Brothers make sure construction of showy new store doesn't disrupt business

ATLANTA — Rising up on a busy stretch of Peachtree Industrial Boulevard in the inner-ring Atlanta suburb of Chamblee is the new home of Hennessy Ford-Lincoln Atlanta.

The showy new dealership will have indoor delivery stations, a 2,300-square-foot technician locker room, coffee bar, courtyard with a fire pit and a 30-foot waterfall when it opens early next year. But in this era of dealer-automaker head-butting, another noteworthy aspect of the multimillion-dollar dealership project is this: There was no arguing that it needed to happen.

That's not always the case with dealership renovations, where tensions frequently arise when automakers ask retailers to adopt their brands' latest image standards. But with the Hennessy project, both dealer and automaker agreed the decades-old showroom, originally built for an Oldsmobile-Rolls Royce operation, must go.

"It was clear that the current facility couldn't last much longer," said Peter Hennessy, one of three brothers who operate Hennessy Automobile Cos., which has 11 dealerships in metro Atlanta.

When Hennessy bought the dealership in 2014, a renovation was always part of the plan.

It soon became clear just how badly it was needed.

The first heavy rain after the acquisition brought with it 36 roof leaks. The main service shop used to flood. Steve Hennessy, the brother with direct oversight of the store, estimates the company spent more than $500,000 just to fix problems and freshen up appearances for employees and customers.

Getting the old buildings into fighting shape so employees could maximize sales and service opportunities during the lead-up to the construction foreshadowed how the Hennessys have approached this massive rebuild.

While some disruption is inevitable, the key to successfully navigating the minefields of such a big project essentially comes down to good planning and good people, the Hennessy brothers said. They've brought in experts in both service and sales to pump up those business lines. And they work with a contractor experienced at helping dealerships operate in a construction zone.

And the store's sales are up by an impressive degree.

Through September, Hennessy Ford-Lincoln's retail vehicle sales rose 13 percent. Gross profit on the fixed operations side of the business is up 29 percent, bolstered by a new quick-service business and a growing commercial truck specialty. The dealership's total revenue for 2019 is on track for a 13 percent jump to $166 million. To achieve that in the middle of construction chaos "is just remarkable," Peter Hennessy said.

The Hennessys have done it before. In 2007, they doubled the size of Hennessy Lexus of Gwinnett and recorded the biggest new-vehicle volume in the store's history, a record that stands today, Hennessy said. Hennessy Porsche North Atlanta had a "banner year" during its renovation two years ago.

"Customers will put up with a lot if they know it's temporary and they know it's going to get better," he said.

With the Ford-Lincoln store, the brothers knew the growth potential was there. And they figured they could leverage their company's strong reputation in the market to grasp it.

Contrary to many dealer families, the Hennessy brothers didn't spend much time in the dealership growing up. Their father, Robert Hennessy, got his start working for General Motors' Motors Holding division after serving in World War II. Hennessy was offered a Cadillac dealership in Atlanta in 1964, and it thrived.

The group started to expand in the 1980s. Steve Hennessy, who had forged a career in the investment business, joined his dad and brother Mark in 1986 to help spur that growth. He ended up working with his dad for only six months when Robert Hennessy died of a stroke.

Still, the company took off, adding brands. Steve Hennessy, 63, oversees the Ford-Lincoln store, in addition to the family's Buick-GMC and Mazda dealerships. That's where he's usually based, but he's carving out an office for himself in the new Ford building.

Peter Hennessy, 59, who works out of one of the family's Lexus stores down the street, said the brothers saw potential when the former Malcolm Cunningham Ford store hit the market.

"It was underperforming relative to Ford standards, so there was certainly upside," Peter Hennessy said. "We were able to look at the existing earnings and think that we could improve them based on our reputation in Atlanta."

Maybe more important, Ford consolidated its dealer network during the Great Recession. The primary market area that Hennessy Ford is in dropped from three Ford stores to one.

"That's one thing that got our attention," Steve Hennessy said.

And that area is now booming. New apartments and houses are on the rise. The area's population has increased by 10 percent, or about 57,000 people, since 2010, said Kevin Giacomini, Ford Motor Co. regional sales and service manager for Atlanta.

Hennessy Ford-Lincoln's sales have soared in the years since the 2014 acquisition. The dealership sold 1,853 vehicles in 2013 and is on track to sell just more than 4,000 vehicles for all of 2019, according to the Hennessys. In metro Atlanta, the dealership is now No. 3 in new-vehicle sales for both Ford and Lincoln, Ford confirmed.

Ford is excited about the investment Hennessy is making, Giacomini told Automotive News in an email.

It's "well known as a family-owned company that cares about their customers, employees and the communities in which they do business," Giacomini wrote. "The new Ford and Lincoln showrooms along with an all-new service department will serve their growing number of customers for years to come."

So just how big is Hennessy's investment in the new dealership? Steve Hennessy declined to share a total. Bill Heifner, president of Renier Construction Corp. in Columbus, Ohio, which specializes in dealership projects but is not involved in the Hennessy renovation, estimated such a project could cost in the range of $20 million to $25 million given its scope.

The dealership is landlocked on 12 acres in the middle of a stretch of dealerships on the northeast side of Atlanta. The site, which started with seven structures and will go to three, moves uphill with a lot of elevation change and rocky soil.

It will be a 30-month project by the time it's done, with new buildings totaling 110,000 square feet. The main dealership alone, a two-story showroom and service building, is 88,000 square feet. An 18,000-square-foot Quick Lane service facility, with commercial fleet service space attached, opened in May. A new car wash and a renovated reconditioning center rounds it out.

If land had been available for greenfield construction, the cost would have been less, and the timeline would have spanned about 15 months, said Scott Daugherity, senior project manager at PRO Building Systems in Atlanta, the Hennessys' longtime contractor.

But rebuilding on an existing site where the dealer must still sell and service cars takes extra planning and time.

"The real challenge is you've got to find a construction company capable of keeping you in business," Peter Hennessy said. "Anybody can do a greenfield site. To have a contractor be able to stay on budget, keep you in business, not cut your power and phone lines, not get shut down by the prevailing authorities because you're putting people in harm's way — there are a lot of challenges you face when you rebuild on your own property."

One snag that slowed this project by a month: Crews encountered "bad dirt" when preparing a portion of the site.

That bad dirt? It included pieces of a burnt house, a washing machine and tires — debris that had been dumped into a pit and paved over decades earlier. It all had to be removed, and trailer loads of fresh dirt were brought in to fill the void.

The Hennessy family's point person on the site is Sammy Hayes, fixed operations director at the store. Hayes came on board in early 2017 to kick-start the store's parts-and-service business. He also influenced the building plans.

The big change was putting in more capacity to service fleet and commercial vehicles, making the project size even larger than Ford expected, Peter Hennessy said.

But the Hennessys figure the commercial specialty and added service capacity will set their dealership apart in a metro area that still has 22 Ford dealerships and eight Lincoln outlets. Hennessy Ford is the only one inside the perimeter highway ringing Atlanta's core.

When done, the dealership will have 48 bays in the main building, 28 for reconditioning, accessories and detail work, plus 18 in the Quick Lane building, including the commercial fleet space.

For Hayes, 52, this is his second stint at this dealership.

He worked at the store for six months in 2008, two owners ago, when he was in Ford's dealer development program. "Distraught" when that program was shelved during the recession, Hayes, now in the National Automobile Dealers Association's dealer school courtesy of the Hennessys, left for another metro Atlanta Ford dealership.

Fixed operations "is the backbone of a dealership," said Hayes, who grew up working on cars with his dad, a tire shop operator. He joined the Navy at 17 and became an aircraft mechanic. After a short stint working on planes at Delta Air Lines, Hayes returned to cars and began working his way up the management ranks at a Ford store in his hometown of Greenville, S.C.

The unfailingly polite Hayes, whom the Hennessys have dubbed "the wizard of fixed," is visibly excited as he leads a tour of the under-construction service department. His equipment budget was $3.6 million, Hayes said, and the resulting modernized department, including air conditioning in the repair bays, will help attract and retain technicians.

Hayes already has done a good job of that, Peter Hennessy said. Employee turnover in service is 12 percent, according to Hayes, a strong number considering the store is in the midst of construction.

"Knowing what was on the horizon, people stuck with us," Hennessy said.

The employees who have stuck it out are excited for the transformation from the leaky-roof days.

Jonathan Chambers, a new-vehicle sales consultant, recalls telling customers " 'Hey, watch out, don't step on the water puddle right there.' You had to make a lot of excuses for it being an old building, when you're asking them to pay $60-70,000 for a vehicle."

The new building will improve the customer experience "100 percent," Chambers said.

For the Hennessys, the project is a long-term play.

"We've been in the business for 55 years. We take a long-term approach to our investments, and we look at our relationships with our manufacturers as a partnership," Peter Hennessy said. "And when you have a great brand in the right location in a market like Atlanta, you can afford to invest for the long run."

Lindsay VanHulle contributed to this report.