 100%

The Fast Lube Operators Survey is one of the most in-depth studies of the fast oil change industry available. Much-requested by both newcomers to the fast lube industry and seasoned operators — who use it to evaluate the success of their own operations — the survey contains current and historical data for almost every operational metric. Survey data was gathered from questionnaires mailed directly to operators or available online.

Survey results for 2011 are presented at the far right in two categories: The first column indicates results from companies operating “Less Than 30 Stores (LT30 Stores),” i.e. smaller operations representative of the majority of the industry. The second column indicates results from those companies operating “More Than 30 Stores (MT30 Stores),” i.e. larger corporate lube chains. Results for 2007 through 2010 are for reference only and represent LT30 operations. In all, the responses for 2011 account for 4,451 facilities and include fast lube stores operating in all 50 states.

general

operations 2007 2008 2009 2010 2011

Fast Lube Operators Survey Results

2011


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September 2011 27


Oil change facilities within three miles of respondent n/a n/a n/a 8.5 8.6 *Population within three-mile radius of best store 32,287 29,296 20,837 24,798 26,288 40,282Daily traffic count in front of best store 21,081 21,207 20,077 23,381 22,625 19,143Customer base that is female 52% 51% 52% 52% 52% 56%Miles customers drive between oil changes 4,352 4,318 4,364 4,419 4,520 4,626Portion of overall sales made up of fleet accounts 12% 12% 10% 11% 11% * Average number of vehicles per fleet 8.8 10.0 7.8 14.5 9.1 *Operators who mystery shop their own stores 53% 59% 57% 62% 59% 75%Operators who mystery shop their competition 32% 46% 53% 47% 53% 42%Customers who drive domestic vehicles 56% 56% 58% 58% 55% 53%Customers who drive foreign vehicles 44% 44% 42% 42% 45% 47%Customers who drive luxury vehicles 19% 20% 18% 19% 18% 20%Customers who drive light trucks n/a 33% 35% 35% 35% 25%Vehicles equipped with oil monitors 46% 51% 52% 57% 54% 53% Miles driven between oil changes by those vehicles 4,685 4,695 4,783 4,831 4,895 5,350


Price of standard, full-service LOF/multipoint check $31.12 $32.37 $34.38 $34.14 $35.03 $36.56Operators who offer basic, low-cost LOF service 26% 31% 31% 34% 38% 8% Price, if offered $25.19 $25.98 $27.77 $26.69 $28.06 $26.00Operators who offer premium LOF (w/ specialty/high mileage motor oil) 79% 92% 84% 90% 89% 92% Price, if offered $42.07 $44.32 $45.70 $45.86 $48.71 $54.86Operators who offer premium LOF (w/ synthetic motor oil) 91% 98% 92% 99% 95% 92% Price, if offered $55.49 $59.42 $60.93 $62.39 $65.86 $70.26Operators increasing LOF price in the past 12 months 70% 84% 63% 37% 66% 67% Amount of increase $2.02 $2.68 $2.64 $1.99 $2.51 $2.18Competitors discounting their oil change 89% 89% 85% 89% 92% 100% Amount of discount $5.94 $5.95 $5.92 $6.69 $7.45 $6.94

Operators discounting their own oil changes 67% 66% 63% 71% 74% 100%

Amount of discount $4.12 $4.40 $4.70 $4.68 $5.25 $6.48

Best SellingMotor Oil

in Fast Lubes(Percentage of LT30 operators that listed each brand as their

“house” oil, 2011)

Best Selling Synthetic Motor Oil

in Fast Lubes(Percentage of LT30 operators that listed each brand as their top selling synthetic oil, 2011)

prices

demographics

2007 2008 2009 2010 2011

Pennzoil 18%

Others 7%

Castrol7%

Private Label 8%

Shell 8%

Other Name Brands 15%

Valvoline 14%

Mobil 16%

Pennzoil 12%

Others 15%

Castrol 6%

Mobil 56%

Amsoil 3%

Best Selling Motor Oilin Fast Lubes

Best Selling Synthetic motor oil in fast lubes

Valvoline8%

Chevron7%

Pennzoil 18%

Others 7%

Castrol7%

Private Label 8%

Shell 8%

Other Name Brands 15%

Valvoline 14%

Mobil 16%

Pennzoil 12%

Others 15%

Castrol 6%

Mobil 56%

Amsoil 3%

Best Selling Motor Oilin Fast Lubes

Best Selling Synthetic motor oil in fast lubes

Valvoline8%

Chevron7%


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Length of employment for managers 5.5 yrs 6.2 yrs 6.7 yrs 7.0 yrs 6.8 yrs 4.6 yrsLength of employment for technicians 2.3 yrs 2.5 yrs 2.9 yrs 3.1 yrs 3.4 yrs 1.5 yrsStarting rate paid to lube techs n/a $7.89 $8.15 $8.26 $8.28 $8.33Hourly rate paid to lube techs $8.70 $9.22 $9.30 $9.47 $9.75 $9.42Annual salary paid to managers $39,020 $39,587 $37,925 $39,456 $40,650 $36,760Annual salary paid to owners (if full-time employee) $52,976 $55,155 $58,719 $62,676 $51,700 *Average number of employees per store 6.0 5.9 5.5 6.2 6.0 7.5Operators testing employees for drugs 47% 40% 59% 63% 66% 80%Hours of formal training employees receive per year 28 35 30 32 28 48Operations that use surveillance cameras 42% 57% 47% 63% 50% 92%Owners who work: On site 64% 69% 73% 72% 65% *

From remote location 36% 31% 27% 28% 35% *

Yearly sales per store: $551,377 $535,803 $558,395 $575,422 $601,164 $723,083Portion of gross sales used for: Payroll1 27.0% 28.3% 27.9% 26.5% 27.1% 28.7% Lease/Mortgage 11.5% 12.2% 11.5% 11.6% 11.8% 11.7% COGS2 29.8% 30.5% 29.4% 28.3% 30.5% 26.0% Net Profit 13.0% 10.0% 12.5% 13.3% 11.3% 13.2% Operations3 15.6% 15.8% 15.8% 17.2% 16.4% 16.6% Other4 3.1% 3.3% 2.9% 3.1% 2.9% 3.8% 1 Includes all payroll (taxes included), salary of owner (if “hands-on” employee), unemployment taxes, Workers’ Compensation, health insurance, bonuses, etc.

2 Includes materials and supplies necessary to perform services.3 Includes utilities, maintenance, company insurance, advertising, franchise fees, uniforms, freight, postage, administrative costs, office supplies, non-income taxes, training, company vehicle, etc. used to operate business on a

day-to-day basis.4 Dues, subscriptions, warranties, travel/entertainment, etc.


Benefits Offered(Percentage of LT30 operators who offer the following benefits)

Sales Breakdown(Percentage of gross sales dedicated

to costs for LT30 operators)

Sales Breakdown(Percentage of gross sales dedicated

to costs for MT30 operators)

employees 2007 2008 2009 2010 2011

sales

retirement

non-sales bonus

paid sick leave

health/life insurance

commission

paid holidays

uniforms

paid vacation

Bene�ts O�ered

Sales Breakdown LT30

COGS30.5%

Payroll27.1%

Operations16.4%

Lease/Mortgage11.8%

Net Pro�t11.3%

Other 2.9%

53% 52%

39% 38%

30%

13% 12% 11%

COGS26.0%

Payroll28.7%

Operations16.6%

Lease/Mortgage11.7%

Net Pro�t13.2%

Other 3.8%

Paid Vacation

Uniforms

Paid Holidays

Commission

Health/Life Ins.

Paid Sick Leave

Retirement

60%

50%

40%

30%

20%

10%

Non-Sales Bonuses

retirement

non-sales bonus

paid sick leave


commission

paid holidays

uniforms

paid vacation

Bene�ts O�ered


COGS30.5%

Payroll27.1%

Operations16.4%

Lease/Mortgage11.8%

Net Pro�t11.3%

Other 2.9%

53% 52%

39% 38%

30%

13% 12% 11%

COGS26.0%

Payroll28.7%

Operations16.6%

Lease/Mortgage11.7%

Net Pro�t13.2%

Other 3.8%

retirement

non-sales bonus

paid sick leave


commission

paid holidays

uniforms

paid vacation

Bene�ts O�ered


COGS30.5%

Payroll27.1%

Operations16.4%

Lease/Mortgage11.8%

Net Pro�t11.3%

Other 2.9%

53% 52%

39% 38%

30%

13% 12% 11%

COGS26.0%

Payroll28.7%

Operations16.6%

Lease/Mortgage11.7%

Net Pro�t13.2%

Other 3.8%



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Total sales represented by ”house“ motor oil brand 77% 79% 81% 76% 77% 87%Customers committed to a specific brand of motor oil 39% 40% 45% 37% 29% 38%Operations that implement used oil for heating purposes 27% 31% 31% 27% 29% 45%Operations that accept used oil from DIYers 84% 85% 85% 87% 91% 90%Operations that accept used oil filters from DIYers 65% 66% 72% 73% 70% 55%Operations being paid for their used oil 94% 95% 96% 91% 96% 100% Amount per gallon $0.54 $0.76 $0.51 $0.53 $0.94 $0.86Operations being paid for their used oil filters 3% 4% 8% 4% 5% 9%Operations offering dexos-licensed motor oil n/a n/a n/a n/a 77% 57%Operators offering a product that meets dexos-licensed specs n/a n/a n/a n/a 61% 63%Operations invoicing customers for environmental fees 30% 22% 28% 19% 28% 18% Average amount $1.89 $1.82 $1.91 $1.79 $1.88 $1.18Per-gallon cost of highest volume bulk oil $6.45 $7.68 $7.96 $7.66 $8.65 $7.78Quarts included in standard lube, oil and filter n/a n/a n/a 5.0 5.0 5.0Average charge per quart for additional motor oil n/a n/a n/a $3.56 $3.85 $4.05Overall breakdown of motor oil sales: Conventional/synthetic blend n/a 74% 72% 68% 70% 60% High mileage n/a 9% 8% 10% 10% 18% Full synthetic n/a 10% 10% 12% 11% 15% Diesel n/a 7% 8% 8% 8% 3% Other n/a 0% 2% 2% 1% 5%Operations that sell re-refined motor oil n/a n/a 5% 22% 38% 50% Percent of customers who purchase n/a n/a n/a 4% 5% 16%Overall breakdown of motor oil sales by weight/grade: 5W-20 n/a n/a 21% 24% 27% 31% 5W-30 n/a n/a 49% 46% 48% 44% 10W-30 n/a n/a 19% 17% 15% 14% 5W-40 n/a n/a 2% 2% 2% 3% 15W-40 n/a n/a 8% 9% 7% 6% Other n/a n/a 1% 2% 1% 2%Operations that sell premium air filters n/a n/a n/a 38% 36% 27% Average charge n/a n/a n/a $23.89 $18.69 $37.99Operations that use lifts for oil changes n/a n/a n/a 15% 12% *Operations that use pits for oil changes n/a n/a n/a 85% 88% *Operations that use pit lifts for tire rotation n/a n/a n/a 59% 54% 67%Percent of operator sales comprised of beam blade wipers n/a n/a n/a n/a 21% 14% Price charged, per pair n/a n/a n/a n/a $31.27 $25.33Percent of operator sales comprised of conventional wipers n/a n/a n/a n/a 79% 86% Price charged, per pair n/a n/a n/a n/a $18.33 $15.42

Pennzoil 12%

Others 37%

Valvoline9%

Performax 5%

ServiceChamp

14%

Mighty15%

Best Selling Air Filters

Purolator8%

Pennzoil 16%Others

27%

Prime Guard7%

Valvoline10%

Performax 5%

ServiceChamp

11%

Mighty16%

Best Selling Oil Filters

Purolator8%

Pennzoil 12%

Others 37%

Valvoline9%

Performax 5%

ServiceChamp

14%

Mighty15%


Purolator8%

Best Selling Air Filters

(Percentage of LT30 operators who listed each brand as their

standard air filter, 2011)


(Percentage of LT30 operators who listed each brand as their

standard oil filter, 2011)

oil & equipment 2007 2008 2009 2010 2011



32 www.noln.net

Percentage of survey respondents offering following services

LT30 LT30 LT30 LT30 LT30Additive sales 89% 89% 86% 88% 84% ATF supplement n/a n/a n/a 68% 65% $17.22 2.8% Chemical engine flush/oil system cleaner 82% 85% 83% 87% 91% $29.78 5.3% Coolant treatment n/a n/a n/a 47% 43% $25.36 † 1.4%†

Coolant stop leak n/a n/a n/a 30% 27% $14.91 † 1.2%†

Diesel fuel supplement/cleaner n/a n/a n/a 46% 41% $20.13 0.9%†

Gear oil supplement n/a n/a n/a 51% 40% $13.47 1.4% Oil stop leak n/a n/a n/a 41% 28% $12.63 1.7%†

Pour-in fuel injection cleaner n/a n/a n/a 78% 83% $16.03 3.6% Power steering treatment n/a n/a n/a 41% 28% $26.19 1.4% Transmission stop leak n/a n/a n/a 39% 20% $13.79 † 1.1%†

Air conditioner recharge 46% 46% 47% 61% 35% $92.60 2.3%Air conditioner odor removal service n/a n/a n/a 29% 20% $41.35 1.0%†

Air filter replacement 100% 100% 100% 100% 100% $19.16 12.0%Brake pads/shoes 26% 39% 40% 43% 34% $136.96 2.4%Brake fluid flush n/a n/a 34% 29% 23% $70.53 1.5%Breather replacement 73% 78% 70% 70% 63% $10.32 1.3%Cabin air filter replacement 90% 83% 88% 92% 91% $32.89 3.6%Check batteries n/a n/a n/a 75% 78% n/a n/aDiesel exhaust fluid fill up n/a n/a n/a n/a 53% $22.32 1.3%Differential service 92% 84% 96% 94% 93% $53.13 2.4%Fuel filter replacement 76% 83% 79% 86% 87% $47.23 3.3%Fuel injector cleaning (multi-stage) 76% 88% 87% 81% 84% $71.55 2.4%Headlight restoration n/a n/a 43% 52% 44% $49.76 1.2%Light replacement 83% 87% 85% 90% 84% n/a 5.8%Manual drain and refill of radiators 31% 40% 49% 36% 40% $62.30 1.3%Mechanical full-block coolant flushes 88% 91% 92% 90% 89% $84.41 1.7%Mechanical ATF exchange 90% 90% 87% 94% 89% $113.24 2.6%Mechanized engine flush/cleaning 8% 16% 28% 23% 25% * *Minor mechanical repairs 34% 45% 43% 53% 48% $91.96 4.9%Nitrogen-based tire inflation 6% 10% 22% 27% 27% $35.32 † 3.0%†

Oil changes on Class 4 or larger commercial vehicles 21% 31% 34% 28% 21% $137.19 *Oil changes on motorcycles 6% 11% 20% 13% 16% $59.00 † *Oil changes on RVs 67% 68% 81% 74% 71% $68.23 *PCV replacement 78% 72% 78% 75% 68% $9.54 1.7%Power steering flushes 45% 60% 67% 68% 68% $61.09 1.8%Radiator, heater, A/C hose replacement 30% 41% 47% 44% 36% n/a 1.9%Repair rock chips in windshields 24% 27% 15% 18% 19% $36.16 † 2.4%†

Sell batteries 56% 65% 69% 70% 66% n/a 2.1%Serpentine belt replacement 84% 86% 86% 89% 85% $67.56 1.5%Shock and strut replacement 22% 24% 33% 31% 21% $117.00 1.2%Smog checks/emission testing 20% 15% 13% 24% 19% * *Spark plugs 28% 38% 43% 37% 33% $87.85 2.0%Tire rotation 64% 70% 78% 76% 76% $19.15 5.6%Tire sales n/a n/a 16% 21% 13% $267.51 *Transmission service (drain/refill manually) 57% 61% 77% 58% 63% $92.10 1.3%Water-repellent glass treatments 30% 27% 35% 30% 41% $12.91 1.9%Wheel balancing 24% 23% 30% 27% 26% $37.30 2.9%

* insufficient data to calculate n/a: question not asked †average from small sampling

AverageCharge

Percentage of Customers

Who Purchase

services 2007 2008 2009 2010 2011

a new opportunity for a changing marketplaceTo receive an information packet, please contact [email protected] or call 855.4.MYSTIK.

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September 2011 33



Annual cost of insuring a fast lube facility $5,356 $5,220 $5,636 $6,341 $5,882 * Average amount of per-store warranty work performed during preceding 12 months $1,444 $1,053 $971 $1,155 $1,047 $1,087

Operators who send reminder cards to customers 48% 47% 47% 51% 53% 75%Operators offering discounted reminder cards 69% 77% 61% 72% 68% 82% Response rate 26% 28% 25% 23% 29% 45%Percentage of customers who redeem coupons 17% 21% 19% 23% 21% 40%Operators who advertise on the Internet 44% 44% 38% 54% 62% 100%Operators who collect customer email addresses n/a n/a n/a n/a 54% 83%Operators who collect cell phone numbers for text message marketing purposes n/a n/a n/a n/a 29% 33%Operators who have a company website n/a n/a n/a n/a 80% 100%Operators who have a company Facebook page n/a n/a n/a n/a 52% 58%

Factors that will determine future success of fast lube industry: Customer service 70% 64% 72% 63% 46% * Quality employees 16% 16% 21% 15% 15% * Economy 0% 0% 0% 4% 10% * Car counts 10% 10% 3% 9% 6% * Cost of goods 2% 5% 3% 3% 5% * Competition 2% 1% 1% 3% 3% * Location 0% 0% 0% 2% 3% * Extended oil change intervals 0% 4% 0% 1% 1% *

Newspaper 1%

Internet 4%

Coupons 7%

Direct Mail 16%

Word of Mouth 70%

Radio 1%

BEST ADVERTISING METHOD

TV 1%

0

10

20

30

40

50

60tire rotation

transmission

� cleaning

additives

wiper blades

58%

8%3%5% 5%

14%

Best Advertising Method for Fast Lubes(Percentage of LT30 operators who listed each type of advertising as their most effective) Best Selling Add-on

Services in Fast Lubes

(Percentage of LT30 operators who listed each add-on service as their

“best-selling”)

insurance 2007 2008 2009 2010 2011

keys to success

advertising

Air Filter

Wiper Blades

Trans. Flush

Fuel Inj. Cleaning

Coolant Flush

Tire Rotation

60%

50%

40%

30%

20%

10%

Newspaper 1%

Internet 4%

Coupons 7%

Direct Mail 16%

Word of Mouth 70%

Radio 1%

BEST ADVERTISING METHOD

TV 1%

0

10

20

30

40

50

60tire rotation

transmission

� cleaning

additives

wiper blades

58%

8%3%5% 5%

14%

a new opportunity for a changing marketplaceTo receive an information packet, please contact [email protected] or call 855.4.MYSTIK.

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• 37% of fast lube operators report July as the busiest month of the year• 42% of fast lube operators report Friday as the busiest day of the week• 26% of fast lube operators plan to add glass repair to their service menu; 19% plan to add tire rotation; 19% plan to add air conditioning service• 19% of fast lube operations have customers wait inside their car during an oil change; 74% of operations have customers wait inside their waiting room during an oil change; and 7% of operations have customers wait inside their car or in their waiting room during an oil change • 52% of fast lube operations have technicians drive vehicles into the bay; 48% of operations have customers drive vehicles into the bay• Fast lube operators take an average of 14 minutes to change a customer’s oil • On average, 71% of fast lube business is from repeat customers• 90% of fast lube operators mention 3,000-mile oil change intervals to their customers• 85% of fast lube facilities are equipped with pits; 15% of facilities are equipped with lifts • 71% of fast lube facilities’ pits are equipped with safety covers• 14% of lube shops are co-located with an on-site carwash• Fast lube operators describe their customers as 80% average income, 13% high income and 7% low income• About two-thirds of lube shops offer bundled service “packages” on their service menus• 15% of lube shops are equipped with underground oil storage tanks; 85% are equipped with aboveground tanks (including basement-mounted tanks)• In 1988, the year the first Operators Survey was conducted, average car count was 43.5 cars per day, average ticket was $23.52 and the average price for a full-service LOF was $19.98• Industry-wide car count peaked in 1995 at 47.9 cars per day

Industry standards compiled from previous Fast Lube Operators Surveys.

McKinzie, Manasselia and Standley Win Great Prizes

To thank lube operators and managers for spending the time it takes to complete our annual fast lube operators survey question-naire, we enter everyone who responds into a drawing for three great prizes. This year, an air-operated fluid handling gun (MSRP $390) from RTI Technologies; a 180-gallon

stackable HDPE liquid storage tank (MSRP $350) from Rhino-Tuff Tanks; and a wind-shield repair starter kit (MSRP $300) from Liquid Resins were given away. Congratu-lations to Lance McKinzie, owner of Lon-don Express Care in London, Kentucky; Jason Manasselia, region five manager of

Oil Changer in Belmont, California; and Clint Standley, owner of Kwik Kar in Grand Prairie, Texas, this year’s winners. And a big thanks to everyone else who participated in this year’s survey. Without your help, this in-depth study of the lube industry would not be possible. S

did you know?

$390 MSRP

$350 MSRP

$300 MSRP

34 www.noln.net

a new opportunityfor a changing marketplaceTo receive an information packet, please contact [email protected] or call 855.4.MYSTIK.

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36 www.noln.net

DEMOGRAPHICS

The Car: 1995 Chevrolet Silverado The Driver: William White; Lawrenceville, GA

We featured White’s truck in our April 2002 issue, just after it had gotten an oil change at Lube 3000 in Lawrenceville and a mere 909 miles before turning over the odometer to one million miles. White put 800 miles a day on his truck picking up newspapers from South Carolina and delivering them to Nashville and other locales before returning home. After he hit the million-mile mark, Pennzoil, which supplied motor oil for Lube 3000, replaced White’s truck with a brand-new one in order to study the engine in his old one.

Not much has changed in recent years as far as fast lube customer demographics is concerned. Slightly more than half of all lube customers are female. Just more than 10 percent of business at a typical shop is from fleets. Population within a three-mile radius of really successful shops is around 26,000 people. Daily traffic count in front of those same stores is around 22,000 cars. About five percent more lube customers drive domestic makes than drive foreign makes. Less than 20 percent of lube cus-tomers drive luxury vehicles. More than one-third drive light trucks.

What is trending in the wrong direction, however, are oil change intervals. This year, lube operators reported that customers are driving an average of 4,520 miles between oil changes, a record high and an increase of more than 100 miles (or 2.3 percent) from last year. (MT30 companies reported an average customer oil change interval of 4,626 miles, an increase of 62 miles, or 1.4 percent, from last year.)

Currently, just more than half of vehicles

serviced at lube shops (54 percent for LT30 operations and 53 percent for MT30 opera-tions) are equipped with oil life monitoring systems. These vehicles are reportedly driv-en an average of 4,895 miles (5,350 at MT30 operations) between oil changes. Both fig-ures represent increases from last year, and are clear evidence that drivers continue to extend their oil change intervals, especially in the face of the high fuel prices endured by drivers this summer.

EMPLOYEES

The Car: 1989 Saab 900 The Driver: Peter Gilbert, Glendale, WI

Travelling salesman Gilbert was featured in multiple media outlets back in 2006 when his Saab’s odometer hit 1,001,285 miles and was retired to a Wisconsin auto museum. He had purchased the car new, followed the rec-ommended maintenance schedule diligently and only used synthetic motor oil. Gilbert told MSNBC that the only mechanical work he had ever had performed on the car was a transmission rebuild at 200,000 miles.

The old saw insists there’s a silver lining to every dark cloud. For lube operators fac-ing an economy wracked by persistent high unemployment, that silver lining may be in the fact that employee turnover is at a his-toric low.

Lube operators reported that the aver-age tenure for lube technicians — a statistic once measured in months rather than years — is now at 3.4 years. That means the typi-cal lube tech stays on the job for nearly 41 months. Clearly, employees in today’s econ-omy view almost any job as a good one, and lube operators are having more success hanging on to their employees.

Part of that success comes with higher wages, too. The average hourly wage paid

to lube techs is $9.75, an increase of 28 cents per hour from last year, and a record high. (MT30 companies pay lube techs an average of $9.42 per hour, an increase of 66 cents per hour from last year.)

Lube managers, too, saw their annual sal-aries increase, with the typical lube manag-er now earning a salary of $40,650 per year, an increase of nearly $1,200 from last year.

What has not increased, however, are owner salaries. In those facilities where the owner takes a salary, the average salary de-clined dramatically, falling to $51,700 from last year’s total of $62,676. It is difficult to determine at this point if this is a one-year statistical fluke, or whether hard-pressed lube owners are forsaking their personal income in an effort to keep their businesses profitable, but either way it is clear that op-erators are making deep sacrifices.

SALES

The Car: 1965 Ford Mustang The Driver: Bob Lucas; Santa Ana, CA

The 79-year-old Lucas is the original owner of this classic Mustang, which saw its odom-eter hit 1,050,000 miles last December. Though it’s been through three engines, the rest of the car remains in perfect shape thanks to lots of TLC from Lucas, who aver-ages about 24,000 miles per year in his ’Stang.

The difference between what a lube shop earns with oil changes and other fluid maintenance and the shop’s total revenue is becoming larger and larger, a statistic we’ve already discussed. What makes that even more clear is when we take a look at the yearly sales per store. Unlike the annual sales totals estimated above, the yearly sales per store figures are reported by lube op-erators and include income from all areas



38 www.noln.net

of the business, not just oil change/fluid maintenance.

This year, LT30 operators reported aver-age annual sales of $601,164, an increase of more than $25,000 (4.5 percent) from last year. MT30 companies reported same-store annual sales of $723,083, an increase of nearly $100,000 (15.8 percent).

Unfortunately, those higher sales have been largely offset by higher costs. The percentage of gross annual sales used for COGS, for instance, grew to 30.5 percent from 28.3 percent for LT30 operations (and increased to 26.0 percent from 24.1 percent for MT30 operations, as well). Expenses like lease/mortgage and payroll were up, as well, and even though operators were able to squeeze a bit of savings from cat-egories like operations (which declined to 16.4 percent of annual gross sales from 17.2 percent) and miscellaneous items, pretax profit fell two percentage points, dropping to 11.3 percent from 13.3 percent. MT30 companies fared a little better, but still saw profit drop to 13.2 percent from 14.0 per-cent last year.

OIL & EQUIPMENT

The Car: 1991 Chevrolet Silverado The Driver: Frank Oresnik; Gresham, WI

Oresnik bought his Silverado in 1996 when it already had 41,000 miles on it. Since then, he’s driven and driven and driven some more on his business route distributing sea-food and steaks in the upper Midwest. At last count, the pickup had more than 1.2 million miles on the odometer, and Oresnik reports the valve cover has never been off the truck, and he’s had no engine work per-formed. His secret? Oil changes every 3,000 miles.

Several things stand out in this section of

our survey. First, operators report that an all-time low percentage of customers (29 percent, to be exact) are committed to a specific brand of oil. That’s down from 37 percent last year and 45 percent in 2009, a significant decline that could be brought on at least in part by the next item on our list: rising prices.

Lube operators reported that their aver-age per-gallon cost for bulk oil rose nearly $1 to $8.65, an increase of nearly 13 percent.

Fortunately, more operators are getting paid for their used oil, and paid more, as well. Operators reported that the average per-gallon price paid for used oil grew to 94 cents, up from 53 cents last year, another all-time record.

We discovered last year that operators typically offer five quarts of motor oil with their standard LOF, a number that was un-changed this year. What did change was the per-quart price charged for additional mo-tor oil, which rose nearly 30 cents to $3.85 per quart.

We also noted a fairly significant dispar-ity in the motor oil sales between LT30 and MT30 facilities. While LT30 operators re-ported that 70 percent of their overall mo-tor oil sales was comprised of conventional/synthetic blend (we combine these catego-ries because several companies marked their “conventional” oil as a synthetic blend), while MT30 companies reported only 60 percent of their overall sales are conventional.

That disparity grows even further when you look at high mileage and synthetic: 10 percent of motor oil sold at LT30 op-erations is high mileage, compared to 18 percent at MT30 operations; wile 11 per-cent of motor oil sold at LT30 operations is synthetic, compared to 15 percent at MT30 companies.

Speaking of synthetic motor oil, this year we asked about GM’s dexos specification, which typically calls for a synthetic mo-tor oil, for the first time. We found that 77 percent of LT30 operations and 57 percent of MT30 operations offer a dexos-licensed motor oil. We further found that 61 percent of LT30 operations and 63 percent of MT30 operations offer a motor oil that meets the

dexos specification, but is not licensed.More operators are “going green” with

re-refined motor oil, as 38 percent of LT30 operations and 50 percent of MT30 compa-nies now offer this recycled product.

We know from past surveys that virtually all lube shops offer wiper blades, but we were curious about the breakdown between conventional wiper blades and newer “beam” blades. We found that conventional blades account for 79 percent of wiper sales at LT30 operations (86 percent at MT30 companies), while beam blades account for 21 percent of wiper sales (14 percent at MT30 companies). Lube shops charge an average of $18.33 for conventional blades and $31.27 for beam blades.

Finally, we typically list market share of various motor oil brands among LT30 shops. What we found is that 18 percent of LT30 operations listed Pennzoil as their “house” brand, followed by Mobil (16 per-cent), Valvoline (14 percent), Shell (8 per-cent), Castrol (7 percent) and Chevron (7 percent). Other “name brands” made up 15 percent, while 8 percent of operations have their motor oil private labeled. Another 7 percent purchase motor oil from indepen-dent lubricant blenders.

SERVICES

The Car: 1983 Lincoln Town Car The Driver: Chet Belisle; Topeka, KS

Belisle paid $2,200 for a brand-new Lincoln Town Car that has certainly been worth the price. Belisle likes to drive, and he’s taken the Lincoln on numerous cross-country trips — so much so the Lincoln has more than 1.3 million miles on the odometer. He’s had to rebuild the engine and transmission a cou-ple of times each, but the Town Car keeps running thanks, Belisle says, to frequent maintenance.



40 www.noln.net

Lube shops continue to offer a wider and wider array of services. In most cases, oper-ators have done a good job of raising pric-es to keep up with the market, as well. Of the 40-odd services for which our survey tracks prices, 26 had seen price increases during the past year.

And while few services had seen a dra-matic increase in the number of LT30 oper-ations offering them, a new service proved how quick lube shops are to jump on the bandwagon. The service is diesel exhaust fluid (DEF) fill-up, and despite being on the market for only a couple of years, 53 per-cent of shops report offering this service, charging an average of $22.32 for a DEF tank fill-up.

KEYS TO SUCCESS

The Car: 1963 Volkswagen Beetle The Driver: Albert Klein; Pasadena, CA

Architect Klein bought his Beetle brand new in 1963 for $1,897.71 (spending an extra $5 for the optional outside mirror). By 1994 when it was listed in the Guinness Book of World Records, he had put 1,442,044 miles on it, going through seven engines, three transmissions, 150 tires and more than $40,000 in maintenance costs.

We’re always on the lookout for what is-sues seem to be driving the lube industry, and this year what we found was surprising.

In years past, a solid majority of opera-tors listed “customer service” as the key to success in the lube business. However, this year only 46 percent listed customer service as the biggest key to success.

The categories that correspondingly in-creased the most were the economy (listed as the determining factor by 10 percent of operators) and cost of goods (listed as the

determining factor by 5 percent of opera-tors). Other operators listed topics as var-ied as work quality, honesty and even the weather as having the biggest overall im-pact on a lube business.

ADVERTISING

The Car: 1976 Mercedes 240D The Driver: Gregorios Sachinidis; Thessalonica, Greece

Sachinidis drove his diesel-powered Mer-cedes taxi 2,858,307 miles before retiring and donating his Benz to a museum in 2004. He purchased the car used in Germany in 1981 when it already had more than 135,000 miles on it. He often drove the taxi around the clock, and in all used three engines in ro-tation, rebuilding them and replacing them a total of 11 times.

When we surveyed lube operators about their advertising habits, a couple of things stood out. First of all, most operators in-sist word-of-mouth is still their best form of advertising. More than one in five lube customers redeems a coupon or discount of some sort. And nearly two-thirds of lube operators now advertise their business on the Internet, up from just 44 percent in 2008.

We took the opportunity to ask a few new questions regarding advertising as well. We found:• Slightly more than half (54 percent) of op-erators collect customer email addresses to send reminders. (Fully 83 percent of MT30 companies collect email addresses for this purpose.)• More  than a quarter  (29 percent) of op-erators collect customer cell phone num-bers for text message marketing purposes. (One-third of MT30 companies do this.)• Four  in  five  operators  have  a  company website.

• More than half (52 percent) of operators have a company Facebook page.

THE FUTURE

The Car: 1966 Volvo P1800S The Driver: Irv Gordon; Long Island, NY

As of June, Gordon and his beloved Volvo had amassed 2.9 million miles together, and were well on their way to hitting three mil-lion miles sometime next year. A longtime teacher, Gordon bought the car brand-new in 1966 and put 1,500 miles on it the first two days he owned it. Since that time, he’s driven an average of nearly 65,000 miles per year, even shipping the car overseas to drive in Europe on occasion. A longtime Castrol user, Gordon credits — what else — excel-lent routine maintenance for his car’s in-credibly long life. (The Volvo didn’t have its first overhaul until 675,000 miles!)

Much like Irv Gordon’s Volvo, the lube industry keeps on rolling. By carefully walking a tightrope and balancing con-venient maintenance services on one end of the pole and a growing number of ad-ditional services (like tires, batteries, light repair, etc.) on the other, lube operators are reporting steady sales and respectable prof-its during unsteady economic times. To be sure, pressures abound on the industry — falling car counts, extended oil change intervals and rising cost of goods are all im-pacting the way lube operators do business.

Fortunately, the very fact that lube opera-tors have been able to maintain and even grow average per-store sales in recent years, despite an economy that has been challeng-ing in most locales, speaks volumes about the success the industry should enjoy once the economy does regain solid footing. S



2011 fast lube operators survey

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