700! Discount Tire reaches milestone, tops MTD 100
The nation’s independent tire store chains keep getting bigger and bigger. That includes the country’s largest independent tire dealership, Discount Tire Co. Inc.
In late May, the Scottsdale, Ariz.-based company opened its 700th store, a retail outlet in Waxahachie, Texas. (Texas is Discount Tire’s largest region with some 200 stores and 3,900 employees.)
“This is an important milestone for the growth of our company,” says Rick Sims, Discount Tire regional vice president.
Under the leadership of Chairman Bruce Halle, Discount Tire has grown more than just its store count. The company achieved record sales of $2.6 billion in 2007.
Discount Tire’s business philosophy boils down to a simple concept: people do business with people. “It doesn’t matter if you’re selling tires or widgets,” Discount Tire Vice Chairman Gary Van Brunt has said.
Five years ago, Modern Tire Dealer quoted Halle, who founded the dealership in 1960, as saying he wanted 1,000 Discount Tire stores up and running by 2010.
That goal should be achievable given the dealership’s current pace of growth and reliance upon good customer service, not to mention its wide selection of tire brands.
Discount Tire carries the Arizonian, Goodyear, Dunlop, BFGoodrich, Michelin, Uniroyal, Bridgestone, Pirelli, Yokohama, Fisk, Continental, General, Falken, Kumho, Hankook, Cooper and Nitto brands. (The company also lists other brands on its Web site.)
Discount Tire isn’t the only independent tire store chain in the U.S. that has successfully added locations while boosting sales and income.
Many of these firms are part of MTD’s Top 100 Independent Tire Store Chains list, or as we like to call it, the Modern Tire Dealer 100.
Here we take a look at these dealerships, starting with an in-depth analysis of the rest of the top 10.
From there, we profile two of this year’s Top 100 chains: one a long-established dealership with a strong multi-state presence, the other a regional up-and-comer.
Dealerships are ranked according to combined number of retail-only, commercial-only and combination retail/commercial outlets. (All information on the list was as of May 1, 2008. As of that date, Discount Tire had 698 locations.) As a bonus, this year we also list the number of wholesale outlets per dealership, if the information was available.
2. Tire Kingdom Inc. Total number of outlets: 678. Brands: BFGoodrich, Dunlop, Falken, General, Continental, Michelin, Pirelli, Goodyear, Uniroyal, Yokohama, Sumitomo. Analysis: Tire Kingdom Inc. continues to grow its store count. The Juno Beach, Fla.-based chain added 20 stores over the last 12 months. This past April, Tire Kingdom’s owner, TBC Corp., created a new operating group, TBC Retail, which includes Tire Kingdom, plus TBC’s National Tire & Battery and Merchant’s Inc. outlets, as well as its Big O Tires network.
3. Les Schwab Tire Centers. Total number of outlets: 421. Brands: Dean, Hercules, Multi-Mile, Maxxis, Toyo, Hankook, Federal, Ohtsu. Analysis: Les Schwab Tire Centers is another tire dealership that hit a sales milestone in 2007. The Northwestern giant posted $1.68 billion in sales for the year. The man who led the chain to that height, Chairman Phil Wick, plans to retire at the end of 2008. Current Les Schwab CEO Dick Borgman will replace him. Borgman will retain his CEO position.
4. Monro Muffler Brake Inc. Total number of outlets: 141. Brands: Firestone, BFGoodrich, Continental, Dunlop, Goodyear, Hankook, Kelly, Michelin, Pirelli, Yokohama, Bridgestone, others. Analysis: Monro has continued to grow through acquisitions. Last summer it purchased King of Prussia, Pa.-based Valley Forge Tire Centers, plus Fairfax, Va.-based Craven Tire & Auto. In early 2008, Monro acquired Broad-Elm Group, a seven-store dealership based in Buffalo, N.Y. Expect more acquisitions, says Monro President John Van Heel.
5. Somerset Tire Service Inc. Total number of outlets: 113. Brands: Bridgestone, Firestone, Continental, Toyo, Pirelli, Michelin, Goodyear, Federal, Runway. Analysis: Somerset Tire Service, which is based in Bound Brook, N.J., retains its status as one of the largest independent tire store chains on the East Coast. The company celebrated its 50th anniversary this past February. President Bill Caulin expects “normal growth” over the next 12 months.
6. Big 10 Tire Stores Inc./Sun Capital Partners Inc. Total number of outlets: 101. Brands: Michelin, Bridgestone, BFGood-rich, Firestone, Uniroyal, others. Analysis: Mobile, Ala.-based Big 10 Tire Stores Inc. has the distinction of being the only dealership in the MTD 100 to be wholly-owned by a private investment firm from outside the tire industry. Boca Raton, Fla.-based Sun Capital Partners Inc. acquired Big 10 in late 2006.
7. Belle Tire Distributors. Total number of outlets: 78. Brands: Kelly, Goodyear, Dunlop, Kumho, Firestone, Bridgestone, American, Michelin, Toyo, General, GITI, BFGoodrich, Continental, Uniroyal, others. Analysis: This past year was a big one for Belle Tire. In October 2007, the firm added auto glass replacement to its menu of services. In early 2008, it opened its Technician Development Center, which conducts full-time tech training. Meanwhile, Belle Tire has moved into a new distribution center. “And we have four retail stores in various stages of development throughout Michigan,” says Belle Tire Vice President Jeff Kruse.
8. Town Fair Tire Centers Inc. Total number of outlets: 71. Brands: BFGoodrich, Bridgestone, Firestone, Pirelli, Kelly, Michelin, Toyo, Uniroyal, Continental, General, Dunlop, Goodyear, Hankook, Nexen. Analysis: Last year, MTD listed Town Fair Tire Centers as having 67 outlets. This year, the company weighs in with 71 stores, all of them retail establishments. Town Fair also has expanded its menu of tire brands, adding Nexen to its line-up.
9. Pomp’s Tire Service. Total number of outlets: 68. Brands: Bridgestone, Firestone, Cordovan, Kelly, Dayton, General, Michelin, Yokohama, Goodyear. Analysis: Silent but solvent is the way to describe Pomp’s Tire Service. The company has two retail-only stores, 27 commercial-only locations and 39 combination retail/commercial outlets.
10. Purcell Tire & Rubber Co. Total number of outlets: 67. Brands: Dunlop, Goodyear, Kelly, Michelin, Toyo, Yokohama, Continental. Analysis: Having come full circle in terms of ownership (see following article), Purcell Tire & Rubber Co. is poised for expansion. Two months ago, Purcell Tire acquired D&D Tire Inc., one of the biggest OTR tire dealerships in the U.S. The two tire companies “share corporate cultures and a commitment to growth that truly benefits our customers and our associates,” says Purcell Tire Chairman Bob Purcell.
Ready to ‘re-brand’ and expand -- Back in original hands, Purcell Tire is poised for growth
From the outside, it looked like business as usual for Purcell Tire & Rubber Co. this time last year. Internally, however, big changes were afoot regarding the company’s ownership.
The process started in 2006, when Purcell Tire (number 10 on the MTD 100) began receiving inquiries from “pretty significant and serious parties” who wanted to buy the company, says Purcell Tire Executive Vice President Keith Butcher.
The dealership had been operating under an ESOP (Employee Stock Ownership Plan) structure since 2002. The ESOP had been set up by long-time Purcell Tire owners Bob and Juanita Purcell as a “thank you” to their employees.
The system was working well, but the company couldn’t ignore the outside offers being made. Acting on advice from its lawyers, Purcell Tire’s board entered into talks with potential buyers — some 170 of them, according to Butcher, including “private equity firms, companies, all kinds of people.” (He did not reveal if tire manufacturers were among the suitors.)
The stakes were high: Purcell Tire is the largest independently owned retreader in the United States and the nation’s 5th largest independent commercial tire dealership with locations throughout the U.S. and Mexico. “We went through several rounds of bids until it came down to six parties.”
Meanwhile, Bob and Juanita Purcell, who had run the dealership since the 1960s, were forced to sit on the sidelines. “Very early on in the process, they (stepped away) from the board because they were two of the five (board) members,” says Butcher. They were told by their lawyer that if they had any interest in topping a bid, they would have to stay out of the melee.
That’s what Bob and Juanita did until the end of the bidding process, when they stepped forward and bought back the company, using their own money. In August, 100% ownership of Purcell Tire — which Bob’s father, Robert M. Purcell, established in 1935 — reverted back to them.
The ownership switch marked the start of a chain of significant changes for the firm, starting with management.
In January 2008, Butcher was named executive president, while his associate, Joe Strycharz, was hired to be the dealership’s executive vice president.
Both came to Purcell Tire from Morgan Stanley, where they had served as strategic advisors to Purcell Tire’s board.
At the end of February, Al Chicago, long-time president of Purcell Tire’s Western States division, retired, following through on a decision he had made one year earlier. When he stepped down, Chicago was directing special projects for the company. (Sam Ungricht had moved into Chicago’s former president slot in January 2007.)
Butcher says there are no plans to sell Purcell Tire. However, the door is open to further restructuring, as well as “re-branding,” he explains.
“We’re going to re-brand the company to make it one stated brand throughout the country.” This strategy will include an “elegant” phase-out of the Purcell Western States name. “It’s just going to be Purcell Tire & Rubber Co. We’re spending a lot of time developing a unified voice to the market.”
It’s clear the western U.S., where many of Purcell Tire’s mining customers are located, will remain a prime area of focus for the company. In May, Purcell Tire strengthened its position in the region by acquiring D&D Tire Inc., one of the largest OTR tire dealerships in North America.
The Fernley, Nev.-based company has 10 tire centers throughout Nevada and Idaho and mine servicing sites in eight states (including Alaska), plus an OTR tire repair shop and a retread plant.
The acquisition, whose price was not disclosed, doubles the size of Purcell Tire’s mining tire business and gives the company annual sales in excess of $300 million.
Enger management -- Ohio dealer wants 100 stores within 10 years
When Jim Enger spots an opportunity, he moves quickly. In late April, he discovered that a retail space had suddenly opened up in a prime spot in Akron, Ohio. (Enger’s company, Enger Automotive , number 72 on the MTD 100, is based in Euclid, Ohio, a Cleveland suburb north of Akron.)
The former tenant, a tire dealer, had lost his lease after 20 years. Enger, who wanted a presence in Akron, sprang into motion. He negotiated a lease agreement with the property’s owner, gutted and refurbished the entire shop, filled it with new equipment, hired new staff and held a grand opening — all within four weeks.
Enger is the proverbial “man with a plan.” He managed a Goodyear Tire & Rubber Co.-owned store for several years before opening his own shop in 1995. By 2002, he had three stores. He has since increased his store count to 17 at press time and will open three more by the end of the year. Within 10 years, Enger wants to have 100 retail stores.
“We’ll have an ‘alpha store’ -— a 12,000- to 13,000-square-foot facility -— that will be centralized in each area,” he says. That store will ship tires to smaller locations in the vicinity.
Auto parts are part of the plan, too. Enger owns two NAPA franchises that hot shot parts to his tire outlets. By 2018, he wants 12 NAPA stores.
Enger says growth will be fueled by funneling profits back into his operation while controlling expansion costs.
Up until now, most of his tire shops have been acquisitions or new leases, “but at least 50 of our 100 stores will be start-up green-field stores.” They will be built by Enger Construction, one of his other companies. Another firm, Enger Properties, will manage the sites. The idea is to keep the money in-house, says Enger. “When we build a store, we capture the revenue of the general contracting and construction fees. We have in-house labor that can be dovetailed into the construction company.”
He calls it “recycling the sale. We get to keep our money so we can increase our volume.”
Within 10 years, Enger says his company, Goodyear’s largest G3Xpress dealer, should be able to move 500,000 tires annually.
Most of Enger’s stores are located in the greater Cleveland area, though he has a couple of stores near Canton, some 60 miles away. “We look for up-and-coming areas where you might see a new Target or a new Wal-Mart going in.”
Enger works with up to 10 real estate agents at any given time. “We don’t want to be tied down to just one.”
Establishing yourself in a new town can be challenging, he says. Tire retailing is a word-of-mouth business, he explains, so it’s important to generate a buzz right off the bat.
To promote the opening of his Akron store, Enger brokered some time on a cable access TV program aimed at car enthusiasts. The show filmed at the shop, where Enger offered $9.99 oil changes to any customer who came in and mentioned the program’s name.
Keeping established stores in the public eye is another priority. Each summer, Enger stages a big tuner show at one of his Cleveland outlets.
Last fall, he brought in the Bigfoot monster truck for a charity event that raised money for the family of an area solider who died in Iraq. He tied it in with the local high school’s homecoming weekend. “About 5,000 people came out for it.”
For the time being, Enger will concentrate on northeast Ohio, though “we get a lot of offers” from tire dealers in other states who want to sell.
He admits he has concerns about growing too quickly. “That’s probably the number one killer of businesses. What you’re doing is stretching your resources too thin.”
See the MTD 100 list in our "Industry Resources, Research and Statistics" area on this Web site. See the "Top 100 Domestic Independent Tire Store Chains."