Tire Pros Dealer Wonders How Long He Can Wait for PPP Loan
This story is the latest in MTD’s exclusive series of articles about how the COVID-19 crisis is impacting independent tire dealers. Stay tuned to www.moderntiredealer.com for more.
It took 10 years for Tred Shed Tire Pros to double its sales and grow from a $2 million store into a $4 million operation. It only took one month for the coronavirus to wipe away that progress.
“Up until about a month ago I sure thought we were going to continue to climb. Now it’s just fallen flat on its face,” says Kyle Schoenthaler, the third generation owner of the store in Pittsburg, Calif.
Schoenthaler was 13 years old when he started working at the business his grandfather and father founded, and he began managing the business about 10 years ago. He bought it from his dad four years ago.
As of mid-April, sales and tire units are both down 50%.
Plenty of retail-only tire dealers are in the same predicament, Schoenthaler knows. He’s tried to be frank with his 21 employees, and admits his gut instinct on the day California Gov. Gavin Newsom announced the state’s stay-at-home order was to lay off half his staff. But he fought that instinct and has listened to the promises of government leaders and applied for assistance from the Small Business Administration’s Paycheck Protection Program (PPP).
“I should not still have all my guys staffed, but I’m trying to do what they told us to do. They said help is coming. I sure hope it’s coming soon,” he says.
He’s circled April 17 on his calendar.
“If by the end of this week I don’t have a solid idea of exactly when the money is coming, I have to make major changes on Monday the 20th. If I can see light at the end of the tunnel I’ll feel better about it. If I don’t see a light, I’m going to have to lay off several guys on Monday.”
Update: Schoenthaler received good news. His PPP application was approved, and his bank tells him he should receive the money within five to seven days.
From day one of the governor’s shutdown, Schoenthaler says he has tried to keep his team in the loop of how things stand. He said he would remain open, but that no one was being forced to work. “If you do not feel comfortable working, you do not have to work.” A couple of employees with underlying health issues have opted to stay home to protect their own health.
He continues to stress to the others that if they change their minds, it’s ok. “We communicate frequently about the future because I’m a lot more uncertain now. I was a lot more confident about it two-to-three weeks ago when I thought this PPP loan was going to happen quickly.
“I was on the phone with my banker this morning saying ‘I haven’t heard a word back and I don’t have any timetable.’ Now I’ve got myself in a big pickle.”
Things are different
Schoenthaler is checking his employees’ temperature every day. It’s a drastic turnaround of his and the industry’s expectations that team members work through illnesses to serve customers.
“Normally in this industry we don’t like when people call in sick. If you got the sniffles, you better get your butt to work. You’ve got a cough? Oh well. But this changes everything. Now, if I hear one of the guys cough I’m asking, “Are you ok? Do you need to go home? Everyone’s on edge. Paranoid. But my guys are solid and they keep doing the best with what we can do.”
Finding new revenue sources
In normal circumstances, Tred Shed Tire Pros services 70 to 80 vehicles a day. “Now we’re happy to see 25.”
The fleet business was better in late March and the beginning of April than it is now in mid-April, Schoenthaler says. Since a lot of construction companies have stopped working, the store’s fleet business has slowed down, though Enterprise and Element fleet work continues.
He admits, he’s sometimes surprised by the customers who do show up requesting services such as a tire rotation. “It just doesn’t seem essential right now.”
But then again, other stores nearby have closed, including the closest America’s Tire. On March 18 Walmart announced it was closing all of its automotive centers. Schoenthaler says customers who have bought tires at both of those places locally have come to his business for flat repairs in recent weeks.
“We have had people buying tires from Walmart.com and showing up and having us install them,” he says.
The business has installed tires bought on other online platforms, including TireRack.com and TireBuyer.com, “but in this climate it’s really rubbing us wrong. Now more than every small businesses need help. When people are bringing in these Walmart tires, our install rate is going up. All my guys have been informed that we’ve got to get it where we can get it at this point.”
The company has traditionally charged $15 a tire for the mount and balance of a standard passenger tire, in a size like 205/55R16. He’s now charging $25 per tire.
The store has traditionally offered free flat repair, too, except for difficult wheels or tires. But he’s started charging $20 for that service too.
“I need every dollar I can get.”