Entrerpreneur's idea is starting to catch on
Tim Brewer wondered why it took all day for a dealer to change the oil in his motorcycle. Brewer, who has been involved in several major business startups, began thinking there might be a business opportunity.
The concept is simple enough: If you can get the oil changed in your car in less than an hour, why does it take all day — more in some cases — to get your motorcycle serviced? The answer is equally simple: It doesn't have to, as long as you set up an operation to service motorcycles and ATVs quickly and efficiently.
Brewer's idea involves putting stores that provide basic motorcycle lubrication services (as well as high margin add-ons, such as tires and wheels, chrome exhaust systems and other impulse items) in or near popular riding areas.
Brewer's first facility opened in April in Tucson, Ariz. Business inquiries from qualified franchise applicants come in at the rate of about a dozen a month. He has another company store in the Phoenix area and plans to open a third facility nearby.
Why franchise? Because Brewer sees national demand for a Ride In/ Ride Out service on a scale that he's not prepared to handle himself. He wants to add 10 franchises this year (having 14 contracts out for consideration in May) and have at least 50 by the end of 2009.
The idea seems to be working. Brewer says 83 percent of his customers return for additional service within 30 days, 92 percent return within three months. Each customer generates 2.3 referrals. Customers routinely ride 30 or 40 miles to get their bikes serviced.
The two company stores service an average of 400 bikes a month. The 1,500 sq. ft. charter facility generates about $35,000 in monthly revenue, while the larger one (4,000 sq. ft.) makes close to $60,000. Both stores generate positive cash flow.
Future stores will be about 5,000 sq. ft. Brewer acknowledges that his biggest mistake so far was making the charter store too small.
Demand is There
Here's the best part of Brewer's business plan. While the average price for a basic service package on a motorcycle ranges from $39 to $79 at a dealership, depending on the bike and the oil package selected, Brewer's average ticket is a whopping $289. The extra dollars come from the add-ons purchased by customers while they wait for the 45-minute service job.
According to the Motorcycle Industry Council, there were nearly 9 million motorcycles in use in the United States in 2003. And roughly 3 million bikes have been sold since then. Riders spent nearly $1 billion in 2003 for service labor on their bikes. That number includes complete overhauls, but not parts and accessories purchases.
Can Dealers Do It?
One would think that such a simple idea would be copied quickly. But Brewer doesn't think that will happen due to the way motorcycle dealers are set up. "It would take a major change in the internal operations of a dealership," he says.
That's not to say motorcycle dealers aren't looking at the business. "I think it's a great concept," a corporate officer of one of the country's largest motorcycle dealer groups told me. "It's one that customers have to be educated about. Look at cars; nobody brings his car to a dealer for servicing. Most dealers take a whole day to get a bike out."
However, this dealer (who wished to remain anonymous) said he wouldn't run with the idea. "I wish we could, but it would require too many changes, and our goal really is to push metal out the door."
Brewer's simple idea may have real impact after all.