Mission: To triple the size of Mr. Lube within five years
Assets: An MBA and experience expanding large companies
Yield: Top job at a franchiser that has deep-pocketed owners
By Glen Korstrom
Acquisitions are the most likely way that Mr. Lube Canada president and COO Stuart Suls will achieve his goal of tripling the size of his oil-change franchising business within the next five years.
It’s an ambitious target given that Mr. Lube has 101 Canadian locations generating $150 million in systemwide sales.
One store is set to open in Regina in October, and Suls expects eight more to open in 2011 – a slow pace for new openings given such lofty ambitions.
Suls admitted as much between bites of a taco at a Mexican restaurant across the street from a Mr. Lube location in Vancouver’s Marpole neighbourhood.
“We’re going to expand through organic growth and building flagship stores [and] potential acquisitions of other chains of varying sizes,” he said. “We will also enter partnerships with large landowners such as Loblaws or Home Depot, which have multiple sites across Canada. Instead of me finding one site at a time, we’re trying to find a partner who will not be invested in this, who will say, ‘I’ve got 30 sites in Canada or 80 sites in Canada.’”
About 76% of Mr. Lube outlets are franchises. Most new outlets will be, too, Suls said. Mr. Lube Canada has a deep-pocketed ownership group capable of financing significant growth. Suls, however, is not a principal.
Owners include Boston Pizza International Inc. founder and owner Jim Treliving, who is likely best known for his role as an investor on CBC’s Dragon’s Den.
Boston Pizza co-owner George Melville and former Boston Pizza CEO Mike Cordoba also own stakes in Mr. Lube, as do several members of Vancouver’s Tricknor family and Mr. Lube founder Cliff Giese.
They promoted Suls to president at the start of 2010 knowing that he had plenty of experience strategizing about acquisitions and building fast food franchising giant Arby’s in the 1990s, before Arby’s merged to become Wendy’s/Arby’s Group Inc. (NYSE:WEN) in 2008.
Suls played no role in the Wendy’s-Arby’s merger, but former Arby’s CFO Ken Thomas said he helped transition Arby’s out of corporately owning its stores into being primarily a franchiser.
“[Suls] worked for me in strategic planning and development,” Thomas told Business in Vancouver. “I wasn’t surprised that he was able to take over the slot of president at Mr. Lube, because at Arby’s he worked well with the legal department, the administration group and our parent company in New York, Triarc.”
One challenge Suls will have to overcome when selling franchises is to convince potential franchisees that franchises are worth a $50,000 one-time fee, 7% ongoing royalty on gross sales, 4% national marketing fee and 2.5% local marketing fee based on gross sales.
The Canadian arm of Jiffy Lube International Inc. charges a $25,000 one-time fee, 5% royalty on gross sales, 3% regional marketing fee and 2% local marketing fee based on gross sales.With more than 2,000 locations, the Mr. Lube competitor is North America’s largest oil-change franchiser.
“Mr. Lube is considerably more expensive,” said Richard Rhee, who owns a Vancouver-based Jiffy Lube franchise.
The flipside of that, Rhee admitted, is that Mr. Lube franchises have a much higher resale value.
Mr. Lube spread to B.C. in the 1980 after being founded in Edmonton in 1976. There are now 19 locations. Jiffy Lube entered the B.C. market in 2001 when executives at the Shell Oil Co.-owned company decided to buy and rebrand some McQuick Oil Lube locations. The company now operates six B.C. locations.
Suls said there’s a cost difference between the two chains because franchisees at Mr. Lube get a more valuable property. Mr. Lube spent nearly $1 million last year creating an online database of virtually all available vehicle ownership manuals.
Customers can now sit in their cars while Mr. Lube attendants push a monitor on a metal arm through their window so they can see what work their owner’s manual suggests be done.
“Most garages and places rely on the technician to know literally thousands of different makes and models of cars,” Suls said. “This puts the trust and integrity back in the transaction and takes out the guesswork.”
Suls said the company has no plans to expand into repair work, although he added that comparatively simple muffler repair work might be added to the chain’s list of services if it’s decided that it will make customers’ lives more convenient.
Originally from Baltimore, 48-year-old Suls always had a passion for business.
He completed an undergraduate degree from Western Maryland College and an MBA from Duke University before taking his first corporate finance job doing mergers, acquisitions and operational planning at the Ryder System Inc. (NYSE:R) subsidiary Ryder Truck Rental.
Three years later he took a job managing investments at Orlando-based General Mills Restaurants – a company that has since morphed into Darden Restaurants Inc. (NYSE:DRI).
Ryder’s head office lured him back two years later and he worked in Ryder’s Miami headquarters and in the field at locations in Michigan, Ohio and around the world.
Four years later, when he was Ryder’s assistant treasurer, he left for corporate finance work at Fort Lauderdale-based Arby’s.
His seven-year stint at the roast- beef sandwich chain culminated with him being vice-president of planning.
Then it was on to Tampa-based Rooms To Go – a large furniture retailer that generated about $750 million in 2001.
As president of the company’s distribution subsidiary, he helped expand the company to $1.5 billion in sales by the time he left in 2008.
Again, he was attracted to a smaller company with the potential to grow quickly.
When Suls moved to Vancouver in February 2008 to be Mr. Lube’s CFO, it became the first company based outside Florida that Suls has worked at since he was employed at Ohio-based Wendy’s as a teenager.
Despite Suls’ American roots and connections, however, he has no plans to branch into the U.S.
“I don’t think there’s a play for our business model in the U.S.,” he said. “I think the customer looks at their car very different in Canada than in the U.S. I think Canadians really take care of their cars in a different way. They tend to follow the owner’s manual closer.”