Dealerships Selling Like Hotcakes, Bright Drop To Hit $1B, Dominos Gets Charged

November 21, 2022
It’s a magnificent Monday to be in the car business as we warm up those turkey ovens and those Black Friday deals. Today we discuss private sector buy/sells, GM’s Bright Drop reaching $1B, and Domino’s EV delivery strategy.
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The Dealership buy/sell transaction count reached 178 through the first half of 2022 which is a 19% jump from 150 in 2021 yet the total number of stores which traded hands was down.

  • Private acquisitions drove the purchasing momentum as the publics’ activity was down by almost half
  • Alan Haig, president of Haig Partners, said while the publics' acquisition activity remains high compared with the period before the coronavirus pandemic, it is below last year's first-half pace.
  • Haig and others expect the publics to continue purchasing given their aggressive revenue targets.
  • Record blue-sky is also a factor although earnings have seemed to plateau according to Haig
  • Dealers and firms expect acquisition activity to pick up as we approach end of year "We're going to continue to see a lot of activity by private buyers," Haig said. "They have more cash flow than they've ever had in their careers."

GM’s last mile delivery company, BrightDrop shared that it is poised to reach $1B in sales in the year 2023 which would make it one of the fastest companies in history to ever reach that figure within 3 years.

  • Has over 25,000 reservations and letters of intent from Walmart, Hertz, FedEx and Verizon — and already has vehicles on the road making deliveries today
  • In Sept the released their Trace Grocery E-cart and early adopter Kroger to deploy the boxy carts that can carry 350lbs of groceries w/temp controls that keep food safe for up to 4 hours and can be brought outside directly for customer pickup after digital verification
  • “We’re a tech startup with a subscription-based product offering that’s backed by a global powerhouse — this puts us in a league of our own,” said Travis Katz, BrightDrop president and CEO.
  • BrightDrop is tracking $10B in sales at a 20% margin by 2030

Domino’s Pizza is investing in a fleet of new Chevy Bolt’s in an effort to add delivery drivers to its ranks, cut emissions, save money, and of course, deliver more hot pizzas.

  • Will be securing 800 units to serve 37 company owned stores and hundreds of franchisees. Units will start hitting the road this month as they will have the largest EV fleet in the pizza industry
  • Hiring and retaining delivery drivers has been a challenge for the industry and providing the vehicle opens up the labor pool to those who don’t have their own vehicle
  • Unlike Papa Johns and Pizza Hut, Dominos fulfills all of its deliveries in an effort to maintain quality
  • Dominos cites rapid recovery of costs due to lack of fuel and maintenance expenses

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Kyle Mountsier, Paul Daly

Paul Daly  00:23

It's not only Monday but it's the Monday of Thanksgiving week, which means we have a lot more to get done than we usually do. Today we're going to be talking about Buy Sell activity and first half bright trot hitting a billion and Domino's buying a couple EVs. The people really want to know who are billions. Let me ask you a question. On Monday. The last time you ordered a Domino's Pizza

Kyle Mountsier  00:51

he ordered a diamond but see we don't have Domino's near us. I would have probably been

Paul Daly  00:55

How is that even possible that you don't have a Domino's near you?

Kyle Mountsier  00:59

I mean, it's close. It's but like, we got three Papa John's are close to my kid. Okay. We,

Paul Daly  01:05

we I'm picking Papa John's honestly. Personally, I'm picking. Well, yeah, and

Kyle Mountsier  01:10

I haven't eaten pizza and I haven't eaten pizza and honestly, in two and a half years. So your soul isn't that important?

Paul Daly  01:19

I don't know, man. Love me some pizza. Love me some pizza. We got a lot going on this week. Obviously, Wednesday, Thanksgiving is Thursday. And then Black Friday, we'll see what people do and then the weekend. So we got to squeeze a lot of stuff. In the three days today. We released the Saturday episode of this podcast if you if you missed it, go back and download it. It's with Dale pollack. It's a little clip, okay. There's like just, it's like a six minute podcast, which if you play at 1.5 speed is like four and a half minutes, which you know, is enough time to listen to the whole thing when you step into the bathroom, and you just try to block everybody else out.

Kyle Mountsier  01:50

Do yourself a favor, bring a little pen and a pad real quick because there's just some like, there's some actual notes that you have to take about your operations. Like you can't just absorb that and be like, Oh, I figured it out. You know, take some notes.

Paul Daly  02:03

It'll be gone. No, no, they'll they'll keep swinging hard. Also, we have a little event coming up in December. I can never remember what we're talking about what we're not talking about yet. We're talking about all of it Tuesday swear

Kyle Mountsier  02:14

there's going to be a landing page ready to go you'll be able to register know where all the stuff is. Maybe by the end of the day today. So if you're listening to this sometime in Monday, then it might actually already be up.

Paul Daly  02:26

Okay, okay, okay. Okay. All right. Let's get into some news. Because it's Monday, we got some things to do kind of a shorter episode today. But the dealership Buy Sell transaction count reached 178 transactions through the first half of 2022, which is actually a 19% jump from the 150 and 2021. And we thought it was busy then, however, the total number of actual stores that traded hands was down so more transactions, less stores, meaning smaller deals across the board. Private acquisitions are really what is driving the activity not publicly traded companies, which was really the case more so last year. Here's a quote from the automotive news article. Kerrigan Automotive is a Nancy antiquarian. No, no, that's her. That's, she's she's, she's the the figure skater. Yes. I'm so sorry. I'm so sorry for making that mistake. But here's the quote. What we're finding is a little bit of a tale of two worlds, in that the private sector is making a tremendous amount of money. Aaron, sorry, Aaron. Aaron. Next time I see you I'm gonna apologize in person, the private sector speaking a tremendous amount of money and redeploying that capital into dealerships to increase scale Kerrigan said, Because scale seems to be a top priority for most groups as they look to tackle the changes that are coming down the pike. Right, the public already have a little thing called scale. And the private companies understand this is how they're going to win. Alan Haig, president of Haik partners said while the public's acquisition activity remains high compared to the period before the Coronavirus pandemic. It's still below last year's first half pace, and he expects the public companies to continue purchasing though, given there. They're pretty ambitious revenue goals. Yeah,

Kyle Mountsier  04:10

so I would expect that we're going to see possibly another speed up period because they're going to be able to pull people out kind of prior to recession because they're still cash positive. And dealers are probably looking at theirs, you know, early on, like 2021. Dealers are going high multiples, high revenue run rates. And so said, Look, we're gonna get out ahead. There's another kind of wave coming. I think of the ones that don't want to go through the potential pain of any sort of recession and kind of get out while they're getting still a little bit good. I would expect that it kind of picks up and we and we know from the Publix that they are all still looking to grow quite significantly to give some of that distribution power. But we haven't seen any acquisitions. I can Larry H Miller, you know or anything like this, you're aware, you've seen just suburban collection, suburban collection. You know, like mid sized groups, but getting bought by large groups is just hasn't happened this year. But I still hear man I hear every day like, this is the access on LinkedIn chatter auto, Bert Davidson, our good friend that's been around the so diverse. They just got perfect purchased by a larger private firm that is now like one of the fastest growing firms in America. So yeah, just you know, I still make a lot of acquisitions we had.

Paul Daly  05:33

Yeah, no doubt. I always wonder like, you know, Alan, Alan Haig says, you know, he thinks, you know, valuations might be plateauing because of earnings, right? It's been higher than usual. And you got to feel it, you got to start to feel that in. Excuse me, instinct going into this where it's like, values are high, the mark starting to change a little bit. Like where do you who gets left holding the bag? Right, right. I guess if you're, if you're big enough, and you have enough scale, it's more about the long term play of just getting the pieces in place

Kyle Mountsier  06:02

all about scale, reduce incidence to decentralization having the opportunity to be close to the customer. I if I had to guess I bet I'm not a futurist or anything. But I think December is going to be hot as it comes to acquisitions.

Paul Daly  06:17

Yeah. I mean, I think so. Maybe it's like the year, the year and push right to get it done before the tax year. I mean, last year was a different reason to push but I think you're probably right. Speaking of people who are right, which rhymes with bright segway so first writing segway first driving segway GMs last mile delivery vehicle company bright drop, share that it is poised to reach $1 billion in annual sales in 2023. That's what I'm saying. Finally use that trigger pad which would make it one of the fastest companies in history to reach that figure in three years so here's Yeah, little company called Google took them five years Facebook took them six years. Tesla it took not it took Tesla nine years to hit a billion is that just crazy to think about it? Like a decade for the people like where they come from they did nine years before they even had a billion in sales. And it took Hapa 14 years to hit 1 billion in sales. So well that little

Kyle Mountsier  07:19

$100 phones or $70,000 EVs you know it's, you know, oh, no,

Paul Daly  07:25

no, well, bright bright drop has over 25,000 reservations or letters of intent from little companies like Walmart, Hertz, FedEx, and Verizon. And it already has vehicles on the road making deliveries. They also in September, they released their trace grocery eat cart, which is super cool. It was adapted or adopted by Kroger first. And it's like this box on wheels that can carry 350 pounds of groceries. And like, you know, temperature control the drawers, and then they can bring it right outside and customers can you know, access verify to open the door. So I think that's pretty cool. I mean, when you're talking last mile that's like, last feet. You know what I mean? I love

Kyle Mountsier  07:59

that option. Because I always feel like the grocery pickup thing is a little bit dicey. You see that? Like, was that in the thing? Was that in that free? Oh, yeah. That's

Paul Daly  08:10

great. Yeah, without a doubt. They also I love I mean,

Kyle Mountsier  08:15

here's the thing on that just real quick. Yeah. OEMs have consistently dip their foot in like other verticals. And this Evie race is allowing them to kind of understand these other verticals and dip in a little bit further, because like a few of the manufacturers have said, Hey, we are we're great battery producers now. We're just leveraging technology. You know, we're great technology producers. And so leveraging those those elements, so this is, hey, why don't why don't car dealers, someone needs to go to the grocery stores and start advertising on those jokers.

Paul Daly  08:53

Oh, you know it. You know, that's a little, little Zamboni machine. It looks kind of like a little Zamboni machine but you want to drive. It does make sense. I love the fact that these kind of like little expansions are in the retail sector, right? Whether you're delivering retail packages or in grocery stores, I think that there's just a good energy around retail that it will serve dealers well by just being in that space. A little bit more brake job also just announced their subscription based software platform designed to help customers kind of optimize the way vehicles and EVs are moving around their business to increase efficiency. Here's a quote from Travis Katz. The CEO says we're a tech startup with a subscription based product offering that's backed by a global powerhouse that puts us in a league of their own. Well mentioned at the end to their tracking. They say they're tracking 10 billion in sales at a 20% margin by the year.

Kyle Mountsier  09:44

No, God I gotta get your pad for that.

Paul Daly  09:51

I know we do. Speaking of GM EVs, DMS. Just having a day just having these Hey, they're all in the news Domino's Pizza said they're investing. Well, the bolt is a little cheaper than a model three and probably actually caters a little more than to put hot pizzas in the back. Hot beats, they're investing Domino's investing in the new fleet of Chevy bolts in an effort to add delivery drivers to its ranks, cutting emissions, saving money and of course, delivering more hot pizzas. There'll be securing 800 EVs to serve the 37 of their company own stores and hundreds of their franchise stores. And one of the biggest benefits to this is they said it's going to help us recruit drivers. And at first I was like, Yeah, first I was like, I don't know how many people really excited to drive a Chevy Bolt like I get to drive a Chevy Bolt right? I'm gonna take that job. But then they were like the problem is a lot of like they're having a big time problem them and Pizza Hut and Papa John's recruiting delivery drivers. So they said no, actually just having a vehicle for them to drive opens up a whole pool of people who can drive but don't have to have your

Kyle Mountsier  10:56

own car, you gotta maintain it. You got to put beat the crap out of it. In that, right. So now every time you're stopped, you just plug that Joker up to the dominoes outlet and you're not worried about it. And I mean, yes, that's a genius move. I mean, that's like, I like it when you're gonna get there. And not just that. But you. Here's the pop culture narrative meeting, retail meeting automotive. It's like, what do you get to do for work? Drive an Eevee and deliver pizzas? I mean, yeah,

Paul Daly  11:23

the new bolts are cool, too, right? Like, especially for someone who might not have a car or maybe they didn't have a nice car, but now they get the sickness thing that feels a little bit like a spaceship. When you get in it, I didn't realize this but Domino's is the only like, between them and Pizza Hut and Papa John's they haven't like Gone third party. So there's no like GrubHub or DoorDash tip and you know, they need to I was thinking about that pizza would be one of the suckiest things I think to get delivered from a third party because it gets cold so fast. And you know, when you get it from like the pizza place that got it in that little bag and it stays kind of still warm when it gets to you. So we'll we'll see how that's going. So

Kyle Mountsier  12:01

you're gonna outfit the back of these things defense like listing pizza oven Domino's, I'm telling you what, since 2010, they have not been messing around and this is just ever since

Paul Daly  12:11

they wrote that letter of apology, right? Yes, several classic, classic classic classic Domino's wrote this letter of apology say what was the CEO just reading bad reviews on like a Superbowl commercial like your sauce

Kyle Mountsier  12:25

were coming out it was good and they just changed the game the advertising change that constantly pressing the boundaries they you know the the pizza tracker was the first thing they did they start handing your stuff to your car out out in your car. Alright, so you don't have to get out of your car and now they're delivering pizzas in EVs. Crazy.

Paul Daly  12:45

What's next? Let's drone drone pizza delivery seems a little more complicated. I mean, just think that that's like carrying a big flat box and windy. Just imagine that thing of blowing rocks

Kyle Mountsier  12:54

windy. 20 degrees out. Definitely not. How am I?

Paul Daly  12:58

No, no, no, but we have three full days before we have some turkey to get in there. Get something done. So go ahead. You know you have some hard work to do.

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