Business & Real Estate

Sacramento’s Rack N Road retail chain sells all but one store

Rack N Road founder and majority owner Greg Bauer, right, chats with customer Ken Nead at the Arden Way store in Sacramento in 2014.
Rack N Road founder and majority owner Greg Bauer, right, chats with customer Ken Nead at the Arden Way store in Sacramento in 2014. mcrisostomo@sacbee.com

Rack N Road, a Sacramento retail chain and one of the city’s great entrepreneurial success stores of the past quarter century, has sold five of its six stores. The company is keeping only its flagship store in Sacramento.

Company founder Greg Bauer said Tuesday he and his partners sold the stores to focus their attention on another company they own, a small but fast-growing manufacturer of permanent bike racks for college campuses and other locations.

Bauer and his partners are keeping their store on Arden Way in Sacramento. They sold the stores in San Rafael, San Jose, Costa Mesa, Seattle and Bellevue, Wash., to three separate owners: two Rack N Road store managers and one of Bauer’s marketing executives. The stores will keep the Rack N Road name.

Bauer said the combined sale price was “in excess of $10 million,” although he and his partners didn’t get all their money upfront. They’re helping finance the purchase and will get paid a portion of the proceeds over several years, through a percentage of the stores’ revenue. In addition, his Bauer 360 Management Group will handle accounting, personnel and other functions for the stores in exchange for a fee.

“We kept skin in the game to make sure (the stores) do well,” Bauer said. “I’m so invested in this. I didn’t walk away from it.”

Because he’ll be maintaining an ongoing financial relationship with the stores, this seemed like a good time to sell. “Ten years from now, I didn’t want to have to think about how I’m going to be exiting Rack N Road,” said Bauer, 52.

Bauer said the sale will enable him to concentrate on Park A Bike, a five-year-old manufacturer of specialty bike racks. The products are found at college campuses and businesses across the country.

“It will be larger than Rack N Road will ever be, I’m guessing, in three years,” he said.

He said he expects Park A Bike to generate sales of $5 million this year. The Rack N Road stores generate sales of more than $11 million a year, including revenue from the Sacramento store.

The sale of the five stores is the latest chapter for an entrepreneur who founded a very successful retail chain and nearly lost it due to overexpansion in the early 2000s.

Rack N Road was inspired by a Bauer family trip to Lake Tahoe in 1990. Struggling to load all the bikes into his car, Bauer decided to to open a store dedicated to selling hitches, roof racks and other carrying equipment. The business, originally called Sports Rack, opened its first store on Fulton Avenue in Sacramento.

By the early 2000s, the company had 16 stores around the West, focusing mainly on cities like Seattle and Denver with lots of skiers and snowboarders. The recession of 2001 nearly bankrupted the company and forced it to close about half its stores and rethink its strategy. Bauer said the company had become too focused on sales and wasn’t paying enough attention to profitability.

Nowadays the company is doing much better, and he said he sold the five stores from a position of strength.

“It’s exactly like real estate in Sacramento,” he said. “There’s no better time to sell a house. We’ve never had a healthier business. ... The stores are doing great.”

Dale Kasler: 916-321-1066, @dakasler

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