Multi-Shop Operators (MSO)

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MSO remains afloat after both natural and market disasters

Wednesday, October 4, 2017 - 06:00
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The third location in Slidell was opened in 2009. “That’s an area where a lot of people from Chalmette had relocated after Katrina because it’s on higher ground,” Waller says. “We had a customer base there already.”

The population in Chalmette-proper declined by nearly 50 percent according to census data, but Waller says the community is now growing through the migration of younger families with multiple cars. “That business is steadily growing as the community starts to grow again,” Waller says.

Centralizing operations

With three stores, Fradella’s has now established centralized accounting and HR operations in Chalmette, and recently promoted a store manager to operations manager. “The only way we felt we could grow was to have somebody who worked on strategy, and somebody who worked on operations,” Waller says. “That’s worked out well for us, because it allows me to work on the vision while he is able to manage operational issues with the shop managers.”

The company also plans to centralize its phone system with a central operator who can route calls to the best shop to handle the work.

Fradella’s has also continued to leverage technology to help streamline its operations. Currently, the company uses Rome Technologies body shop management software, along with CCC and Audatex estimating software.

The Rome system helps identify the capacity of each shop for load leveling purposes. “It has an extensive production management system, so we can look at how many hours are in process and how many we have coming,” Waller says. “We can look at that on a minute by minute basis. We promise our customers the safest, fastest, and most flawless repair experience possible, and everything is tied back to that vision and our mission. Every decision about load leveling has to pass that litmus test. We don’t move the car unless we know we can get it done faster and that it benefits everybody.”

In general, Chalmette handles heavy-hit trucks, while Slidell gets most of the heavy-hit cars. Metairie serves as more of an express location, and is expanding to include a co-located quick service operation that will open this October.

Waller says that expansion has made it more challenging to stay on top of day-to-day operations at each location. “As an owner, when you have a single location, you are involved all day long and you can make adjustments as you go along because you are right in the heat of it,” Waller says. “When you start adding locations, you are not in it all the time and it becomes more difficult to have your finger on the pulse of the business.

“You have to build a process and hire people to work in that process and hold them accountable,” he continues. “That’s the challenge: holding yourself and your team accountable for the results. It starts with me. I have to be accountable to myself and everybody else.”

Competition in the New Orleans market is largely made up of long-standing mid-sized shops. “The population here is not transient like you’d find in Atlanta or Dallas,” Waller says. “People are born here, work here, and they are pretty stable. That polarizes the business; your parents got their cars fixed at a particular shop, and that’s where you get your cars fixed. That’s a good and bad thing. It’s hard to get that business away form another shop.”

The company participates in several DRPs and tries to maintain good relations with its customers’ insurers. There are on-site car rental counters at two locations. Fradella’s has also established an active online marketing operation, and works hard to ensure good word of mouth from its customers in order to obtain referrals.

Having a good relationship with Sherwin Williams/Martin-Senour has also been beneficial. “We’re in one of their focus groups, and that’s been a tremendous resource for us,” Waller says. “They do a tremendous job for us as a partner in our business. It takes a big commitment from us, too, but there are a lot of benefits.”

Fradella’s launched a technician training program last year to help with team expansion, as the technician shortage in Louisiana is as pronounced as elsewhere in the country. “We’re competing with a lot of manufacturing here, so we are taking entry-level individuals and having them work in damage analysis for 12 months, then they go on line with a technician,” Waller says. “We give them a path. We’ve got four or five people in that entry level program now.”

In addition to the new construction in Metairie, Fradella’s plans additional expansion. While the first three locations were greenfields, Waller says they have always considered other options such as acquisitions. “We’ve learned that the slowest way to add locations is to build them. It’s a two-year process to execute,” Waller says. “The issue in the New Orleans metropolitan area is that there are few existing businesses that are up for sale. Our economy is relatively stable, most shops have been profitable and there’s not a lot of movement.”

“We’re looking at opportunities with two other locations, so that’s the direction we’re heading,” Waller says. “Adding locations is a benefit to our team. One of our visions for the company is having customers for life so we can provide careers for life. In order to do that, we have to grow our company.”

In fact, that potential for growth is what Waller says is the biggest benefit to an MSO structure. “We can grow our company and work with young folks and our experienced employees alike, and give them a path to advancement,” Waller says. “One of the things that often happens in collision repair is you sometimes run out of a path for people, and they have to move on to make that next step. For me, nothing is more disappointing than to not be able to provide that next step for my teammates. We’re making sure we grow the company so they have a place to grow to.”

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