A New Champion, Frontline Fundamentals, Pop-up Brand Play by Chick-fil-A

February 20, 2023
Welcome to another wonderful week in Retail Auto as we talk about the new leader among publicly traded Auto Dealers. We also talk about some very sage wisdom coming from Dealership front lines, as well as a notable brand activation we can all learn from.
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  • It’s official, we have a new frontrunner as Lithia has officially overtaken AutoNation, who has held the #1 position since 1997, as the largest publicly held Auto Dealer
  • Lithia’s new vehicle sales rose 4.2% last year as they retailed 271,596 new vehicles…40k more than AutoNation who’s sales dropped 12% over the same period
  • Lithia’s climb to the top was strategic and steady
  • Broke into the top 10 in 1999
  • Hovered between 8 and 9 from 2000-2014
  • Acquired their first store, DCH Group in 2014
  • No. 5 in 2015, No. 4 in 2016 and No. 3 in 2018
  • Passed Penske for the No. 2 spot in 2021
  • CEO Bryan DeBoer played pinball with Paul in January 2022 at the Auto Team America Buy/Sell Summit at NADA
  • Claimed the No. 1 spot
  • They had no comment on surpassing AutoNation in the top position

  • Key story about fundamentals with Jordan Cox, Digital Marketing Manager at Gates Automotive in Middlebury, IN
  • “A few weeks ago Clint and I were talking and laughing and crying, and we decided to come up with as many Sam-isms as we could. Clint and Sam both grew up on farms, so they would pull out great little farm sayings from time to time, and one of my favorites was, "We ain't farming half as good as we already know how."
  • "Lately, I've been thinking of that in terms of knowing how to treat people. We already know how to talk to people, how to help people, and how to help them move toward what they want. "

  • Chick-fil-A is being, well, themselves as they open “The Brake Room,” a storefront pop-up in Manhattan’s upper east side, where food delivery gig workers for services like Uber Eats, Grubhub, and DoorDash can take a break between deliveries.
  • Open Monday through Saturday between 11 a.m. and 7 p.m. to food delivery workers showing proof of a delivery within the past week
  • Access to bathrooms, beverages, bike storage, outlets for phone chargers, a variety of seating and Wi-Fi
  • NYC Mayor Eric Adams in October announced an initiative to convert empty spaces like vacant newsstands into rest areas for delivery workers
  • “The Brake Room” concept will remain open through April 13.

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Paul Daly  00:31

Yo, it is Monday, I got to have some fun. We got to talk about a new champion today a new one. Support Line fundamentals from the front line and a pop up brand play from Chick fil A. We got to run the first. Strong. Running the first one. Let people know you're serious repeat. You

Kyle Mountsier  00:52

know you're serious when you rhyme it on a Monday not messing around rhyming on a Monday. Let's go. Oh,

Paul Daly  00:57

I hope everybody had a really good weekend. Good morning, Larry. It's good to see you. I always when Larry shows up in the live stream. First thing it's like, you know, we're doing something now.

Kyle Mountsier  01:06

Yeah, I did.

Paul Daly  01:08

I did. So like we you know, we took a little family vacation last week, we're back in the saddle. And I tried to like be still really intentional, about you know, kind of spending time with family. When you have teenagers, you have to be emotionally present. More than physically present. I'm finding out this thing, right? And instead of this like demeanor that I've had in the past, right, like, you go on a vacation, you fill it up, right? And then you start to drain it out by like getting back to your business. I'm like, I'm going to put the mindset when I fill it up, and I'm gonna maintain it full. Right. So that was my weekend, like just attention on detention. How about units?

Kyle Mountsier  01:41

Oh, no, it's good weekend. I mean, we had a nice little chill weekend. And my parents were in town for a day. And so that was nice. And got to just chill with that. Like, we literally I think we went out Chick fil A speaking Chick fil A. And that was it. Everything else was on the chill mode this weekend.

Paul Daly  01:59

So we'll take that. We'll take that. Let's take that. Hope everybody else had a good time out there. A lot of cool things in store for this week. This Friday? I don't know. Do we talk about this right now? Or do we announce this like at a different time? I don't know. You don't know either. All right, we're gonna, we're gonna hold off on.

Kyle Mountsier  02:18

Everybody's just thrown their phone across their car there.

Paul Daly  02:24

I put it in the show notes. And we didn't talk about it. But there's okay. It's not going to be in the show. We'll talk about it tomorrow or later today. So there's that whole thing we will say though, we are going to be at the writers automotive event in May in Las Vegas, 16th and 17. We're going to be moderating some of the the mainstage panels setting up a podcast booth. So check it out. We'll link it up. It's not linked up in the show notes. If you just Google Reuters automotive event, Las Vegas, it'll be there and I'm super excited. And three. Yeah, right. Right. And I'm super excited because I found out there's a new airline breeze airways, founded by the guy who founded JetBlue flies out of Syracuse, they have a direct from Syracuse to Las Vegas for $250 that I sit in a first class seat, and I leave here at nine when I get there at like 11 Yeah, well, that's the

Kyle Mountsier  03:08

one without the cardboard underneath of you. Hey, I

Paul Daly  03:11

watched reviews man people are saying if you remember back to the beginning of JetBlue JetBlue is

Kyle Mountsier  03:16

revolutionary, or beginning of Southwest or whatever it is right? Yeah. Like how to get

Paul Daly  03:20

him in the beginning because we know what happens after that.

Kyle Mountsier  03:23

Money Making time speaking of money making time. segue

Paul Daly  03:30

way to get us into the news. Yo get into it. Here we go. It's official. We have a new front runner as Lithia has now officially overtaken auto nation who has held basically the number one position of publicly traded auto dealers since 1997. So last year Lithia sales rose 4.2%. And auto nations dropped 12% With he has also been on an acquisition spree. But basically they sold 40,000 More cars and automation. Now check this. I had I had to like, like dig into and read about the the growth of Lithia. Right. Yeah. So it's just like the tortoise and the hare stories, maybe not the top, maybe it's just the story of the tortoise. But they broke into the top 10 Back in 1999 was a while ago. And then they hovered between numbers eight and nine for 14 years. So between 2020 14 They were either eight or nine. They acquired their first store in 2014. They're building the strategy. They became number five and 2015 number four and 2016 number three in 2018. In 2021, they passed Penske is number two, and then I played pinball with Brian DeVore. And all of a sudden they're number one.

Kyle Mountsier  04:50

All of a sudden they got announced it was like it wasn't gonna happen unless you played pinball with Paul.

Paul Daly  04:57

They had already sold as many cars as they ever got to sell by the time, they were just still counting. But either way, they didn't claim the number one spot this year. And let me just read this quote and I'd love to know your thoughts on this. Brian DeBoer said, in a call with analysts after their earnings call, he said, we made a conscious decision, this is about moving forward, we made a conscious decision to utilize the majority of our cash flow toward acquisitions, rather than redistributed redistributing them primarily toward shareholders or paying down debt. As such, we have and will continue to establish the foundation for massive competitive advantage, you know, advantages and size, like using size and leveraging slot size for competitive advantage. And when they asked him What do you think about being number one? He's like, we don't we don't have a comment on that. Yeah, cuz like drop moment.

Kyle Mountsier  05:45

Exactly. They shouldn't like that they are on a growth. That is, well, it's retail minded. I mean, just look at what they've done with driveway. Right? Like, the the intention with acquisition strategy and growth via retail via a retail mindset is altogether different from the rest of the Publix and the rest of auto groups, they are after a different audience, right? They are they're playing in the game of the Carvanha has and the car Max is and they're, and they're leveraging their size and scale to go at more size and scale. I mean, literally, they're just putting delivery centers in. I mean, Brandhorst said it multiple times, like they want to have a location, a physical location within 100 miles of every single US citizen. And they are there after that goal. And it serves both a local game and a national game. With the driveway strategy, they've been very intent about their intentions. And I don't think it's going to slow down anytime soon. Like he said, they're going to leverage their cash position to go after acquisition not paying down debt or paying stockholders and I think that the stockholders are responding kindly to that. I don't see how you could not and and for me, and this is the the encouragement that I give every single mid to large sized group is leverage your scale to become bulletproof. Right? They are a used car operation and a machine when it comes to future proofing themselves against any OEM changes, as well as including themselves in OEM direct to consumer sales, because they become the most logical choice for distributorship. So, like this strategy, in my opinion, is is sound. And I don't see any reason why they're going to get anyone catching up anytime soon.

Paul Daly  07:33

You know, I'm thinking like, Okay, what's going on in the auto nation hauls or the Penske hauls or any of the other Publix? And if I think if they're smart, they're I mean, yeah, it's fun to be number one. But the reason Lithia is number one is because they picked the strategy and they stuck to it, right? They didn't follow, like the pop culture wave of like what we should do this year, and what we should do that year. And so to your point, like paying attention to where it is that you're going and just being like, Hey, okay, it's fun to be number one, but we're not even going to comment on that because it doesn't have anything to do with how we're going to execute our strategy best, right? Like the consumer will decide what strategy is working best in the end anyway. But you know, a lot of bride newborn if you know, and getting to spend a little time with him and reading about him. It's like it is he's a man who like he sticks to the fundamentals man, and he just hammers at home. Speaking of fundamentals, segway segues this week. I'm done with the trash segways of last week,

Kyle Mountsier  08:28

Friday with trash coming in on Monday,

Paul Daly  08:31

real, real segways you want to take this one? Now? You got it? You gotta go. All right. All right. All right. Okay, okay. Okay. I didn't know if you're leaving. So. So there is an awesome email that exists in automotive and it comes out every Saturday and it happens to be called this a recharge. No, we do. We have an amazing, you know, it's fun. I I'm able to partake of the Saturday email, because I'm not a part of building it at all. So when it comes down on Saturday, I read it and I get to experience it like super fresh. And this week, I read the email, I was like, Man, these are so good. They're so good. And we try to feature someone on the frontlines of the industry with a fresh not reported anywhere else story. And this week, it was a story about Jordan Cox, a digital marketing manager at gates automotive in Middlebury, Indiana. And he talked about his mentor, he talked about what he what his role is in the company, his mentality and he like a real deal, like getting it done player in the game. He's the marketing manager and he pays attention to marketing. He makes content. And he was talking about, you know, he's talking about his colleague, Clint and their mentor who passed away recently and there's so many nuggets in this I'm gonna read this from the article it says a few weeks ago, Clint and I were talking and laughing and crying. And we decided to come up with as many Sam isms. Sam was the mentor as we could. Couldn't Sam both grew up on farms. So they put together all these farm sayings and from time to time, one of one of the favorites that Sam would say is we ain't farming half as good as we already know. Oh, hell,

Kyle Mountsier  10:01

yeah. Right. I read that I. So I titled the email for this weekend because when I read that, and I think I actually messed up how many people opened it because there's kind of a little farming Not, not perfect grammar there. But we ain't farming half as good as we already know how. I mean, Michael Cirillo said this over and over and people over and over at nada said, we have to get back to the basics. And when this guy dropped in there, I was like, whoa, what it really means is that we have all the know how we have everything put in there, we have, like all of the tactical and practical pieces, and we're just not doing the things that are necessary to farm. Good. Now,

Paul Daly  10:48

what is hard man that hits hard. History? Well, I mean, it really does say way off the Lithia story in so many other great operators. Um, you know, no matter what new technology or great new idea, we already have the answer or likely know the answer to whatever problem we're trying to solve. And it's probably something super basic basic because of a neglected fundamental. You know, and the last thing they mentioned in the article, if he's been thinking in terms of knowing how to treat people, we know how to talk to people, we know how to help people, we know how to help them and move them toward what, what they want. That's not such a great reminder for the industry for anybody, like literally for anybody and everyone, whether it's relationships, you're having a relationship issue, you're having a workplace issue. You know, you and I have spent a lot of time in ministry. And it's like, look, it's like people don't need another book on some new way to position the content or have a catchphrase, no, you already know what you're supposed to do, you just need more adherence to the knowledge you already have. So I know right now, if anyone listening thinks of a situation and they're like, actually, I probably already know how to solve this. If you just think about it for 30 seconds, you'll probably want so just want to give a shout out to Jordan Cox for just reminding us as an industry and follow him on LinkedIn final one social look him up, show him some love. He makes great content. He's a great engager with the audience. So thanks for giving us some your time. And we just thought it was so good. We had a shared this morning. Yes, did thinking things. Now speaking of things that are just so good segue.

Kyle Mountsier  12:19

This one I, I read this one, and I'm so glad you put it there was I mean, just as a note, if if if Paul and I would have both put the show together, there would have been 33 articles, so many good things to talk about for an hour and a half because there's just a lot good going on inside and outside the industry. But Chick fil A is you know being themselves. And they are opening their very first the break room br A ke e a storefront prop up in Manhattan's Upper East Side, where food delivery gig workers for services like UberEATS, GrubHub, and DoorDash can take a break between delivery. So they're going to be open from Monday through Saturday, naturally, from 11 to seven delivery workers showing a proof of delivery within the last week with with one of those services. They're going to have bathrooms, beverages, Bike Storage outlets, for phone chargers, a variety of seating Wi Fi, just a place for these people to go you think about that. You are a lone ranger, if you are delivering any type of ordination it Yeah, you are you are especially in New York City. And you're an employee or some of these different places, right you are you are wearing the brand of a Chick fil A or an Arby's or you know, whatever it may be, you're wearing the brand of that. And let me tell you, I bet you anything. People get in there Chick fil A, in Manhattan over the next couple months, from people that have visited to see the break room service, man, it's gonna be next level I'm telling you right now. So true.

Paul Daly  13:53

It's so true. This isn't an opportunity on the example that they set and saying, like, serve the people without anything that directly comes back to you. Right? It's got multiple layers of effectiveness. Number one is what you just mentioned, right? You think they're actually going to benefit from food being hotter than getting priority service? Yes, it's absolutely. But another layer of it is all the attention that you get from doing something filling a need that needs to be filled media on. Like what we're talking about. Now. It's a temporary thing, right? But they're just showing and they're paving the way. And like I'm even thinking like, gosh, auto dealers have so much leverage in so many different communities in all all across the country to do something like this. And it doesn't even have to be a permanent installation. Right? This is a four month pop up. It's a four month pop up. And here it goes. Oh, we got some comments coming in on this but it's a form of pop up. Joe let me get his name right. I'm not gonna get it right. Sour Seino SAR ACI And Oh Joe sarracenia, Senior Vice President of brand strategy and advertising and media Chick fil A said ever Every day Chick fil A operators love to show care for their team members and communities in which the restaurants are located. The food delivery community is an extension of that same experience Chick fil A restaurants provide our guests an increasingly significant part of our business, we created the break room as a small gesture, a little thank you, for for them who serve our guests, especially in a market experience high demand and sometimes harsh winter weather conditions. New York City Mayor Eric Adams, they're already kind of paying attention a little bit to this need saying like, hey, most people have a break room. Food delivery folks don't so they're gonna like transition, some maybe newsstands and things like that and to rest areas. But Chick fil A break room is where it's at the concept will remain open through April 13.

Kyle Mountsier  15:41

All right, I'm gonna give you I'm gonna give you three, just low, the lowest hanging fruit that a dealer could possibly leverage right now one partners, delivery drivers, you're getting shards from Napa. And I mean, all these parts delivery places throughout the day, these people are always on the road running, right? It's not your person that's sitting behind the pirates counter that can go to the break room, right. So make a space in parts dedicated to them, leave a couple snacks, leave a couple sodas couple of waters, make sure that they know where that's at boom, second, delivery drivers for new vehicles and pre owned vehicles. You know the people that drop them off, always on the road always on their own. Make sure that they know when they come to your spot to drop off your vehicles that you've got a spot that they can get in they they know where the restroom is, they know where the you know, a little bit of break room, maybe they can maybe they can grab a snack or a drink before they hit the road again, on house right? You think they might not be raising their hand to come deliver deliver vehicles see you

Paul Daly  16:44

priority service, but you already want immediate

Kyle Mountsier  16:47

right? Third one, hey, there's a lot of dealers actually doing valet pickup and delivery. And they're utilizing services from local places that that employ some of these like, they're similar to like an Uber Eats or GrubHub. But they're meant to be these valet pickup and drop off. I know a lot of people that are using red cap delivery service, that they kind of have an agency connection for this. So make them give them a place to write somewhere close to service, a place where they're going to always want to pick up your cars take them drop off and delivery, because that service is becoming a high priority for really, really great customer service when it comes to your fixed ops department. So those are your three places. employ them right now. I'm telling you take this from Chick fil A and run with it.

Paul Daly  17:37

Well, they say good writers borrow and great writers steal. So my suggestion would just be like steal Chick Fil A's idea and do something for the DoorDash people in the Uber driver. Because I'm not as creative as Kyle, but we hope we give you enough to think about on Monday. There's obviously a lot of work to do. And according to our little show here, there's a lot of really easy ways to do it. Like you already have the knowledge so just go do some of that.

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