Important Midas Conference Call Quotes

| About: Midas Group (MDS)

We are pleased that we opened 6 new shops this year. But unfortunately 21 have closed in the U.S. and Canada during the same period. Our goal remains the same; stabilize shop count this year, and begin to see increases in 2008. To that end, year-to-date, we have signed 8 conversions all of which should open this year. In addition to the conversions, as I said, we have 6 new shops under construction.

Inquiries into the Midas franchise opportunities continues to grow, with leads up 34% during the quarter as compared to the same period last year. As a result, we were able to transition 28 shops in the second quarter to new owners, with more than 2/3rds of them involving franchisees new to the Midas system. During the first half we had 53 transitions. We are well on pace to meet our full year target of 110."

Source: Alan Feldman, CEO, Midas Inc

I think the price competition in the brake category has heated up tremendously in the last 24 months. And I think it has probably put pressure on everybody. And as a result I think our discounting maybe becomes a little less effective.

You know our longer term game plan is to try to rise above that. To get out of the discounting world to rely more on quality and brand image in this category so we cannot commoditize it. And we have been testing a couple different approaches to that this year. We're not satisfied with the results we've gotten so we're still working on that.

But I think the brake business is huge for us at over 40% of our mix. And every business model we have it is a huge piece of our business. You're 100% right for us to be successful we have to be in a growth mode on the brake business. And we know. Some of our competitors seem to be doing a better job of it right now than we are. So we continue to work our marketing and operational savy as best we can to drive that in a positive way.

Source: Alan Feldman, CEO, Midas

I could not disagree more that Midas' success depends on the brake business. I don't think it is a bad business as I am told brakes are actually a growth category because of manufacturers using thinner pads.

But if something has changed, management should not be out there trying to fight the trend. I think this is what got Midas and other repair shops into trouble over the years trying to fight the decline in exhaust volumes.

The value proposition Midas delivers cannot and should not be related to a specific product or service. Otherwise they are just going to end up in a price war (which tends to end badly in a franchise model.)

As Alan Feldman said, the "game plan is to try to rise above that."

I encourage them to do just that.