Robert Behar is among those who have traveled an unusual path into tire store ownership.
A former oncologist, Behar first transitioned from treating patients to buying, building and operating hospitals. Then that business extended to owning and running other specialty medical facilities, such as diagnostic centers and emergency rooms.
Eventually, Behar sold his medical business and retired.
“Retirement didn’t really do well for me," he says. "It lasted about two weeks."
Behar started Summit Capital Partners, a private equity group. One division of his private equity operation is dedicated to automotive and specifically, to opening and operating RNR Tire Express franchises. (Summit Capital Partners also invests in real estate, university housing and self storage businesses.)
In 2020, he opened his first RNR Tire Express in Anderson, Ind. Four years later, Behar has 22 stores throughout four states, with plans to expand even more.
“We’re going to go to 100 stores," he says. "We’re in four states — Indiana, Ohio, Michigan and Iowa. We’re happy to be in the Midwest and I think it’s a very good regulatory environment. We’re going to build the brand. We don’t think tires are going anywhere.”
Tires are the core
Behar’s newest store is in Akron, Ohio. It was built from the ground up — just like all of his previous stores.
Scott Robertson is vice president of Summit Capital Partners Automotive Services LP, the division that encapsulates Behar’s RNR franchises. Before joining Behar’s business, Robertson led the expansion of an automotive collision franchise.
Robertson says Summit Capital Partners wants to not only sell tires and wheels, but also serve a role in the communities where it operates. In Akron, the company redeveloped the site of a former discount bakery store.
He says the Akron RNR Tire Express store, including its showroom of about 3,500 square-feet, is among the franchisee’s largest. As soon as a customer walks in the door, they encounter a colorful, large inventory of wheels.
“We want them to immediately see we’re a wheel and tire store,” says Robertson, who notes that tires represent between 50% and 60% of the business's overall sales.
“Our core business is renting tires."
The Akron store has four service bays - three for tire and wheel installation. The fourth is dedicated to alignments and is outfitted with an alignment rack from Hunter Engineering Co.
RNR Tire Express zeroes in on tires, wheels and alignments and offers them through its unique rent-to-own, no-credit-needed business model. Robertson calls it “the most gratifying part of this work,” because the payment schedule helps customers outfit their vehicles with tires that are safe for the road. “It changes people’s lives.”
Focusing on supply chain
Behar says he landed on RNR Tire Express' model - and tires and wheels, in general - after studying different industries and looking at their specific financial metrics. “We’re looking for things like financial margins, returns, risks, how we can mitigate the risks (and) what the long-term mega-trends are.”
His first stores opened in spring of 2020 in Indiana during the height of COVID-19. “We steamed right through that and then we had this horrific inflation that popped up.”
Despite those headwinds, Behar’s business has continued to grow and his outlook for future expansion continues, as well.
“It’s like everything," he says. "You have to have the right staff. You have to have the right inventory. You have to have the right marketing strategy. And it takes off on its own.
"I really like working with people. I’ve mentored a lot of people. I’ve seen people grow and it’s been a lot of fun.”
There are fundamental principles guiding Behar and the growth of his automotive operation. One is his search for supply chain options outside of China.
“I started a process of divesting from China in our supply chain years ago, because I could see the political risks,” he says.
He’s concerned by how much of the United States' tire and wheel inventory comes from China and what might happen to that supply chain if there were to be a confrontation between China and the U.S.
“This is an industry that has an enormous amount of supply from Asia. And in my opinion, this industry should look to diversify to other areas, like Africa or Latin America."
In terms of the inventory in his stores, Behar says that "most of our tires are not made in China anymore. We are working very hard to diversify wheels.”
Even though he’s a franchisee under the larger RNR Tire Express umbrella, Behar says he and his team have the freedom to pick their own products.
Disruption is ahead
Supply chain concerns notwithstanding, Behar does see two big disrupters ahead for the automotive space. Both have played into his thinking of why tires are a good business for the future.
The first is electric vehicles (EVs). Behar says EVs “will completely disrupt the way that cars are built and how they’re built and who builds them. (EVs) are easier to build. They’re more modular and electric motors are far more simple than complex combustion engines.”
Eventually, he believes EVs will be outfitted with an economical battery that holds a 750-mile charge and “you’ll be able to charge your car once a month.”
Add to that advances in autonomous driving and the fact that EVs require less lubrication and Behar says “the one thing that is always going to be there is tires. The tires are still there unless there’s an invention of a tire that lasts forever. The problem with that is, there’s no economic incentive for anyone to do that.”
Behar thinks autonomous driving will ultimately lead to his second mega disruption — the collapse of the automotive insurance industry.
By taking autonomous driving technology to the extreme, “90% of (auto) accidents would disappear very rapidly, within a matter of a couple of years," he estimates. "Autonomous cars can’t drink and drive. They can’t be distracted. It’s impossible for them to (run) a red light or not stop at a stop sign.
“You should see a dramatic drop in accidents, which would really more or less bankrupt insurance companies.”
