Growing Your Tire Business With Judd K. Shader, Founder and Chief Executive Officer at Leeds West Groups

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1.1 Here’s a glimpse of what you’ll learn:

1.2 Resources mentioned in this episode:

Judd K. Shader is the Founder and Chief Executive Officer at Leeds West Groups, one of the largest and most-respected leaders in the franchise aftermarket automotive repair space. He founded the company in 2009 as a student at the University of Colorado Boulder. Judd is active across various automotive industry boards and organizations and resides in Denver, CO.

In this episode…

As a tire and auto repair shop owner, what will it take to expand your number of stores? Have you thought about growing from two to four locations? How about double-digit locations in multiple states? According to Judd K. Shader, whose company started with two Midas shops and now consists of 121 Big O Tires and Midas locations, a large part of that growth is driven by process.

“Anytime you’re talking retail, it’s process-based. And there’s no difference here,” Judd said. “We understood quickly to create the scale we wanted, our processes had to be tight.” If you want to grow, check out this episode of Gain Traction!

On this episode of Gain Traction, Mike Edge sits down with Judd to discuss the keys to successful scalability for a franchisee in tire and auto repair. Judd shares how his dad gave him the choice between becoming a business owner or pursuing a graduate degree. He ultimately chose to become a franchisee, so his dad helped fund two Midas shops, and now Judd and his team have grown their number of stores into the triple digits, with plans to add more retail locations in markets they already occupy. Don’t miss it!

Here’s a glimpse of what you’ll learn:

Judd K. Shader explains how his dad gave him a choice between earning an MBA or starting a small business
Why Judd ended up choosing Midas as his initial business
How Judd went from owning two Midas shops to getting heavily involved with tires
The importance of process for scalability in the tire and auto repair business
How the acquisition of Big O Tires stores led to the formation of Leeds West Groups
Why real estate is an excellent long-term investment for Leeds West Groups

Resources mentioned in this episode:

Transcription

Announcer:

Welcome to the Gain Traction podcast, where we feature top automotive entrepreneurs and experts, and share their inspiring stories. Now let’s get started with the show.

Mike Edge:

Welcome to the Gain Traction podcast, Mike Edge here. I am one of the hosts of Gain Traction, where I talk with top automotive business leaders about their personal experiences in the tire and auto repair industry, as well as extract some words of wisdom.

Before we get started today, I’d like to give a shout out to Michael McGregor, who was my guest recently on Gain Traction. He is the author of the book Buy, Build, Fix, Sell, which helps tire and automotive shop owners prepare their businesses to sell or to grow. Michael is also a columnist for the Modern Tire Dealer. Check his book out on Amazon.

Today’s episode is brought to you by Tread Partners and the ReTread program. Tread Partners has a theory that your best audience is your existing customer base. Tread Partners has design a product called ReTread that is a full-scale customer re-engagement program to win back a shop’s best lost customers. It is a one time 90-day program that generates a guaranteed 10 to one return on investment. That is correct, a 10 to one guaranteed ROI. No tricks or gimmicks. These are your customers that are in your POS right now. So what we’re saying is if you give us $10,000 today, we’ll return it at $100,000 in 120 days. We’ve removed the risk. So what are you waiting for? Email me at i[email protected] or to learn more, visit treadpartners.com.

My guest today is Mr. Judd Shader, who is the founder and CEO of Leeds West Group, LWG, which was established in 2009. Mr. Shader is additionally active across various automotive industry boards and organizations. In 2011, he expanded the company with the addition of the Big O Tires brand. By 2012, Mr. Shader had built the company’s portfolio to include three unique automotive national brands and concepts, all master franchised by TBC Corporation. In 2012, he launched LWG Realty Group, along with overseeing the company’s expansion into outside investments.

He is responsible for the largest acquisition in the history of the aftermarket brands, Midas Automotive Experts, with the addition of 30 location. Then in 2017, Mr. Shader announced the next largest Midas acquisition in the brand’s history with the purchase of 42 Midas locations across six Midwest states. He continues to focus on outside investment opportunities, growth within the company’s current divisions, and management teams. He is a graduate of University of Colorado at Boulder and he currently resides in Denver, Colorado. Judd, welcome to Gain Traction podcast.

Judd K. Shader:

Mike, thanks for having me.

Mike:

Well, I’m going to be honest with our crew here. This is our second take at this and I appreciate your generosity, but it says a lot about your character and I’m just excited about doing this program with you. How did you get started?

Judd:

Of course.

Mike:

Where did the idea for Leads West Group in 2009 come from?

Judd:

Yeah, I’m not really sure exactly to pinpoint where the idea came from, but the overall concept was I was in college at CU Boulder. I was a junior going into my senior year and I was really looking at what I was going to do with the next stage of my life. Really had a few options, had an option of going to grad school. I was looking at going to get my MBA. I was also looking at some law school options or kind of the third one, real life experience. So I took the money that I would’ve used to go to a grad school of some sort, either the JD route or the business route, and bought two Midas stores, bought two Midas stores, one in our Nevada, Colorado and one in Lakewood, Colorado. December 1st of 2009, me and had one other employee at the time started it from my college apartment, the table in my college apartment.

Mike:

Fantastic.

Judd:

And that was the founding of it. I mean 13 years forward, now we have over 1,000 employees and 121 locations, but it started as a junior in college at University of Colorado.

Mike:

I mean, how’d you pick the brand? You know what I mean? Obviously you had enormous amount of choices and that’s what you went with.

Judd:

Yeah. There wasn’t really anything in particular that I was saying this is the brand I have to go with or anything along those lines. I wasn’t even just looking automotive specific. I was really looking for something that, A, I thought I could get a lot of experience with. Even if I didn’t scale it to what it is now, I could get real life experience and I wanted to get retail-based experience. I love brick and mortar, I love the identity of retail and this was about as old school retail brick and mortar as you could get. So that’s what really drew me into automotive was more the retail brick and mortar approach.

And then when I got in, they were strong brands. Especially getting in originally with Midas, I felt there was a strong historic brand that also had changed with the times. To me, when I really look at brands, I want to see a brand that can adapt and can change and grow. And when you see Midas, obviously I think different generations think different things, but the originality and origination of Midas was mufflers and then brakes and now tires and it’s evolved over time. So the strength of the Midas brand is really what got me in it.

And then from there, as we’ve grown into Speedee Oil and in Big O Tires and some of the other brands, we’ve continued to consolidate over the years. Same type of thing, there were brands that have changed over time. Big O’s changed from specifically tires only now to full service and Speedee continues to adapt to do the same thing. And that’s what drove me to those individual brands. From the whole skew of just knowing brick and mortar retailers, I wanted to grow the company to start.

Mike:

You seem to have a great eye for recognizing, I mean obviously I think that’s cool the way you recognize that at a young age about the brand. You wanted something that was established, something that proved its longevity, but did it play in a part where… Were you influenced at all with the fact that the product itself or the service you’re selling very needs based? I mean, well, it’s not an exciting thing in the sense that people don’t just wake up one day and go, “Man, I can’t wait to go fix my car or pay for this or new tires,” or whatever. So did that play into it, just the fact that, hey, it’s always going to be there, that need?

Judd:

Yeah, very much so. I think the excitement around automotive is what you just said, especially when you look at it from a consolidation factor and what continues to happen in the industry. It’s need based from the service technician level. It’s not getting any easier to fix your car. There’s no doubt about it.

Mike:

No.

Judd:

I mean the parts are getting more complicated. The cost of the parts are going up, the sensors are being put on, everything you can think of. So the ability to call it really do it yourself is getting harder and harder unless you just have a really, really strong skillset. From that, it really, really excited me and then being able to consolidate that and then also tie it into brick and mortar was really the deciding factor when we really decided, or I decided to take the company kind of the next level and really scale it to what we have become and where we want to take it.

Mike:

So are you tuned in at all with the right to repair issue right now?

Judd:

I am. I am. I’ve watched it from afar, I obviously watched it from the origination of reading the documents back in the northeast when it really, really got momentum some years ago. And that obviously predates me and then where it is today and where it’s going. But the Right to Repair Act is a huge piece of legislation that aftermarket has to continue to make sure that we’re fighting for that information, also fighting for those freedoms.

Mike:

No, I’m glad. I’ll give another shout out, Tim Winkler up in Maine with VIP Tire and Service 66-door operation. He’s really trying to push it through in Maine, but also he’s got his finger on the pulse on the national level as well. But we just did a segment on it, so I’m giving it a plug because I think it’s so important for all of us in this industry. I mean the independence, we don’t exist without it, I mean, and the manufacturers. And it’s not just in this industry, it’s spreading out across all the industries that takes it away from the independence and the do-it-yourself guys that you’re not going to be able to use them. I mean, you’d have to take it to a specified manufacturer, which is just wrong. I mean everybody have the right to repair the way they want to or choose who they want to repair it. Anyway.

Judd:

Yeah. No, go.

Mike:

Just wanted to give that plug there and I figured you were on that side of the thing. So as it pertains to the automotive with LWG and the three brands, did you create the Realty Group to support your expansion in these brands?

Judd:

Yeah, the Realty Group was originally done to create our expansion within those brands and give us the ability from a capitalization structure to look at deals a little bit uniquely to be able to become a little bit more fluid. And that’s changed over time and it’s continued to change. Our Realty Group actually has a decent amount of outside investments that are not just in automotive at this point, but it was really done to be able to allow us to grow within automotive at the time and we’re continuing to expand it even to this day.

One of our big initiatives right now is greenfield. We just announced publicly within the last 60 days that we’re going to do half a dozen greenfields in the next 12 months. We’d actually like to get that to 12 greenfields a year and really use that to infill our current markets that we’re in 18 different states across the US. And I feel like it’s a must for us to be able to fill pockets now in all these different markets we’re in as the markets and the trends continue to expand. And I think that’s just an example of how our realty company has grown and is continuing to grow. It’s not just acquiring locations we’re in. It’s acquiring other brands and other concepts that might not be automotive. It’s acquiring automotive properties that we might not lease, but maybe we’ll lease eventually or landlords in automotive all the way now to new construction. So it’s pretty cool to see how that expands. That entity, we probably own about, at this point, 40% of our portfolio that we’re in today and then a decent size of investments outside of just us.

Mike:

Oh, okay. Gotcha. Well, I love the strategy. I mean it’s like you probably looked up one day and you realized, “Man, we’re really out there in a footprint, so why not fill it in a little tighter and do it ourselves?” The strategy for greenfield I’m assuming gives you a little bit more flexibility in trying to fill it in versus trying to find somebody to buy. Would that make sense?

Judd:

Yes, very much so. It controls the narrative. We have changed strategy significantly over the last 12 to 18 months. We’ll always acquire, but we are not spending nearly as much time on acquisition right now. We’re spending a lot of our time on greenfield. We feel if we can do, like I said, up to 12 new stores a year that we’re controlling the narrative and in fillings with acquisition, that’s great. So yeah, we’re putting a lot of effort, time, energy and money into being able to go vertical here quickly across the country.

Mike:

I know you do a lot of brands and the one I’m probably most interested in just because we’re tire guys and auto repair, but Big O, any specific plans for it in the next 12 to 24 months?

Judd:

Yeah, Big O is probably our biggest growth brand that we have. We will always grow in the other brands. We’ve opened two Midas stores in the last 60 days. I think we’ll have a third Midas, new Midas location open in the next 30 days. So we are growing significantly on the Midas side, but for example, the new six locations we’ve announced the greenfield ground up will all be Big Os. So our greenfield program is pretty specific Big O at this point. So Big O is definitely a exciting growth mechanism for us.

Mike:

That’s fantastic. You’ve been written up recently a lot in different, I think it was Tire Review and Tire Business about the Big O brand. So it seems like you guys, what do you total at 38 stores right now out of their 450, is that right?

Judd:

I think so. I think we’re between 38 and 41, somewhere there. It’s kind of always a changing number.

Mike:

Yeah, no, that’s awesome. I remember we talked in the past, we talked about a mentor that you had that kind of really helped you formulate this way of growing and gave you the confidence. You want to talk about that again? I mean, because I felt like that was a significant part and I think the person’s involved in your board now, if I’m not mistaken.

Judd:

Yeah, very much so. I’ve had a few mentors. I can’t obviously not name my father. My father has been a huge mentor for me and I wouldn’t be here without him.

Mike:

What he did for you in the beginning though, he was the guy that basically said, “Look, you can go in the real world and I’ll help you get started there or you can go to school, one or the other.” You had your choice, right? I mean that’s what-

Judd:

Exactly. When I first started, my father said to me straight up, he goes, “You can go get your JD and go get your MBA or you can go in the real world and I’ll give you the same amount of money for either of those, but that’s all you’re getting and here it is and you can pick which route.” And yeah, the company would not be here without him. No question.

Mike Edge:

Well, first of all, I love his offer to you. I think that’s awesome. But I love your guts about it like, “Hell, let’s go for it, man.” Well, it says a lot about both of you, but you got a good relationship obviously. And yeah, dads mean a ton in regards to giving you the support and kick out the door at the same time.

Judd:

I think when you’re young you’re very naive, you don’t have a family and maybe some of the other things you really think about at the time. So yeah, it was a great time in life to do it. And the other mentor I know you’re referencing is Josh. Josh Weinreich. Josh has been incredible. Josh has been our chairman of our board since the company really was foundered, since we professionalized the company and brought a professional board in. Josh was the ex-co president of Bankers Trust, was the CEO of the assets in the Americas for Deutsche Bank, a big, big Wall Street individual, has sat on very, very big Fortune 500 publicly-traded company boards and has really, really given me time and energy and thought that I would not be here without him and the company would not be here without him.

It’s just been incredible to have an individual like that, an individual that sits on company’s boards that, again, are Fortune 100 companies. He’s been CEO of very large companies, and Leeds is very fortunate to have had them. And that’s one of the reasons we’ve had such great growth. To be able to go from two stores to 121 stores in a period of time that we have is not just me based by any means. It’s a effort by the team and then our incredible board that we have. We’ve been just very lucky to have him.

Mike:

Well, yeah. But, Judd, it says a ton about your leadership and the fact that you’re like, “Hey, I don’t have all the answers, but I know where I can get some answers.” And you’re willing to look in other directions. And that’s why I think we were talking about it just a little bit ago with your realty side. I mean the fact that you’re willing to change strategies when it’s necessary. I think that’s what leadership’s all about. So I tip my hat to you and I think that’s awesome. But I love the fact that you got a guy like that in your corner. You’ve obviously got your dad, but it sounds like you got just a good group of people that know how to help steer the ship.

Judd:

We really do. I mean our board and the foundation we have is strong. I think it way out kicks the coverage for what we are. I’m not saying 121 stores is not a lot. It is, especially where we’re growing and where we want to push it, and then our outside pieces that we’re continuing to take the company in. But even past Josh, Dave Smith is on our board. Dave sits on the board for Northern Trust Bank and ITW. Ben Lefkowitz. I mean the list goes on. Markus Hockenson.

Really, really strong individuals and we’ve just done a great job and it’s a lot of Josh’s leadership and mentorship of really position the company for where we want it to really be. And I think we’ve done that really strong and we’ve done it along the ways. When we see changes we need to make, we make them, even though they might not be easy at the time. And we really, really are looking, we use the analogy a lot, is it noise or is it actually a shift? I mean noise is, okay, let’s talk about it, let’s move on. But is it actually passed noises? Is it a big shift that we need to look at? And we’re really, really always trying to look at that horizon much farther out than I think a lot of companies, especially our size.

Mike:

Well, I mean you got that experience that can recognize that and help you shake that out and determine it. We don’t have a lot of time, but what’s one of the biggest challenges you felt like individually that you overcame in the professional atmosphere of what you’ve created here? Or let’s say just Leeds West Group in general? What do you feel like one of your big challenges or accomplishments are?

Judd:

I think my biggest challenge, I think it was also probably one of my biggest strengths was age, inexperience. When you’re young, I think it brings a lot of energy and excitement, new thought, a lot of naiveness. But I also think it’s also the biggest challenge of you’re seeing things for the first time, you’re being challenged in different ways. Maybe because of your age you’re being challenged in different ways because people question things maybe a little bit more. So I think growing with the company and understanding leadership changes, understanding you’re going to be challenged in different ways. So I really tried to use that to my advantage of, and I think the company, we did a good job using it to my advantage of, I was naive in a lot of things and I think it pushed our limits maybe a little bit faster if I maybe have had those experiences and thought about things a little bit more.

So I would say that was a strength, but I would also say it was just a challenge. And I wouldn’t change the experiences that I’ve had for anything, but they’re experiences for a reason and you can’t duplicate experience. But those were definitely challenges. When you have a CEO starting out at 22 years old, 21 years old, managing individuals two to three times my age with two to three times 20, 30 years experience to one year experience. It’s going to create challenges and I feel like it’s made me a much better leader and it’s made the company much stronger because of it.

Mike:

That’s fabulous. It’s a lot to learn in a short period of time, but obviously you did it right. So before let you go too, give us a little idea of what some of your daily rituals are that make you effective at what you do in managing so many stores and people.

Judd:

Yeah, I think with my daily rituals, I’m not really sure I have a daily ritual. I think one of the things is I’m very consistent. I check my email the first thing when I wake up every single day. I go through the same numbers every single day today with 1,000 that I did with 10 employees. I look at our control mechanisms the same today with 120 something locations when I had 20 locations. I look at the gross profit the same, I look at the top line the same. I don’t get into the weeds, but I really look at the same controllables with the same light, and then we talk about those and we manage to those expectations, what I’ll call the big levers. And I think that’s really my daily routine. And then obviously with any company with different things going on, I think it probably flows from there.

Mike:

That’s fabulous. No, and I think consistency is the key and you’ve found what you needed to focus on to make you successful, whether you are at 10 or 1,000 employees. It doesn’t matter. You still got to do the same things. I think the hardest part in life is repetition. You got to love the grind and you can probably speak to this better than I can, but you got to kind of love the monotony and the grind in a sense. I mean, doing the same things and maybe you expand, but you still got to do the same exercises. Does that correlate?

Judd:

Yeah, very much so. I think it’s very easy to get away. I mean, yes, you get out of the weeds and when… I mean our company, like I said, has continued to grow and we have a lot of scale in size now, but in my mind, you can never lose sight of what got us there from a retail-based experience. At the end of the day, we can be as fancy as we want in a lot of different areas, but we’re a retail-based company taking care of the customer. And if we can’t capture those things, then all the other stuff we’re doing really doesn’t matter. And we really, really try to keep a focus on those levers.

Mike:

I love it. Well, I’m going to ask you a real tough question here at the end. We’re coming up on a hard stop. But, let’s say, if I were to ask you, you like to travel, I think, so what’s your favorite place to visit or-

Judd:

The tough question is to finish it off. Yeah, no, no. I love to travel. I travel a lot, but I would go with Mexico. I have a house down in Mexico. I spend a lot of time down in Mexico. I grew up in Florida, so the beach. I definitely have adapted to Colorado and I love skiing and all the winter activities. But I think when you grow up in Florida or you grow up by a beach, you really can’t get that out of your blood. So yeah-

Mike:

I’ve noticed that [inaudible 00:21:43]. You can get people from the Midwest to the North or whatever, they can end up moving to a beach and liking it, but you can’t get the beach out of somebody that’s been down there or grew up there.

Judd:

Yeah, it’s like that home-cooked meal that you grew up with, with your family. Just something about it just always… It might not be the best, but it feels the best to you.

Mike:

No, it’s fabulous. Well, Judd, thank you for being on the Gain Traction podcast. It’s been a real pleasure. And to all our listeners out there, thank you for being part of the podcast. If you’d like to recommend a guest to us, anytime. Feel free to email me at [email protected]. Until next time, be safe and have a great day. Thank you, Judd.

Judd:

Thank you, guys.

Announcer:

Thanks for listening to the Gain Traction podcast. We’ll see you again next time and be sure to click subscribe to get future episodes.