Is a recess coming? Is it time to get panicky?

[Eric H]

The average price for gasoline in MA is $4.75 today (5/20/22). This is giving me flashbacks to post 9-11 and the Obama years. For those that weren’t in the Carwash business at those times, as gas prices went up our wash volume dropped. The consumer only has a certain amount of money to spend after necessities, washing the car isn’t a necessity.
I expect the cost to run floor heat this coming winter to be the biggest negative impact to the bottom line. Increased expenses and lower wash volume are very likely a reality.
What steps are you taking/considering to implement NOW to help reduce expenses in the future?

 

[mac]

My guess is most operators are already doing this. Stay calm.

 

[soapy]

For SS operators our biggest age demographic of users is the 18 to 35 group. I was reading in the Wall Street Journal that Dutch Brothers coffee is looking for a downturn in spending of this age group because the impact of the economy is far greater to this group that it is to older americans. Floor heat will be one of the big costs coming this winter. ONe of the hedges might be to prepay some of those big bill that you know are coming. NOt a bad feeling to be paid ahead on you gas bill by a few thousand heading into winter.

 

[Eric H]

Floor heat will be one of the big costs coming this winter. ONe of the hedges might be to prepay some of those big bill that you know are coming. NOt a bad feeling to be paid ahead on you gas bill by a few thousand heading into winter.

I had no idea you could prepay natural gas. I used to prepay for heating oil. Do they let you pay at the current rate or do they just place a balance on you account?
I’ll have to make some calls on this

 

[TSchmitz]

I had no idea you could prepay natural gas. I used to prepay for heating oil. Do they let you pay at the current rate or do they just place a balance on you account?
I’ll have to make some calls on this

Look up ESCOs in your state, they can lock you in at a price over the course of a few years.

 

[Randy]

Gasoline is over $5.00 a gallon here now and diesel is around $5.50 and climbing. We are already starting to see a decrease in S/S business. Everything is tied to the cost of fuel. What worries me is farmers who are just starting to plant their crops, the truckers who haul everything to the stores. There piece pie just keeps getting smaller and smaller. I think the car wash industry is going to take a big hit in the next 18 months or so. Tighten your belt and look for ways to decrease the cost of doing business. We aren’t going to be making any major expenditures in the near future. We are currently about as lean as we can get.

 

[Roz]

Clearly no one here has ever traveled outside the USA where gas and diesel prices are $5-$8 / gal before the recent war gave the Arabs an easy way to stick it to America for complaining about the butchering of a journalist. Europe has always paid 50-100% more for gas than us. It will pass when Russia has enough of a senseless war or the Arabs need something from us like warplanes.

 

[Roz]

Wondering if the stock market crash will encourage more 65+ people to get a part time gig. May be the only benefit for us as operators and owners.

 

[PaulLovesJamie]

Clearly no one here has ever traveled outside the USA where gas and diesel prices are $5-$8 / gal ...

Dont fall for what the TV says, thats the price of taxes, not gas.

 

[OurTown]

Dont fall for what the TV says, thats the price of taxes, not gas.

$2-$3 per gallon (or more) just in taxes in Europe depending on country.

 

[Roz]

Yes. On Ave Europe adds $2.5 per gal and we add about $0.35/gal. Point was that Europe did not collapse with high prices and we are more resilient (in general). The higher prices are due to OPEC and from the lower overall supply as we embargo Russian oil.

Getting back to car washing (since politics is often a third rail topic) will higher prices impact our businesses? Not clear. People may want to keep their cars longer since car prices are high for used cars so they may wash them more often. They may travel less given higher airfares so they are around their home which gives them more time to wash their car. Or they feel their pocketbook being pinched so they scale back the amount they spend to keep their car clean. Too early to tell which scenario plays out. My guess is that all three are seen depending on the state or part of the country your car wash is located.

 

[Greg Pack]

I know the last time gas went over 4.00/gallon it impacted business. Granted minium wages were lower but the lower income people are usually always living on the edge and I could see high fuel affecting their descretionary purchases. Couple that with the slight decrease in the market and some people are beginning to feel less wealthy. Its a natural response for many to cut back where they can. It will be interesting to see how the subscription programs at expresses weather this.

 

[soonermajic]

Do u guys think the unlimited subscriptions will decrease? If so, slightly, a lot...?

 

[Islandwash]

The subscription model for carwashing was not really present in the last recession. My thoughts are yes, hopefully just slightly.

 

[eckert16]

Small business owners in America are feeling their gloomiest in nearly five decades, a survey released Tuesday morning showed.

Fifty-one percent of owners reported job openings that could not be filled, up four points from the April and March readings.

Instead of relief for supply chain problems, these appear to be getting worse. Thirty-nine percent of owners report that supply chain disruptions have had a significant impact on their business, up three points from April. Another 31 percent report a moderate impact and 22 percent report a mild impact. Only eight percent say there has been no impact from the recent supply chain disruptions.

www.nfib.com
/content/press-release/economy/small-business-owners-expectations-for-the-future-at-48-year-low/

 

[Roz]

If china opens up for normal trade and manufacturing you will start to see the supply chain issues subside. People do not appreciate how much of our goods is manufactured there. When they lock down major cities for several months at a time it causes major headaches here.
There used to be a shipping container shortage in USA. If you drive thru Baltimore now you will see that there is no longer a shortage of containers. The lots near the ports with imported cars are full too. Just takes time for the system to get up to speed.

the Fed hiking interest rates in an attempt to bring down house prices is what the stock market sees and reacts to. Once house prices start to level off or even dip in the overheated markets things will start to calm down.

 

[washnshine]

Do u guys think the unlimited subscriptions will decrease? If so, slightly, a lot...?

I think if they do, then you will also see a decrease in non subscription washes. Around me, the average subscription wash package is right around the price of two washes of the same package. So basically if people are quitting subscription plans, then theoretically, people who do not wash on a plan will be washing less than two times per month. That means 1 or 0. I’m guessing that is lower than where most of our non subscription washers were before the economic changes began.

 

[Roz]

If anything changes I would wager that more customers seek out monthly plans so they can wash their cars weekly but only pay for 2 washes per month.

 

[washnshine]

If anything changes I would wager that more customers seek out monthly plans so they can wash their cars weekly but only pay for 2 washes per month.

Agree

 

[Car_Wash_Guy]

the Fed hiking interest rates in an attempt to bring down house prices is what the stock market sees and reacts to. Once house prices start to level off or even dip in the overheated markets things will start to calm down.

They're hiking interest rates to stamp down the rampant inflation. At this rate we'll end up like Zimbabwe.

Back to car washing and gas prices. I'm actually surprised to see as many RV's on the road with the fuel prices what they are. My wash is busier than ever. I guess it'll take $7+ a gallon and I believe we'lll get there to begin seeing people curtail their discretionary spending.