Auto Repair Chain Model

The model grows the estate by a gross number of new shops each year, then tapers that pipeline using a cubic factor that decreases as the shop count approaches an addressable ceiling.

• This means early growth is barely constrained, but later expansion flattens into an asymptote.
• Closing shops, which equal opening shops plus tapered new shops, drive repair-order volume, technician capacity and service-advisor headcount.
• The year's new shops also trigger build-out capital expenditure through a per-shop investment, so expansion decisions directly affect cash flow and valuation over the seven-year horizon.

// Closing shops
= Opening_Shops + Tapered_New_Shops

// Build-out capex
= New_Shops * Investment_Per_ShopCopy

Repair orders per shop start from a physical capacity basis: bays per shop times mature orders per bay. Utilisation is applied in two layers.

• A seasoned rate ramps annually toward a practical ceiling, while shops opened during the year run at a first-year productivity haircut and only for the portion of the year they are open. Effective utilisation blends seasoned shops at the full rate with the de novo cohort at the haircut rate.
• Demand-side volume is then capped against a supply-side ceiling: closing shops times the bay-limited maximum technicians per shop times orders per technician. Total repair orders is the lesser of the two, and technician headcount is solved backward from booked volume, so the technician constraint actually binds when demand exceeds supply.

// Technician capacity
= Closing_Shops * Maximum_Technicians_Per_Shop
  * Orders_Per_Technician

// Repair orders
= MIN(Demand_Side_Volume, Technician_Capacity)Copy

Repair revenue is built tier by tier. Total repair orders are split across maintenance, mechanical, collision and diagnostics according to their respective shares, with diagnostics as the residual so the mix always sums to 100%.

• Each tier applies a base ticket and a price index, then revenue is escalated at a menu step-up. This makes blended revenue per order a direct output of the service mix rather than raw car count.
• On top of repair revenue, shop-driven maintenance plans add closing shops times members per shop times an annual fee, and order-driven tire and accessory retail adds orders times retail spend per order. All three revenue streams carry their own cost of revenue: tier revenue times one minus tier net margin for repair, and separate margins for plans and retail.

These costs feed into gross profit.

// Repair revenue by tier
= Repair_Orders * Service_Share * Base_Ticket
  * Tier_Price_Index * Price_Escalation_Factor

// Direct cost by tier
= Tier_Revenue * (1 - Tier_Net_Margin)Copy

Gross profit is revenue less parts, tires and consumables cost. From there, technician and service-advisor labour are charged as operating expenses, driven by headcount, wages, benefits and wage growth.

• Technician headcount follows booked volume through the capacity build, while advisor headcount follows the mid-year-weighted shop count. Overhead items—facilities and equipment, marketing, technology and corporate SG&A—are set as percentages of gross profit rather than revenue, reflecting the parts-pass-through and labour-intensive nature of the business.
• This leads to EBITDA, then depreciation, EBIT, tax and net income. A separate memo block reports effective labour rate, parts-to-labour ratio and parts margin, which are outputs of the tier margin structure rather than independent drivers.

// Gross profit
= Revenue - Direct_Costs

// EBITDA
= Gross_Profit - Labour - Overhead

// EBIT
= EBITDA - DepreciationCopy

Unlevered free cash flow starts with net operating profit after tax, adds depreciation, and subtracts maintenance capital expenditure, shop build-out capex for new shops, and the change in working capital. Working capital reflects parts inventory and insurance receivables, so a portion of revenue growth ties up cash.

• The terminal value uses a normalised free cash flow where replacement capex equals depreciation, stripping out growth build-out spending, and working capital is charged only at the perpetuity growth rate. Discounting explicit free cash flows and the terminal value at the WACC gives enterprise value, then net debt is deducted for equity value and value per share.
• The model discloses the implied terminal EV/EBITDA and the terminal value share of enterprise value, so you can judge how much of the valuation depends on perpetuity assumptions.

// Unlevered free cash flow
= NOPAT + Depreciation
  - Maintenance_Capex - Shop_Build_Out_Capex
  - Change_In_Working_Capital

// Enterprise value (PV denotes present value)
= PV(Forecast_Cash_Flows) + PV(Terminal_Value)

// Equity value
= Enterprise_Value - Net_DebtCopy