National franchise operation RNR Tire Express had a banner year in 2020 and is poised for an even better 2021. The Tampa. Fla.-based company has agreements in place to open nearly 50 more franchise outlets before the end of the year.
The stores — which will be located in Arkansas, Arizona, Colorado, Indiana, Kentucky, New York and Ohio — will push the total number of RNR Tire Express locations to around 170. That’s on top of the dozen RNR Tire Express franchise stores that opened last year, despite the COVID-19 pandemic.
Larry Sutton, the president of RNR Tire Express, wants the company to have 500 franchise outlets in place by the year 2027. It’s an ambitious target, but well within reach, says Sutton — especially as more cash-strapped tire buyers explore alternative forms of financing.
‘Easy payment system’
RNR Tire Express’ “lease-purchase model,” as Sutton calls it, is steadily gaining traction — in part, because it addresses an underserved customer niche, he says.
“When we go to a new market that hasn’t experienced what we do, we can make a big impact because there are a lot of people out there who were probably buying used tires every four to five months and never really had a decent set of tires,” says Sutton.
“In our program, you can buy a high-quality set of tires” through what he calls an “easy payment system.
“We’ll start a deal with anybody for $20 down and that will take them to their next payment,” he explains.
“There are millions of people in the U.S. who don’t have cash in their bank accounts or maybe their credit cards are maxed out. They have to figure out a way to stretch their dollars.”
When enrolling customers, “we don’t ask for a lot of information. We take a few personal references, where they work and where they live — and that’s about the end of it. We don’t do credit checks or any of that stuff.”
According to Sutton, customers don’t have to “go with a lower-priced tire with our model. They can get the tire they want. We’ll customize the payment around their budget.
“Once they have products on their car, from that moment on, we’ll take care of their tires for as long as they’re on the vehicle. We’ll rotate and balance for free. We’ll fix flats for free. We offer a roadside assistance program. If they damage a tire, we’ll put a new tire on their car.
“The tire business has changed over the years,” he says. “It used to be, you went in and bought tires and then you paid for mounting and balancing, you paid for rotation — all these things were added on.
“We said, ‘There’s a better way to do this.’ And that’s when we came up with our customer care package.”
The economic shock of COVID-19 has helped accelerate acceptance of the lease-purchase model, according to Sutton. Repeat customers made up more than 40% of RNR Tire Express franchisees’ sales last year.
“That’s an indication of satisfaction. And we want to keep that number high. We wouldn’t mind it being 60% or higher.”
Most RNR Tire Express stores have a 70/30 ratio of tire sales to wheel sales. But that hasn’t always been the case.
“Originally, our model was skewed toward wheels,” says Sutton, who founded RNR Tire Express 21 years ago.
“When we opened, the name of our company was Rent-N-Roll Custom Wheels & Performance Tires and we were really focused on wheels. The timing was good because when we first got into the business, wheels were just starting to get bigger.
“When we started, we were doing 17s and 18s and then 20s and 22s. We grew really well with that model, but after several years, found we had painted ourselves into a corner.”
Consumers saw Rent-N-Roll stores as places to buy custom wheels — not tires, he says.
“It was the look of our stores and the way we advertised. We were in the wheel business. And we found that people wanted to buy tires from tire stores — not wheel stores.
“Survey after survey, people said, ‘Why would I go to RentN-Roll to buy tires?’ I would ask people, ‘Have you ever been to one of our stores?’ And they would say, ‘No. I don’t need wheels.’
“I would then ask, ‘Well, do you need tires?’ They would say, ‘Oh, you sell tires?’
“The other thing about the wheel business is we found out we could get a store up to a certain level, but we weren’t getting the growth you want to see at a mature store. It was because we weren’t getting that passenger tire business.”
Some of Rent-N-Roll’s franchisees discovered the same thing. “One called me and said, ‘Hey, I have an idea I want to try. I think we ought to pay more attention to tires. When customers come into my store, I want tires to be the first thing they see and for wheels to be in a different area.’ “We started talking through it,” says Sutton.
The franchisee revamped his showroom and started running ads that emphasized tires. “Sure enough, it became the fastest-growing store we ever had. I said, ‘We might be onto something here.’”
Another franchisee adopted the “tires-first” approach with great success. Others soon followed. “We said, ‘Now we know what has to happen here.’ We were a wheel dealer that sold tires and felt we needed to be a tire dealer that sells wheels. And that’s when we became RNR Tire Express. We reinvented ourselves.
“It just really took off. We started growing new stores faster and our more mature stores that were rebranded grew their revenues faster.”
Sutton and RNR Tire Express franchisees discovered another thing — switching to the tires-over-wheels format did not hurt their wheel sales. “We do as many or more wheels as we always did,” he says.
89% growth rate
Sutton says most RNR Tire Express franchisees are open to testing new concepts at their stores. And he backs them up.
“We’ll help them set up anything they want to do. Now, if a guy calls me and wants to try something we’ve already tried and didn’t have much success with, I’ll tell him up front, ‘Here are the things we had to deal with. You might experience the same thing.’
“When I first got into the franchise business, my attorney told me, ‘You’re not going to be a good franchiser. You never tell anybody no.
“I didn’t know what he meant at the time, but I learned quickly that there are some areas where you have to say, ‘Let me help you.’
“But I don’t assume that because we failed at something, someone else will. We give franchisees the freedom to try new things because you never know when someone will come up with a different implementation that makes things work.”
At the same time, RNR Tire Express franchisees also are expected to follow certain brand standards.
This particularly benefits new franchisees who don’t have tire or wheel industry experience, says Sutton.
“We have a very extensive training and support group. My trainers are ex-store managers and they know their business like the back of their hands.”
New franchisees visit RNR Tire Express’ Tampa headquarters for in-person training. “They’ll come down here for a couple of weeks and will work with our people. Then we’ll follow up with that in the field. My training and store guys will travel to their locations to get shops set up and then when they leave, our sales trainers will come in.
“And we’ll do that, too, for our franchisees who might be having a tough year and need some help.”
“We just opened our first store in the state of New York in Queensbury, which is in that northern corridor by the Adirondacks.”
The owners of the outlet are a couple that had operated a paper products distribution business, which they sold. “They read an article about us and visited us. And now we’re talking with them about expanding into three more stores.”
The lease-purchase model can be attractive to small, independent business people who are looking to make a career change, says Sutton.
“Everybody needs tires. Depending on what you read, anywhere from 15% to 20% of the market is in-market at any given time. How many other businesses can say that?”
The light truck tire market is particularly hot at the moment, he adds. “And that brings us additional business. A lot of people want accessories when they buy bigger tires for Jeeps and vehicles like that.
“We’re rolling out ancillary products and services like lift kits in different markets and that’s working well. We’re telling franchisees, ‘This is something you ought to get ahold of because you’re going to miss some business if you don’t.’
“A guy who wants an off-road package is probably going to buy his tires” at the same place.
All of the above should add up to another banner year for RNR Tire Express. The company achieved $211 million in sales during 2020, a 12% year-over-year increase. That continued an overall, three-year revenue growth rate of 89%.
“We signed a deal this past year with a very aggressive group that is well-heeled and well-financed and they want to open 50 stores. They’ve already opened three successful stores right out of the gate.
“Our new store openings are off the charts in how fast they have ramped up their customer base.”
Sutton himself owns a percentage of one RNR franchise, which operates under the SPF Management Co. LLC corporate umbrella. (Based in Tampa, the franchise has 20 locations.)
“There’s a few more I wouldn’t mind owning part of, but I try to stay in my lane when I can,” he says with a laugh.Read More