Already this year, Big O Tires added 12 locations to its network of stores and is promising even more growth in the years to come. The franchise hit the $1 billion sales mark in 2021 and announced its eastward expansion. But Brian Maciak, president of Big O Tires, explained that while growth is the goal, the franchise can’t do that without a mutually beneficial relationship with Big O Tires and TBC Corp. So, how is Big O promoting this type of healthy growth?
In this episode of What’s Treading with Tire Review, presented by AAPEX, we connected with Maciak to discuss how Big O plans to grow its footprint, the resources it gives its franchisees and the organization’s plans for a more digital customer experience.
- How Big O plans to achieve “monumental” growth (0:40);
- The way analytics play a role in finding markets for growth (3:53);
- Spreading brand awareness through digital transformation (7:27);
- Ways Big O is staying close to its franchisees and helping them with succession planning (11:57);
- What sets Big O apart from other automotive repair franchises (15:27).
Maddie Winer, Editor, Tire Review: Big O has experienced a lot of growth recently. The company has already opened new stores in Q1 of 2023. What do you all credit for this really rapid growth?
Brian Maciak, President, Big O Tires: In 2021, we opened 12 new shops, and we were happy with that. In 2022, we opened 15, so you look at that and you say, “Twenty-seven stores over two years, that is really good growth.” But we think the brand is just absolutely fantastic and deserving of even greater growth, so we have aggressive targets, we have aggressive plans, and it’s starting to really bear fruit because this first quarter of ’23, we’ve already opened 10 new locations. I credit it largely to some pretty diligent planning. I had a vision for pretty monumental growth and my leadership team is absolutely behind it. We come up with a plan of how are we going to grow. Where are we going to grow? What are our long-term aspirations?
Then, we take a step back and figure out in order to reach that, what do we need? We found that we had some deficiencies that we needed to shore up, and we found a heck of a lot of tremendous things that are going to allow us to accelerate the strong growth plans that we had. Largely, our growth strategy, our growth plan, consists of making sure that we have the right tools, the right resources for franchisees to succeed. We’re very cautious here to say we don’t want to just open rooftops, but we need them to be profitable and we need them to exceed even their own expectations. When we looked at our resources, we made sure that we have strong partnerships with whomever we’re going to marry, and we make sure that each of our franchisees and the support team are firm believers in our mantra, which is “The team you trust.”
We want our franchisees to never question why they’re paying royalties. We want them to know what we’re doing to help them be more profitable. When you have all of that, the recipe together, you’re going to have a very healthy marriage. I think we have that and that’s why we’re starting to really walk into the fruits of our labor. I’m not exactly telling you we’re going to have 40 new stores this year… but it’s going to be bigger than it was the year before, and I’m excited to see what it brings.
Winer: Very cool. Tire Review was at Big O’s dealer conference last year and found out that Big O is looking to expand eastward. Big O has recently added locations in Indiana, but can you go into some of the markets or cities that you all are targeting for growth?
Maciak: Yeah, so I’m not going to get so specific, but I can speak more about our growth strategy and tell you a little bit about where and with whom and how we’re going to get there. We’re trying to rely pretty heavily on analytics and we have some pretty good tools that will help us say where we are going to be the most successful. Focusing on where without saying specific markets, I would say we’re probably going to focus, at least initially, on the markets where we currently exist. We’ve identified more than a handful that could use more Big O’s. There’s no saturation out there, and so we’re probably going to start there.
Then our next step is going to be adjacent markets to where we currently are and grow from there. It’s largely because they may have the same customer base, and if we go into a brand new market on the East Coast, we’ve got to let the customers know who Big O is, and that takes time and money. So we’re going to crawl before we run. After we saturate those adjacent markets, we are going to look at new markets and we are going to take that plunge. What I said at the convention about moving eastward is absolutely the truth, but I would be lying if I said, “Hey, tomorrow we’re going to be in Charlotte, North Carolina.” We’re probably going to inch our way there, but we’re going to get there.
We’re also trying to make sure that as we grow, it’s aligned to our tire distribution system. We have arguably, under TBC’s leadership, National Tire and Wholesale (NTW), which is a big leverage point for our franchisees to be able to get the tires that they want through the TBC network.
That’s really our three stages of where we’re going to grow. The who, we’re going to grow with our current franchisees for sure. We’re going to focus on some conversions, and then we’re going to look at some new franchisees because we know that’ll be a new infusion into our bloodstream. In terms of how we’ll have brownfield and greenfield. I do think there’ll be acquisitions for Big. O. Probably not in ’23, but soon enough,
Winer: That definitely shows growth. Going off of that, you mentioned you don’t just want to open a Big O Tires location where there’s really no brand awareness. But in the new areas that you all are looking to grow adjacent to the areas where there are Big O Tires locations, what are some of the things you all are doing to bring that brand awareness to a new consumer base?
Maciak: It is largely centered around digital transformation. We have linked arms with a third-party company to help us in this endeavor. We want to know at the end of the day… I want to know how our customers are going to expect to have their car serviced in five years, in 10 years. It was different 10 years ago, it’s going to be different 10 years from now. I’m just not smart enough to know what that is going to be. I don’t have that crystal ball, so we’re linking arms with a whole bunch of subject matter experts to try and sketch that out.
Any way customers are going to want to be serviced in the next five or 10 years, we want to be that service provider. We want to learn now digitally how [customers want us] to communicate with them, how they want us to roll out our programs, how they want us to connect, and how frequently they do they want us to connect. We’re building a new plan, a new footprint and completely redoing what the customer journey is going to look like. At the end of the day, the one thing that we want to maintain is we want to have the tattoo of Big O, the team you trust, emblazoned on all of our franchisees, all of our employees, and then hopefully our customers. If we do that successfully, I don’t think we’re going to have a problem making this a national brand.
Winer: Very interesting. In providing a more digital experience for the consumer, in terms of what that looks like, I mean, I know just from my standpoint in the industry, we’re seeing a lot of online appointment scheduling, texting customers, things like that. Is there anything specific that you all are looking at in terms of a more maybe digital experience on the customer side?
Maciak: We want them to be able to use their phone to, of course, just make the online appointments, but also figure out what kind of tires might be great for their car. We want to be able to educate that consumer before they even walk into the door. We want clarity in terms of our pricing. Then, when we’re under the car looking at what we can do to make sure that car is as safe as possible, we want to be able to digitally send them a photo or video of what we found so it helps build that trust. They’re no longer taking the word of a mechanic, but they’re actually seeing what needs to get done.
A lot of customers today just want to be able to pay digitally, then they want to be able to just pick up the car, pick up the keys, get in their car and leave. Some don’t want to interact with the franchisees. Some want to interact deeply and be explained what they’re buying. Again, we just want to be able to, do whatever that customer wants, we want to be able to not just meet their needs, but really exceed their expectations.
Winer: Makes sense. I know digital inspections are very much gaining traction in the industry.
Maciak: They’re in vogue, yes.
Winer: Another thing I’m curious about… obviously you guys have a huge franchisee base, and it’s no secret that consolidation is really happening at a rapid rate in the industry right now. More private equity firms are coming in, things like that. I’m curious how Big O Tires is working with existing members to create succession plans for other businesses or other franchisees that might say, “Hey, I’m looking to get out of the tire business.” It’s beneficial for Big O to keep those locations, so is there any initiatives around that in order to keep these locations as part of the Big O family?
Maciak: Absolutely. Consolidation is everywhere, and succession planning is key to us. I’ll tell you a story, just maybe two weeks ago, I had a great opportunity to have lunch and then play golf with Dan Cathy, who’s the chairman of Chick-fil-A, a wonderful franchise model. In four or five hours with him, he picked my brain for whatever I could add, and I picked his for everything that I could muster from him. He has run and grown a tremendous brand and had great wisdom for me. He mentioned a saying that I have heard from John Maxwell. John Maxwell will say, “Success is about succession. If you’re focused on succession, then you’re not living for the here and now, but you are looking for tomorrow, making sure that that brand can exist,” and that was music to my ears. Fortunately, that’s something that we have already built in over the last maybe 18 months into our annual business review.
What we do is our field leadership teams go out every year and meet with the franchisee for their year-in-review business evaluations. Of course, we look at the economics of tire units and gross profit and service mix and expenses, their turnover, and we’ll offer some advice. We also sit down to say, “What is your long-term plan? Is it to grow? Do you want more stores? Do you just want to make your current stores more profitable? Or are you going to be looking to exit the business and how can Big O partner with you to help you reach that goal?” At the end of the day, they’re spending a lifetime building a profitable store or profitable stores, and that’s going to be their retirement, and so we want to help them maximize that. We want to make them profitable while they’re operating it so they can maximize the sale price when they decide to exit.
Also, we’re self-interested, and they know that. We want to make sure that the store stays in the Big O family, so it’s mutually beneficial to partner with our franchisees. It is central to our annual business plan to know what our franchisees want to do, whether it’s to help them maximize that sale or keep that store in the network.
Winer: Brian, obviously Big O is focused on growth and bringing, you even said it, new dealers, new franchisees into the fold, so what do you feel Big O offers that really sets itself apart from other franchise groups in the industry?
Maciak: I have been with TBC for 14 years and now as president and COO for Big O. My very first boss, he took the complexities of running a business and tried to distill it down as simple as possible. What he has said is, “You take care of people, you take care of your employees, you take care of the customers,” and he promised, “the financial results will be there.” He is exactly right. You take care of those two constituent groups, and you’re going to have a strong business.
I think more than any other franchise that I know, we do that very well. I harp on my leadership team in the field because they make sure we’re taking care of each other. I feel as though I could lead them into battle, and all of us would go willingly. We stand shoulder to shoulder. Similarly, we stand shoulder-to-shoulder with our franchisees. I think more than any other franchise that I’m aware of, our compensation is tied in part to the profitability of our franchisees, so we want them to know we have skin in the game. We’re in the boat with you. If you don’t increase your profitability, our compensation is impacted by that, so they feel as though we’re actually a team rowing in the same direction, and there’s truth to that.
The other way that sets us apart from other franchisees is just the TBC corporation. We’re a vertically integrated company. Again, arguably the best tire distributor is under our roof, National Tire Wholesale. We are owned by Michelin and Sumitomo Corporations. What that means is there’s a plethora of resources at our disposal. We have product availability at hand to feed our franchisees and make them profitable. I just don’t know of another franchise that can compete with that, and I think if I were to guess, I think that’s why we were ranked as the number one wheel and tire franchisee of the year last year. I think that’s a great recipe. When you throw all of those ingredients together, the stew tastes pretty good.