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The accelerator at Monro Muffler Brake

Larry Day:
The accelerator at Monro Muffler Brake

Larry Day’s hand hovers over a map of the United States, describing small circles as it darts from New England to Ohio and dives down to Virginia.
The map hangs where he can easily see it from his desk.
Protruding from it are 233 small, colored pins, clustered mostly in the Northeast. Each one marks a Monro Muffler Brake Inc. store location.
Day, who became president and CEO of Monro Muffler April 1, believes he can double the number of little pins on the map in five years. Maybe four.
“Easily,” he says, “and that’s without leaving this geography.”
His hand again floats over the Northeast but proceeds to describe a wider arc, taking in an area west of Ohio and edging south to Tennessee. The fingers flutter briefly west of the Mississippi River, pointing toward the West Coast, but do not stray long.
It is not an immediate goal, Day admits. Before the decade is out, however, he hopes to see a profusion of pins stretching from coast to coast and border to border.
“I really want to ramp things up,” he says.
Day, 45, who joined the auto-service firm as chief operating officer and executive vice president a little less than two years ago, has settled in quickly.
Indeed, former Monro Muffler CEO Jack Gallagher says Day’s aptitude for the business induced him to step down earlier than anticipated.
Gallagher, 58, had led the firm since 1987, overseeing it through a 1991 initial public offering and leaving it roughly twice as large as when he started.
Day grew up in the Republic of South Africa and Gallagher was raised in the Midwest, yet their backgrounds and outlooks are strikingly similar.
Both come from modest, middle-class families and have spent a lifetime in the automotive aftermarket business. Both first worked for tire companies. And while they never met there, both spent some years with Firestone Tire & Rubber Co.
Each also harbored ambitions of running a firm, but took his first shot at it in an overleveraged company that later ran into financial problems.
Gallagher, who remains at Monro Muffler in a position that might be described as CEO emeritus, in fact is hard-pressed to name any key differences between his management style and those of his successor.
“There are similarities and dissimilarities, but more similarities,” he says. “Larry’s doing pretty much what I would do. He’s going a little faster than I would, but then he reminds me of myself at that age.”
The two indeed are cut from the same mold, says John Walthausen, an analyst at C.L. King & Associates in Albany.
“Larry is a no-nonsense, disciplined manager. He’s as good a successor to Jack as you could hope for.”
Day readily acknowledges that he is building on a foundation Gallagher laid.
Founded in 1957, Monro Muffler was the brainchild of Charles August, a onetime Midas International Corp. franchisee. August quit to start his own firm after failing to sell Midas on the idea of adding brake and other undercar repairs to exhaust-system work.
Midas and other established, deep- pocket competitors such as Meineke Discount Muffler Shops Inc. quickly adopted August’s formula and held Monro Muffler to a minor-league position in the market niche it invented.
Meineke is wholly owned by GKN, PLC, a $4.5 billion British automotive firm. And Midas’ sales are more than three times Monro Muffler’s.
But another factor worked to keep Monro Muffler regional while Midas and Meineke blanketed the country: the Rochester firm’s insistence that all stores stay company run.
Switching from company-run to franchised operations would have let Monro Muffler expand more quickly. Gallagher nixed the idea, however, opting for slower growth and tighter quality control.
Bent on building a strong infrastructure, he installed a state-of-the-art, computerized inventory and distribution network and created training systems designed to keep and promote managers up from the shop floor.
Which is not to say that the firm did not grow.
When Gallagher took the helm, Monro Muffler was a $34 million company with 69 stores. By his retirement, it had more than doubled store locations and posted sales approaching $100 million.
In fiscal 1994, earnings reached $7.4 million, up from $5 million in 1991.
Day, who emigrated to the United States in 1976 with no clear job prospects, clearly is tickled to be stepping into Gallagher’s shoes.
And as Gallagher did before him, Day promises not to fix what is not broken.
“My management will basically be the same hands-on style as Jack’s,” he says.
Gallagher’s success came from his ability to maintain and nurture a small- company culture while implementing big-company systems, Day says.
So, like Gallagher, he is adamant that all locations operate under central management.
“Control is critical,” Day says. “The industry has taken some hard knocks. As an owner-operator, we can control the culture.”
The knocks to which Day refers are controversies over the last decade or so in which firms such as Midas and Sears, Roebuck and Co.’s auto-service chain were accused of scamming customers with phony repairs.
For Monro Muffler, such accusations are a double-edged sword, Day says.
The company never has faced such charges and thus can be favorably compared to some competitors, he says. Yet in the public’s mind, the entire industry is tarred, so it is doubly critical for Monro Muffler to maintain a sterling reputation.
Day’s marketing strategy, like Gallagher’s, is not to attack the competition frontally. Rather, it is to position Monro Muffler as a brand name consumers can trust.
“We’re not a discounter,” Day insists. “We’re selling trust and service.”
Key to the strategy, he says, is keeping the company culture small while running an efficient, large-scale operation. To do both, Day says, workers must be happy and motivated.
“This is one of the few companies around where somebody can start out changing tires and be promoted to shop manager, to regional manager and ultimately into the corporate structure,” Day boasts.
While Day did not exactly start out as a tire changer, his roots are close enough to give him an insider’s feel for the ground level.
He grew up in Johannesburg, where his father was a production manager in an aluminum window factory and his mother worked in a bank.
Day says his family, though middle class, could not afford to send him to a university.
The South African higher-education system is like England’s. Children of the elite train to become doctors, lawyers and captains of industry at pricey universities; others train for trades or attend lesser-ranked colleges.
After graduating from high school, Day enrolled in Lyceum College, essentially a training school for bank workers.
At such institutions, banks pick up the tuition tab, while students work full time at the sponsoring institutions.
Standard Bank of South Africa paid Day’s tuition and employed him as a director of foreign-exchange transactions. Despite the title, the job was fairly menial and his salary unimpressive, Day assures.
By the time he earned a diploma in 1972, Day says, “I realized (banking) wasn’t for me.”
At the time, Day was an avid rugby and cricket player. (Knee injuries and the difficulty of rounding up 22 cricket players in the United States have since side-lined him from the games.) Several cricket mates worked in the tire industry and encouraged him to try his luck there.
So in 1972, Day left the bank for a job as a manager-trainee with the Goodyear Tire & Rubber Co.’s South African branch.
The following year, the company transferred him to Rhodesia (now Zimbabwe), where he was promoted to branch manager of its wholesale operation. In mid-1974, he returned to Johannesburg to run a larger branch.
Meanwhile, in June 1973, Day had married Sue DeLisle, an American nursing student who was studying in South Africa.
In 1976, the couple decided to leave politically volatile South Africa for Sue Day’s native Boston.
“It seemed like a better place to raise a family,” Larry Day says.
Two sons, now 17 and 15, were born after the couple’s move to this country.
In Boston, Day canvassed tire companies for work and landed a job with Firestone Tire & Rubber Co. as assistant manager in a retail store.
By 1982, he had become district retail sales manager in Cincinnati. Promotion to general market manager of 35 Atlanta-area stores followed in 1984.
In 1987, Day again moved up, gaining responsibility for West Coast stores in the San Francisco, Phoenix, Portland and Irvine, Calif., markets.
In the same year, however, the Japanese-owned Bridgestone Corp. acquired Firestone.
Day says he had become less and less enamored of working for a big company, and he figured the corporate environment under a new, foreign owner was likely to be even less to his liking.
A Firestone colleague, Orland Wolford, recently had started running Automotive Industries Inc.
The Florida-based firm was a holding company under which a group of investors had bought up several small chain operations in the South.
Wolford recruited Day, making him an Automotive Industries vice president and president of the Jim Martin Tire Co., a 20-store chain based in Savannah, Ga.
Like a lot of late 1980s enterprises, Automotive Industries was strung together with leveraged buyouts that left it strung out, Day says.
Less than a year after he started there, the firm filed for Chapter 11 bankruptcy protection.
Then in 1989, the cash-strapped company started negotiations that led to its acquisition by General Tire Inc.
Since General Tire is owned by the German Continental A.G., Day says, the buyout looked to him like a replay of the Bridgestone/Firestone situation.
In December 1989, while Automotive Industries and General Tire still were negotiating, Day jumped to Montgomery Ward & Co. Inc., where he became director of field operations for the Chicago-based retailer’s 350 Auto Express Stores.
By the time Monro Muffler wooed him in 1993, he had risen to vice president and was responsible for running the Auto Express chain.
While Gallagher and Day never met at Firestone, Gallagher says Day’s reputation earned him a place on Monro Muffler’s short list of succession candidates.
Once the two met and talked, Gallagher says, “Larry moved way out in front of the pack. The next ones in line weren’t that close.”
Day, meanwhile, confesses that the meeting also made up his mind.
“I flew back to Chicago and I told Sue: “I know this sounds funny but start packing. I think we’re moving to Rochester.”’
Twenty-one months later, his enthusiasm has only mounted.
Monro Muffler expanded by 20 stores a year under Gallagher, says Day, who predicts it can make 30 without running a danger of overexpansion.
“The perception in the market is that Monro is this nice, little regional chain,” he says. “We’ve got to change it. We’ve got to work harder.”
Faster growth might draw more attention to Monro Muffler’s stock, which was trading on the NASDAQ market this week at $18.38–up less than $2 a share from its 1991 offering price.
Gallagher, whose emeritus duties include hunting up expansion opportunities for Day to pursue, neither disagrees nor sees Day’s haste as incautious. To the contrary, the younger man’s ambitions–which, after all, echo his own–seem to awaken an avuncular pride.
“I believe in Larry,” Gallagher says. “And remember, I’ve still got a lot of stock in the firm.”

[Rochester Business Journal Profile, 4/28/95]

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