All right, great. Thanks everybody. Up next in today's agenda, we have Driven Brands, and with us, I'm very happy to have Jonathan Fitzpatrick and Kristi Moser in investor relations. I think, Jonathan, you had a couple of prepared remarks you wanted to give, so I'll give you the stage.
Yeah, just. Yeah. Thanks, Liz. Thanks for having us. just a quick sort of snapshot of Driven Brands. We're automotive aftermarket services, operate in a needs-based category, $350 billion sort of growing addressable market. We've been delivering really solid sort of double-digit top and bottom line growth since we went public about two years ago. We have, you know, quadrupled EBITDA since 2019. We've got four main business lines in our company. We've got some more mature franchise businesses that are very high cash flow generating businesses, which then we reinvest into our core growth priorities, which are Quick Lube, car wash, and glass.
We've got a unique set of shared services that provide a bunch of network benefits across our business, whether that's our data and marketing, our procurement capabilities, and then obviously our growth capabilities, whether that's more franchise stores, M&A, or organic stores. Anyway, thrilled to be with you here today, and quick opening.
Great. Thanks. so you have a pretty diverse suite of brands that, you know, service vehicles from collision to oil change to car wash. I guess unlike the, you know, the auto parts retail industry that did see a big increase in demand during the pandemic following, you know, distribution of stimulus payments, auto service was pretty negatively impacted. You know, just do you feel like the U.S. auto service industry is back to normal yet?
Yeah. Well, we were impacted very short term when we had sort of the initial outbreak of the pandemic in that sort of late Q1 of 2020. We were back to basically, you know, 0% same store sales by, you know, the start of Q3. We bounced back very quickly. I think what's important to understand for our business and our customers is our, you know, core customer has an average household income of $70,000, so our core customer was driving and using their vehicle over the last two to three years. We also saw that VMT, which is Vehicle Miles Traveled, which is probably the biggest leading indicator for our business, you know, was +1% in 2022, and the forecast is for low single digit growth in 2023.
Again, we look at sort of the needs-based categories that we're in, our household customer in that sort of 70,000 range, they were driving, using their vehicles for the last number of years. What you have to remember about the automotive aftermarket category is it's highly fragmented. We're the largest player in the category with, you know, almost 5,000 locations. We serviced 70 million vehicles last year, and 80% of our competition would be sort of small chains and independents. You've got this massive growing industry that's, you know, you know, primarily made up of sort of less sophisticated players or certainly people that don't have our scale and sophistication.
you know, certainly short-term impact with the pandemic and the business has, you know, been ripping really since then, so feel really good about where we are.
Great. What do you think were the biggest changes to your business or the most profound learnings that really came out of the last three years?
Yeah, lots of things to think through there. I would say one is scale matters. When we had, you know, disruption to the supply chain over the last number of years, it's basically moderated now to, I would say, almost back to pre-pandemic levels. You know, the power of our scale in terms of our vendor partnerships, our ability to secure product, you know, at the best price and terms and conditions to keep our stores stocked, you know, both franchise and company stores, you know, that was a huge benefit, and that sort of scale power continues to grow.
I think the other thing that was amazing is the unit level economics within our business, whether it's our, you know, Quick Lube business or other categories, we continue to expand our pipeline, both in terms of the number of stores that we're opening and the pipeline of stores that we have visibility into. Sitting here today, we've got 1,600 stores in our pipeline, with about 35% of those which what we would call site secured or better. We've got, you know, 3-4-year visibility into unit growth, which, you know, last year we delivered almost 400 net new units. This year we've guided to, you know, almost 400 on an organic basis. I think we're seeing, you know, continued growth in terms of the unit count and then the benefits of scale.
Great. You talked about driving activity kind of recovering. It was up, you know, 1% last year, expected to be up mid, you know, low single digits this year. Are there regions of the country, or income brackets where you're seeing trends diverging meaningfully? Like, are there some areas just slower than others, or, like, what does that look like for you?
Look, I think the, you know, the lower end consumer is feeling the impact of the inflationary environment probably more than, more than most. You know, no surprise there. We still delivered 14% same store sales growth in 2022 across our portfolio. I think we see a little bit of softness with that lower end consumer, but again, I go back to our consumers are, you know, not doing Zoom calls. They're not working from their basements, you know, for the last 3 years. They're out and about using their vehicles. Vehicle Miles Traveled is back. I think we see a little bit of softness there, but overall, the health of the business feels really good.
Got it. Then you mentioned, you know, $70,000 average household income of your consumer. What's the typical age of that vehicle for your average customer?
Well, first of all, if you look at the overall car park, we call it in the United States. There's about 285 million vehicles on the road today. Just a sidebar. You know, less than 3% of those are fully electric vehicles. We'll probably come back to that. Within that car park of 285 million vehicles, the average age of the vehicle has now surpassed 12 years. That average age has been growing, you know, for the last decade or so, driven by the fact that cars are made better, so they last longer. When you look at that average age of the vehicle, you know, our average age of vehicle within our portfolio is in that sort of, you know, 5-7, 5-8 category.
We typically are dealing with vehicles that are in their second ownership cycle. You know, we're not targeting those vehicles in the first three years. They're typically getting serviced or maintained at dealerships. We're very much in that sort of older car, and second ownership cycle.
Got it. Does that vary between the brands at all? Or under the Driven Brands umbrella, or is it pretty similar?
There's slight nuances, Liz, but for the most part, I would say that older vehicle, let's say five to eight years of age, you know, higher mileage obviously, more expensive to maintain. Obviously, we think about sort of the new and used car environment right now. People are holding onto their vehicles 'cause of the inventory and pricing challenges on the used and new car prices. Then again, our household income in that $70,000 range, which is typically the core customer that's really using their vehicle and has been using it for the last three years.
Okay. Your average, like, car wash customer is probably pretty similar to your average oil change customer.
Pretty similar. We've got some nuances there, but we've got, you know, this incredible data ecosystem where we have, you know, close to 30 million unique customers in our data ecosystem today. We capture a very rich vein of information from our customers as they come through our shops and our businesses. In automotive aftermarket, it's very typical for a customer to give you their name, their address, their contact information. We get that with the vast majority of our customers. We also scan the VIN and get the service history and the mileage on the vehicle. We take that data and enrich it, you know, through third parties. We've got very good understanding of who our customer is by category and by segment...
Mm-hmm.
You know, based on that sort of data access that we have.
I would imagine that's a pretty powerful tool, and one of the reasons why scale matters so much in the auto service industry.
Yeah. It's huge. If you look at last year, we drove about 8% of our retail traffic, you know, and revenue came through our direct-to-consumer marketing. We've got a very powerful, you know, customized direct-to-consumer marketing CRM engine that's continuing to expand. As we look forward, the ability to take a customer, let's say, that comes through a Quick Lube shop and have them invited to use our car wash or our glass businesses. That ability to cross-brand and cross-promote through that data ecosystem is pretty exciting for us.
Great. Kinda going back to this, the idea about miles driven and how your customers have been, changing, you know, some of their habits, right? I guess I'll share a stat from a survey that we run every quarter, and we published the latest one this morning. You know, 41% of our survey respondents were still working the majority of their week from home last quarter. This quarter, you know, that came down to 35%. You know, we've seen a pretty, you know, dramatic shift in return to work, from our survey work. You know, definitely not back to, like, the 10% that was pre-pandemic of, you know, people working the majority of their week from home.
I guess, you know, do you feel like if we don't ever get back to that pre-pandemic level, is that a structural headwind for the industry or just kinda starting at a different base?
Yeah. Look, I think even at our company, you know, we're three days required in the office, you know, starting in January. I think a lot of companies have moved to at least some sort of hybrid structure. New York's probably a little bit, you know, four to five days a week. I think you're seeing that. I do think that when people are at home, they're still driving, right?
Yeah.
You know, it's not like they're at home and not ever driving. I think we will end up at sort of a, an equilibrium where it's probably a 3- to 4-day office week.
Mm-hmm.
That's number one. Number two is, you know, when we look at that household income that we target, you know, or, you know, that we sort of own today, which is that $70,000 household income, those folks are generally not sitting at home doing Zoom calls and sipping lattes in their basement.
Yeah.
It's a pretty different customer set. Again, those folks need their vehicles working properly to, you know, carry out their lives. I think even if we settle in at sort of a 10% or 15% stay at home, I think it has a de minimis impact on our category.
Great. Then I wanted to touch on gas prices a bit. You know, we've seen some pretty big fluctuations, since we hosted you guys at the same conference in New York last year. You know, there are some other inflationary pressures that we'll get into more in a bit. I mean, what have you been able to observe about how your, the different parts of your business are either sensitive or not sensitive to gas prices?
you know, what we've looked over history, you know, typically sort of $5 a gallon gas price is where we start to see some behavioral change in people driving. It's not necessarily on their daily commute. It's on those longer trips perhaps. When we saw the $5 this time last year, we did see a slight decline in demand but, like, de minimis.
Mm-hmm.
That was offset by the cost of airline travel. People were looking at the price of airline tickets and they were saying, you know, "I'll drive for my summer trip or my road trip." You know, that was sort of offset. We believe that it's really at a sustained over $5 a gallon where you would see some possible erosion of consumer demand. The other metric that we look at, which is probably more relevant for us or has a higher correlation, is this Vehicle Miles Traveled. Even if you look at that short-term $5 a gallon this time last year, Vehicle Miles Traveled still grew by 1% in 2022, and is forecasted to grow by sort of low single digits this year.
It's a contributing factor, but, you know, it's not the defining factor.
Got it. Then I wanna talk about the competitive environment a bit. Just how much market share do you think you have today, in the various business lines you're in? Then how much do you think is realistically available to Driven Brands in the next decade?
We're at about 4,900 locations today. You know, we've grown that unit count really nicely over the last sort of five years. As I mentioned earlier, our pipeline is 1,600 units sitting here today that will open ratably over sort of the next three to four years. We still believe in the North American market, there's white space to get to at least 12,000 units, so you could argue 2.5x or 3 x where we are today. Again, because of this highly fragmented industry, you know, do I think the total number of Quick Lube shops, as an example, in the U.S. is going to grow?
Mm.
I think it's probably de minimis growth in that, but it's really our ability to take down market share through either new stores or acquisitions. We feel really good about our 12,000 unit white space target, you know, over the sort of medium to long term. you know, the pipeline and our unit growth certainly supports that aspiration.
Right. You touched on acquisitions. I mean, Driven's been an acquirer in the past, both sort of small tuck-in businesses and larger transformative deals. As public company valuations have generally, you know, kind of moderated a bit in the last year, have private valuations followed suit? Is it a more attractive acquisition market?
Don't get me started on the public company valuations. What I would say in 2017, 2018, now we've been building new stores, either company or franchise, for the last three years. You know, this year we've guided to, you know, about 50 new company stores in Quick Lube and more than double that with franchise. There's really no acquisition on the Quick Lube side. In the car wash side, I think everyone saw some of the multiple frothiness, let's just say, over the last 24 months. I think that has significantly moderated. We're seeing processes just get busted now because people are not willing to pay those multiples, obviously the debt markets are pretty tight. The other thing that we're seeing is the snowball effect in car wash.
You had a lot of individual entrepreneurs or, you know, small business folks that were opening stores, and they had multiple buyers willing to pay sort of double the price of CapEx that they put in. That's starting to essentially dissipate right now. I think we're seeing a return to normality within the car wash multiples. I think there's a lot of folks that got into the business over the last couple of years and are probably over their skis a little bit. You know, we've got a nice war chest of capital, and we'll remain opportunistic if and when those opportunities come along. Lastly, in glass, you know, 2022 was a year where we built out our North America glass, auto glass platform. We did about 10 acquisitions last year.
We've built a really nice sort of base platform in the glass business. We've now got 200 locations, you know, close to 1,000 mobile vans. We now can hit more than 20% of the U.S. consumer base from a glass repair perspective. You know, I think we've already said that we're migrating towards a greenfield strategy with glass. There's still some opportunistic things there. You know, the good news is multiples are down, but, you know, we really are executing our strategy, which is get into a category, build scale, through M&A, and then migrate to greenfield growth with opportunistic M&A, and that's what we're doing.
Got it. What does the typical Driven Brands acquisition look like, in terms of EBITDA multiple, and what kind of synergies you can typically achieve in the first, you know, one to three years?
Look, every acquisition that we've done, and we've done about 100 acquisitions over the last seven to eight years, some super large and lots of small tuck-ins, we really ask ourselves two questions with every acquisition. Number one, you know, will that asset be better as part of Driven Brands? Secondly, will Driven be better off with that asset? That's the overriding principle we think about. We've been very disciplined in that most of our acquisitions have been in a single-digit LTM multiple. That's not a pro forma two-year adjusted crazy multiple. That's sort of an LTM basis. In all cases, we get significant synergies, probably two to three turns of synergies that we get when we acquire the business. Sometimes that's through procurement or supply chain.
In many cases, it's about tweaking or improving the operating model. Then obviously it's layering on our data and marketing capabilities. You can think about historically, you know, single digit on an LTM basis with two to three turns of multiple expansion, you know, once that business is fully integrated into the network. That's kinda how we think about, you know, historical M&A.
Great. I mean, that acquisition engine is, you know, pretty powerful, but, you know, the environment's gotten a little competitive for some of these, you know, highly covered, highly coveted assets and properties. I mean, What has the shift looked like in terms of greenfield growth, and how flexible are you in terms of capital deployment between, you know, acquisitions and Greenfields?
We don't have a budget for acquisitions. Obviously, we have a phenomenal M&A team and, you know, that's sort of very much part of our DNA. It's not episodic. We've been doing it for many, many years. We have a target list of things that we're interested in acquiring, and we sort of work through that list. In terms of greenfield, you know, if you look at the three growth businesses, Quick Lube, car wash, and glass, Quick Lube, we've migrated from M&A to organic growth sort of in 2019, and that's what we've been doing. We literally do no M&A in Quick Lube anymore.
Within that organic growth, it's, you know, sort of 2.5 to one franchise versus company. That's a, that's a proven strategy that's been highly successful for us in that business. The car wash, we got into the car wash business in late 2020. We bought about 200 company-owned units in the United States. We wanted to build scale there, so we added about 125 to 150 units through acquisition. We were disciplined in the multiples we paid. We paid single-digit LTM multiples for those businesses because we were buying smaller versus larger platforms. Last year, if you looked at, we still did some M&A, but we opened I think 35, you know, greenfield stores last year because we had to build out the pipeline.
Our guidance for this year is to open at least 65 new greenfield car washes, that's, you know, the full process from, you know, identifying the trade area, finding the real estate, and then, you know, building the car wash. We'll, we'll remain opportunistic on M&A within car wash, but really the focus now is on greenfield. Lastly, in glass, as I talked about, we did about 10 acquisitions last 20 or so, new glass units this year, so we're already shifting into that organic growth, you know, within the, sorry, the glass space.
Yeah.
We have these deep capabilities, you know, both on the M&A side and a team that has unbelievable access to finding the right real estate at the right price, and then obviously executing in terms of the build process.
Great. kind of going back to your customer group for a minute, just how price sensitive, does that customer tend to be? What, what's Driven's competitive strategy in businesses like car wash or oil change, where the frequency of visit is higher than sort of typical auto service?
Yeah. Look, I think the price sensitivity depends on, you know, how needs-based the service is.
Mm-hmm.
You know, if you look at our Quick Lube business, for example, about 650 company-owned stores in the United States. We took price 3 x last year, really to balance the inflationary pressures with both supply chain and labor. Every time we took price, you know, we pause, we look at what happens to the consumer feedback.
Mm-hmm.
Our NPS scores, our Net Promoter Scores, which are top-two box, the most important metric for us, stayed, you know, flat post price increases. I think we're very cautious about when we take price. However, we have no intention to reverse pricing. If we look at sort of 2023 and beyond, we think we'll hold on to those prices. Our franchisees are phenomenal entrepreneurs. They are people who live and operate their businesses every day. They manage their business to what's in the cigar box at the end of every week. They are very good at taking price. We don't control what franchisees do from a pricing perspective, but our franchisees are very conscious around their cost basis and what they need to do to manage that.
I think we remain very thoughtful and deliberate when we take price. I think, you know, there is elasticity in this business. You never wanna get past that point where you're, you know, you're diluting traffic or demand.
Mm-hmm.
I think it's, you know, there's science in terms of how much you take, and then there's art in terms of watching and monitoring what the consumer reaction is. This year, we will continue to be thoughtful around what are the inflationary pressures, and what price we need to take. I think it's important though, Liz, to understand across all categories in automotive, the check has been growing-
Mm-hmm
you know, over the last decade. Why is that check growing naturally? It's because of the cost to maintain and service those vehicles. If you take collision, for example, if anyone's had a rear fender bender in this room over the last couple of years, you know, that's going to be $3,000, $4,000, $5,000, depending on the amount of ADAS or accidents avoidance equipment on the vehicle. You no longer have the ability to repair that. It's typically replace, so that cost goes up. You know, our average check in our collision business is $3,500. That's grown by $1,000 naturally-
Mm
y ou know, over the last decade. If you look at our Quick Lube business, you know, we now deliver about 85% of our customers buy premium oil. We determine premium oil as either semi or full synthetic. Why is that? Because they're older vehicles with higher mileage on it, and typically every vehicle since about 2015 has, you know, from an OE perspective, asked for at least a semi-synthetic. There's a natural progression there in the price. If you look at our glass business, which we've been in for, you know, 14, 15 months, you've got the standard glass replacement, you know, and that's sort of grown a little bit from an inflationary perspective. We've got this calibration service now.
If you have a windshield that's been replaced in the last couple of years, most vehicles now have a forward-facing camera mounted on that front windshield. That is literally the central nervous system for accident avoidance.
Mm-hmm.
Now you've got to calibrate, you know, which is typically a $300 incremental check, part of the check. You're seeing sort of natural, you know, growth there. You know, this is an interesting industry that as we look forward the next 10 years, I think there'll be really healthy organic growth in the check just based on what we're fixing.
Yeah.
I think the one thing that I would add there is from a competitive landscape perspective, you know, we're well-positioned in the marketplace to add significant value to our customers. We're not leading the way in terms of price, but we're also deserving a great, delivering a great value, so we're not kind of, on the economic end of the spectrum either. When you look at the competitive landscape on things like inflation and pricing, it's remained relatively rational and have been moving pretty consistently together, which I think is important in looking through past cycles that those price increases, as Jonathan mentioned, have been very sticky.
I think a lot of that has to do with, you know, the competition and remaining rational, as you look forward to, you know, being able to generate additional margin as those cost input crisis prices potentially come down.
Right. Yeah, that actually raises a question which I think has come up in a lot of my conversations with investors and probably does in yours as well, just about, you know, you mentioned the increasing complexity of vehicles, and I think there's an assumption that electric vehicles are simpler. You know, they have a different drivetrain than, you know, there's no engine. You know, how are you thinking about how that shift impacts your business, and are they even, you know, actually less complex?
It's awesome, if you think about this industry, the only significant change in the last 50 or 100 years, you know, we fully embrace the change. A couple of things to think about. One, as I mentioned, the 285 million car park in the United States, you know, about 3% are fully electric today. You know, a good year for new car sales is sort of 18 million new vehicles. I'm guessing most people in this room can do the math on 280 million vehicles, you know, divided by 18 million vehicles if you assumed every new vehicle was EV, how long it's gonna take for that car park to transition.
That's sort of just a, an actual you know, data set that people sometimes get lost in a bit of the broad way and don't actually look at the hard numbers.
Mm-hmm.
In terms of, you know, how we think about EV, a couple of things. You know, two of the largest platform builds that we've done in the last couple of years were car wash, so we did that in late 2020. You know, part of the underwriting there was car wash washes all types of vehicles. It's, you know, diesel F-150s to Teslas. They all come through our car wash, so that's a sort of EV neutral business. The second business we acquired or have built out is our glass business, and same thing. Glass needs to be replaced or repaired on all vehicle types. That was strategic sort of thinking about how the landscape may change over the next, you know, couple of decades.
Our internal analysis, which is pretty conservative, thinks that, you know, our Quick Lube business, which is, you know, in theory the most exposed to this, is gonna continue to grow minimally through the late 2030s.
Mm-hmm.
That is an unbelievable business with phenomenal unit-level economics. We have, you know, consistently taken down great real estate in that business. We're watching very closely what's happening with the vehicles, with EV vehicles, what services do they need, what products do they need. If and when the time comes to add incremental services or products to our Quick Lube business, we will.
Mm-hmm.
Driven has a great case study on this. We've a brand called Meineke, which was founded in 1972. It was a pure muffler shop or exhaust shop when it was first founded, and over time, it's migrated now to a total car care company with less than 8% of its sales coming from exhaust. You know, the change will happen. We welcome the change. I think it's gonna happen probably at a slightly slower pace than people think, but we're excited about the change and the opportunity to add those incremental products and services when we need to.
Great. I guess I wanted to focus a little bit on people, you know, 'cause they're... Obviously, we talked about inflationary pressure on things like, you know, parts and fluids and whatnot, but then, you know, there are also cost pressures on, you know, on your cost of labor, wages and benefits. How are you planning for labor costs this year, and is that growth pace more accelerated than usual, or is it starting to moderate somewhat?
We've got close to 12,000 employees at Driven Brands, I'm very aware of the labor line on my P&L. It's definitely has increased if you look at sort of over the last three years. We definitely saw moderation kicking in in the second half of 2022, I think we're still seeing loosening of the labor market, if you like, Liz.
Mm-hmm
... for want of a better description. I don't think we'll see the labor rate inflation that we saw in 2021 and 2022 in 2023.
Mm-hmm.
We've talked about pricing, we're very conscious about taking price to make sure we manage that. A couple of things that are unique to Driven Brands from our, from our labor pool. Every employee at Driven Brands participates in variable compensation, we are massive believers in, you know, variable compensation for performance. If you're a Quick Lube technician or a car wash attendant, you have a base hourly rate plus you have the opportunity to make incremental bonus based on KPIs that matter to us. We are big believers in variable compensation at all levels in the organization. That's very attractive.
Secondly is we have, when you think about our labor pool, and we're sort of in that, you know, $13 to $16, $17 an hour for a lot of the folks that work in our stores, our hours of operation are pretty attractive. We're typically sort of 8:00 to 6:00, 5 or 6 days a week, so people get nights off and weekends off, and that is attractive. We've got a lot of people that have a passion around the automobile, so they sort of like working in and around cars. What's pretty cool for us is, you know, we are growing our businesses pretty rapidly. If you take our Quick Lube business, we've got 650 company stores in the United States. Over 80% of those managers were promoted from within. That's pretty cool.
You can come into one of our businesses. You can come in making $13, $15 an hour as a lube technician. You can get promoted quickly. We've always got new stores coming online, and within two-three years, you can be making a base salary of $45,000 - $50,000 with 25%-30% variable compensation. You know, those factors sort of, you know, I think position us better than most in terms of that labor environment.
Mm-hmm.
Not immune to it, but I think we're in pretty good shape.
Great, I'll squeeze in one more, and then I'll open it up to the audience here. I guess, on the cost line of questioning, where are you seeing costs getting more favorable, if anywhere, and are there opportunities in areas like, you know, rent or advertising to achieve?
Yeah
... cost savings?
Advertising, I haven't seen a big reduction in advertising costs. Rent is definitely on new stores, both the price of new real estate, if we're acquiring it, or long-term leases has definitely plateaued, I would say, and we're starting to see a little bit of softness there. Labor we've talked about. If you look at some input costs for us, so we're a very large buyer of oil, so we buy about, you know, north of 10 million gallons of oil a year. You know, we're ultimately indexed to the price of, you know, you know, crude, if you like. You know, we expect to see some positive tailwinds in terms of our price of oil this year.
If you look at some of the other products, whether it's our paint that we use in the collision and paint businesses, you know, petroleum is a big part of that, so I think we'll see some moderation in cost there. That's really gonna impact our franchisees' P&L. If you look at, you know, products that we bring in from overseas, obviously, you know, people know that shipping costs are now, you know, at or below pre-pandemic levels. That sort of $15,000 per container is back down now to sort of $2,000, $3,000, $4,000 per container. That has a flow-through effect for both our company stores and our franchisees. I think we're starting to see moderation across almost all the categories that we deal with.
I think the one other thing that's really important for Driven Brands is the fact that we get a lot of leverage on our growth. If you look back over the last couple of years, we've expanded margins by several hundred basis points, driven by the fact that we're growing so swiftly and we're able to drop a lot of that growth to the bottom line through leveraging our shared services.
Great. With that, I'm gonna open it up to the audience. If anyone has a question, feel free to raise your hand. We'll get a mic to you.
Thanks. You have a lot of growth already factored in with the existing categories and the stores plan, but I'm just wondering, with all the data you're collecting on the consumers, is there anything in the development pipeline that's leading you to think about other categories within the whole car ownership that could be targeted for expansion, i.e., you know, tires or something of that nature?
Yeah. Look, we added two new segments over the last two and a half years, you know, with car wash and glass. When we think about a new segment, there's several questions we ask ourselves. You know, what is the underlying growth characteristics of that segment? What's the total addressable market? You know, for Driven Brands today, I would use a number like, if we're gonna get into a segment, can it be at least $200 million of EBITDA? That's sort of an, you know, not an exact number, but sort of we think about that sort of scale. Driven Brands today generates about a 25% consolidated EBITDA margin. When we look at tires, which is a great example, it's a very large total addressable market.
It probably has some EV resilience to it because car tires are likely to be consumed at a faster rate with EV. However, when you look at the best tire retailers on the planet, they're generating, you know, high teens EBITDA margins, you know. It's very capital intensive and very labor intensive. You know, we do look at all these categories, and we're constantly sort of evaluating, you know, if there's a new segment for us. There's definitely a decision process that we think through.
Great. I'll squeeze one more in since, you know, we have some time. I guess, top priorities for this year and how you're thinking about long-term investments, what could arguably be sort of a challenging year if a recession does play out as, you know, many economists are forecasting. How are you thinking about where you really wanna focus your energy on this year?
Yeah. I mean, look, we've delivered for 10 years, obviously, and then the last couple of years that we've been public. I think we've sort of beat and raised almost every quarter. You know, our focus is continuing to execute on the core strategy, which is growing our priorities, which is Quick Lube, car wash, and glass, supported by those more mature, highly cash flow generative businesses. Two other things that we're highly focused on, one is unlocking this wallet share opportunity with our data ecosystem. We do have an analyst day in May. We'll jump into that, Liz. Our investor day in May, we'll jump into that more. We just launched this procurement platform called Driven Advantage, which is pretty incredible.
You know, we've got about $46 million in 2022 of EBITDA that comes directly from procurement benefits. That's providing procurement opportunities for our franchisees to buy everything that they need through us. We make a rebate or a spread on that. We've launched a new platform, which we're pretty excited on, and we think that over time that procurement opportunity, if it was broadly $50 million in 2022, we think that has pretty massive incremental growth opportunities as we look forward the next few years. Continuing to lean into wallet share and then really, you know, leveraging the network benefits out of the procurement opportunity.
Great. Any other questions in the audience? If not, I've got one more. Okay. Last one for me is just about interest expense as one line item that's, you know, where costs have increased, I guess, more than the company's planning assumptions originally. How are you thinking about leverage at this point?
It's funny. A year ago, we weren't asking these questions.
No.
Anyway, we're talking about it now. Couple of thoughts. 80% of our debt structure is long-term fixed, you know, sub 4%, we feel very good about that. We've got about 20% in floating. Obviously, the interest rates are, you know, higher than when we took out that, you know, term loan, you know, a year or so ago. We've operated at, you know, mid-4s leverage rate and, as we think about the current conditions, you know, I think we will, as we grow EBITDA, we'll organically de-lever. We expect that to continue to happen. We shored up our balance sheet last year, we've got a ton of dry powder to do everything we need from a capital perspective this year. I think we're in good shape.
Obviously, I think folks are, you know, probing and prodding a little bit more there. We don't have a need to go back to the capital debt markets this year. We've got more than enough capital to fund our pretty aggressive growth plans for 2023. I think we're in pretty good shape, you know, so I'd say we're in good shape.
Great. All right. Well, unless there are any other questions in the audience, I think we'll wrap it up. Thank you so much.
Thank you. Thank you, Liz.
Thanks, Liz.