Hi, everybody. I'm Robert Ohmes from BofA Global Research. Vicky and I are very pleased to have Driven Brands here with us today, including Jonathan Fitzpatrick, the President and CEO, and Danny Rivera, the EVP and COO. I think most of you know Driven Brands is the largest automotive services company in North America, and they continue to execute incredibly well in what has been a pretty dynamic environment out there. So I know they've been very busy, so I want to thank Jonathan and Danny again for coming today. I'm going to just kick it off. I think just in terms of the industry outlook, where do you think we're in the demand cycle for the customer? I know in the past, you know, the DIY, there was sort of DIY overperformance during the pandemic. How's the do-it-for-me customer doing?
How do you guys think about that?
Yeah, I'd say the overall retail consumer environment is pretty good. I think if you look at just the complexity of the automobile, it's pretty hard for that sort of nostalgic "let's do it in my driveway" type thing. So I, I don't see that sort of, you know, picking back up from where we were in the middle of COVID. Our core household income customer is about $70,000, typically married, typically have two vehicles in their house, typically use those vehicles to live their lives and, and use those vehicles for work. So we've seen a very nice sort of overall demand profile over the last number of years. Outside of our U.S. car wash business, which is the only sort of more discretionary element of our needs-based services, but I'd say overall we feel very good.
I think it's important for people don't necessarily understand 50% of our system-wide sales come from commercial customers or B2B customers. So 50% of our total system sales are coming from large insurance, large fleet managers, you know, rental car companies, things like that. So we've got a very nice balanced book of business between B2B and B2C.
That's really helpful.
Yeah, and thank you for that. Then when we look at factors that impact the industry, should we be looking at miles driven, and is growth in that resulting in the demand increases that you were originally expecting?
Yeah, miles driven is definitely one factor. I think another factor is the average age of the automobile, which has now crossed that 12-year mark. So you've got older cars being driven more. You've also got generally more complicated cars. So if you look across our business lines, you've seen organic growth in average check just because of the complexity of the vehicle. For example, the premiumization of oil, the cost of collision repair, the ability that you have to generally replace versus repair 10 or 15 years ago. So I think this industry still is anchored on miles driven and age of the vehicles, but there's natural tailwinds because of the vehicle complexity, which is driving check. Some people think that check is price-driven. It's really more sort of the PMIX element of that and the cost of the repair.
Yeah, thank you.
All right, kind of two questions together. One of them, I think you guys get it a lot, and I think probably sick of it. What is the current thinking on EVs and what that means, you know, across your businesses? That's, that's the first one, and then I just have a, a follow-up.
Well, Robbie, you know you were on our IPO team, and, back in, 2021, there was a lot of, you know, positive narrative around EVs and the electrification of the fleet. And, you know, by 2025, the U.S. was going to be full of self-driving vehicles, and we were going to be at 50% electrification. I think what we've seen is the narrative, you know, change certainly over the last 12-18 months. I think a couple of things that people don't take a step back and just look at the math. So there's about 280 million vehicles on the road today in the United States. Less than 5% of those are fully electric vehicles. So our car park, you know, predominantly is an internal combustion car park with 280 million vehicles.
If you think about new car sales on an annual basis, let's call it an average of 16-18 million over the last decade. If you were to assume every new car sold was fully electric starting now, you can sort of do the math how long it'll take for that car park to turnover. Clearly, we're not seeing 100% of new vehicle sales being electric. I think we're seeing now that the initial demand curve for electric vehicles were rich people who lived in rich parts of the world. That demand seems to be sort of, you know, met to some extent right now. We're seeing inventories build. I think we're seeing the true cost of repair and ownership of some of the electric vehicles, certainly on the collision side, is a lot higher than people think.
So within our portfolio, the only business that we have that's directly exposed to the electrification is our Take 5 Oil Change business. Again, $70,000 household income, cars typically five plus years of age. These are folks that are not necessarily buying Teslas that live in Marin County. They tend to frequent Dunkin' Donuts and not Starbucks. So I think we look at our business and say, you know, our quick-lube business alone is going to continue to grow into the late 2030s until we reach some sort of inflection point. And then I think from a technology perspective, it does seem like hybrid is becoming a more likely solution or part of the solution for the long term. And obviously, with hybrid cars, we still require oil changes.
I think we watch it very closely, and it's been kind of interesting to see the narrative and the reality shift over the last three four years.
Then a follow-up. I was just curious on this. You mentioned miles driven, average age of an automobile. In the event that, I mean, you know, used cars did very well during COVID. If you got a glut of new cars in the U.S. and you saw more consumption of new cars, where I think initially those people go to the dealer and stuff like that, would that be a headwind to your business?
I don't see it happening. It's an interesting hypothesis. I think what you're seeing is the price of new cars is significantly up over, let's say, pre-pandemic levels. We're seeing the average age of the vehicle grow because our core customer, that $70,000 household income, simply can't afford to buy the price of the new car. So I think, look, rounding errors, if we had a bumper new car sales year where we got to $22 million-$23 million, on the margin, there's a small impact to our business. But we actually look at, you know, the average holding period for a vehicle is likely to expand, not to contract, over the next sort of five 10 years.
Well, I think the only thing I'd add to that, just to double-click for a second, is if you look at Driven, right, so Driven is a platform which brings with it a little bit of diversification, right? So if there was hypothetically a glut, so to speak, of new vehicles being purchased, that may impact, let's say, our repair and maintenance businesses or oil change businesses. But when it comes to car wash or collision business, no impact whatsoever, right? So, like so many things with Driven, if it's a put in one place, it could be a take in another.
That's really helpful.
Yeah. I want to dive into the competitive environment a little bit. To start off, can you talk about what the competitive environment looks like for each of your segments broadly?
Sure. Well, we obviously have competitors in all of our markets. A handful of those companies are public, publicly traded. You know, within our oil change business, we've got a super great public company competitor that we respect, and I think they've done a great job over, you know, many decades. We feel really good about our unit economics, our pipeline, the number of franchisees that we have building stores. So we feel like we're in a very good spot there from an oil change perspective. In our collision business, we have 1,000 franchise collision shops. We do over $2 billion of annual revenue, 95% of that coming from our insurance partners. There's one public competitor, Boyd Group, who do a really nice job, but it's a company-operated model versus a franchise model.
So the margins on our franchise business are significantly north of 50% versus a company-operated model that may be in the, you know, low to mid-single, you know or sorry, low, low teens, let's say, on a company with a margin. Car wash, we have one public competitor. I think, John and the team have done a great job for decades in that space. I think what's happened in the car wash industry, though, overall is we've seen a massive influx of new stores come online over the last four years. So I think it's not so much about a really great competitor with John and the team. It's really about the incremental competitive intensity we've seen in that space. So that's kind of a quick landscape on some of the competitors.
Very helpful.
I want to dig a little more into Take 5. I think you guys took some pricing in the fourth quarter of 2022. You know, how do the pricing opportunities look from here for Take 5, and what does the pricing environment look like in the industry for them?
So maybe I'll answer the question this way. I think the focus on pricing is a little bit you got to look at it a little bit differently, and Jonathan alluded to it a second ago. So in the oil change space, you have kind of these natural tailwinds into business, right? So one of them, Jonathan mentioned, is the premiumization of oil. So 10, 15 years ago, you had a lot more cars back then would have had conventional oil. So think of that as, like, a base product, right? Sitting here today, if you look at our Take 5 business, north of 90% of the oil that we put in cars is going to be synthetic or semi-synthetic oil. That synthetic and semi-synthetic oil is just going to come at a higher price point because it costs more, right?
So there's just this natural tailwind in the business or in the industry as it relates, you can see it as price, but really what's happening under the covers, it's really a PMIX story, right? We also have attachment rates. So we have our big five attachment. Back when we started with the business, that could have been, you know, 30%. You look at it today, 40, 45 you know, we think we can get it to 45%. And it was big four, and now it's big five. So if we look at average check, there's a few different great things happening in our industry and in the oil change business in particular with premiumization of oil and then our attachment rates. And look, in 2023, we didn't take any price. The last time that we took price was back in Q4 of 2022.
The team out in the field does an amazing job taking care of our customers. Historically, if there are commodity price increases, at least historically, we've been able to pass that through and maintain, you know, high 70s NPS scores.
And then to follow up on that, are you seeing rational pricing dynamics in the industry from your competitors as well?
We're seeing a little more from certain competitors, a little more promotional activity, let's just say. The team is keeping their eye on it. I'd say we're being smart about it. We're not overreacting to it. We're being competitive where it merits us being competitive and making sure that we don't lose share. So it's a little bit more promotional there than it was, let's say, a year ago.
I want to switch over to acquisitions and divestitures. I think you guys indicated, I think it might have been in the presentation you guys gave, you know, no expectations for M&A this year. Is that right?
Yeah, we've never forecasted M&A. And, you know, the last couple of years, we're quite busy with building on our U.S. glass platform where we did 12 acquisitions. But what I've said to investors, you know, from our Investor Day back in September to the latest earnings call, I don't foresee any material M&A, certainly in 2024. We still do a little bit of bolt-on, tuck-in acquisitions for a couple of quick-lube stores here and there, but really de minimis. So at least sitting here today for 2024, we don't see a lot of M&A.
Just to follow up, would you guys look at making a divestiture at some point?
Sure. I said it a couple of times already in the, you know, in the public domain. You know, my job is to be an active portfolio manager. We have a number of segments and operating businesses. And, you know, there may come a time where some of those businesses don't fit strategically as we're thinking about the business for 5 or 10 years. So yes, absolutely, we continuously evaluate the portfolio. And as a result of that, we may end up with some dispositions.
You briefly mentioned the top acquisitions, so I want to touch on that a little bit. On the last call, you mentioned, you completed the integration. Can you tell us a little bit more about how you, went about that process and any difficulty that you, saw in the process?
Yeah. We went through it carefully, very carefully. Look, what we did is 24 months ago, we weren't in the glass space at all, right? So made the decision to get into the glass space, through a series of acquisitions. And we bought 12 different companies over the course of, you know, 12 months or so. And then we went about integrating those businesses. Think of these businesses as entrepreneur-led small businesses that all had, you know, number one, they have their own brands, their own processes, their own people. So everything about the business is unique to how that business was built up through the years. The challenge for our team, as far as integration is concerned, is to take these 12 different and disparate businesses and turn them into one business that goes to market one way with one operating playbook, right?
So, you know, I've mentioned it in the public domain. You know, that was everything from point of sale system, which I think, you know, I say that. I have a former life in technology, and that folks' eyes, like, roll back in their heads when I say a point of sale system changeout, you're talking about every single process within the four walls of a business, right? So that person that was, let's say, in sales that's been doing that for 15 years, they've been, you know, landing the work, processing the work, and deploying the work the same way for 15 years. You go in there, and you change out their point of sale system. You've changed out their 9:00 A.M. to 5:00 P.M. Every single part of their business is now different. We had to go change compensation plans.
Again, it's a pretty straightforward thing to say, but when you start changing people's pay, that tends to upset people, right? That's a very violent way of moving somebody's cheese. But the reality is we can't run a business with, you know, 25 different payment plans, right? So we went about pretty methodically integrating the business over the course of the last 12 months or so. And that all culminated in, you know, last earnings said, "Hey, this work is behind us now." So feel good about where we are. The business is going to market as one business with one set of systems and processes. And that opens up the team now for 2024 to really focus on, number one, maintaining the cost structures we've put in place, but number two, is leaning into the revenue side of the business.
Yeah. That's great.
You guys have been talking more about, you know, sale-leasebacks, real estate pipeline, divestitures, things like that. You know, what's driving that? That would be kind of the first question. The second would be, who are typically the partners, and kind of what kind of terms are you getting on these divestitures? Related to that, should we forecast rent expense to start to grow at a more significantly accelerated rate going forward?
Yeah. Let me unpack that a little bit, Robbie. So, start with we have $300 million of assets held for sale, which we've talked about. That is a set of assets in real estate that we built as part of our U.S. car wash pipeline. Represents about 130 different pieces of property or car wash buildings that we have that we haven't opened. So that none of that assets held for sale will impact store count. So that's number one. The total assets held for sale on the balance sheet is $300 million. We are actively, you know, marketing, selling, and disposing of those assets. We have said that we would expect at least $100 million of proceeds in fiscal 2024. Hopefully, that would be more than that.
Obviously, any of those proceeds that we get in will generally be used to pay down debt, which is a priority for us. That's kind of on that assets held for sale bucket. In terms of future sale-leasebacks, the only area we'll be doing sale-leasebacks for 2024 is on our company quick-lube stores. We will build this year approximately 50 stores. We think about 35-40 of those locations will have real estate. We will sale-leaseback those typically within six months of opening the location. We're selling those to really two types of real estate investor. One is sort of that 1031 Exchange investor. Then we're selling to more institutional groups like, you know, REITs and so forth. Typically, we're getting 6.25%-6.5% cap rate on those quick-lubes.
When you look at the math, it takes the cost of about $1 million to build a quick-lube CapEx real estate. You could think about real estate on average being about $700,000, so gross CapEx of about, you know, $1.7 million. We're getting about 90% of that capital returned to us through the sale-leaseback. And then we've been very thoughtful on around making sure that the occupancy expense is really less than 10% of the annualized sales at maturity. So that's important, that we're getting the capital out in a very efficient way, but we're not burdening the stores with excessive occupancy costs. So that's kind of how we're thinking about this year. Our forecast for this year, Robbie, for sale-leaseback proceeds is in that $40 million range, you know, for the entire fiscal year, again, coming from our quick-lube stores.
That's really helpful. Thank you.
Pleasure.
In the beginning, you were talking a little bit about the margins differences between franchise and company-owned.
Yeah.
Do you have a preference on franchise versus company-owned stores, which one you prefer to open and why? And can you also remind us of the growth outlook for each?
Sure. Having been doing this for 25 years, I've experienced both good margins, bad margins, both on company and franchise. Our main company-operated business is our 650 company Take 5 quick lube. Their four-wall EBITDA margins are mid-30%. So there's just not many multi-unit customer-facing businesses that are generating mid-30% four-wall EBITDA margins. So it's an incredibly powerful EBITDA margin. People ask me, "Why don't I refranchise those stores?" And, having done refranchisings in former lives, you typically refranchise company stores whose EBITDA margins are low double-digit, 10, 12, 13, 14, 15%. You're trading that for a royalty rate of 5, 6, 7% and typically trading it for an offsetting development agreement. So you put it all together, it can be positive. It's a pretty hard trade to trade 35% four-wall company margins to a 7% franchise margin, and we already have 1,000-store pipeline. So we love the company stores.
We love the margins. We love the simplicity of that business. And we will continue to open, you know, broadly 50-60 company stores for the foreseeable future. In other parts of Driven Brands, we have pure franchise businesses. So we've got about five what we call legacy franchise businesses: Meineke, Maaco, 1-800, CARSTAR. And those are, you know, 99% franchise businesses. We obviously get paid royalty off the gross sales. That blended royalty rate is about 4.5% because there's different royalty rates in there. Those businesses, we look at high cash flow-generating assets. And, you know, those businesses are typically generating EBITDA margins, you know, north of 60%. So again, really good businesses. And this is the combination that we like at Driven, that we've got really strong, stable franchise businesses.
Some of these have been around for more than 50 years, very predictable same-store sales, you know, outlook, very predictable margin profile because we get paid off the top, which then provides great free cash flow for the business, which we can then invest into some of the higher growth opportunities like quick-lube.
Yeah.
In the dream big plan for 2026, you know, circling back to Take 5, Take 5, I think, is well over half of the, you know, dollar growth between now and.
Two-thirds, yeah.
So it's two-thirds or so huge contributor. So obviously, they have fantastic profitability and everything. Are they, you know, not knowing the business as well as I'd like to? I mean, is Take 5, what are the competitors all in that range also, or what does Take 5 do different from competitors?
Yeah. So I, I think two things come to mind when I think about Take 5, right, and, and how, how does this thing keep delivering the way it's been delivering? I'd say number one is we've stayed true to who we are to our core, right? So Take 5 is about being fast, friendly, and simple. So it's a 10-minute experience. It's not a 15-minute experience or a 20-minute experience, right? It's a 10-minute experience. It's a stay-in-your-car model, which is a differentiated model other than our, our competitors in blue, right? Really, we're the folks that are bringing that model to bear. And the consumer loves it, right? It's a very simple model. So we only we only sell five services.
So in the world of automotive aftermarket, where the average consumer has a certain, let's just say, expectation when they show up to do something with their car, they're expecting maybe an entry price point, and now it's a much bigger price point after the fact. It's a very simple service. We sell you five things. It's a very visual sales process. So it's very hard to feel like there's a bait-and-switch happening. I mean, you're seeing with your own eyes the services that we're recommending. So it's fast. It's friendly, and it's simple. And you put that all together, we're delivering that service with high 70% NPS scores. So I think you'd be hard-pressed to find, frankly, any retailer doing, you know, high 70% NPS scores, let alone in the automotive aftermarket. So we do all of those things.
We've figured out how to do it at scale. It's one thing to do that when we, you know, got into the business. We bought the businesses about 40 units in New Orleans, mostly. That's one thing. Doing it with 1,000 units across the entire country, I think, takes a certain amount of execution, let's say, that's difficult to pull off. I'd say number one is staying true to your core. Then the second one is just our people. I think our people are phenomenal. If I think about our company employees, north of 80% of Take 5's management team, call it store manager and above, are grown from within. These are folks that we've hired. We've trained on how to handle our culture and deliver these kind of north of, you know, kind of high 70s NPS scores.
We've distributed these people throughout the country. So we have an amazing team with an amazing DNA that we've grown from the ground up. And then if you look at the franchise base, it's an amazing group of franchisees. These are all, for the most part, either former developers or scaled operators. And these folks know how to operate businesses and scale predictably. So you put that all in the blender, and it's stuff that's easy to say, but it's hard to do at scale.
That's all really important. But it's a two and a half year cash-on-cash payback for someone who's investing in the business on an unlevered basis. You're making your cash flow positive within six months. So all of that stuff that Danny talked about is incredibly important, but ultimately, it's got a financial return. So you look at what our franchisees are deploying, getting returns, and are saying on our company stores, the magic comes from what Danny talked about, but it obviously manifests itself in their financials.
That's true.
Another thing I'm curious about Take 5 is the Take 5 Rewards that you recently launched. Can you talk about if it's generating similar impacts to what you were originally expecting?
Yeah. I'll take that one happily. So, Take 5 Rewards, so I would say, you know, we have our car wash business and our oil change business. They're both branded Take 5. And obviously, part of the reasoning behind that is we wanted to get this kind of cross-pollination of customers across both brands. Take 5 Rewards represents our first kind of formal way of introducing that and incentivizing that behavior from the consumer as opposed to just maybe you went to Take 5 Oil Change, and you liked the experience. And there's this other Take 5 Car Wash, and you may assume that you like the experience, right? So we said in Q3 that we're, or we said, actually, on Investor Day, that we're going to be live in Q4 with Take 5 Rewards.
I'm happy to say, first and foremost, that we did, in fact, go live in Q4 the way like we said. As a person that had a prior life in technology, I can tell you that it, it's not all the time that technology things happen on time. So I'm super happy that we did it on time, and the team was great at executing. For us, think of it right now, it's basically in beta. So a big part of the test for us is there's a fair amount of technology behind the solution to make sure that the points that we're giving the customers and stuff like that works across both brands. It's working almost flawlessly from a technology perspective. So knock on wood, that's working quite well.
The teams have done an amazing job integrating it into our day-to-day processes, how we interact with customers, and kind of the sales process. The conversion rate or the adoption rate, let's say, that we're seeing from consumers right now is, I'm happy with it. It's, you know, first half of the first inning. So we have a lot of room to go. But so far, I'm happy with what we're seeing.
In the businesses that aren't expected to grow, like a Meineke, are there, I mean, it might not be in the plan, but is there any sort of EBITDA improvement opportunities or anything that could or should we just think of those as kind of steady-eddy cash flow generators?
Yeah. I think on the margin, they're growing. I shouldn't mean margin as in, you know, financial margin. But I think they are growing at sort of a, you know, 1%-3%, 1%-4% on an annualized basis. Some of that is coming from the natural growth in check that we talked about earlier. But, you know, we're not deploying capital in there because they're franchise businesses. So we look at that as this really great predictable cash flow stream with, you know, runway for, you know, moderate, I'll say, 1%-3% growth over time. But really, we look at sort of the cash flow characteristics there first and foremost.
I want to talk about the glass business a little bit. So for the three sides in glass, retail, commercial fleet, and also insurance, what expectation do you have for their respective growth?
Yeah. So, maybe let me size it here for a second. So if you look at 2023 numbers, so to your point, kind of three channels when it comes to revenue. In 2023, it loosely netted out to about a third apiece, right? So a third retail, a third commercial, a third insurance. As I think about 2024, I said it a second ago, there's kind of two big goals in my mind for the glass business. Number one is hold on to the cost structures that we put in place, which look good coming out of 2023. And then the second piece is grow the revenue side. I think we'll, we'll certainly try to grow all three parts, whether it's retail, commercial, or insurance. We're going to lean pretty heavily into the insurance space going into 2024 and then specifically into regional insurance.
So just to spend a moment on that, not to further complicate things. But when it comes to the insurance business, there's basically three levels, really, three types of insurance work. So you have local insurance. Think local agents and maybe selling, you know, multitude of different insurance carriers. We have a team that's solely dedicated to that, landing that kind of work. The second is regional insurance, which I'll touch on here in a second. And then the third one is national insurance. So these are your, you know, your State Farm's, your GEICO's, things like that. Big part of 2024 for us is that regional insurance carrier and leaning in there. So think these are typically carriers that cover a state, let's say, or part of the state. It could be, you know, part of California, all of Massachusetts, something like that.
Post-integration, now that we have all the integration work behind us, all the systems and processes built out, we actually can go to these regional carriers and offer a TPA solution for them where they can basically outsource all the claims management to us. So we've built up in the last six months a nice pipeline of regional insurance. And I think we're positioned well for this year to start to deliver some of that work and make some announcements.
That's great.
Let me pause here and see if there are any questions from the audience. Okay. Well, I have many more questions. So, you said a lot about car wash already. You know, what is the and I looked at the plan out to 2026, and you're not really assuming a whole lot from that area. What, you know, I think it was like something like $5 million of EBITDA or something. It's not a huge number. What could make it be more than that? What things could happen that could make it more than that? And then what things could happen that could make it a lot less than that?
Yeah. So as I think about, let's talk about kind of what happened at the end of 2023 and then where we focus into 2024. And if those plans come to fruition, it could turn into a more interesting business, right? So coming out of 2023, there's kind of two big focus areas. Number one is, let's really focus on the basics and operate the business better, right? So that's everything from making sure we have the right people, we have the right processes, we're open and operating at the times we're supposed to be, kind of a variety of things. So, I think the team did an amazing job improving kind of, let's make sure that when we go to market and we make promises to the consumer, that we can fulfill those promises. So that's number one.
Number two is we really focused in on the variable cost structure of the business. So I think you saw, you know, in Q4, we sequentially improved the business 600 basis points. That was a lot of very methodical work making sure that every piece of the business from a detergent and labor perspective specifically was configured and operating correctly, right? So that's very methodical work: is every single tunnel operating at the right speed? Are you shooting the right amounts of chemicals? Are you timing everything correctly? So it's not difficult work, but it's methodical work that needs to happen. And then you have to put the proper controls around that to make sure that it doesn't go back out of whack, you know, two months later or something like that. So feel good about where we put the business towards the end of 2023.
2024 then turns into kind of two things. Number one is hold on to the variable cost structure of the business, right? So don't let it go back out of whack where our margins go upside down or not upside down. They go, they regress, let's just say, and then grow the revenue side of that business. To me, a key part of growing revenue and where this business maybe could be more interesting over time is if we grow the membership base. So the reality is if you look at the industry, we are underpenetrated from a member perspective. That's not a new phenomenon for us. It's been true since we acquired the business. It hasn't been a huge focus for a period of time. So the good news in all of that is that we're very focused on it now in 2024.
If we have a couple tests going on right now to make sure that we have the right program priced the right way, where we get the right type of customer with the right stickiness, to the extent that we figure that calculus out, then the business looks hopefully different in the future.
Yeah. That's really helpful.
So you've talked about the importance of membership conversions. With the increasing competition in car wash, are you seeing an increase in membership acquisition costs?
It's not so much that we're seeing an increase in acquisition costs. I would just say with more competitors comes more choice, obviously, right? So as a consumer, you know, if you look at our ICWG business that we acquired, it's an older business vis-à-vis some of the competitors that we compete with, certainly some of the local or regional competitors. So, it's a business where you, over time, if you haven't focused on the membership side of that business, then you haven't built that kind of moat into the business that you need from a P&L perspective so that you can kind of outweather the weather, not to be repetitive. But when you have rain and stuff like that, you want to have this part of the business that has this nice annuity coming in where you can kind of hedge against that.
Since we haven't focused on that for such a long time, and we haven't, you know so, so that's, that's a detriment to us. The additional competitors, this means there's more choice, which means we just have to fight a little bit harder to get that membership base up.
Yeah. Got it. So my understanding of the Driven Advantage platform is it's kind of a third-party marketplace structure. Is that so? 3P Marketplace, that, you know, that's kind of an exciting term these days because of the success people like Walmart are having with 3P, and obviously, Amazon has a huge 3P Marketplace. What are the data and digital advertising opportunities for that over time?
Yeah. This is, I think, an unknown, future positive with the company. So we started with trying to understand how much of the spend within Driven Brands are we capturing? And when we say capturing, that means that we're influencing, we're making sure, you know, company stores and franchisees are pooling their purchasing together. We're getting our franchisees the best price so they can leverage the company store purchasing. And then Driven really gets paid for creating this marketplace. So we invested in an SAP technology called Miracle, which we've, you know, we've probably put $12-$15 million in over the last couple of years. That platform is built. It's up and running. We now have 80,000 SKUs on that marketplace today, everything from pens and paper to four post-lifts compressors. We've got a growing number of vendor partners that are on that marketplace.
By definition of a marketplace, it is self-regulating in terms of competitive pricing. So you just need to make sure that you've got at least two vendors for every one product. And it tends to sort of self-regulate in terms of pricing. Our company stores are all purchasing on it. And why that's important, not because they have any choice but to purchase on it, but we can curate what they're allowed to purchase. So we can curate a set of SKUs and ancillary products. So that means that we can control purchasing and out-of-marketplace purchasing. So that's been a really nice margin pickup for our company stores. We are now getting more and more of our franchisees to do their regular purchasing on it. So obviously, some of them will be buying oil every week.
But then as they're buying oil, they see, "Well, maybe I need a compressor," or, "I need office supplies," and other things like that. And then we've got this cool little business called ATI Automotive Training Institute, which is a small little business in our platform services segment. That's made up of 1,800 independent repair and maintenance and collision shops. And we've now introduced marketplace to those folks who are truly independents. And we're seeing a really nice pickup from them in terms of them buying product and other things on the marketplace. Our focus is to make sure that our franchisees get the best purchasing price and terms. And obviously, that won't be as good as third-party affiliates or non-Driven Brands folks. We make about $0.08-$0.10 on every $1 that flows through that platform.
It converts at a very high margin rate because our internal SG&A is relatively low on this platform. The vendors are super excited because they have a captive audience where they've got thousands upon thousands of eyeballs every day. This has upselling capabilities, basket-creating capabilities. We're now getting advertising revenue from our vendors who want to get higher placement in terms of a search. So again, this is one of these unique platforms that has massive scalability to it. But most importantly, it benefits our franchisees and potentially third-party operators because they get lower costs. It's easy to navigate and order from. Our vendors love it because it puts purchasing in all one place. And obviously, Driven Brands likes the $0.08-$0.10 that we make on every dollar for it as well.
So I think this is an unbelievable body of work the team has done. The investment is made. We said that we would grow the EBITDA from that platform by about $30 million-$35 million through the end of 2026. I feel really good about where we stand on that platform.
And just to understand it, is it a closed platform, meaning it can only be accessed by the customers you let on it right now?
That's right. That's right. You have to have full credentials, assigned by Driven Brands to get onto it. But what's cool about it is, for example, Robbie, we've got some CARSTAR franchisees, this is sort of an, an interesting anecdote, who happen to own car dealerships. And they're actually seeing that they can buy products on our marketplace for their car dealerships that are cheaper than what they can buy in the in the open market, so to speak. So there's a bunch of interesting tangential circles to this. But again, it is a it is a closed environment right now. But, we're pretty excited about this platform.
That sounds very interesting.
Yeah. Pretty excited about it.
You've planned a significant CapEx reduction for 2024. Can you talk about what areas will CapEx be invested in, in this year, and in what areas has CapEx been taken out of?
Yeah. It's pretty simple. We've stopped spending capital on car wash until we figure that out. So that's the biggest change from 2023. We talked about company stores for QuickLube. There's a slug of dollars there. We're implementing a new ERP system. So that's got a slug of dollars. And then we've got maintenance CapEx, just typical annual maintenance dollars that you spend on our company stores. So those are really the three big buckets.
Yeah.
What are you seeing? We're running out of time. Last question. The labor market, what are you seeing in labor costs?
Yeah. I think we've got about 11,000 employees at Driven Brands, about 10,000 above shop sorry, 1,000 above shop, 10, 10,000 sort of at the shop level. I think overall, things have moderated from where they were 6, 9, 12 months ago. Certainly, in the above shop market, the pendulum, I think, has swung back to the employer. And on the comp on the, the shop labor, I think we've got unique labor models in terms of we don't require skilled labor for our shops. So we can employ people, train them in 6-8 weeks to be proficient. And I think Danny mentioned a hugely important data point, which is we've had really nice growth in our company store platform. So 80% of our shop managers were promoted from within. So that creates a real career path for some folks that may start at $15 an hour.
Feels a lot better than 12 months ago.
That's great. Is there any last questions from the audience? We can squeak one more in. All right. Terrific. I want to thank you guys for doing this. This has been.
Thank you.
Great, great presentation.
Thank you.