2018 Car Care Expo Express Car Wash presentations

[Greg Pack]

Excellent forty five minute presentation made by Ryan Essenburg of Tommy Car Wash Systems:


https://www.youtube.com/watch?v=qtQLgsK3cUA


IMO, worth watching regardless of your current market segment. The express model seems to gaining even more steam. New investors are pouring in.

 

[carwashireland]

Nice share Greg. An incredibly informative and insightful presentation. Makes me reconsider my business plan for the next five years!

 

[robert roman]

I find nothing new here except different audience and he gets to plug his brand.

 

[Earl Weiss]

He had some interesting points concerning location such as Grocery store proximity, good operation overcoming some location negatives, experts with general knowledge (mentioned civil engineers) not having specific knowledge for wash operations. (I recently did some construction and had to educate plumbers, contractors and electricians about peculiar needs of a car wash building / operation which wasn't easy since some felt that as a lay person I could not know more than they, and their consultants. )

 

[Greg Pack]

I find the number of washes that they have decided will work in a market as surprising. This probably works better in snowbelt that in milder climates. Also, the trend mentioned towards more numerous smaller tunnels that are spaced closer together(approximately 2 miles apart) is a bit concerning. I thought that one of my washes (a 4/2)was well positioned in between two tunnels, which are three miles in either direction from my site. Because of their proximity I wasn't so worried about a tunnel in my immediate area. With a mindset of 2 miles apart, my area would be ideal for development of a small tunnel.

The low hanging fruit in my region (southeast) has been developed. Operators are branching out quickly to build chains in other parts of the Country. Several southern chains are developing northward, and the express concept really has the attention of new investors.

Sure, this was a great sales presentation for Tommy CWS, but it was quality info and this information could be adopted for any manufacturer.

 

[mac]

Yes, there are a lot of new investors doing this. And that is the issue I see. The town close by me has about 6 full serve or express washes in a 10 mile stretch of US 41. There are now about 6 signs stating new express wash coming soon. All in the same area. Anyone want to bet on how many actually make it?

 

[Greg Pack]

Yes, there are a lot of new investors doing this. And that is the issue I see. The town close by me has about 6 full serve or express washes in a 10 mile stretch of US 41. There are now about 6 signs stating new express wash coming soon. All in the same area. Anyone want to bet on how many actually make it?

Mac in the presentation Ryan mentions midwest Fl. They are planning 25 new locations "every two miles up the coast"

 

[robert roman]

Mac in the presentation Ryan mentions midwest Fl. They are planning 25 new locations "every two miles up the coast"

Back during the last construction boom, people were putting up self-serve like hotcakes and markets became saturated, many overbuilt.

Then came the financial and real estate crisis followed by recession then there was big bankruptcy cycle.

This is different.

Express is not only experiencing organic growth it is also gobbling up existing retail space in process.

Instead of mom and pop, most investors are deep pockets and have their own money or access to private equity. In other words, they don’t need studies to get loans approved.

So, as Paul Fazio told me, OEM’s have to act like referees because the new breed isn’t as keen on advice as previous wave of investors.

How wild is it getting?

The last project I reviewed for a bank was a stand-alone express wash on 1.5 acre, cost to build over $5.0 million.

Some of future Tommy Express locations are on its website and its network partner Everwash.

 

[robert roman]

Some of future Tommy Express locations are on its website and its network partner Everwash.

Hey, Bob, that's Superoperator, not Everwash.

Thanks

 

[mac]

Let's see, 25 new locations placed every two miles. At least they will control that market. So with a cost of 3M to 5M, that's 75 million to 125 million dollars. That would buy a real nice boat. Could even hire the Hooter's girls as the crew and still have money left over. Will be fun to watch.

 

[mac]

So out of curiosity, what kind of numbers would an express exterior that cost 3M have to do for a decent ROI? Been talking to some people who have heard the buzz about this but real numbers seem hard to find.

 

[Earl Weiss]

There are so many variables I do not know how anyone could answer this.

Is competition $3.00 or $6.00 base or even more?

How much competition is there?

What are local water costs?

What are anticipated real estate taxes. $50,000 a year or $100,000 a year?

etc.

 

[robert roman]

So out of curiosity, what kind of numbers would an express exterior that cost 3M have to do for a decent ROI? Been talking to some people who have heard the buzz about this but real numbers seem hard to find.

Based on standard financing, $3.0 million express with sales of $1.1 million would generate cash on cash return of about 60 percent. Cash on cash is earnings before taxes divided by equity.

 

[robert roman]

Here is another example. Cost $4.6 million, sales $1.4 million, and cash on cash 64 percent.

 

[mac]

So to assume a little more, in order to get sales of a million per annum, how many washes does that translate to? The express washes that have opener here started out with a $4 wash. After a year or two it went up to around $6 to start, with average ticket prices of maybe $8 to $9. And here in FL during the summer it rains almost every afternoon. We just came off of a very wet month where most of my customers said they should have simply gone fishing. If these sales people do put one every two miles competition will keep prices way down. My advice to potential owners in central FL is to simply wait 2 or 3 years, then buy one back from the bank at 0.50 cents on the dollar. Your thoughts?

 

[soapy]

Mac, I asked the question of how many cars per million spent did it take to break even for a express car wash a few years ago to a well known car wash appraiser. He had not been asked this question before so it took him a while to work the numbers. Based on several washes he had recently reviewed he came up with the number of 112 cars per day per million dollars invested to break even. So a 3 million dollar investment would need to do 336 cpd to break even and everything over that would be profit. I ran this number by several express car wash operators and they all told me that was a pretty good number based on their situation. A few figured it higher like 125 car per million invested. This was back about 2010 so numbers may have changed a little but I think it would be in the ball park still.

 

[Greg Pack]

Big private equity firms are paying WAY more than 3x gross for these sites. Some operators have sold out and are simply developing a new part off the regions or Country with the intent to sell it again as soon as the chain is of sufficient size to attract the big players.

Locally, the expresses with $7 base are averaging over $10.00 per car.

 

[Earl Weiss]

Spoke to OP. It seems real estate taxes for a location he is considering are $125,000.00 year. Some locations may be $25,000 a year. Just an example of what the different numbers might be for a location to make $.

 

[robert roman]

Buy back isn't likely to occur in this era, Mac. Exception is hurricane. Private equity and brands also aren't building small or cheap. One acre and larger and $4.5 to $5.0 million is more like it. People like new and modern. Many washes and operators in Florida are 30 years or more behind the times. For example, most operators in Pinellas don't have a website. Now we have two NASCAR express and more express are being built here every year. I foresee dry self-serve bays and more closed up gas station washes. When I go to full-service, which isn't often, all I see is old people.

 

[robert roman]

BTW, Mac, I was recently told that Sunshine Car Wash sold. Do you know if this is true?