Four Parking Spaces Today, Fast Lube Tomorrow

Monday, May 01, 2000

Modular fast lubes are a hit for Ohio operator

Tim LaGanke spent nine years developing his 10-minute oil change in Cleveland, OH under the name LubeStop before he decided that building the lube shops from the ground up wasn't the way he wanted to go. So after selling his share of the company to his partner in 1994, he headed to Florida to think about his next move.

It was there that LaGanke came across an interesting concept: modular buildings. He met the president of Checker Hamburger franchise, and he immediately began to see the possibilities for the oil change industry. "The restaurants were small buildings built modularly and then shipped to the site. Everything is in them when they're shipped so it's almost like a turnkey operation when they get set on the pad," says LaGanke.

LaGanke spent most of 1994 developing a prototype modular oil change building. At one point, just as he was completing the project, the president of Pennzoil was in town, and he decided to pay LaGanke a visit. He was so impressed he purchased LaGanke's prototype and shipped it to a gas station site in Pennsylvania. Soon afterwards, LaGanke began the process to secure a patent for his creation.

"The building itself is designed to operate almost like an oil changing machine," says LaGanke. "I call it a machine because it's got everything it needs there." The buildings themselves are brought by truck to the selected site and set on a patented concrete vault that becomes the lower level where technicians will work. Inside the building are all the components necessary to open--compressors, equipment, doors, and even a restroom. Once placed on the pad and hooked up to utilities, the QuickChange is ready to go.

After selling his first building, LaGanke built 10 more in Cleveland. These units sold just as easily as the first one, and he also opened several himself around the Cleveland area so he could own and operate his own buildings again. By 1996, he was building them with the help of a modular building company in Georgia, which started selling them to his specifications. Since then, LaGanke has sold over 20 of those buildings to other operators.

One of the main draws to the QuickChange idea is that since the steel-construction modular buildings take up so little space, they can be planted on very small lots...alongside a carwash or gas station, or in the parking lot of a retail center. LaGanke says one of his single-bay buildings fits in an area as small as four parking spaces. "Not only is it only $400 a month rent there, but it's taking up space that otherwise never would have been used for anything else...other than to pile up snow," he says.

The cars certainly pile up for the fast service, though. The QuickChange is set up exclusively to get cars into the bay, serviced and on their way again in 10 minutes. Since customers stay in the car, sometimes a car can be in and out in about five minutes.

Over the years, LaGanke has learned a thing or two about the history of the business, developing his own set of rules along the way. "Back when some of these big companies started out in the 1970s, it was simply just a quick way to get your oil changed. Today it's turned into a 30 to 40 minute ordeal," he says.

While LaGanke does offer a basic 14-point service, consisting of the basic oil change and filter, he only sells additional wiper blades and filters, drawing the line at more complicated services. "We're selling time and convenience," he says. "The future to me in the oil change business is back to basics. I'm going back to the quick oil change because I have the low cost of overhead and investment. That's where I see my niche in this business." Solid concrete vault There are currently 31 buildings built by the QuickChange Operating Company on the ground, 12 of which are owned and operated by LaGanke. Whether the buildings are single or double-bay, the entire operation is possible thanks to LaGanke's patented vault component.

Usually installed in a pit that is dug the day before the modular building is delivered, the concrete vault is about 10 feet wide by 20 feet long and about 6 feet deep, with walls that are a full 10 inches thick. Since it is 6 feet in depth, it allows for technicians to stand on the base of the vault to perform services on the car above. There is room in the vault for about a day's worth of supplies. To get more oil and filters, it's only four or five steps to the main level. The vault is complete with a rolling drain pan and oil tanks.

The QuickChange buildings can hold up to 650 gallons of new oil of one type and about 300 gallons of another type, and there are used oil holding tanks in the vault as well. "One of the big issues landlords have with oil change businesses are EPA exposure concerns," notes LaGanke. In all, the vault is about 47,000 pounds of solid concrete without any seams or other places for it to leak. Therefore, oil is contained without the need for underground storage tanks.

Another important factor that helped LaGanke to receive his patent for the vault in 1997 was the fact that the entire building is transportable. "If you put it in a shopping center parking lot and then two months later competition moves in across the street from you, you can pick this operation up and take it someplace else," says LaGanke. The entire process to hook up the building usually takes about four hours, and can carry a total price tag of as low as $120,000 including site work.

Since the overhead is considerably lower than some larger chains' franchises, LaGanke says his sites don't need to do as many cars a day in order to break even. The average ticket price around the country at the QuickChange stores is about $30. In LaGanke's Cleveland locations, an oil change starts at about $26.99.

He estimates that his locations service an average of 20 to 23 cars per day, although some only handle about 12 cars a day and still manage to make a profit. Yet another one of his stores recently serviced 52 cars on a Thursday. "Now they were really pumping them through, but that's what we're capable of. It's very efficient," he says.

LaGanke says that he has found that it takes an average of six to eight months for a QuickChange to become profitable. He believes this "ramp-up time" depends on several variables such as land, rent and site work costs, but is still generally lower than many other companies.

As for getting good workers, LaGanke says it has gotten much easier to find reliable and well-trained technicians than it was when he first began LubeStop. "Back then I had to hire guys and take them up to Detroit to teach them at a store there. Now there's an oil change place in almost every area, so you can always hire the good guys away from other companies," he says.

LaGanke entered the oil change field in 1985, following 25 years manufacturing bolts and screws. He had also been vice president and general manager of a large company in Detroit, when one day he went in to get his oil changed at a Pennzoil Ten Minute Oil Change. "I said, 'I'm going to do these back in Cleveland!'" says LaGanke.

The resulting company ended up becoming a $13 million a year operation with 35 stores, but after a while LaGanke decided to move on. He didn't think he would move on to the same business--oil changes--but it was in the cards anyway. "The invention of the building is what got me back into this. It's a new way to go about the oil change business." The father of two daughters and one son, LaGanke says he enjoys the fact that oil changing is a customer-service driven industry and that it has daytime operating hours, unlike restaurants that could be open all night long. He's also managed to run his own 12 locations efficiently, with the help of an operations manager who handles most of the personnel issues as well as stocking products and helping to set up new locations. This comes in handy in busy times, such as the past year--LaGanke set up four new stores in the same amount of months. He doesn't see the growth stopping any time soon. In fact, he hopes to grow from 12 stores to 18 in 2000.

LaGanke's son, Tim, Jr., is the president of the company, and he is mostly in charge of day-to-day operations. He will no doubt be instrumental in his father's next endeavor--a possible franchise. If it happens, LaGanke plans to offer franchisees a complete package: the building and all the operations. He is currently seeking an oil company to partner with, and feels he could offer a lot to operators wanting to buy into QuickChange. "I own and operate my own stores, and we are a company that is using its own product...that's credibility in and of itself," he says.

He does admit that he would love to own all the QuickChanges himself if he could. "I don't need to sell buildings. That's not my main cause in life. The money is in the operating business," says LaGanke.

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