Owning a Lube Shop

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AlphaMale8

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May 12, 2011
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Oakville, Ontario, Canada
Being a relative n00b, I hope I posted in the right forum for my questions below.

Like all of you gents, I'm passionate about oil, good-quality oil filters (no cardboard end caps if possible, lol), and tip-top running cars, and have been thinking about running either an oil change or a detailing shop.

For those who have run an oil change shop before or currently (franchise or non-franchise - I'd be interested in the latter) and can provide tangible input, is it still profitable in this day and age, or are cheapie "$19.99 oil change" places undercutting the market and making it not worthwhile when you have payroll, liability insurance, inventory, merchant transaction fees, high taxes (here in Canada at least!), rent and utilities to cover each month?

I am a service advisor at a dealer, so I know that you don't survive on just oil changes. You must (ethically) up-sell beyond the oil change, and I'm guessing for an oil change shop, tire rotations, air filters, cabin filters and wiper blades would be top items to up-sell, and if you have a licensed tech, maybe tire repair/balancing and brake servicing can be done.

Any thoughts or opinions? Still profitable in this day and age assuming an excellent business plan in place, unique marketing angles and strong client service?

Thanks in advance and sorry for the length.
 
Personally, I can't fathom how you can cover the cost of materials, expenses, make a decent living, and still provide quality work for $19.99. IMO, it is a loss leader that brings a client to the shop. Money is made elsewhere. So, as long as you plan to offer all these other services you mentioned, you might stay afloat. Otherwise, lube service alone at 19.99, I don't think so.
 
Originally Posted By: Quattro Pete
Personally, I can't fathom how you can cover the cost of materials, expenses, make a decent living, and still provide quality work for $19.99. IMO, it is a loss leader that brings a client to the shop. Money is made elsewhere. So, as long as you plan to offer all these other services you mentioned, you might stay afloat. Otherwise, lube service alone at 19.99, I don't think so.


Hey Pete, thanks. No no, I personally would NEVER sell a $19.99 oil change - I charge more than that personally to friends and family (but I use OEM filters :), but other shops do, so what I meant to ask was do places that sell oil changes that cheap undercut independent shops?
 
Originally Posted By: AlphaMale8
so what I meant to ask was do places that sell oil changes that cheap undercut independent shops?

For majority of the population, I would think so. Where you might find your niche is with owners of more upscale cars that will not dare take their cars to a quickie-lube type place because they know what kind of quality they'll get there. The question is, whether this niche market will be big enough for you to live off of.
 
We have "Mobil 1 lube express" shops here. Only know of one but believe they're a chain.

What I would do, to be different, is do-it-for-you if you bring in filter and oil, and for only $15. Then people could just hit walmart for their favorite supplies. Could make a wall of glass between garage and waiting area so the critical customers could watch the guys work.
 
Originally Posted By: Quattro Pete
Originally Posted By: AlphaMale8
so what I meant to ask was do places that sell oil changes that cheap undercut independent shops?

For majority of the population, I would think so. Where you might find your niche is with owners of more upscale cars that will not dare take their cars to a quickie-lube type place because they know what kind of quality they'll get there. The question is, whether this niche market will be big enough for you to live off of.


And convincing them to use your shop rather than the dealer.
 
I work at a dealership. Always thought a kwik lube would be a good idea. The previous shop I worked at charged $9.50 for labor on an oil change. They paid their tech about $10/hr, usually took an hour to do an oil change.

My current shop charges no labor, we make our money on the oil and filters. If you figure 100% profit on parts, we make about $16 on a typical oil change, before paying our tech $10 per hour.

So, oil changes are usually a losing proposition. Oil changes are usually a loss leader that gets people in the door. If you do not use this as an opportunity to up-sale necessary and needed parts, it is a losing proposition.

Because we are in a small town, most customers drop their car off and want a "loaner". After they burn up your gas running errands, you are even deeper in the hole. Then there are those who expect to have their vehicle picked up while they are at work. Figure tech time to pick up and drop off, you are even more in the hole.

Then there is the guy who gets paid $8 per hour to wash the vehicle and vacuum it out (all expected by the customer). If you charge what the service is worth ($100), there is money in oil changes. Otherwise, expect to go broke if you are solely doing service work.
 
Originally Posted By: otis24
I work at a dealership. Always thought a kwik lube would be a good idea. The previous shop I worked at charged $9.50 for labor on an oil change. They paid their tech about $10/hr, usually took an hour to do an oil change.

My current shop charges no labor, we make our money on the oil and filters. If you figure 100% profit on parts, we make about $16 on a typical oil change, before paying our tech $10 per hour.

So, oil changes are usually a losing proposition. Oil changes are usually a loss leader that gets people in the door. If you do not use this as an opportunity to up-sale necessary and needed parts, it is a losing proposition.

Because we are in a small town, most customers drop their car off and want a "loaner". After they burn up your gas running errands, you are even deeper in the hole. Then there are those who expect to have their vehicle picked up while they are at work. Figure tech time to pick up and drop off, you are even more in the hole.

Then there is the guy who gets paid $8 per hour to wash the vehicle and vacuum it out (all expected by the customer). If you charge what the service is worth ($100), there is money in oil changes. Otherwise, expect to go broke if you are solely doing service work.


Thanks Larry, great points! At my dealer, the tech gets paid 0.3 hours of labour on an oil service, and upselling is indeed almost always needed to pad the bottom line.
 
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My advice is to not do what everybody else does. The town I used to live in had a privately owned lube shop that I loved. It had 3 drive-through bays with pits in the floor. You drove in, and could get out and watch exactly what was done, or stay in your car. They changed the oil and topped off everything under the hood (except transmission) and checked the air filter. They also checked/filled air in the tires. The entire process took about 10 minutes, and I never went there when it was empty. They always had business. For me, it was because I could watch everything they did, it was quick, and the prices were reasonable.
 
This is what I would do to try to make a niche market for my shop. I would promote a Saturday morning workshop where you can teach/demonstrate simple car maintenance to willing costumers who are not so mechanically inclined, but have an interest in learning about cars. Could cover various basic topics. Even charge a fee. By doing so, I would have the goal of creating a loyal customer base who now trusts my shop because we demonstrate our knowledge and passion for cars during the workshops. In my view, it would now be easier to up sell these customers. Just my thoughts.
 
ok, i have some input for you, it costs me $17 roughly to do an oil change (own a lube shop) you have to make your money from upsell, i know that is a dirty word but it is reality! do not go with a franchise because you will have to lock into a contract that requires you to buy product from them, this will cost you more then buying the same product w/o a contract. also put cameras in the shop so not only will you see what is going on above the car but also record what is being done under, people will sue and it is up to you to prove you did what you said, i got sued by a guy that had a diff service, it was 14 mo. after we did the work and his diff. locked up and he wrecked his truck, he claim we left the plug out but it was 14 mo. and 15k miles there is no way,he also says that no one had worked on his truck since, i think another lube shop did an lof and checked the diff for a possible upsell and left it out. but i lost since i could not prove that we did put it in. that takes us to the next subject...insurance, i paid $1,800 a mo before i got sued and now i pay $2,300. honestly after everything is paid i make about $3k a mo. but i have a car wash that does make more and has far fewer headaches, that's the way i'd go if i were you.
also anytime your lof price is below $20 you make less upsells, i lost almost 40% of my average upsells after i dropped below $20, it's like people are bound and determined to not spend over $20.
 
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What if oil changes are $40 for conventional?

How would that change the landscape?

I ask because that is the average price around here among dealerships and independent shops.
 
All great ideas! Thanks guys.

Originally Posted By: mopar_monkey
ok, i have some input for you, it costs me $17 roughly to do an oil change (own a lube shop) you have to make your money from upsell, i know that is a dirty word but it is reality! do not go with a franchise because you will have to lock into a contract that requires you to buy product from them, this will cost you more then buying the same product w/o a contract. also put cameras in the shop so not only will you see what is going on above the car but also record what is being done under, people will sue and it is up to you to prove you did what you said, i got sued by a guy that had a diff service, it was 14 mo. after we did the work and his diff. locked up and he wrecked his truck, he claim we left the plug out but it was 14 mo. and 15k miles there is no way,he also says that no one had worked on his truck since, i think another lube shop did an lof and checked the diff for a possible upsell and left it out. but i lost since i could not prove that we did put it in. that takes us to the next subject...insurance, i paid $1,800 a mo before i got sued and now i pay $2,300. honestly after everything is paid i make about $3k a mo. but i have a car wash that does make more and has far fewer headaches, that's the way i'd go if i were you.
also anytime your lof price is below $20 you make less upsells, i lost almost 40% of my average upsells after i dropped below $20, it's like people are bound and determined to not spend over $20.


Hey Mr. Chrysler, thanks so much, this was the exact counsel and feedback I was looking for. There are some terrible people out there who try to squeeze businesses for free stuff. It's the same up here in Canada too, though in the USA, I understand people can sue for even the most frivolous things, and greedy lawyers love it.

I appreciate your sharing of numbers. I've done my due diligence and spoke to a few of the shops I deal with locally, but sadly, one thing I notice is that 9/10 mechanics are very negative in their outlook on things even though they are super-nice guys (I only deal with nice people). This is why I posted here. When I talk to them, they seriously all say that they're not making any money and that there's too much sh!te to deal with. Even the techs I work with are all negative. Maybe some shops don't want to say they're doing well (even if they might be) so you keep coming to them? Who knows. And funny enough, my mechanic said the same thing to me, run a detailing shop instead of an oil change place, lol.
 
I think you would do well to work in a lube shop for six months first. Consider it an education. Watch the owner, the other employees, the successful upsells, the unsuccesful ones.
 
Do other ones exist in your area? If yes than you are in a tough spot trying to lure folks in.

The ones around here(a few chains) sometimes have their employees trying to wave folks in. Its pretty sad.
 
Originally Posted By: rjundi
Do other ones exist in your area? If yes than you are in a tough spot trying to lure folks in.

The ones around here(a few chains) sometimes have their employees trying to wave folks in. Its pretty sad.

they do that here too. It is extremely sad. I also shake my head at the quick lube that is open at 9am on Sunday here. Those guys just sit there and drink coffee and [censored] all morning without a sale in sight. What a waste.
 
If you are good at what you do, there can be good money in detailing vehicles. There's a kid that worked at a dealership where I worked. He did great work detailing automobiles. His dad died and left him a little money. He started his own detail shop. He employes a couple of people. The big money is in washing and detailing combines and tractors for the farmers. He charges in the area of $1000 plus for farm machinery, and gets it! I was told that after he pays for his chemcals, help and overhead, he nets about @ $100k per year. Oil changes would be a good side-line that would provide a job opportunity for a willing young person and enhance a detail shop's bottom line.
 
Originally Posted By: The Critic
What if oil changes are $40 for conventional?

How would that change the landscape?

I ask because that is the average price around here among dealerships and independent shops.
You must live in a very expensive part of town.

Remember I sent you a pic of Jiffy lube here doing it for $19.99?

Now they are $15.99! They are not making any money on oil changes at that price. They have to be trying to upsell everything on the board to stay open.
 
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