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Oil and water: A perfect pair

October 11, 2010
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Crude prices have risen well above $55-per-barrel and $2-per-gallon gasoline is now a distant memory. As such, consumers everywhere are tightening their belts and deferring services like carwashes and regular automotive maintenance raising the question: does starting a fast lube business in this volatile market make sense?

However, by efficiently managing overhead costs such as cost-of-goods-sold (COGS) and labor, while developing the appropriate menu of services and marketing for your businesses, it is possible to develop a successful and profitable fast lube.

Controlling costs
COGS and labor costs typically consume two thirds of a fast lube facility’s total operating budget. Through proper planning and research, a manager can trim unnecessary costs and reduce these operational expenses.

First off, find the right suppliers. The key to efficiently managing costs is to maintain short-term, flexible agreements with suppliers.

Be very cautious if vendors propose contracts that lock you in to long-term agreements.

A long-term contract may have short-term benefits, but it doesn’t allow you to regularly research and shop the market to search for better supplier agreements.

These contracts can also negatively impact your business over time, as they don’t typically protect you from price changes.

Labor management
When it comes to labor, learn from the past and plan for the future. The first step for effective labor management is to implement a system to track car counts and build a detailed vehicle history.

A vehicle history allows you to mirror your anticipated car counts with the appropriate staffing levels.

This history should include the day of the week and part of the day to help you plan for the ebbs and flows of car counts.

By utilizing this historical data to create your employees’ schedules, you will reduce the risk of:

  • Overstaffing;
  • Understaffing; and
  • Unnecessary labor costs.

What’s on the menu?
One of the best ways to help counter declining car counts is to develop a service menu that delivers long-term value to consumers.

You can increase your customers’ ticket averages by developing a high-value, price-tiered service menu.

However, remember that a high-value service menu should be designed around services that are OEM recommended.

It is important to avoid having employees recommend unnecessary services and not risk the trusting relationship you have built with your customers.

Make sure employees reinforce the long-term fuel savings consumers can see from preventive maintenance, such as:

  • Performing an oil change service with the OEM-recommended grade of motor oil to ensure a vehicle’s engine is running efficiently.
  • Regular maintenance to help drivers maintain a well-tuned engine, which could result in a 4 percent savings in fuel economy.
  • Changing the air filter every 12,000 miles can save consumers up to 10 percent in fuel economy.

Before adding additional services analyze your initial and ongoing investments to determine if it’s worth adding the new service.

A break-even analysis can tell you the number of services you must perform to pay off your initial investment and can help you determine the average number of services you will need to perform over time to maintain profitability on the offering.

Marketing for success
Although there is no single solution for promoting your business, it is clear you can stand out from the competition by developing a relevant marketing plan.

Your marketing and promotional efforts should focus on targeting your customers’ needs and providing valuable service offerings and, in turn, this will help you develop a loyal customer base.

Before developing your plan, take time to research and truly understand your customers’ needs.

In the end, your promotion will only be as effective as the current demand for the service in the marketplace.

Utilize some of the following tips to learn more about consumer needs:

Open a dialogue

Who better to learn from than your consumers directly? Begin a two-way communication with your customers to better understand their maintenance needs.

Before adding a service, your customers can help you as you evaluate whether there truly is a need for the service in the market.

By connecting with your customers, you can also determine which promotional strategies work the best.

Stay up on trends

There is an abundant amount of research available on consumer trends.

Take advantage of the research being done and utilize it to help you formulate a marketing strategy.

Shop the competition

What are your competitors doing to promote their businesses in the market? By researching the market you can quickly pick up on both good and bad marketing techniques and begin building a plan for your business.

Cooperative promotions

Utilize your carwash facility to package valuable bundled offers and cross-promote the two businesses.

For example, on service reminders offer a free basic carwash or discounted premium wash with the purchase of a preventive maintenance procedure.

A bundled offer allows you to combine valuable services and provide consumers with graduated savings as the price of the package rises.


Service reminders are an effective method to stay top-of-mind with consumers, provide relevant maintenance solutions and communicate seasonal promotions to consumers.

For example, a seasonal promotion can be an effective way to drive consumers to your facility as a one-stop solution to their maintenance needs.

Though the current market presents a challenging business environment, a fast lube operator can efficiently manage operational costs, utilize a high-value service menu and develop a relevant marketing plan to build a successful fast lube facility.

David Kunkel is the retail/installed/private label sales and marketing manager for Automotive Lubricants, CITGO Petroleum Corporation.

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