Quick Lube History – 1990 – JIFFY LUBE BLAMES BAD PRESS, FAST GROWTH FOR TROUBLES

JIFFY LUBE BLAMES BAD PRESS, FAST GROWTH FOR TROUBLES

DAVID ALTANER, Business WriterSUN-SENTINEL

Jiffy Lube wanted to be the McDonald’s of the quick-lube, oil-change industry.

It succeeded in becoming the largest in the business, and becoming so familiar that its name is often used generically.

But those successes have not meant profits for either the parent company or its South Florida franchisee.

Jiffy Lube International nearly went into bankruptcy last year, and was rescued from a crushing debt load in January by being purchased by Pennzoil.

Jiffy Lube’s South Florida franchisee also has financial troubles. South Florida Lubes, based in Lauderhill, filed for Chapter 11 protection from its creditors on June 28, then filed to be released from the bankruptcy last Monday.

For the three-month period ended March 31, 1990, Jiffy Lube incurred a net loss of $3 million, or 3 cents per share. Revenues for the three-month period were $20.4 million.

South Florida Lubes partner Frank Del Rocco blamed the problems on two things: too rapid growth and bad publicity from a Channel 7 news report.

The franchisee grew from nine outlets to 23 in less than three years. In May, Channel 7 claimed that Jiffy Lube and other quick-lube stations coerced consumers into unnecessary services — an allegation that competing quick-lube station owners say was partly true, but was exaggerated.

Del Rocco said business dropped off steeply after the May report, and only recently started to recover. “It hurt,” he said.

South Florida Lube’s bankruptcy petition said it owed $500,000 to the parent company, and $550,000 to suppliers and trade creditors. Company officials said the move to bankruptcy was simply a tactic in its negotiations with the parent company. A spokeswoman for the parent company said negotiations were progressing, but she would not give details.

It is not just Jiffy Lube, however, that is unhappy.

Another quick-lube service says business is off about 30 percent this year. Bill Stevenson of Inn ‘n’ Out in Fort Lauderdale and Hallandale said he was forced to lay off an employee in his Fort Lauderdale location.

West Palm Beach-based Oil Connection is adding its 10th location, but revenues on a per-store basis are flat, said one of its partners, Bob Pavese.

Meanwhile Pennzoil, the new owner of Jiffy Lube’s parent company, is attempting to turn around the company.

Spokeswoman Carolyn Foster said Jiffy Lube expanded rapidly because it thought it needed to establish itself quickly before the competition did. It even lent money to franchisees who later could not pay back their loans.

Now Pennzoil has directly taken over 152 of the Jiffy Lube’s 1,107 outlets, and it will sell those that are not performing, she said.

Pennzoil has also pumped money into advertising and research and development, she said.

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