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2007 Top Shop Winner: Gatto’s Tires & Auto Service

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Convention just doesn’t seem to fit in. Not always, and not with statements like, “We just do our own thing.” Or, “Sometimes the customer isn’t right.”

Not that Gatto’s Tires & Auto Service has succeeded by living on the fringes. Far from it. As the first winner of the Tire Review Top Shop Award presented by Hennessy Industries, running by-the-book has served it quite well, thank you.

But sometimes Gatto’s has had to by-pass convention – even reason – to control its own destiny and assure the future. Being a little different hasn’t hurt, either, especially on the highly competitive east coast of Florida.

With seven retail stores, one commercial truck tire center and nearly $15 million in sales, the Brevard County-based Gatto’s has become the region’s most recognizable name in tires and car care. While the 35-year-old business has served generations of area residents, getting to the top – and staying there – hasn’t been as easy.

The dealership has a 50/40/10 sales mix (tires/service/tire services) with 98% of its business coming across the retail counter and 2% from its single commercial tire center.

Founder Mike Gatto spent 22 years as a regional retail manager for Goodyear, traveling so much that daughter Pam, the current president and CEO, went through seven schools before graduating from high school. Enough was enough, so in 1972 Gatto got Goodyear’s help establishing his own retail store, and he chose to settle in then-tiny Melbourne, Fla., instead of more populated areas.

Why Melbourne? Not much competition there, Mike figured. And he was right. One store soon became two, then four and finally 10, spread from southern Brevard County on northwest to the outskirts of Orlando. And soon enough Gatto’s Goodyear and its familiar blue/gold paint scheme was well known. Perhaps too well known.

One day in 1973, as Pam explains, she went to the store to help her dad out. “A couple of weeks” turned into 34 years, the last 10 as president and CEO. Now retired, Mike, a quite-spry 82, still serves as a sounding board, and still dispenses sound advice – the kind of conventional and conservative, walk-before-you-run wisdom that served him well over the years.

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As time went by, and the 1980s became the 1990s, Pam began seeing signs that change was going to be needed. More and more competition was cropping up, and it became apparent that being Gatto’s Goodyear – as well known as it was –wouldn’t be enough to stave off the threat.

Three stores near Orlando, the furthest from Gatto’s Melbourne homebase, were closed. Marketing efforts were changed, with the focus going to Gatto’s Tires & Auto Service and away from Goodyear’s coattails. Finally, the hardest decision – going multi-brand. “Going multi-brand after so many years as a Goodyear store was difficult and it took years,” she says. “But we had to do it.”

With 30-odd years invested in Goodyear and the Goodyear brand, getting Mike to agree to such a dramatic change took some doing.

After all, Goodyear put bread on the table and a roof over their heads, gave Mike a chance to succeed on his own and gave him a familiar, trusted name to build from.

It took two-plus years of discussions and thinking, with Pam making her case time and time again that future growth and stability had to come from a collection of tire brands, not one. Eventually, Mike saw that the change needed to be made, and today he hails his daughter’s bold move. As tough as it was for him to accept, going multi-brand gave Gatto’s the chance to grow even more.

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More importantly, it gave the dealership the ability to build its own brand. As new competition came to the area, muddying the tire waters, being able to separate from the pack proved invaluable. Today, Gatto’s still carries Goodyear, Dunlop and Kelly tires – and is a Gemini dealer – but now has Toyo, Michelin, BFGoodrich and Delta in the arsenal. The results, as Pam notes, were stunning.

Changing Focus

“Our advertising and merchandising definitely shows our personality as a business,” says Pam. “We want our messages and merchandising to reflect our philosophies as a good community business and a good neighbor. We want what we believe in as a business to be seen in what we say.”

Ten years ago, Gatto’s Tires & Auto Service was born, and the old Gatto’s Goodyear was put to rest. Gatto’s ad agency was enlisted to give the dealership an overhaul. Store paint and design schemes were altered or outright changed to emphasize the Gatto’s brand name, and it was put out front and center.

Five years ago, the now familiar “Gotta Go to Gatto’s” tagline was developed, and became the centerpiece for all of Gatto’s merchandising. It was hammered home in everything from store display headers to direct mail to billboards to TV and radio, not to mention POS brochures.

The latest addition to the brand-building blocks is its current “Yes, We Do That” campaign, established to bring focus to the service side of the business and stave off growing car dealer competition. Each location’s front door carries the phrase, followed by a door-tall list of all the mechanical services Gatto’s offers.

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“Our great people allow me the pleasure of standing behind the Gatto name with confidence,” says Pam. “The fact that we branded ourselves, as opposed to living under a major tire brand identity, is one of the keys to our long and successful relationships with customers and helps us speak personally to potential new customers.”

People, she insists, are the alpha and omega of business success. “I learned from the best retail guy in the world,” Pam says of her dad. It’s a point he quickly dismisses, as any father might. But the obvious respect and care they have for each other transfers to store employees, many of whom have been with Gatto’s for at least 15 years, including Pam’s right hand man and sales manager John Tidwell, a 19-year vet.

“We’re a family owned and operated business. We live and work in these communities, and we’re always available to our customers,” Pam says of her team’s longevity. “Customers appreciate knowing they’re dealing with people with roots in the community, and they appreciate seeing the same faces when they walk into our stores.”

Among those familiar faces are well-trained and heavily ASE-certified service techs and service writers. Hundreds of man-hours each year are dedicated to on-going professional training, especially when new technology challenges – like TPMS – arise.

Gatto’s claims lower turnover than the industry average. “My dad always said, ‘Hire slow and fire fast.’ We have the first part down, but sometimes we don’t get the second part right. We make every effort to help people fit in,” she says.

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New employees learn the Gatto Way from established employees who understand what it means to the success of the whole. When a new location is opened, such as its now 10-month-old Lake Washington store, it is staffed with veteran employees, some earning promotions at the new shop.

“The key to this business is people,” she insists. “It’s got to be the people first. Without great people you don’t have the level of customer service that makes a business successful.”

“The customer is not always right,” says Tidwell. “But we have created an environment that allows us to address customer needs quickly and effectively.” Complaints are part of the business, but the Gatto’s team wants every customer to be satisfied. Pam and Tidwell stress that in their part of Florida, flush with retirees, word of mouth is king. All the advertising and goodwill in the world won’t offset bad remarks overheard at the local bridge club.

Getting Gatto’s-worthy employees is hard, so hard that the company often looks well beyond its immediate area for top-shelf talent. Harder still is training. Getting employees – especially younger ones – to understand what good customer service takes has grown increasingly difficult. “They just don’t understand,” Tidwell complains. “You cannot teach a pleasant personality and a good work ethic.”

“Finding great employees is one of the most critical challenges we face now,” she says. “Our standards are high, and many younger people don’t relish a 60-hour work week. Master technicians are in short supply, and competition for good people is fierce.”

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Tougher Market

Tire and service sale competition is equally fierce in Brevard County. The coastal county runs 72 miles north and south, and is less than a quarter of that in width. The Melbourne metro area is dead center, bracketed by I-95 to the west and the fabled A1A to the east. To the north is NASA’s Cape Canaveral facilities and Cape Canaveral Air Force Base. To the south is Ft. Pierce. The county, as a result, is a mixed bag of rocket scientists (literally), beachcombers, young families and retirees.

Jostling for position in the market are such outfits as NTB/Tire Kingdom, Tires Plus, Sears, Wal-Mart, Allied Tire, Sam’s Club, not to mention numerous car dealers who see a future in rubber.

Beating the dealers at their own game, Gatto’s launched its Milestone Maintenance program, which allows Gatto’s to reach out to customers for OE-recommended service. Every car that comes in goes into Gatto’s computer system, and service interval reminders are sent out under the “Yes, We Do That” tag. Where Gatto’s differs from the car dealers is they give customers options on how – and how much to spend – to keep their cars running right. Hence the Milestone Maintenance moniker.

“Since our software system keeps a history of all services we have performed by vehicle, we can easily keep track of what’s been done and what remains,” she says. “This ensures that all recommended maintenance is presented to the customer in a timely manner. Customers love the fact that we have a complete history of their vehicle at our fingertips…and theirs.”

Making good use of modern technology has also given Gatto’s the edge. “We’re proud of the fact that every computer terminal throughout our company, more than 35 of them, has Internet access,” she says. “Some dealers don’t have access, and many who do only use this opportunity in a limited way.

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“By having Internet access, our managers have a convenient and instant way to get information. We know immediately if products are available and are able to order online or check specifications of products. It’s another example of how we have stayed with the times to create a great experience for our customers.”

Fertile Ground

Pam plans to add stores in the future as the county continues to grow, but there is no timetable. Finding the right land at the right price is as hard as finding good people. “I learned the hard way that ‘location, location, location’ is very true,” she says. As areas of the county grow it is easy to see where we need to go.” It’s just hard to get there sometimes.

Of the seven Gatto’s locations, three stores were built from the ground up. Three more were remodeled after a series of hurricanes battered the coast in 2004. The insurance settlement allowed them to bring the older stores in line with the look of the newer stores at a fraction of the cost.

“The stores don’t all look the same, which bothers me a little,” she says. “But it’s the nature of the available land we can get that dictates the configuration of the store.”

While Pam frets the look of the stores, it’s hard to tell them apart. They are all clean, bright, attractive, family oriented and focused on selling the Gatto’s brand, not tire brands. There are no formal waiting areas. Instead each store has a series of round four-seat tables and freshly ground coffee, which customers seem to like a lot more than couches.

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The only remaining oddball in the system is Gatto’s Cocoa location, which until recently was a mixed retail/commercial center. After much deliberation, the two sides were split, each gaining its own physical place and own manager. The retail side is being remodeled right now; the commercial center is in a separate structure behind the retail store.

The split, while painful to some employees, resulted in greater attention being paid to both sides of the business there…and sales increased.

In the bygone days, a store-owner would manage by feel. Pam prefers cold hard numbers. Every possible metric is measured. Stores track and focus on gross profit, not sales; that way they know they have to capitalize on every opportunity.

By staying up with the numbers, Tidwell can make quick adjustments and uncover growth opportunities that may not have been apparent before.

Slow methodical growth is what is expected, she says. When they see something other than that, “we know there is an issue.”

The Gattos – father and daughter – have spent 35 years busting myths and breaking icons, betting the house on the Gatto name, and winning the tire battles in spades.

“We just do our thing,” says Pam. “We don’t feel special.”

Except that Gatto’s is now North America’s Top Shop.

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