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Numbers guy directs company’s additions

Like many youngsters, John Van Heel wanted to play ball when he grew up.
 
"I made thousands of last-second shots," says the Monro Muffler Brake Inc. president with a laugh. "I think I’m normal. Every single guy wants to be a ballplayer."
 
But when it was clear that dream would not come to fruition, Van Heel chose to pursue a career in public accounting. The path would lead him to an executive role at the automotive repair company, which was on the verge of double-digit sales and earnings growth.
 
His choice to go into public accounting has served him well, Van Heel says.
 
"I’m very glad because I didn’t know exactly what I wanted to be, and the experience you get in that environment provides a great basis for the job I’m doing today," he says. "You can’t be in a leadership role in a company unless you understand how the company makes money-how it services its customers … and how it can be successful going forward."
 
Monro Muffler consistently ranks among the area’s top public companies based on net income. The company employs 5,500 people at 840 stores in 19 states, including 300 staff in Rochester.
 
It recently reported record fourth-quarter sales and net income. For the full year ended March 30, 2012, net sales rose nearly 8 percent to $686.6 million. It posted net income of $54.6 million, or $1.69 a diluted share.
 
Monro Muffler was founded in 1957 by Charles August as a franchise of Midas Muffler. August grew weary of Midas’ muffler-only concept, and in 1966 he ended his affiliation with the company. August partnered with his brother, Burton August, and Sheldon Lane to form Monro Muffler.
 
The trio’s plan was to offer more than just muffler and exhaust repair: Monro Muffler was formed to provide common under-car maintenance, in addition to what its competitors offered.
 
In the two decades that followed, Monro Muffler grew to 20 stores. In 1984 a New York City investor group led by Peter Solomon and Donald Glickman purchased a controlling interest in the company. At the time Monro Muffler had 59 stores, primarily in Upstate New York.
 
Monro Muffler went public in 1991 and throughout the 1990s continued to grow by building stores in the Northeast.

Growth through acquisition
 
In 1998, when Monro Muffler had 330 stores, it acquired nearly 200 Speedy Muffler King stores from Toronto-based SMK Speedy International Inc. In 2002 it continued pursuing a growth-through-acquisition strategy by purchasing Baltimore-based Kimmel Automotive Inc., effectively adding a tire-store format to its repertoire and expanding its presence in Maryland and Virginia.
 
Van Heel, 46, joined the company later that year as a vice president in its finance department, after a career at PricewaterhouseCoopers LLP and elsewhere. He had spent a majority of his career supporting acquisitions.
 
"As I went through that career path, I realized that I wanted to be in a company, growing a company," he says. "I was all around it, consulting on acquisitions, so I was helping people build their company, and at a certain point I decided that I wanted to do that."
 
When the opportunity to join Monro Muffler presented itself, Van Heel jumped at it.
 
"The reason I came here was because I thought the company at the time was large enough to be publicly traded and doing some real business: 500 stores, about $250 million in revenue," he explains. "But I saw the opportunity for the company to get a lot bigger."
 
Van Heel also notes that the management team at Monro Muffler was small enough so that he thought he could make a contribution and an impact, as well as expand his role beyond the finance department.
 
"I wanted to lead the company and grow it, and I felt like I had both opportunities here," he adds. "I have been very fortunate to have been given more responsibility, and we as a group have had success."
 
In 2003 Monro Muffler purchased Frasier Tire Service Inc., which had 10 stores in South Carolina. A year later the company bought 36 Mr. Tire stores in Virginia and Maryland. Later in 2004 it acquired Donald B. Rice Tire Co. Inc., which had five stores in the Baltimore area.
 
In 2005 and 2006 the company’s acquisition strategy hit a glitch: Monro Muffler purchased a 13 percent stake in Strauss Discount Auto, an operation similar to Pep Boys. The Strauss deal would have been Monro’s first foray into the retail auto parts market. Strauss had 101 service and retail stores in New York, New Jersey and Pennsylvania.
 
But in 2006 Monro opted not to purchase the remaining 87 percent stake in Strauss, citing the company’s declining performance. Strauss filed for Chapter 11 bankruptcy protection, and Japanese investors purchased the company shortly thereafter.
 
Monro Muffler rebounded via the purchase of 75 stores of ProCare Automotive Service Solutions LLC in Ohio and Pennsylvania. At the same time, Van Heel was named executive vice president and chief administration officer.
 
Acquisitions continued to play a role in Monro’s expansion through 2007 with the purchase of Valley Forge Tire & Auto Centers and Craven Tire & Auto in Philadelphia and northern Virginia. In 2008 the company purchased Buffalo’s Broad-Elm Tire & Service Centers, rebranding the seven locations as Mr. Tire stores.
 
Shortly thereafter Van Heel was named president, succeeding Robert Gross, who had been named chairman and CEO. Van Heel was charged with leading the company’s continued acquisition strategy.
 
Van Heel says growth through acquisition works well for Monro Muffler.
 
"When you acquire a chain within your footprint, you take out a competitor and you also have a great understanding of what you’re buying because it’s within your market and the stores have been operating awhile," he explains. "And, as opposed to opening new stores, you’re growing sales very quickly and you have customers and a team on the ground already."
 
The best growth for Monro Muffler is within its current territory, Van Heel adds.
 
"Having more stores within our footprint makes us more convenient to customers and makes us more efficient," he says. "That said, you could see us in Florida. You could see us east of the Mississippi. You won’t see us in California in the next five years, and probably not in Texas."
 
Monro Muffler’s five-year operating plan calls for the company to generate 15 percent top-line growth-which will double its sales, Van Heel notes-and 20 percent earnings growth. Ten percentage points of the top-line growth is to come from acquisitions and 5 percentage points from existing stores.
 
The company’s success is a result of a history and culture of conservative management and a focus on customer service and convenience, Van Heel says. Monro Muffler has reported positive comparable-store sales for the past 11 years.
 
"You get sales being driven by that good performance within our stores and good development of customer relationships, and acquisitions and the conservative management helps us make sure we continue to report earnings for shareholders and other stakeholders," he adds.
 
Monro Muffler relies heavily on repeat business and creating trust among its customers. To that end, the company offers inexpensive oil changes that get clients in the door and a "report card" that tells customers the condition of their vehicles’ brakes, tires and other maintenance items.
 
"The oil change for us is a great way for a customer to test our store out. It’s a low-risk service that doesn’t cost a lot of money," Van Heel says. "We’re in the auto service industry, which is an industry that’s high service but low trust. We use the oil change to establish that trust."
 
During the recession and its aftermath, Monro Muffler capitalized on drivers keeping their cars longer.
 
"The average age of the car in the U.S. has risen to the highest point ever," Van Heel notes. "Older cars need more work and repairs, and that definitely helps our business. It certainly costs less each year to maintain a car than a new-car payment."
 
The biggest challenge Van Heel has seen in his time in the industry is dealing with a consumer under a lot of pressure, coupled with rising oil and tire costs.
 
"Even in a defensive industry where people need what we sell, no one wants what we sell," he laments. "They’d much rather buy a TV."
 
CEO Gross notes that the company tries to make the consumer’s dollar go farther and that leads to customer loyalty.
 
"Certainly people have to fix their car, so when people don’t buy new cars or are struggling, they’re looking for value-oriented alternatives to get to and from work and move forward with their daily lives," Gross says.
 
The hedge in Monro Muffler’s business is that when sales get tougher, so do the sales of competitors, which makes acquisitions more feasible and attractive.
 
"So they’re making less money, and what happens is in tough periods we tend to grow our company and our sales more through acquisitions," Van Heel explains. "In a tough market we’ll do more acquisitions. It’s one of the factors that leads me to be confident that we’ll be able to continue to grow the company throughout that five-year plan."
 
Whether the economy is up or down, Monro operates along the same path, says Chief Financial Officer Catherine D’Amico.
 
"We watch our pennies always, in good times and in tougher times," she says. "That way when business is slower we don’t have to take more drastic actions such as laying people off or eliminating our 401(k) match."

Atmosphere
D’Amico calls Van Heel quiet, genuine and honest.
 
"John is thoughtful about his decisions, to ensure that he has the facts before proceeding, but is a strong leader and decisive," she adds.
 
Van Heel calls himself hands-on but not a micromanager.
 
"I didn’t grow up within this industry, but we’ve got a lot of people with really deep industry experience here," he adds. "So I know what I don’t know."
 
Gross says Van Heel picks up on things quickly and has high integrity.
 
"He leads a good discussion and moves the topic forward toward conclusion, not a lot of vacillation," Gross says. "We share the same vision for the company. I think he’s me, but smarter."
 
Monro Muffler has a relatively flat management structure, Van Heel says, and employees understand the need to work together as a team to make the company a success.
 
"An example of that is integrating the acquisitions that we do. We don’t have a set acquisition team; we get those done as a general management group and team," he explains. "But more importantly, at the store level it absolutely takes a team to service customers well, and that’s really more important than what happens back here."
 
Van Heel says the best part of his job is the opportunity for Monro Muffler to keep growing and the continued changes within the company.
 
"It presents new opportunities and challenges, new things we have to deal with," he says.
 
Indeed, Monro Muffler last month purchased 18 Colony Tire retail stores in North Carolina and expects to sign a letter of intent on another transaction of similar size this year.
 
"We’ve got a great opportunity at this company to grow well into the future," Van Heel says.
 
If he could pass along a piece of advice, he says, it would be "Work harder than everyone else and get everything done you can today, because you don’t know what tomorrow will bring."

At home
Born and raised in Chicago, Van Heel and his wife of 21 years, Linda, live in Fairport. They have two children, Gianna, 15, and Matthew, 11.
 
Gianna was born in Italy, a result of Van Heel’s working there for nearly five years. Though at the time Van Heel did not speak Italian, he now is fluent in the language and calls the time they spent in Italy tremendous.
 
Van Heel enjoys sports, including basketball and golf, and like other dads of teens he spends a lot of time at games and dance recitals. He also is treasurer of his church and a supporter of United Way of Greater Rochester Inc. He serves as a director of the organization and a member of the finance committee.
 
United Way president Peter Carpino has been friends with Van Heel for about seven years. He describes Van Heel as smart, thoughtful and measured.
 
"He has always struck me as a very humble person," Carpino says. "He doesn’t like to be the center of attention. He is somebody who leads from behind."
 
Van Heel is centered and has his priorities right, Carpino adds.
 
"John appreciates the legacy of involvement that the founders of Monro Muffler, and now the current management, has in this community," he says. "He takes that very seriously. The company was founded by Chuck August, then both brothers worked in the company. You had in the two of them individuals who always put this community first, for whom service was incredibly important, for whom philanthropy was very important. I think John understands that."

John Van Heel
Title: President, Monro Muffler Brake Inc.
Home: Fairport
Age: 46
Education: B.S. in business administration, SUNY Buffalo, 1987
Family: Wife, Linda; daughter, Gianna, 15; and son, Matthew, 11
Hobbies: Basketball, golf, spending time with family
Quote: "Even in a defensive industry where people need what we sell, no one wants what we sell. They’d much rather buy a TV."

7/6/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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