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Car Rental Firm Puts Teens in Driver Seat

October 18, 2006|Martin Zimmerman | Times Staff Writer

Ben Bennani knows the risks and rewards of niche marketing.

Back in the 1990s, he dropped his efforts to create a demand for buffalo meat as a healthy dining option at his Newport Beach restaurant after nearby residents launched a boycott. But buffalo burgers were back on the menu within a matter of weeks when loyal customers raised a ruckus.

The moral: Find a niche -- either by creating a demand or serving an overlooked clientele -- and exploit it.

"You have to have a specialty," Bennani said recently. "Otherwise, your competitors will put you out of business."

That philosophy came in handy a couple of years ago when Bennani, 55, was trying to revive the small car rental firm he had acquired after selling his three Orange County restaurants.

Casting about for ways to lure customers from his rivals -- several of which have outlets within a mile or two of AA Car Rental's Costa Mesa location -- Bennani focused on the fact that the big agencies generally won't rent cars to drivers 18 to 20 years old. There, he decided, was a pool of potential customers just waiting to be noticed.

It was a risky strategy; the big companies shun this age group for a reason.

For one thing, drivers 18 to 20 are much more likely than other motorists to be involved in an accident.

Ensuring that the cars come back in decent condition is also more of an issue with this group than with the typical corporate renter, Bennani realized.

Neil Abrams, a longtime industry executive and consultant, sums up the challenges of the car rental business in stark terms.

"You give a $20,000 vehicle to a perfect stranger and hope they come back and that the vehicle comes back in the same condition that it left," said Abrams, president of Abrams Consulting Group Inc. in Purchase, N.Y.

"The element of risk can be the difference between making money and losing money. You have a few bad rentals, and it can literally put you out of business."

Then there's the problem of payment and security. Renting a car typically requires a credit card -- something many young people don't have.

Bennani tackled the first problem in a couple of ways.

He offers safety tips -- a sort of informal driver ed course -- to improve the odds that his cars will come back in one piece.

"We don't have a license to train drivers, but we can guide them," Bennani said.

He also imposes restrictions on how far his younger customers can drive, usually 100 miles. If they exceed their limit, he will make a note in their files and threaten them with a ban.

Renters who return his cars in pristine condition are each rewarded with a $20 gift certificate to a French restaurant in Laguna Beach. Good behavior also warrants a free limo ride home.

On the financial front, Bennani requires a security deposit that can reach into the hundreds of dollars, which is charged either to the renter's credit card or to the card of a friend or relative.

But he's not above taking a chance on a hard-luck case -- like the woman with the almost-maxed-out credit card who got a rental car on the basis of a 73-cent deposit and later paid her bill in full and in cash. Although risky, such an approach can pay off in loyalty.

"Many of our customers come to us because they have been referred by friends or classmates," Bennani said.

Lea Price, 19, of Huntington Beach found Bennani through his Yellow Pages ad, which touts the young-renters policy. Returning a car one recent morning, Price explained why Bennani gets her business: "This was the only place that would rent to me."

Despite his emphasis on safety, Bennani plays to the automotive preferences of younger drivers. His small fleet of 15 cars includes a tricked-out 2004 Honda Accord coupe complete with tinted windows and massive speakers mounted in the trunk.

"I know what the teens like, so I have to please them," he said.

Drivers in the 18-to-20 bracket account for about a quarter of Bennani's business, and he plans to add the word "teens" to company nameplate when he renews his business license next year.

He won't divulge the financial performance of his privately held firm, other than to say the two-employee company recently turned profitable.

One of his youthful drivers had a wreck early on; since then, he said, it has been smooth sailing.

As Bennani targets younger drivers to keep a step ahead of competitors, he is not alone in seeing the niche as potentially profitable. Car-sharing firms such as Flexcar and Zipcar Inc., which specialize in hourly rental programs, are pitching their services to young urban dwellers and college students who lack cars.

Seattle-based Flexcar, controlled by an investment firm owned by America Online founder Steve Case, has offered its services to students at UCLA for a number of years and recently expanded its target market to include 18- to 20-year-olds.

"The market opportunity is obvious," Flexcar Chief Executive Mark D. Norman said of younger drivers.

"They're underserved. They're value conscious. They're tech savvy."

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