PART I

PART I

FORWARD-LOOKING STATEMENTS

Cautionary Note Regarding Forward-Looking Statements

The statements contained in this

This Annual Report on Form 10-K contains “forward-looking statements” as that are not historical facts, including (without limitation) statements madeterm is used in this Item and in “Item 1. Business”, may contain statements of future expectations and other forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this Annual Report on Form 10-K,Forward-looking statements can be identified by the fact that they address future events, developments and results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements preceded by, followed by or including words “anticipates,such as “anticipate,” “believes,“appear,” “contemplates,“believe,” “expects,“contemplate,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “see,” “could,“strategy,” “may,“vision,” “estimate,“will,” “appear,” “intend,” “plans,” “potential,” “strategy”“would” and variations thereof and similar expressions, are intended to identify forward-looking statements.expressions. Forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed. These factorsFor example, our forward-looking statements include, but are not necessarily limitedwithout limitation, statements regarding:

•the potential effect of general business or economic conditions on our business, including the direct and indirect effects of the novel strain of coronavirus (“COVID-19”) pandemic on the economy, consumer spending levels, and unemployment in our markets;

•the uncertainty of the impact of the COVID-19 pandemic and public health measures on our business and results of operations, including uncertainties surrounding possible disruptions in our supply chain or sources of supply, the physical and financial health of our customers, the effectiveness and duration of government assistance programs to productindividuals, households and businesses to support consumer spending, levels of traffic in our stores, changes in customer demand dependence onfor our services, and competition withinincreased expenses for higher wages and compensation paid to employees and the primary marketscost of personal protective equipment and additional cleaning supplies and protocols for the safety of our employees;

•our expectations regarding cost increases in which Monro, Inc.’s (“Monro,” the “Company,” “we,” “us,” or “our”) stores are located,future, including costs relating to our COVID-19 response initiatives, increases in the needminimum wage by states and localities, potential federal minimum wage legislation, increases in distribution and fuel costs and potential new legal requirements to provide increased pay for and costs associated with store renovations and other capital expenditures, employees who work during pandemic restrictions;

•the effect of economic conditions, seasonality and the impact of weather conditions and natural disasters on customer demand;

•the dependence on and our expectation regarding competition within the primary markets in which our stores are located;

•our growth plans, including our plans to add, renovate, re-brand, expand, remodel, relocate or close stores and any related costs or charges, our leasing strategy for future expansion, and our ability to renew leases at existing store locations;

•the impact of competitive services and pricing,pricing;

•the reliability of, and cost associated with, our sources of parts supply, restraints or difficulties, our dependence on vendors, including foreign vendors, changes in U.S. or foreignparticularly imported goods such as those sourced from China;

•the impact of trade policies,relations and the ongoing trade dispute between the United States and China, including the impactsactual and potential effect of Section 301 tariffs or proposed tariffs,on Chinese goods imposed by the United States Trade Representative, uncertainties surrounding the policies of the new presidential administration, and other potential impediments to imports;

•the impact of industry regulation, risks relatingregulation;

•our ability to service our debt obligations, including our expected annual interest expense;

•our cash needs, including our ability to fund our future capital expenditures and working capital requirements;

•our anticipated sales, comparable store sales, gross profit margin, costs of goods sold (including product mix), operating, selling, general and administrative expenses and other fixed costs, and our ability to leverage and debt service (including sensitivity to fluctuations in interest rates), continued availability of capital resources and financing, those costs;

•advances in automotive technologies,technologies;

•risks relating to disruption or unauthorized access to our computer systems, risks relatingsystems;

•our failure to protection ofprotect customer and employee personal data, data;

•business interruptions, interruptions;

•potential outcomes related to pending or future litigation matters;

•risks relating to litigation, risks relating toacquisitions and the integration of acquired businesses including goodwill impairmentwith ours;

•the effect of changes in labor laws, and the risks set fortheffect of the Fair Labor Standards Act as it relates to the qualification of our managers for exempt status, minimum wage and health care law;

•our assessment of the materiality and impact on our business of recent accounting pronouncements adopted by the Financial Accounting Standards Board (“FASB”);

•management’s estimates and expectations as they relate to income tax liabilities, deferred income taxes and uncertain tax positions; and

•management’s estimates associated with our critical accounting policies, including business combinations, self-insurance liabilities and valuations for our goodwill and indefinite-lived intangible assets impairment analyses.

Any of these factors, as well as such other factors as discussed in “ItemPart I, Item 1A., “Risk Factors”.Factors” and throughout Part II, Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K (“Form 10-K”), as well as in our periodic filings with the Securities and Exchange Commission (the “SEC”), could cause our actual results to differ materially from our anticipated results. The information provided in this Form 10-K is based upon the facts and circumstances known as of the date of this report, and any forward-looking statements made by us in this Form 10-K speak only as of the date on which they are made. Except as required by law, we do not undertake and specifically disclaim anyno obligation to update anythese forward-looking statements after the date of this Form 10-K to reflect events or circumstances after such date, or to reflect the occurrence of anticipatedunanticipated events.

Introductory Note

Unless otherwise stated, references to “we,” “our,” “us,” “Monro” or unanticipated eventsthe “Company” generally refer to Monro, Inc. and its direct and indirect subsidiaries on a consolidated basis. Unless specifically indicated otherwise, any references to “2021” or circumstances“fiscal 2021,” “2020” or “fiscal 2020,” and “2019” or “fiscal 2019” relate to the years ended March 27, 2021, March 28, 2020 and March 30, 2019, respectively.

Available Information

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on our website at www.monro.com as soon as reasonably practicable after the dateelectronic filing of such statements.reports with the SEC.

ItOur investor presentation regarding the financial results for the fiscal year ended March 27, 2021 is available and accessible at Monro's Investor Relations page at https://corporate.monro.com/investors. Information available on our website is not a part of, and is not incorporated into, this Form 10-K. We intend to make future investor presentations available exclusively through our Investor Relations page.

Item 1. Business

GENERALGeneral

Monro isWe are a chainleading nation-wide operator of 1,197 Company-operatedretail tire and automotive repair stores (as of March 30, 2019), 98 franchised locations, eight wholesale locations, three retread facilities and two dealer-operated stores providing automotive undercar repair and tire sales and services in the United States. At March 30, 2019, Monro operated Company stores in 28 states, including Arkansas, Connecticut, Delaware, Florida, Georgia, Iowa, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West VirginiaWe offer to our customers, referred to as “guests”, replacement tires and Wisconsin, primarily under the names “Monro Auto Service and Tire Centers,” “Tread Quarters Discount Tire Auto Service Centers,” “Mr. Tire Auto Service Centers,” “Autotire Car Care Centers,” “Tire Warehouse Tires for Less,” “Tire Barn Warehouse,” “Ken Towery’s Tire & Auto Care,” “Tire Choice Auto Service Centers,” “FreeService Tire” and “Car-X Tire & Auto”.  Company-operated stores typically are situated in high-visibility locations in suburban areas and small towns,tire related services, automotive undercar repair services as well as in major metropolitan areas.  Company-operated stores serviced approximately 6.2 million vehicles in fiscal 2019.  (References herein to fiscal years are to the Company's year ended fiscal March, e.g., references to "fiscal 2019" are to the Company's fiscal year ended March 30, 2019.)

The predecessor to the Company was founded by Charles J. August in 1957 as a Midas Muffler franchise in Rochester, New York, specializing in mufflers and exhaust systems.  The Company was incorporated in the State of New York in 1959.  In 1966, we discontinued our affiliation with Midas Muffler, and began to diversify into a full line of undercar repair services.  An investor group led by Peter J. Solomon and Donald Glickman purchased a controlling interest in the Company in July 1984.  At that time, Monro operated 59 stores, located primarily in upstate New York, with approximately $21 million in sales in fiscal 1984.  Since 1984, we have continued our growth and have expanded our marketing area to include 27 additional states.

The Company's principal executive offices are located at 200 Holleder Parkway, Rochester, New York 14615, and our telephone number is (585) 647-6400.

Monro provides a broad range of routine maintenance services, primarily on passenger cars, light trucks and vansvans. We also provide other products and services for brakes; mufflers and exhaust systems; and steering, drive train, suspension and wheel alignment.  Monro also provides other products and services, including tires and routine maintenance services, including state inspections.  Monro specializes in the repair and replacement of parts which must be periodically replaced as they wear out.  Normal wear on these parts generally is not covered by new car warranties.  Monro typically does not perform under-the-hood repair services except for oil change services, various “flush and fill” services and some minor tune-up services. 

All of the Company-operated stores, except Tire Warehouse Tires for Less (“Tire Warehouse”) and Tire Barn Warehouse stores, provide the services described above.  Tire Warehouse and Tire Barn Warehouse stores only sell tires and tire related services and alignments.  However, a growing number of our Company-operated stores are more specialized in tire replacement and service and, accordingly, have a higher mix of sales in the tire category.  These Company-operated stores are described below as tire stores, whereas the remaining stores are described as service stores.  (See additional discussion under “Operations”.)  The acquisition of tire stores allows us to fill in our existing markets with a second store more specialized in tire replacement and service.  We believe this provides us with a competitive advantage,the convenience and value we utilize this fill-in strategy to maximize densityoffer are key factors in the markets we operate in.

Included in the numberserving and growing our base of Company-operated stores described as tire stores are certain locations that also service commercial customers.  Our locations that serve commercial customers conduct tire and automotive repair activities that are similar to our retail locations, other than with respect to the sales mix resulting from the sale of commercial tires. At March 30, 2019, there were 560 stores designated as service stores and 637 as tire stores.

In recent years,27, 2021, we have acquired multiple wholesale locations as well as retread facilities located in numerous states that operate under various names.  The wholesale locations, in most cases, sell tires to customers for resale, although these tire sales do not include installation or other tire related services.  The retread facilities re-manufacture tires through the replacement of tread on worn tires that are later sold to customers.

As of March 30, 2019, Monro had eight wholesale locations and three retread facilities. 

Our sales mix for fiscal 2019, 2018 and 2017 was as follows:

The Company has two wholly-owned operating subsidiaries, Monro Service Corporation and Car-X, LLC.

Monro Service Corporation, a Delaware corporation, holds all assets, rights, responsibilities and liabilities associated with our warehousing, purchasing, advertising, accounting, office services, payroll, cash management and certain other operations.  We believe that this structure has enhanced operational efficiency and provides cost savings.

On April 25, 2015, we acquired the Car-X brand, as well as the franchise rights for 146 auto service centers from Car-X Associates Corp.  Car-X, LLC, a Delaware limited liability company, operates as the franchisor through a standard royalty agreement, while Car-X remains a separate and independent brand and business with franchise operations based in Illinois.

As of March 30, 2019, Monro had 97 Car-X franchised locations.

Monro’s operations are organized and managed in one operating segment.  The internal management financial reporting that is the basis for evaluation in order to assess performance and allocate resources by our chief operating decision maker consists of consolidated data that includes the results of our retail, commercial and wholesale locations.  As such, our one operating segment reflects how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management and the structure of our internal financial reporting.

INDUSTRY OVERVIEW

There are a number of industry trends driving a favorable shift in the automotive aftermarket.  New car sales have been robust over the past five years,1 resulting in consistent growth in the number of vehicles on the road,2 which on average are being driven more miles per year.3  Over the past few years, the industry has been growing significantly in vehicles zero to five years old, driven by the growth in new car sales after the Great Recession.4  Conversely, six to 12 year old vehicles, which we consider our targeted segment or our “sweet spot”, has declined over the past several years.5  However, these structural headwinds have been transitory, and are expected to turn into tailwinds over the next few years.

Additionally, vehicles generally need more service and repairs as they advance in age.  However, as consumers’ vehicles age, the consumers’ willingness to pay higher prices decreases.  We intend to be able to offer better value than the new car dealers to these more price-sensitive consumers.  Monro’s service menu is also focused on our sweet spot, focusing on items that provide good purchase frequency, like oil changes and other scheduled services, along with higher value services like tires, brakes and other undercar services.  These dynamics, combined with a declining number of service outlets and bays are important traffic drivers for us as consumers go to outlets they trust to provide tires, maintenance, and repair services for their vehicles.

The continued shift from Do-It-Yourself to Do-It-For-Me is another favorable trend in our industry.  The automotive aftermarket is estimated at approximately $287 billion in the U.S. and is primarily concentrated on the Do-It-For-Me channel, which represents about 80% of the market.6  There has been acceleration in the shift from Do-It-Yourself to Do-It-For-Me, and we expect that trend to continue with the increasing adoption of technology in new vehicles.

In addition, any meaningful shift to fully electric vehicles will create opportunities for expanded services to complement the tires, ride control and brake service that will still be required on those vehicles.  Monro provides our technicians with the necessary training to remain on the cutting edge of these changes.  However, these changes create challenges for smaller competitors, who will struggle to make the investments needed to keep up with the evolving marketplace.

We also believe that ride-sharing companies may provide increased opportunities for the automotive aftermarket.  Individuals who provide ride-sharing services are likely to drive their vehicles more, therefore potentially needing their vehicles serviced more often by providers such as Monro.  Additionally, while there is potential for fewer cars on the road due to these ride-sharing programs, this is not expected to have a near-term impact on our industry.

We believe Monro is well-positioned to capitalize on these evolving industry dynamics and favorable macro trends, which we expect will help position Monro to deliver consistent and sustainable organic growth.

MONRO.FORWARD STRATEGY

In October 2017, the Company completed a rigorous and comprehensive business assessment to identify areas of opportunity to improve in-store execution and the customer experience across our store base to drive higher traffic with a focus on overall customer lifetime value.

Based on these observations, we developed our strategic plan, called Monro.Forward, which is focused on four key pillars:

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We believe that these four key pillars, supported by investments in technology and data analytics, will create a scalable platform for sustainable growth over time.

Executing on accretive acquisition opportunities also remains a key element of our growth strategy.  Moving forward, we will continue to effectively as well as efficiently acquire our targets using a data-driven, analytical approach.  We have a robust pipeline and believe the fragmentation of our industry allows for many opportunities for consolidation.  Using consumer demographic analytics, we are able to better identify targets that operate in the markets with favorable demographics and customer trends, allowing us to enter regions we are poised to benefit most.  Additionally, to ensure we are capitalizing on these opportunities, we have added talent and structure to our mergers and acquisitions teams, who will work with our management team to ensure we capitalize on the momentum in the market.  Finally, we believe the implementation of our Monro.Forward initiatives will allow us to more effectively integrate acquisitions and drive higher return on investment (“ROI”) going forward as we will have a more structured, consistent and effective business model.

In that regard, we have completed many acquisitions, including:

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As of March 30, 2019, Monro had 1,197 Company-operated stores, 98 franchised locations, eight wholesale locations, three retread facilities and two dealer locations located in 28 states. 

STORE ADDITIONS AND CLOSINGS (a)

The following table shows the growth in the number of Company-operated stores over the last five fiscal years:

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In the first quarter of fiscal 2020, Monro completed acquisitions in two new states: California and Louisiana. The California acquisition includes 40operated 1,263 retail tire and automotive repair stores locatedand serviced approximately 4.8 million vehicles in San Francisco, San Diego and Los Angeles and one distribution center located in Riverside, California while the Louisiana acquisition includes 12fiscal 2021.

Our retail tire and automotive repair stores.stores operate primarily under the names “Monro Auto Service and Tire Centers,” “Tire Choice Auto Service Centers,” “Mr. Tire Auto Service Centers,” “Car-X Tire & Auto,” “Tire Warehouse Tires for Less,” “Ken Towery’s Tire & Auto Care,” “Tire Barn Warehouse,” and “Free Service Tire & Auto Centers.”

We plan to add approximately 20 to 30 new greenfield stores in fiscal 2020 and to pursue appropriate acquisition candidates.  Greenfield stores include new construction as well as the acquisition of one to four store operations.

Key factors in market and site selection for selecting new greenfield store locations include population, demographic characteristics, vehicle population and the intensity of competition.  Monro partners with a customer analytics firm to provide market segmentation and demographic data specific to a geographic area in close proximity to a Monro location to identify high value lookalike customers and market directly to them.  Monro attempts to cluster stores in market areas in order to achieve economies of scale in advertising, supervision and distribution costs.  All new greenfield sites presently under consideration are within Monro's established market areas.

As a result of extensive analysis of our historical and projected store opening strategy, we have established major market profiles, as defined by market awareness: mature, existing and new markets.  Over the next several years, we expect to build or acquire stores in mature and existing markets in order to capitalize on our market presence and consumer awareness as well as grow in new markets through building and acquisitions.  During fiscal 2019, 39 of the stores added (including acquired stores) were located in existing markets and 21 stores were added (including acquired stores) in new markets.

Monro has a chain-wide computerized inventory control and point-of-sale (“POS”) management information system, which has increased management's ability to monitor operations as the number of stores has grown.  We have customized the POS system to specific service and tire store requirements and deploy the appropriate version in each type of store.  The system includes the following:

Enhancements will continue to be madeconverted to the POS system in an effort to increase efficiency, improve the quality and timeliness of store reporting and enable us to better serve our customers.Tire Choice Auto Service Centers brand.

The financing to build a new greenfield service store location may be accomplished in one of three ways: (i) a store lease for the land and building (in which case, land and building costs will be financed primarily by the lessor), (ii) a land lease with the building constructed by Monro (with building costs paid by Monro), or (iii) a land purchase with the building constructed by Monro.  In all three cases, for service stores, each new store also will require approximately $225,000 for equipment (including a POS system and a truck) and approximately $55,000 in inventory.  Because we generally do not extend credit to most customers, stores generate almost no receivables and a new store's actual net working capital investment is nominal.  Total capital required to build a new greenfield service store ranges, on average, from $360,000 to $990,000 depending on the location and which of the three financing methods is used.  In general, tire stores are larger and have more service bays than Monro’s traditional service stores and, as a result, construction costs are at the high end of the range of new store construction costs.  Total capital required to build a new greenfield tire (land and building leased) location costs, on average, approximately $600,000, including $250,000 for equipment and $150,000 for inventory.  In instances where Monro acquires an existing business, it may pay additional amounts for intangible assets such as customer lists, covenants not-to-compete, trade names and goodwill, but generally will pay less per bay for equipment and real property.  

At March 30, 2019, we leased the land and/or the building at approximately 72% of our store locations and owned the land and building at the remaining locations.  Monro's policy is to situate new stores in the best locations, without regard to the form of ownership required to develop the locations.

New service and tire stores, (excluding acquired stores), have average sales of approximately $400,000 and $1,050,000, respectively, in their first 12 months of operation, or $67,000 and $150,000, respectively, per bay.

STORE OPERATIONS

Store Format

As part of Monro.Forward, one of our largest initiatives is to improve our customers’ in-store experience.  This initiative is twofold and includes the implementation of standardized in-store operating procedures, followed by reimaging stores to create a more consistent appearance.  Through these efforts, we have taken major steps to improve our customers' in-store experience and help ensure that we deliver a 5-star experience at each of our store locations.

We have taken an education-centered approach to the in-store customer selling process and trained our teams to execute our standardized procedures, which we call our Monro Playbook, to drive consistency across all locations.  Our Monro Playbook includes clearly defined roles and responsibilities for our employees with a focus on service quality.  We expect that this clear and consistent selling approach, coupled with our stronger merchandise strategy, will be instrumental in driving higher in-store conversion.  To complement our Monro Playbook, we also established clear brand standards to align the appearance of our stores and further drive consistency across our store base that currently includes a wide range of stores and formats.  We are determining the appropriate scope of refresh needed for each of our stores by examining their age, size and market demographics to ensure we are investing the appropriate amount of capital to achieve the highest possible returns.

During the third quarter of fiscal 2019 we reached a significant milestone in this initiative by substantially completing our pilot initiative of 31 stores in Rochester, NY.  Following the successful completion of our pilot program, we are planning to roll out our brand operational standards across our store base and modernize our store portfolio over the next three to five years.

To drive improved consistency across our store base, we also implemented tablet-based dashboards and a cloud-based standardized store review process.  Our tablets and dashboards allow our store operation leaders to more effectively evaluate and manage each store's performance across numerous key performance indicators, including customer satisfaction and online reviews, traffic and sales trends by category, margin performance and staffing and labor metrics.  Managers have the ability to track these metrics versus historical trends and their peers, with the information flowing to them in near real time.

Our store review process now is standardized across all districts in the Company and will drive increased visibility into the field.  This standardized store review process allows us to take both a quantitative and qualitative approach to assessing our store performance, evaluating each store regularly on 135 points across five areas ranging from store appearance to operational performance.  Overall, we believe our data-driven approach and related investments in technology will drive efficiency in our stores and our field management organization, reducing the time that they spend identifying underlying causes of performance issues and allowing them to prioritize their time and attention to coach our store teams on improving their results.  The cloud-based systems will also increase the transparency and accountability throughout our organization and drive consistent improvement in execution across all of our stores.

The typical format for a Monro store is a free-standing building consisting of a sales area, fully-equipped service bays and a parts/tires storage area. Most service bays are equipped with above-ground electric vehicle lifts. Generally, each store is located within 25 miles of a “key” store which carries approximately double the inventory of a typical store and serves as a mini-distribution point for slower moving inventory for other stores in its area. Individual store sizes, number of bays and stocking levels vary greatly even within the service and tire store groups, and are dependent primarily on the availability of suitable store locations, population, demographics and intensity of competition among other factors.  (See additional discussion under “Store Additions

A certain number of our retail locations also service commercial customers. Our locations that serve commercial customers generally operate consistently with our other retail locations, except that the sales mix for these locations includes a higher number of commercial tires.

As of March 27, 2021, Monro had seven wholesale locations and Closings”.)  A summarythree retread facilities. The wholesale locations, in most cases, sell tires to customers for resale, although these tire sales do not include installation or other tire related services. The retread facilities re-manufacture tires through the replacement of average storetread on worn tires that are later sold to customers. Monro also had 95 Car-X franchised locations as of March 27, 2021. (Two franchised locations were closed during 2021.)

Our operations are organized and managed in one operating segment. The internal management financial reporting that is the basis for evaluation in order to assess performance and allocate resources by our chief operating decision maker consists of consolidated data that includes the results of our retail, commercial and wholesale locations. As such, our one operating segment reflects how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management and the structure of our internal financial reporting.

Monro incorporated in New York in 1959. We maintain our corporate headquarters in Rochester, New York.

Business Strategy

Our vision is to be America’s leading auto and tire service center, trusted by consumers as the best place in their neighborhoods for quality automotive service and tires. We believe that success in this vision will position Monro to deliver consistent and sustainable organic growth as well as lead to strong, long-term financial performance. Specifically, we are committed to seeing this vision executed across all aspects of the business, through the following actions:

•Exceed guest expectations.We will continue to invest in and execute strategic initiatives to improve our guests’ in-store experience. This ranges from modernized store infrastructure through rebranding and reimaging investments, new tire storespricing and category management technology to match customer demand and building an omni-channel presence.

•Provide consistent value. We intend to be able to offer better value than new car dealers to more price-sensitive consumers. Vehicles generally need more service and repairs as they advance in age. However, as consumers’ vehicles age, the consumers’ willingness to pay higher prices decreases. Monro’s service menu is presented below:focused on items that are purchased frequently, like oil changes and other scheduled services, along with higher value services like tires, brakes and other undercar services. Our tire pricing and category management system allows us to dynamically track demand trends and make rapid adjustments to optimize our tire assortment by leveraging the breadth of our tire brand portfolio to offer the right tires at what we believe are the right price points.

•Build a committed, knowledgeable organization of friendly and professional teammates. We will continue to invest in technology and training to accelerate productivity and team engagement. This includes our data-driven cloud-based store staffing and scheduling software that re-balances our store technician labor to meet customer demand as well as utilizing Monro University, an extensive cloud-based learning curriculum, to provide our employees, referred to as “teammates,” with the technical training needed to effectively serve our customers today and into the future.

Data

We are committed to building an omni-channel presence through our primary retail websites in order to create a seamless buying experience for the Tire Warehouseour customers. With responsive optimized design for mobile users, a streamlined tire search and Tire Barn Warehouse stores has been excluded because theseimproved content and functionality, our retail websites better position us to address our customers’ needs. These websites, aligned with our primary retail names, help customers search for store locations, primarily install newaccess coupons, make service appointments, shop for tires and wheelsaccess information on our services and products, as well as car care tips. Importantly, they better showcase the solutions we provide to our customers, including our Good, Better, Best product and service packages.

To minimize the impact of the COVID-19 pandemic on our business, we modified our plans for some of our strategic initiatives, including temporarily suspending all reimaging and rebranding investments related to our store transformation program during the first three months of fiscal 2021. With sales improvement throughout the year, we resumed these investments and completed the store transformation of 147 stores in fiscal 2021. To date, we have completed the transformation of 366 stores.

Growth Strategy

Executing on accretive acquisition opportunities remains a key element of our growth strategy. We have a robust pipeline and believe the fragmentation of our industry allows for many perform alignments.opportunities for consolidation. Using consumer demographic analytics, we believe we are able to better identify targets that operate in the markets with favorable demographics and customer trends, allowing us to enter regions from which we are poised to benefit most. Additionally, most Tire Warehouse storesto ensure we are capitalizing on these opportunities, we have one indoor service bay to perform alignments.  The store building houses a waiting room, storage areaadded talent and an areaorganizational structure to mountour mergers and balance tiresacquisitions team, who will work with our management team to ensure we capitalize on the car’s wheels oncemomentum in the wheelsmarket.

During the last five years, we have completed 19 acquisitions, adding 262 locations and tiresapproximately $411 million in annualized revenue. Additionally, during this time, we have been removedentered seven states, solidifying our presence in the Southern markets as well as expanding into the Western region. As of March 27, 2021, we have stores in 32 states.

Although acquisition activity was temporarily paused in response to the COVID-19 pandemic during the first six months of fiscal 2021, we continued to evaluate potential acquisition candidates that we believe would fit our growth strategy while maintaining financial discipline, and we acquired 17 retail tire and automotive repair stores located in California during December 2020.

Subsequent to March 27, 2021, we acquired 30 retail tire and automotive repair stores located in California from Mountain View Tire & Service, Inc. on April 25, 2021.

In addition to our plan to continue to seek suitable acquisitions, we plan to add new greenfield stores. Greenfield stores include new construction as well as the car.  Removalacquisition of old tiresone to four store operations.

Key factors in market and wheels from, and installation ofsite selection for selecting new tires and wheels on, customers’ cars are performed outdoors under a carport.  The average inventory carried by the Tire Warehouse and Tire Barn Warehouse stores is $224,000 per store.

Stores generally are situated in high-visibility locations in suburban areas, major metropolitan areas or small towns and offer easy customer access.  The typical store is open from 7:30 a.m. to 7:00 p.m. on Monday through Friday and from 7:30 a.m. to 6:00 p.m. on Saturday.  A majority ofgreenfield store locations include population, demographic characteristics, vehicle population and the intensity of competition. We partner with a customer analytics firm to provide market segmentation and demographic data specific to a geographic area in close proximity to a Monro location to identify high value lookalike customers and market directly to them. We attempt to cluster stores in market areas in order to achieve economies of scale in advertising, supervision and distribution costs. All new greenfield sites presently under consideration are within our established market areas.

Purchasing and Distribution

We believe that our substantial buying power and our flexibility in making sourcing decisions contributes to our successful purchasing strategy. We also open Sundays from 9:00 a.m.believe our ability to 5:00 p.m.

Inventory Control and Management Information System

All Company stores communicate dailynegotiate with the corporate headquarters and warehouse by computerized inventory control and electronic POS management information systems, which enableour vendor partners allows us to collect salesensure we are receiving competitive pricing and terms as well as minimize the margin impact of economic pressures such as tariffs.

We select and purchase tires, parts and supplies for all Company-operated stores on a centralized basis through an automatic replenishment system based on operational data we collect from stores on a daily basis,basis. This allows us to adjustcontrol store pricing to reflect local conditions and to control inventory on a near "real-time"real-time basis. Additionally, each store has access through the POS system, to the inventory carried by up to the 14 stores or warehousedistribution center nearest to it. Management believes that this feature improves customer satisfaction and store productivity by reducing the time required to locate out-of-stock parts and tires. It also improves profitability because it reduces the amount of inventory which must be purchased outside Monro from local vendors.

Quality Control and Warranties

To maintain quality control, we conduct audits to rate our employees' telephone sales manner and the accuracy of pricing information given.

We have a customer review and survey program to monitor customer attitudes toward service quality, friendliness, speed of service, and overall customer experience for each store.  Customer concerns are addressed by customer service and field management personnel.

Monro uses a “Double Check for Accuracy Program” as part of our routine store procedures.  This quality assurance program requires that a technician and supervisory-level employee independently inspect a customer’s vehicle, diagnose and document the necessary repairs, and agree on an estimate before presenting it to a customer.  This process is formally documented on the written estimate by store personnel. 

We are an active member of the Automotive Maintenance & Repair Association (“AMRA”).  AMRA is an organization of automotive retailers, wholesalers and manufacturers which was established as part of an industry-wide effort to address the ethics and business practices of companies in the automotive repair industry through the Motorist Assurance Program (“MAP”).  Participating companies commit to improving consumer confidence and trust in the automotive repair industry by adopting “Uniform Inspection Communication Standards” (“UICS”) established by MAP.  These UICS are available in our stores and serve to provide consistent recommendations to customers in the diagnosis and repair of a vehicle.

We offer limited warranties on substantially all of the products and services that we provide.  We believe that these warranties are competitive with industry practices and serve as a marketing tool to increase repeat business at our stores.

Store Personnel and Training

Monro supervises store operations primarily through our Divisional Vice Presidents who oversee Zone Managers who, in turn, oversee District Managers.  The typical service store is staffed by a Store Manager and four to six technicians, one of whom serves as the Assistant Manager.  The typical tire store, except Tire Warehouse and Tire Barn stores, is staffed by a Store Manager, an Assistant Manager and/or Service Manager, and four to eight technicians.  Larger volume service and tire stores may also have one or two sales people.  The higher staffing level at many tire stores is necessary to support their higher sales volume.  Tire Warehouse and Tire Barn stores are generally staffed by a Store Manager and two to four technicians, one of whom serves as the Assistant Manager.  All Store Managers receive a base salary and Assistant Managers receive either hourly or salaried compensation. 

We believe that the ability to recruit and retain qualified technicians is an important competitive factor in the automotive repair industry, which has historically experienced a high turnover rate.  As part of our Monro.Forward strategy, we are creating a clearly defined career path and enhanced training program to attract, develop and retain our talent.

During fiscal 2019, we also optimized our store staffing model by rightsizing our overstaffed and understaffed stores.  As a next step, we will implement a cloud-based data-driven store staffing and scheduling system to drive further staffing efficiency by more accurately re-balancing the level of technical skills in each store, ensuring our stores are staffed with technicians who have the right skill levels based on sales and volume mix as well as that store's growth potential.

To attract the right talent and build the best team in the aftermarket auto industry, we are focused on providing our people with the right training to optimize their performance.  To accomplish this, we have created a cloud-based curriculum called Monro University, with the pilot phase launched during the third quarter of fiscal 2019.  This will provide our employees with the technical training needed to effectively serve our customers today and prepare them to handle future technician requirements as vehicles become more complex with the increased adoption of technology.

In addition to Monro University, our training department develops and coordinates technical training courses on critical areas of automotive repair to Monro technicians (e.g. Antilock braking systems (“ABS”) brake repair, drivability, tire pressure monitoring system (“TPMS”), etc.) and also conducts required technical training to maintain compliance with state inspection licenses, where applicable, and AMRA/MAP accreditation.  Additionally, our training department holds periodic field technical clinics for store personnel and coordinates technician attendance at technical clinics offered by our vendors.  We have electronic repair manuals installed in all of our stores for daily reference.  We also issue technical bulletins to all stores on innovative or complex repair processes, and maintain a centralized database for technical repair problems.  In addition, Monro has established a telephone technical help line to provide assistance to store personnel in resolving problems encountered while diagnosing and repairing vehicles.  The help line is available during all hours of store operation.  A comprehensive set of on-line courses in automotive repair and tire service is made available for our technicians to participate in at no cost.

Many of our new technicians join the Company in their early twenties as trainees or apprentices.  As they progress, many are promoted to technician and eventually master technician, the latter requiring Automotive Service Excellence (“ASE”) certification in eight different categories.  We will reimburse technicians for the cost of ASE certification registration fees and test fees and encourage all technicians to become certified by providing a higher hourly wage rate following their certification.  We also offer free online ASE certification preparation courses, as well as a tool purchase program through which trainee technicians can acquire their own set of tools.

Our training program provides multiple training sessions to both Store Managers and technicians in each store, each year. 

Management training courses are developed and delivered by our dedicated training department and operations management, and are supplemented with live and on-line vendor training courses.  Management training covers safety, customer service, sales, human resources (counseling, recruiting, interviewing, etc.), leadership, scheduling, financial and operational areas, and is delivered on a regular basis.  We believe that involving operations management in the development and delivery of these sessions results in more relevant and actionable training for Store Managers, and helps to improve overall performance and staff retention. 

Monro also maintains an employee website that contains many resources for both managers and technicians to reference including Human Resource information and forms.  Additionally, there is a Facilities section containing important environmental and equipment information, as well as a Training section that contains training programs, including on-line training videos, and documents for both managers and technicians.

We also expect to drive higher retention by providing more transparency into career opportunities and to aid our employees in charting their own course towards advancement.  This is further supported by annual reviews with employees to align their own developmental objectives with our desired business objectives.  Further, we ensure our incentives are tightly connected to desired performance.  While our previous compensation model was based solely on profitability, our new compensation model is based on a balanced scorecard that rewards same-store sales growth, profitability and the customer experience.  The incentives are designed to increase as the employees' performance improves with maximum payouts for outstanding performance.  This new compensation plan also streamlines all previous bonus programs, creating consistency and providing us the ability to use labor more productively across our stores and markets.

OPERATIONS

Monro provides our customers with a wide range of dependable, high-quality tire and automotive services at a competitive price by emphasizing the following key elements.

Products and Services

The typical store provides a full range of undercar repair services for brakes, steering, mufflers and exhaust systems, drive train, suspension and wheel alignment, as well as tire replacement and service.  These services apply to all makes and models of domestic and foreign cars, light trucks and vans.  During fiscal 2018, we conducted a comprehensive analysis of our product and service offerings to develop a clearly defined merchandise strategy.  As a result of this analysis, we launched Good, Better, Best service packages during the first quarter of fiscal 2019 to provide customers with clear options to choose the right services for their vehicle.  Offering several options keeps the customer education and in-store selling process simple and gives our employees the opportunity to trade customers up to higher-value packages and increase attachment sales.  Additionally, we are optimizing our tire assortment by leveraging the breadth of our tire brand portfolio to offer the right tires at the right price points.  Going forward, we also see potential in leveraging data analytics to align our tire inventory assortment with consumer demographics, so that we can provide the right-size tire inventory for the vehicle population surrounding our stores.

As a percentage of sales, the service stores provide significantly more brake and maintenance services than tire stores, and tire stores provide substantially more tire replacement and related services than service stores.

Stores generally provide many of the routine maintenance services (except engine diagnostic), which automobile manufacturers suggest or require in the vehicle owner’s manuals, and which fulfill manufacturers’ requirements for new car warranty compliance.  We offer "Scheduled Maintenance" services in our stores whereby the aforementioned services are packaged and offered to consumers based upon the year, make, model and mileage of each specific vehicle.  Management believes that we offer this service in a more convenient and cost competitive fashion than auto dealers can provide.

Included in maintenance services are oil change services, heating and cooling system "flush and fill" service, belt installation, fuel system service and a transmission "flush and fill" service.  Additionally, most stores replace and service batteries, starters and alternators.  Stores in certain states also perform annual state inspections.  Additionally, approximately 71% of our stores offer air conditioning services.

The format of the Tire Warehouse and Tire Barn Warehouse stores are slightly different from Monro’s typical service or tire stores (as described above) in that, generally, over 93% of the stores’ sales involve tire services, including the mounting and balancing of tires, and the sale of road hazard warranties.  Most of these stores also provide the installation of wiper blades.  Currently, 79% of Tire Warehouse and 93% of Tire Barn Warehouse stores perform alignments. 

Customer Satisfaction

As part of our Monro.Forward strategy, we have fundamentally changed our culture from a transaction-focused business to one that is built on long-term customer relationships.  To achieve this goal, we launched a new technology-supported customer satisfaction and online review management system during the fourth quarter of fiscal 2018.  We are using this technology to help us solicit feedback from our customers across all major areas of their brand experience.  Additionally, we leverage our online reviews to learn more about what our customers want and need, and how we can always deliver a 5-star experience to them.  Utilizing the insights from these investments, we are making improvements to our store operations, which in turn are leading to a material improvement in Monro's overall star rating across online review sites.  As of March 30, 2019, we have an all-time high average Company rating of 4.5 stars across our 1,197 locations.  Equally important, we believe improved customer experience is a virtuous cycle, as it leads to improved online ratings that drive better visibility online, which in turn leads to increased conversion and ultimately higher potential traffic to our stores.

Competitive Pricing, Advertising and Co-branding Initiatives

Monro seeks to set competitive prices for quality services and products.  We support our pricing strategy with special offers and coupons distributed through a variety of channels including: direct mail, e-mail, digital advertising, newspaper advertising, home-delivered newsprint inserts and coupon booklets, promotional store signage and in-store displays.  In addition, to increase consumer awareness of the services we offer, Monro has a presence in traditional and online radio platforms, cable television, billboards and relevant directories.  We are concentrating our marketing efforts in high ROI channels, with an emphasis on the digital environment.  Our digital marketing efforts include paid and organic search on all major search engines, search remarketing and banner and mobile advertising.  We also manage social media profiles on a variety of platforms.  We leverage customer relationship marketing and data analytics to reach our customers where they are and deliver tailored messages based on our customer specific vehicle needs.

We are committed to building an omni-channel presence to create a seamless buying experience for our customers.  During the second quarter of fiscal 2019, we launched modernized retail and corporate websites, the first phase of this initiative and a major milestone in the development of our online presence.  Our websites include www.monro.com,  www.mrtire.com,  www.tqtire.com,  www.autotire.com,  www.tirewarehouse.net,  www.kentowery.com,  www.tirebarn.com,  www.thetirechoice.com,  www.freeservicetire.com and www.tiresnowonline.com.  With responsive optimized design for mobile users, a streamlined tire search and improved content and functionality, our new retail websites better position us to address our customers’ needs.  These websites help customers search for store locations, print coupons, make service appointments, shop for tires and access information on our services and products, as well as car care tips.  Importantly, they better showcase the solutions we provide to our customers, including our Good, Better, Best product and service packages.

Our corporate website is www.corporate.monro.com, which provides detailed information regarding Monro’s vision, values, leadership and financial performance.

Centralized Control

While we both operate and franchise stores, we believe that direct operation of stores enhances our ability to compete by providing centralized control of such areas of operations as service quality, store appearance, promotional activity and pricing.  We also believe our experience in operating stores makes us a more valuable partner to our franchisees.  A high level of competence is maintained throughout the Company, as we require as a condition of employment, that employees participate in periodic training programs, including sales, management, customer service and changes in automotive technology.  Additionally, purchasing, distribution, merchandising, advertising, accounting and other store support functions are centralized primarily in Monro's corporate headquarters in Rochester, New York and are provided through our subsidiary, Monro Service Corporation.  The centralization of these functions results in efficiencies and gives management the ability to closely monitor and control costs.

PURCHASING AND DISTRIBUTION

Through our wholly-owned subsidiary, Monro Service Corporation, we select and purchase tires, parts and supplies for all Company-operated stores on a centralized basis through an automatic replenishment system.  Although purchases Purchases outside the centralized systemMonro are made when needed at the store level these purchases are low by industry standards and accounted for approximately 19%18 percent of all parts and tires used in fiscal 2019.2021.

Our ten largest vendors accounted for approximately 80%73 percent of our total stocking purchases, with the largest vendor accounting for approximately 26%24 percent of total stocking purchases in fiscal 2019.2021. In fiscal 2019,2021, Monro imported approximately 16%26 percent of our parts (excluding batteries, oil and supplies) and tire purchases. We purchase parts, oil and tires from approximately 13098 vendors. Management believes that our relationships with vendors are excellent and that alternative sources of supply exist, at comparable cost, for substantially all parts used in our business.  We routinely obtain bids from vendors to ensure we are receiving competitive pricing and terms.

Amid global tariffs, market uncertainty and other material cost pressures, our vertically-integrated and diversified supply chain continues to drive our cost leadership position and remains a key differentiator in our industry.

Most parts are shipped by vendors to our warehouse facilities and are distributed to stores by the Monro-operated tractor/trailer fleet.  The majority of tires are shipped to our stores directly by vendors pursuant to orders placed by our headquarters staff.  Stores are replenished at least bi-weekly, and such replenishment fills, on average, 96% of all items ordered by the stores' automatic POS-driven replenishment system.  Monro operates warehouses in New York, Maryland, Virginia, New Hampshire, Kentucky, North Carolina, South Carolina, and Tennessee.  These warehouses each carry, on average, approximately 2,600 SKUs.

We enter into contracts with certain parts and tire suppliers, some of which require us to buy (at market competitive prices) up to 100%100 percent of our annual purchases of specific products. These agreements expire at various dates. We believe these agreements provide us with high quality, branded merchandise at preferred pricing, along with strong marketing and training support.

COMPETITIONThe majority of our parts supply is distributed to our stores through our network of distribution centers, and vendors ship the majority of our tires supply directly to our stores. Stores are generally replenished at least bi-weekly, and such replenishment fills, on average, 96 percent of all items ordered by the automatic replenishment system. Monro operates eleven distribution centers in California, Kentucky, Maryland, New Hampshire, New York, North Carolina, South Carolina and Tennessee.

Human Capital

At Monro, competesour business success is built upon our dedicated, passionate and diverse teammates who work and live in the automotivecommunities we serve. We are committed to providing a safe, healthy, inclusive and supportive work environment where teammates embrace our core value of collaboration, feel empowered and are motivated to have enriching and successful careers. We seek to be an employer of choice to attract and retain top talent. To that end, we strive to provide an engaging work experience that excites and motivates our teammates to deliver their best every day as well as provides opportunities for learning and growth, to ensure our team is always the best in the business.

As of March 27, 2021, Monro had approximately 7,800 employees, of whom 7,270 were employed in the field organization, 210 were employed at the distribution centers, 260 were employed at our corporate headquarters, referred to as store support center, and 60 were employed in other offices. Monro's employees are not members of any union. Due to the impact of the COVID-19 pandemic, we reduced our workforce through furlough or other reduction. With sales improvement, we adjusted our workforce to meet demand.

Teammate Retention

We understand that our teammates will benefit from a clear path to advancement and from investments in their continuous learning to allow them to achieve their personal development needs and career growth. To that end, we invest in training and development programs at all levels within the Company. We also leverage annual processes that support individual performance planning, individual professional development planning and a broad review of talent throughout our organization. Our continuous efforts are reflected in our turnover rates, which are our lowest since 2015.

During fiscal 2020 our online training platform, Monro University, was initially focused on the technical and operational excellence training that technicians need to effectively serve our customers today and prepare them to handle future requirements. We have since expanded the platform across a wide variety of topics accessible to our teammates in our stores, distribution centers and store support center.

New technician development has been an area of particular focus for Monro to increase productivity and retention and make it easier for technicians to overcome barriers of joining the industry. One way we do this is by offering a tool purchase program through which trainee technicians can acquire their own set of tools. We also provide Automotive Service Excellence (“ASE”) certification in eight different categories as technicians advance in their careers.

Store and operations managers also have courses available through Monro University that are supplemented with live and on-line vendor training courses. Management training covers topics including safety, customer service, human resources, leadership and tire industry.scheduling, and is delivered on a regular basis. We believe that involving operations management in the development and delivery of these sessions results in more relevant and actionable training for store managers, helping improve staff retention as well as overall performance.

Monro University also provides targeted training for corporate management and staff, including diversity training, harassment training and people manager training.

We also foster development through annual reviews at which time employees can discuss with their manager goals for aligning their own development with our business objectives.

The compensation for our teammates is tied to, and increases with, increased productivity. Our store compensation plan also streamlines bonus programs, creating consistency and providing us the ability to use human capital more productively across our stores.

In fiscal 2022, we will provide all teammates with an engagement and satisfaction survey, and intend to use those results to inform further strategy and goal-setting.

In addition to providing ongoing learning and development opportunities, ensuring our teammates feel supported is also important in teammate retention. Besides standard employee benefits we offer a confidential Employee Assistance Program with 24/7 support, financial counseling, estate planning, and online resources for parents whose children struggle with developmental disabilities, as well as other services aimed at enhancing our teammates’ well-being.

Workplace Safety

We are committed to providing a safe and secure work environment and have specific safety programs. To identify elevated safety-related risk areas more effectively, we have increased our focus on data gathering, tracking and analysis. With greater insight into real-time data, we can prioritize focus on areas that present the biggest potential hazards to our teammates and identify process improvements. Another important component of our risk analysis is conducting formal and thorough investigations into safety-related incidents. Investigations are analyzed by our Vice President of Risk and Safety as well as our Risk Management Team to determine a root cause, and pro-active plans are in place to improve safety related patterns that emerge, determining the next steps to address these patterns.

Monro’s training programs are key to our strong safety culture. Training increases awareness and helps to reduce and eliminate workplace accidents and injuries. Our Monro University platform has allowed us to conduct more robust and structured trainings based on a teammates’ job position, and Monro’s safety manuals are available at every workstation within our stores and distribution centers and serve as the basis for our safety training and protocols.

COVID-19

Given the significant impact of the COVID-19 pandemic, the end of fiscal 2020 and all of fiscal 2021 presented a unique set of challenges. In February 2020, we formed a COVID-19 Crisis Committee comprised of members of management that has been leading and coordinating the Company’s overall response. This team leads efforts to develop and monitor mitigation and business continuity plans; track all relevant state and local government guidelines, directives and regulations; develop work-from-home plans for non-store teammates; implement safe working protocols for store teams; assess appropriate return-to-office protocols; and provide timely and transparent communications to teammates and key stakeholders. We also incurred additional costs in procuring and distributing the supplies necessary to keep our teammates safe, such as cleaning supplies, face masks and other protective equipment, including sneeze guards installed at each sales counter, as well as investments in technology to allow our teammates to work remotely.

Diversity, Equity and Inclusion

Diversity is one of our core values and we are committed to driving diversity, equity and inclusion across our Company. This commitment will continue to be supported by training and awareness programs as well as focused efforts to recruit, retain, develop and promote a diverse workforce. Our Code of Ethics lays out a zero-tolerance policy for discrimination or harassment behavior.

We are taking action to increase the focus on our diversity efforts and are committed to making continuous progress. In 2020, we formed a Team Resource Group (“TRG”), comprised of a cross-functional coalition of teammates to educate and provide resources and training to help Monro build and maintain an inclusive culture where every teammate feels they belong, can contribute and are

able to reach their full potential. A Diversity, Equity & Inclusion (“DE&I”) expert consultant and the TRG have also been working with the Senior Leadership Team to assist in the formulation of an official DE&I strategy which will include goals and a long-term plan.

We have also added resources to our recruitment team to help launch new hiring initiatives aimed at reaching diverse groups and are also expanding the recruitment platforms we use to broaden our pool of candidates.

We also view training as a tool to foster inclusion and, through Monro University, we provide Unconscious Bias Diversity and Inclusion Awareness courses to our teammates.

Competition

Our segment of the retail industry is generallyfragmented and highly competitive, and fragmented, and the number, size and strength of competitors vary widely from region to region. We believe that competitionoperate in this industry is based on customerthe automotive repair service and reputation,tire industry, which is currently and is expected to continue to be highly competitive with respect to price, store location, name awareness and price.customer service. Monro's primary competitors include national and regional undercar, tire specialty and general automotive service chains, both franchised and company-operated; car dealerships, mass merchandisers’ operating service centers; and, to a lesser extent, gas stations, independent garages and Internet tire sellers. Monro considers TBC Corporation (operating primarily under the NTB, Merchant’s Tire, Midas and Tire Kingdom brands), Firestone Complete Auto Care service stores, The Pep Boys – Manny, Moe and Jack service stores, Meineke, Discount Mufflers Inc., and Mavis Discount Tire to be direct competitors.  In most of the new markets that we have entered, at least one competitor was already present.  In identifying new markets, we analyze, among other factors, the intensity of competition.  (See "Monro.Forward Strategy” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations".)

EMPLOYEESRegulation

As of March 30, 2019, Monro had 8,183 employees, of whom 7,622 were employed in the field organization, 260 were employed at the warehouses, 244 were employed at our corporate headquarters and 57 were employed in other offices.  Monro's employees are not members of any union. 

Our strong commitmentWe maintain programs to support our teammates' professional development and the cultural changes we have made across the organization have had a tremendous impact on our ability to retain talent, as evidenced by our quarterly turnover reaching its lowest level in the fourth quarter of fiscal 2019 since the fourth quarter of fiscal 2015. We have received strong positive feedback from our employees supporting our Monro.Forward initiatives and the actions the Company is taking to better serve our customers.

REGULATION

We are subject tofacilitate compliance with various federal, state and local laws and governmental regulations relating to the operation of our business, including, among other things, those regarding employment and labor practices, workplace safety, building and zoning andrequirements, the handling, storage and disposal of hazardous substances contained in the products that we sell and use in our service bays, the recycling of batteries, tires and used lubricants, and the ownership and operation of real property. We maintain programs to facilitate compliance with these laws and regulations.  We believe that we are in compliance with allthese applicable environmental and other laws and regulations, and our related compliance costs are not material.

Monro stores new oil and recycled antifreeze and generates and/or handles used tires and automotive oils, antifreeze and certain solvents, which are disposed of by licensed third-party contractors. In certain states, as required, we also recycle oil filters. Accordingly, we are subject to numerous federal, state and local environmental laws including the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”).Act. In addition, the United States Environmental Protection Agency (the "EPA"), under the Resource Conservation and Recovery Act ("RCRA"), as well as various state and local environmental protection agencies, regulate our handling and disposal of certain waste products and other materials. The EPA, under the Clean Air Act, also regulates the installation of catalytic converters, engines and equipment sold or distributed in the United States by periodically spot checking repair jobs, and may impose sanctions, including but not limited to civil penalties up to $37,500of approximately $45,000 per violation (or up to $37,500approximately $45,000 per day for certain willful violations or failures to cooperate with authorities), for violations of RCRA and the Clean Air Act.

Monro strives to maintain an environmentally and socially conscious corporate culture, giving back our time, talent and financial resources however we can.  This is demonstrated by our recycling policies at our offices, warehousesdistribution centers and stores and our support of charitable organizations dedicated to caring for the communities and neighborhoods we serve.stores. In fiscal 2019,2021, Monro recycled approximately 3.32.5 million gallons of oil and 3.03.3 million tires, as well as approximately 81,00073,000 vehicle batteries and 30316 tons of cardboard, all as part of the Company’sour commitment to the environment.  Further, Monro and its employees donated to a number of charities during fiscal 2019, including over $260,000 to the United Way.  The United Way, which directly improves lives by mobilizing people and resources to advance the common good, has always been our primary charitable focus.  The Company and employees participate in the annual United Way campaign in Rochester, NY, our corporate headquarters, as well as in many other communities where we do business.

SEASONALITYSeasonality

Although our business is not highly seasonal, customers do purchase more undercar service during the period of March through October than the period of November through February, when miles driven tend to be lower. InSales of tires are more heavily weighted in the tire stores, the better sales months are typicallyof May through August, and October through December. The slowest months are typically January through April and September. As a result, profitability is typically lower during slower sales months, or months where mix is more heavily weighted toward tires, which is a lower margin category.  Additionally, since

Sales can also be volatile in areas in which we operate as a result of warmer weather in winter months, which typically causes a decline in tire sales, or severe weather, which can result in store closures.

Given our stores are primarily locateduse of a fiscal calendar, there may be some fluctuations between quarters due to holiday shifts in the northeasterncalendar year and midwestern United States, profitability tends to be lowerthe number of days in a particular fiscal quarter or year. In addition, the COVID-19 outbreak has had an impact on consumer behaviors and customer traffic that may result in temporary changes in the winter months when certain costs, such as utilities and snow plowing, are typically higher.seasonal fluctuations of our business.

COMPANY INFORMATION AND SEC FILINGS

Monro maintains a website at www.corporate.monro.com and makes its annual, quarterly and periodic Securities and Exchange Commission (“SEC”) filings available through the Investors section of that website.  Monro’s SEC filings are available through this website free of charge, via a direct link to the SEC website at www.sec.gov.

ItemItem 1A. Risk Factors

In addition to the risks discussed elsewhere in this annual report, the following are the important factors that could cause Monro’s actual results to differ materially from those projected in any forward looking statements:

Risks Related to our Business

Matters related to the COVID-19 pandemic have and will continue to significantly and adversely impact our business, financial position, results of operations and cash flows.

The spread of COVID-19 has created a global public health crisis that has resulted in widespread volatility and deteriorations in household, business, economic and market conditions. We have experienced negative impacts to demand for our products and services from the COVID-19 pandemic, which has and will continue to adversely affect our results of operations, and we are continuing to experience significant disruption to our normal business operations and may experience further disruption to our planned implementation of certain strategic initiatives.

Our business will continue to be affected by the broader economic effects from the COVID-19 pandemic and related regulatory and individual actions, including customer demand for our products and services. Because more people in the United States are working from home, those workers will likely drive less often, and are less likely to require our services or will require our services less often. If this trend continues, we may see a permanent decline in demand for our services. Although travel by car may replace air travel as the preferred means of transportation because of fear of the spread of COVID-19, the recessionary economic environment resulting from the COVID-19 pandemic may reduce levels of leisure travel, which would reduce the demand for our products and services. We anticipate disruption to the demand for our products and services throughout the course of the pandemic. For example, in fiscal 2021, we experienced significant declines in comparable store sales compared to 2020 due to lower store traffic and reduced store hours as a result of our, individuals’, and governmental responses to the COVID-19 pandemic. Additionally, our growth strategy was impacted by the pandemic, as we paused all store acquisition, rebrand, and reimage initiatives during the first quarter of fiscal 2021 in order to focus our efforts on determining the full impact of the COVID-19 pandemic on our business before restarting them later in fiscal 2021. Given the continuing uncertainty during the pandemic, we may have to pause these initiatives again if necessary to mitigate the effects of the pandemic.

While we have so far been able to source required products at reasonable cost, the pandemic may also affect our supply chain in ways that are beyond our control. We may also incur costs or experience further disruption to comply with new or changing regulations in response to the pandemic.

In addition, our continuing response to the pandemic could divert management’s attention from our key strategic priorities, increase costs as we prioritize health and safety matters for our employees and customers, cause us to reduce, delay, alter or abandon initiatives that may otherwise increase our long-term value, increase vulnerability to information technology or cybersecurity related risks as certain of our employees work remotely and otherwise continue to disrupt our business operations. For example, we have and expect to continue to incur additional costs and investments in supplies necessary to keep our employees and customers safe, such as face masks, hand sanitizer and cleaning supplies. We expect to encounter labor inefficiencies as we adjust to new operating models to adapt to operating during the pandemic while experiencing what we believe will be an increase in sales activity from 2021. Those labor inefficiencies may include difficulty in hiring employees if enhanced unemployment benefits are signed into law. As our employees return to more normalized store hours, there will also be increased risks to the health and safety of our employees and customers, particularly if there were to be one or more clusters of COVID-19 cases occurring at any of our stores or our corporate headquarters. We may also be subject to enhanced legal risks, including potential litigation related to the COVID-19 pandemic.

The overall magnitude of the COVID-19 pandemic, including the extent of its direct and indirect impact on our business, financial position, results of operations or liquidity is inherently uncertain due to the fluidity of the situation. Further, the ultimate impact of the COVID-19 pandemic depends on many factors that are not within our control, including, but not limited to: governmental, business and individuals' actions that have been and continue to be taken in response to the COVID-19 pandemic; the severity and duration of outbreaks of the virus; the effectiveness of vaccines; the impact of the COVID-19 pandemic and actions taken in response on global and regional economies, travel, and economic activity; the availability of federal, state, local or non-U.S. funding programs; general economic uncertainty in key global markets and financial market volatility; global economic conditions and levels of economic growth; and the pace of recovery, particularly in our markets, when the COVID-19 pandemic subsides.

We are unable to estimate the impact of the COVID-19 pandemic with certainty on our business and operations at this time. The pandemic could cause us to experience impairment of our goodwill and other financial assets, further reduce demand for our products and services and other adverse impacts on our financial position, results of operations and cash flows. Sustained adverse effects may also prevent us from satisfying financial covenants in our credit agreement, which would prevent us from paying dividends, or result in downgrades in our credit ratings.

We operate in the highly competitive automotive repair industry.

The automotive repair industry in which we operate is generally highly competitive and fragmented, and the number, size and strength of our competitors vary widely from region to region. We believe that competition in the industry is based primarily on customer service, reputation, store location, name awareness and price. Our primary competitors include national and regional undercar, tire specialty and general automotive service chains, both franchised and company-operated, car dealerships, mass merchandisers operating service centers and, to a lesser extent, gas stations, independent garages and Internet tire sellers. Some of our competitors have greater financial resources, are more geographically diverse and have better name recognition than we do, which might place us at a competitive disadvantage to those competitors. Because we seek to offer competitive prices, if our competitors reduce prices, we may be forced to reduce our prices, which could have a material adverse effect on our business, financial condition and results of operations. Further, our success within this industry also depends upon our ability to respond in a timely manner to changes in customer demands for both products and services. We cannot assure that we, or any of our stores, will be able to compete effectively. If we are unable to compete successfully in new and existing markets, we may not achieve our projected revenue and profitability targets.

We are subject to seasonality and cycles in the general economy and customers’ use of vehicles and seasonality, which may impact demand for our products and services.

Our industry is influenced by the number of miles driven by automobile owners. Factors that may cause the number of miles driven by automobile owners to decrease include the weather, travel patterns, gas prices and fluctuations in the general economy. For example, as a result of the COVID-19 pandemic, there has been a marked decrease in the number of miles driven by automobile owners due to the various stay-at-home orders across the regions in which we operate. As a result of this reduction in the number of miles driven by automobile owners, there has been a negative effect on the demand for our products and services. As another example, when the retail cost of gasoline increases, the number of miles driven by automobile owners may decrease, which could result in less frequent service intervals and fewer repairs. The number of vehicle miles driven may also decrease if consumers begin to rely more heavily on mass transportation.

Sales can decline in areas in which we operate as a result of warmer weather in winter months or severe weather, which can result in store closures. Although our business is not highly seasonal, our customers typically purchase more undercar services during the period of March through October than the period of November through February, when miles driven tend to be lower. Further, customers may defer or forego vehicle maintenance at any time during periods of inclement weather. InSales of tires are more heavily weighted in the tire stores, the better sales months are typicallyof May through August, and October through December. The slowest months are typically January through April and September. As a result, profitability is typically lower during slower sales months or months where mix is more heavily weighted toward tires, which is a lower margin category.

Additionally, for our stores located in the northeastern and midwestern United States, profitability tends to be lower in the winter months when certain costs, such as utilities and snow plowing, are typically higher.  Sales can also be volatile in these areas in reaction to warm weather in winter months or severe weather, which can result in store closures.

We purchase products such as oil and tires, which are subject to cost variations related to commodity costs.  If we cannot pass along cost increases, our profitability would be negatively impacted.

Further, our industry is influenced by the number of miles driven by automobile owners.  Factors that may cause the number of miles driven by automobile owners to decrease include the weather, travel patterns, gas prices and fluctuations in the general economy.  Should aAny continued significant reduction in the number of miles driven by automobile owners occur, it would likely have an adverse effect on the demand for our products and services. For example, when the retail cost of gasoline increases, the number of miles driven by automobile owners may decrease, which could result in less frequent service intervals and fewer repairs.  Accordingly, a significant reduction in the number of miles driven by automobile owners couldwill have a material adverse effect on our business and results of operations.

Our business is affected by advances in automotive technology.

The demand for our products and services could be adversely affected by continuing developments in automotive technology. Automotive manufacturers are producing cars that last longer and require service and maintenance at less frequent intervals in certain cases. Quality improvement of manufacturers’ original equipment parts has in the past reduced, and may in the future reduce, demand for our products and services, adversely affecting our sales. For example, manufacturers’ use of stainless steel exhaust components has significantly increased the life of those parts, thereby decreasing the demand for exhaust repairs and replacements. Longer and more comprehensive warranty or service programs offered by automobile manufacturers and other third parties also could adversely affect the demand for our products and services. We believe that a majority of new automobile owners have their cars serviced by a dealer during the period that the car is under warranty.

Advances in electric vehicle technology and production may adversely affect the demand for our services because electric vehicles do not have traditional engines, transmissions, and certain related parts. An increase in the proportion of electric vehicles sold could decrease our service-related revenue. In addition, advances in automotive technology continue to require us to incur additional costs to update our diagnostic capabilities and technical training programs. Changes in vehicle and powertrain technology and advances in accident avoidance technology, electric vehicles, autonomous vehicles and mobility could have a negative effect on our business, results of operations or investors’ perception of our business, any of which could have an adverse effect upon the price of our common stock.

Changes in economic conditions that impact consumer spending could harm our business.

The automotive repair industry and our financial performance are sensitive to changes in overall economic conditions that impact consumer spending.spending, including the economic volatility resulting from the COVID-19 pandemic. Future economic conditions affecting consumer income such as employment levels, business conditions, interest rates, inflation and tax rates could reduce consumer spending or cause consumers to shift their spending to other products. During periods of good economic conditions, consumers may decide to purchase new vehicles rather than servicing their older vehicles. In addition, if automobile manufacturers offer lower pricing on new or leased cars, more consumers may purchase or lease new vehicles rather than servicing older vehicles. A general reduction in the level of consumer spending or shifts in consumer spending to other services could have a material adverse effect on our growth, sales and profitability.

Changes in the U.S. trade environment, including the imposition of import tariffs, could adversely affect our consolidated results of operations and cash flows.

The U.S. government has imposed new or higher tariffs on specified imported products originating from China in response to what it characterizes as unfairIn recent years, trade practices, and China has responded by imposing new or higher tariffs on specified products imported from the United States.  Additionally, in 2018,tensions between the U.S. government imposed imported steel and aluminum tariffs in response to national security concerns and several countries retaliated by proposing or imposing new tariffs on specified products imported from the United States.  In the spring of 2019, trade tensions with China have increased as the U.S. government has implemented and proposed additional tariffs and the Chinese government proposed retaliatory tariffs.

Although we have no foreign operations and do not manufacture any products, tariffs imposed on products that we sell, such as tires, may cause our expenses to increase, which could adversely affect our profitability unless we are able to raise our prices for these products. If we increase the price of products impacted by tariffs, our service offerings may become less attractive relative to services offered by our competitors or cause our customers to delay needed maintenance. Given the uncertainty regarding the scope and duration of these trade actions by the U.S. or other countries, the impact of these trade actions on our operations or results remains uncertain. However, the tariffs, along with any additional tariffs or retaliatory trade restrictions implemented by other countries, could adversely affect the operating profits of our business, which could have an adverse effect on our consolidated results of operations and cash flows.

We depend on our relationships with our vendors, including foreign sources, for certain inventory. Our business may be negatively affected by the risks associated with such relationships and international trade.

We depend on close relationships with our vendors for parts, tires and supplies and for our ability to purchase products at competitive prices and terms. Our ability to purchase at competitive prices and terms results from the volume of our purchases from these vendors. We have entered into various contracts with parts suppliers that require us to buy from them (at market competitive prices) up to 100%100 percent of our annual purchases of specific products. These agreements expire at various dates.

We believe that alternative sources exist for most of the products we sell or use at our stores, and we would not expect the loss of any one supplier to have a material adverse effect on our business, financial condition or results of operations.  Our dependence on a small number of suppliers, however, subjects us to the risks of shortages and interruptions. If any of our suppliers do not perform adequately or otherwise fail to distribute parts or other supplies to our stores, our inability to replace the suppliers in a timely manner and on acceptable terms could increase our costs and could cause shortages or interruptions that could have a material adverse effect on our business, financial condition and results of operations.

Because we purchase products such as oil and tires, which are subject to cost variations related to commodity costs, if we cannot pass along cost increases, our profitability would be negatively impacted.

In addition, we depend on a number of products (e.g. brake parts, tires, oil filters) produced in foreign markets. The U.S. government has made proposals and taken actions intended to address trade imbalances, which include encouraging increased production in the United States. These proposals could result in increased customs duties and the renegotiation of certain U.S. trade agreements, which in turn could cause an increase in the prices we pay for certain of the products we sell. Any changes in U.S. trade policies, or uncertainty with respect to the future of U.S. trade policies, resulting in increased costs which we are not able to offset with pricing increases of our own could adversely affect our financial performance.

We also face other risks associated with the delivery of inventory originating outside the United States, including: