In late 2014, when FenderBender wrote about Maaco’s new location at O’Hare International Airport (“An Alternate Business Model,” fenderbender.com/maaco), the business concept was largely a novelty. Now it appears destined to be part of Maaco’s plan for years to come.
A few years ago, Maaco reached the conclusion that it needed to change how it does business in a transforming industry. Eventually, the idea emerged to have the franchisor take its business to airports, where some of its large fleet partners were.
In Chicago, Maaco partnered with owner Jay Patel, a successful franchisee since 1986. It has been a blissful union to date, with the O’Hare facility boasting an average monthly car count of 300, and recently adding a half shift each day.
By March 2017, Maaco is expected to open four more locations near airports in Philadelphia, Boston, Phoenix and Detroit. That will bring the number of Maaco locations near airports to nine.
How has Maaco’s airport concept evolved so quickly? Frank Petrane, vice president of fleet solutions, North America, for Maaco parent company Driven Brands, provided FenderBender with answers during a recent interview.
One key to the Chicago location’s success is the fact Maaco partnered with Hertz, which has plenty of property around airports.
“We’re just opening in warehouse space and fixing rental cars,” Petrane explains. “We are paying approximately half of what a retail facility would cost in rent.
“You don’t need fleet drivers to find you, because you’re just servicing the airport.”
Imagine that: a retail company establishing a non-retail facility. … In a low-margin setup, where damaged vehicles typically have little more than dings.
While the airport model might seem slightly illogical at first, the concept has taken off.
After doing $45 million in fleet sales in 2012, Maaco projected that number to be $100 million by the time 2016 figures are finalized.
“We believe, if run properly, all of these locations [near airports] are $2 million facilities within the first 16 months,” says Petrane, who feels it’s possible for some airport locations to handle 150 cars per week.
Airport facilities like those at O’Hare have the chance to be successful due to the “factory mindset” utilized there, Petrane notes. The airport facilities feature setups where limited parts allow for more throughput. And, without retail customer interaction, the focus is solely on damaged units, allowing for swift turnaround.
“Chicago, we certainly wanted to test it to make sure it was something viable,” Petrane adds, “and now it’s up and running and profitable, and now we can just go duplicate that. … It really is a simplified production model.”
Maaco’s airport concept is mainly about trying to evolve as a company. Now Maaco is trying another, somewhat similar model, in which franchisees open new facilities that strictly handle fleet customers near main thoroughfares in cities. That concept would ideally allow fleet-management companies to find Maaco easier than they could at the franchise’s airport locations.
“We sell to many verticals,” Petrane adds, in reference to rental cars, fleet-management companies, private fleets, insurance carriers, and government and dealer groups. “We don’t necessarily need to be near airports to succeed with these customers. We’ve added five sales reps to the team this year to tackle these other decentralized fleet opportunities.”
Currently, fleet work accounts for roughly 20 percent of Maaco revenue; The franchisor would only like that number to increase if it doesn’t erode more profitable work, Petrane noted. That said, Driven Brands’ vice president of fleet solutions, North America, sounds energized by the possibilities fleet appears to offer.
“You’ve got to look at all the ways to grow a business,” Petrane says.
“The industry is ever-changing. And, if you’re not changing, you’re stagnant.”
