Broadwayautoclinic
New member
What effect will these $4 and soon to be $5 prices have on the car wash industry, and how might we overcome it?
High gas prices and its effect on the car wash business.
- Thread starter Broadwayautoclinic
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Jim Caudill
Self Serve Operator
The first part of your question should be "self-evident". I have long thought that the car wash industry suffers from lack of psychologial analysis. Years ago, I though I needed a carefully thought out "viewpoint" that I could adopt for help in dealing with all the "stressors" of operating my own wash. This could easily be a long essay or short book, all by itself.
Now you are asking about the "mind set" of the customer. Car Washes are highly discretionary purchases that are often impulsive. In the past, Americans have had a "love relationship" with their cars. We used to go to "drive-ins" for movies, "Hot Dog Stands" (think A&W) to eat in our cars, and the great Robert Schuller began by offering church services that you attended while sitting in your car. Car commercials were crafted to appeal to your "sense of self" and how the car you drove, helped define who you were.
In this age of expensive gas, many will fill their car up and look with discorn at what the POS they happen to be driving is costing them. Do you think they will want to lavish suds and polish on something they resent? Conversely, the "greenie types" driving their fuel sipping hybrids, will want to hop up and down with delight at how little gas they are purchasing and how little CO2 they are emitting into the air. They would probably want shower their little baby with love and suds.
I think the love affair with the automobile is over, and they will be looked at primarily as a necessary evil. You can get someone to reinforce any view you choose to adopt.
Now you are asking about the "mind set" of the customer. Car Washes are highly discretionary purchases that are often impulsive. In the past, Americans have had a "love relationship" with their cars. We used to go to "drive-ins" for movies, "Hot Dog Stands" (think A&W) to eat in our cars, and the great Robert Schuller began by offering church services that you attended while sitting in your car. Car commercials were crafted to appeal to your "sense of self" and how the car you drove, helped define who you were.
In this age of expensive gas, many will fill their car up and look with discorn at what the POS they happen to be driving is costing them. Do you think they will want to lavish suds and polish on something they resent? Conversely, the "greenie types" driving their fuel sipping hybrids, will want to hop up and down with delight at how little gas they are purchasing and how little CO2 they are emitting into the air. They would probably want shower their little baby with love and suds.
I think the love affair with the automobile is over, and they will be looked at primarily as a necessary evil. You can get someone to reinforce any view you choose to adopt.
Gasoline here is $4.37 this morning. When gas hit the $4 mark it was like someone turned off the light switch. I?ve talked to just about every S/S carwash operator in the area and they are all down. Some as high as 40%, I?m only down about 20% and it hurts. The tunnel operators are really down some are upwards of 50%. America is dependant on cheap energy, now that the costs have gone out of sight the economy is going to suffer. I think we are going to see a lot more washing in there driveway or going longer between washes. It?s just not important to have a clean car when it?s a choice of food, gas or a clean car. It makes me feel good to drive a clean car but it?s not one of those things that I just have. I?d be scared spit less if I was in the process of opening a new wash now.
Ben's Car Wash
Conveyor & self service
I think your seeing the effects right now as Jim so well points out!
My Tunnel this year is down in volume 9% and average ticket down $1.70 on top of that!. The SS apears to be off by as much as 30% but that is difficult for me to gauge because I only owned it one year as of April 15th and the previous owner kept no records. So the SS's & IBA's, in this area at least, are telling me that they are off by 30-40% and tunnels by 10-20% with a few saying that they are off by as much as 50%!
It's not only gas prices, it's the effect of raising fuel costs on everything else...milk, eggs, cereal averaging over 20% increase. Less discreationary spending all around and the sticker shock at the pump of $100 to fill up is way to much for a lot of people to bare. Most bays in my town are dry! Hell someone stole an Aluminum vac nozzel last week I guess to recycle it!
However I printed off all my #'s yesterday morning for the past 3 years to trend them and I feel blessed that I am only 9% off in volume this year! It feels much worse, but I'm encouraged after hearing from so many others that they are off by 30-40%. My chemical suppliers..... they're dying.
The economy in general... won't tolerate much more. OPEC mets Monday to talk about increasing output. It might help not to be running tanks, hummvees and planes in IRAQ... they do use a lot of oil and money we could use right here! Besides... where's that oil we were promised? (ok...smack me... I said it).
My Tunnel this year is down in volume 9% and average ticket down $1.70 on top of that!. The SS apears to be off by as much as 30% but that is difficult for me to gauge because I only owned it one year as of April 15th and the previous owner kept no records. So the SS's & IBA's, in this area at least, are telling me that they are off by 30-40% and tunnels by 10-20% with a few saying that they are off by as much as 50%!
It's not only gas prices, it's the effect of raising fuel costs on everything else...milk, eggs, cereal averaging over 20% increase. Less discreationary spending all around and the sticker shock at the pump of $100 to fill up is way to much for a lot of people to bare. Most bays in my town are dry! Hell someone stole an Aluminum vac nozzel last week I guess to recycle it!
However I printed off all my #'s yesterday morning for the past 3 years to trend them and I feel blessed that I am only 9% off in volume this year! It feels much worse, but I'm encouraged after hearing from so many others that they are off by 30-40%. My chemical suppliers..... they're dying.
The economy in general... won't tolerate much more. OPEC mets Monday to talk about increasing output. It might help not to be running tanks, hummvees and planes in IRAQ... they do use a lot of oil and money we could use right here! Besides... where's that oil we were promised? (ok...smack me... I said it).
Broadwayautoclinic
New member
On the same property as the car wash, we are opening a dog wash, two bay quick lube, auto repair, and detailing. A total of 11,000 sq/ft.
My wife and I are hoping that the these businesses will compliment each other, and and bring people in.We are located next door to a very busy convenience store called Stewarts, that sees 15,000 cars a week in volume.We actually share their entrance, via an easement.
My feeling is that no matter what, people will have to drive to work. So, the auto repair end of it should do fine. We already have an auto repair business, and it's been doing well for 13 years. As for people washing their cars, well.....
The area and the surrounding Hamlets in the area that we are opening in is fairly well off. There are many high end autos, and we are hoping to capture them. In our business plan, the bulk of our nut is supposed to be paid for by the car wash, and if it doesn't do well, we will be absolutely screwed. So we must overcome the economy, somehow.... If I could could do it over, I might omit the car wash, but we're in too deep with construction and finance.
I am very concerned, to say the least. We have put everything we have into this endevour.
Rick
My wife and I are hoping that the these businesses will compliment each other, and and bring people in.We are located next door to a very busy convenience store called Stewarts, that sees 15,000 cars a week in volume.We actually share their entrance, via an easement.
My feeling is that no matter what, people will have to drive to work. So, the auto repair end of it should do fine. We already have an auto repair business, and it's been doing well for 13 years. As for people washing their cars, well.....
The area and the surrounding Hamlets in the area that we are opening in is fairly well off. There are many high end autos, and we are hoping to capture them. In our business plan, the bulk of our nut is supposed to be paid for by the car wash, and if it doesn't do well, we will be absolutely screwed. So we must overcome the economy, somehow.... If I could could do it over, I might omit the car wash, but we're in too deep with construction and finance.
I am very concerned, to say the least. We have put everything we have into this endevour.
Rick
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Bubbles Galore
Active member
We were planning on doing some pretty substantial upgrades at our wash this summer. After seeing how the general public is reacting to gas prices and such, we have decided to put off indefinitely.
We are by no means throwing in the towel. I know alot of people have scoffed at our idea of a $1 Tuesday, but I have received numerous positive comments about it, and the revenue is up compared to the rest of the weekdays. We have started advertising our tokens to local businesses which has worked out really well.
Sidenote: Contact your local post office, they are buying 50 tokens a week from us =)
On the weekends, we have started doing a 'power hour' where we give away vacuum tokens as our customers are leaving the wash bay. Our customers really appreciate the extra effort and come back again and again. I am not saying that we have not seen a decrease in revenue, but I don't believe we are down 30-40%. As an owner, you have to do what you think is best for your business, but I will tell you this, sitting on your a** won't get it done. I am sure your bank required a pretty substantial business plan to give you the required financing. I would also have a marketing plan laid out as to how you are going to attract business and interact with the public at your site.
Good Luck
We are by no means throwing in the towel. I know alot of people have scoffed at our idea of a $1 Tuesday, but I have received numerous positive comments about it, and the revenue is up compared to the rest of the weekdays. We have started advertising our tokens to local businesses which has worked out really well.
Sidenote: Contact your local post office, they are buying 50 tokens a week from us =)
On the weekends, we have started doing a 'power hour' where we give away vacuum tokens as our customers are leaving the wash bay. Our customers really appreciate the extra effort and come back again and again. I am not saying that we have not seen a decrease in revenue, but I don't believe we are down 30-40%. As an owner, you have to do what you think is best for your business, but I will tell you this, sitting on your a** won't get it done. I am sure your bank required a pretty substantial business plan to give you the required financing. I would also have a marketing plan laid out as to how you are going to attract business and interact with the public at your site.
Good Luck
Something sure is happening, and gas priceing is the most likely culprit. There are some washes in south Florida that are off by more than 50%. I drove around last week and saw 5 station with washes and/or wash only that were closed. Know of two that are in foreclosure, and expect to see many more. The ones I see really hurting are the ones with newer owners who overpaid to start with.
Bubbles Galore
Active member
There is no more 'build it and they will come'. I don't understand that mentality at all. I don't know if other industries are like this, but that statement is rampant where I am from. Do you know of any other businesses that are like that? I see this economic climate as a way to strengthen my customer base by adding incentives and running a quality wash where my customers leave happy and satisfied.
raisetheprice
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I think you have to use this to justify going up on your price, not going down...everything else costs more not just fuel. 2 benefits...higher ticket per car and the riffraff washes at home. The riffraff leaves more work for you anyway.
Waxman
Super Moderator
Good points.
I sure am glad I built when I did (before costs of steel, trucking, etc went way up), where I did (across from an empty plot of land on the busiest road in town which soon after became a beautiful new and very busy bank) and how I did (with a strict budget, carefully thought out and conservative pro formas, years of research into the business, and equipment/chems that get the job done well).
I'm also glad I've been sowing some seeds for repeat business and success by operating a detail shop at the same location for 13 years prior to the wash being built. I'm the local guy, the one customers know, the one who gives alot to charities and the community, and really cares about customers. Detailing shows no signs of a slowdown.
I sure am glad I built when I did (before costs of steel, trucking, etc went way up), where I did (across from an empty plot of land on the busiest road in town which soon after became a beautiful new and very busy bank) and how I did (with a strict budget, carefully thought out and conservative pro formas, years of research into the business, and equipment/chems that get the job done well).
I'm also glad I've been sowing some seeds for repeat business and success by operating a detail shop at the same location for 13 years prior to the wash being built. I'm the local guy, the one customers know, the one who gives alot to charities and the community, and really cares about customers. Detailing shows no signs of a slowdown.
Bubbles Galore
Active member
Maybe it is just my local customer base, but they enjoy and appreciate those extras. I may very well raise my price, but I doubt I will do away with the dollar tuesdays. Like I said, every place is different so you can't say that you HAVE to do what is successful somewhere else. Like waxman said, I want to be the local guy, the one who cares for his wash and his customers. I believe that this will pay off more than just raising the price.
robert roman
Bob Roman
According to some industry trackers, the days of relatively inexpensive fuel, energy and food are over. Somer analysts expect that baby-boomers will see gas prices hit $7.00 to $10.00 before its all over.
Even when the economy begins to grow again, consumers will need to make major lifestyle adjustments. For example, buying more fuel efficient vehicles, living closer to work, letting the kids ride the school bus, becoming better shoppers in terms of extracting more value, making less shoppng trips, shopping closer to home, etc.
Geography will also play a larger role in how well carwash operators will fair in the future. For example, if you operate in Tampa Bay, Florida, the prospects are grim. Pinellas County has become second only to Broward County in Florida population loss. Last year, jobs and salary levels went no where. Unemployment rose by 1.5%, tourism dropped by 2.5%, home sales dropped by 25% (only 1,100 building permits and over 8,000 foreclosures) and property values tanked by over 16% (still falling). Once the land of the frugal, the cost of living in Pinellas has soared in recent years due to skyrocketing property taxes, insurance and rents. On the other hand, if you operate in, say, Wake County, N.C., the propects are a lot better; net migration 25,900 persons; rising property values (14,200 building permits and only several hundred foreclosures); 1.5% increase in jobs; and the average wage is $12,000 higher than Pinellas.
Quite frankly, the vast majority of the carwash market in Pinellas is 25 years behind the times. Over coming $5 or $6 gasoline is going to call for operators to make major changes in way they conduct business. If your market sounds like Pinellas, expect the same.
Bob Roman
www.carwashplan.com
Even when the economy begins to grow again, consumers will need to make major lifestyle adjustments. For example, buying more fuel efficient vehicles, living closer to work, letting the kids ride the school bus, becoming better shoppers in terms of extracting more value, making less shoppng trips, shopping closer to home, etc.
Geography will also play a larger role in how well carwash operators will fair in the future. For example, if you operate in Tampa Bay, Florida, the prospects are grim. Pinellas County has become second only to Broward County in Florida population loss. Last year, jobs and salary levels went no where. Unemployment rose by 1.5%, tourism dropped by 2.5%, home sales dropped by 25% (only 1,100 building permits and over 8,000 foreclosures) and property values tanked by over 16% (still falling). Once the land of the frugal, the cost of living in Pinellas has soared in recent years due to skyrocketing property taxes, insurance and rents. On the other hand, if you operate in, say, Wake County, N.C., the propects are a lot better; net migration 25,900 persons; rising property values (14,200 building permits and only several hundred foreclosures); 1.5% increase in jobs; and the average wage is $12,000 higher than Pinellas.
Quite frankly, the vast majority of the carwash market in Pinellas is 25 years behind the times. Over coming $5 or $6 gasoline is going to call for operators to make major changes in way they conduct business. If your market sounds like Pinellas, expect the same.
Bob Roman
www.carwashplan.com
raisetheprice
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Being the 'local guy' is great and wonderful and very much respected. The fact that you're seperating yourself from the guy down the street will pay off. People will see you're hard work, dedication and use your wash because of it. They will also pay more for it. I'm the highest price in town and wash the most cars (one wash I'm $3 higher on my best wash and his bays stay mostly dry). Part location, part better product, part better customer service.
Bubbles Galore
Active member
I see what you mean about the higher price. I have an 8 bay self serve with your basic setup. I would love to increase my price/minute but I don't want to do a price increase without having something to show my customers i.e. new meterboxes, wall paneling, tri-foam, etc...I don't want to drain my savings right now because I am a little hesitant of the market and economy. I could probably use that excuse for the next five years, but I would like to see how the summer plays out and do my additions in the spring.
robert roman
Bob Roman
Most of the gas/c-stores that are not doing well charging $10 for a wash are those which are still using low volume, touch-less in-bays. This usually means long waiting times, a grim looking wash-bay and barely acceptable wash/dry quality. After spending $70 for a fill-up, that is why people don't want to use them.
Several weeks ago, I visited a gas/c-store that pumps about 400,000 gallons a month. The carwash (express conveyor) did over 400 high quality washes on a Thursday. The top package at this place was $12.00.
Several weeks ago, I visited a gas/c-store that pumps about 400,000 gallons a month. The carwash (express conveyor) did over 400 high quality washes on a Thursday. The top package at this place was $12.00.
Ben's Car Wash
Conveyor & self service
Robert, It is my understanding that plans to move ahead to build a tunnel on 54 at I-75 are still in the works. The Grove mall and the 32 other mall on 56 are moving (however very slowly) shows that Pasco County has some growth.
Still I am very concerned. As you stated in the prior post, the entire State of Florida has so been effected by negatives... it's going to be tough even in Wesley Chapel for these guys!
pitzerwm
Active member
I heard and find it interesting that crisis and opportunity are the same word in Chinese.
Get On The Path
"Success usually comes to those who are too busy to be looking for it."
~ Henry David Thoreau, author
Get On The Path
"Success usually comes to those who are too busy to be looking for it."
~ Henry David Thoreau, author
smokun
Consultant - Rainmaker
Once again, Chicken Little shouldn't own a CARWASH!
Contrary to what some believe, the sky is NOT falling.
Absolutely, we are going through a rough patch, thanks mostly to our Congress and the President in Washington... and a litany of bad decisions. It's happened before, and since history has a tendency to repeat itself for those who soon forget, it will likely happen again.
The fuel shortage and spiking gasoline costs reared its ugliness in the very early 70's. Skyrocketing inflation with mortgage rates and car loans in the high teens. Long gas lines had turned some nice ordinary people into acting like desperate animals. People in gas stations had to arm themselves because of fist-fights.
The carwash business mostly did just fine, especially those operators who increased the perceived value of what they were selling. Foolish price cutting turned out to be the kiss of death for many. Others wary of cutting their prices chose instead to upgrade the carwashing experience and offer more... for the same price! The challenge was to make professional carwashing & detailing a task with exceptional performance that was unmatched by the ordinary consumer in his driveway.
Yes, much of the "dead wood" went out of business, but a great deal were replaced by those filled with enthusiasm and better focus on the customer's needs & wants.
We all adapted to a better way of doing business.
Self-serve was hit the hardest because they seldom had a human face to interact with, so it was a bit easier to migrate towards conveyor washing. Savvy self-serve operations soon learned to get involved with upgrades and special extras that smelled good... or worked better. They learned that people wanted to see an attendant at the self-serve, mostly to provide confidence that someone was there to ask for assistance.
This is the time for innovation, exceptional customer service and plain old person-to-person courtesy. As before, we'll get through this just fine.
-Steve
Contrary to what some believe, the sky is NOT falling.
Absolutely, we are going through a rough patch, thanks mostly to our Congress and the President in Washington... and a litany of bad decisions. It's happened before, and since history has a tendency to repeat itself for those who soon forget, it will likely happen again.
The fuel shortage and spiking gasoline costs reared its ugliness in the very early 70's. Skyrocketing inflation with mortgage rates and car loans in the high teens. Long gas lines had turned some nice ordinary people into acting like desperate animals. People in gas stations had to arm themselves because of fist-fights.
The carwash business mostly did just fine, especially those operators who increased the perceived value of what they were selling. Foolish price cutting turned out to be the kiss of death for many. Others wary of cutting their prices chose instead to upgrade the carwashing experience and offer more... for the same price! The challenge was to make professional carwashing & detailing a task with exceptional performance that was unmatched by the ordinary consumer in his driveway.
Yes, much of the "dead wood" went out of business, but a great deal were replaced by those filled with enthusiasm and better focus on the customer's needs & wants.
We all adapted to a better way of doing business.
Self-serve was hit the hardest because they seldom had a human face to interact with, so it was a bit easier to migrate towards conveyor washing. Savvy self-serve operations soon learned to get involved with upgrades and special extras that smelled good... or worked better. They learned that people wanted to see an attendant at the self-serve, mostly to provide confidence that someone was there to ask for assistance.
This is the time for innovation, exceptional customer service and plain old person-to-person courtesy. As before, we'll get through this just fine.
-Steve
robert roman
Bob Roman
No, Steve, the sky's not falling, but I believe that it may take several years to work our way out of this mess.
Ben's Car Wash, actually it is not a bad time to build. With the slack in the housing market, construction costs here have actually gone down (except for oil-derivatives). I believe the wash should do pretty well if the services are priced right because the market has the need. They probably would do even better if it was a flex-serve conveyor rather exterior-only.
Bob Roman
www.carwashplan.com
Ben's Car Wash, actually it is not a bad time to build. With the slack in the housing market, construction costs here have actually gone down (except for oil-derivatives). I believe the wash should do pretty well if the services are priced right because the market has the need. They probably would do even better if it was a flex-serve conveyor rather exterior-only.
Bob Roman
www.carwashplan.com
