New to Car Wash Industry

[Hogaz]

Hello all,

After working for large companies for decades in finance, I am looking to move into the car wash space, likely through acquiring an existing facility.

I am quite familiar with the "financial stuff" and have done quite a bit of reading on the industry to come to the decision the car wash space is where I would like to operate but and am looking for guidance on the best resources and/or advisors that could help me as I diligence facilities (ie. layout, state / quality of equipment, etc.) and to avoid any pitfalls that might not be obvious to someone new to this specific industry.

My focus area for locations would likely be the greater NYC area, including NJ and CT.

Any help would be greatly appreciated.

 

[washnshine]

Hello all,

After working for large companies for decades in finance, I am looking to move into the car wash space, likely through acquiring an existing facility.

I am quite familiar with the "financial stuff" and have done quite a bit of reading on the industry to come to the decision the car wash space is where I would like to operate but and am looking for guidance on the best resources and/or advisors that could help me as I diligence facilities (ie. layout, state / quality of equipment, etc.) and to avoid any pitfalls that might not be obvious to someone new to this specific industry.

My focus area for locations would likely be the greater NYC area, including NJ and CT.

Any help would be greatly appreciated.

Here is my 2 cents on your locations:

Greater NYC:

Westchester County - unattainable land costs

Rockland/Orange Counties - lots of new builds and expanding market. Get in quick - it will be saturated and this is before the acquisitions begin.

East of the Hudson- similar situation - but pricier.

Ct. and NJ - would need to know where, but already experiencing acquisitions of existing washes and many “big name” express exteriors peppering the landscape in some locations.

Choose your location wisely - this region is not for the novice.

 

[traveler17]

Agreed w/ wash n shine. These expresses are saturating everything but also ya gotta be more specific, what kinda of carwash space are you looking for. Self serve, express, automatics , full service ????

 

[bkim13]

Here is my 2 cents on your locations:

Greater NYC:

Westchester County - unattainable land costs

Rockland/Orange Counties - lots of new builds and expanding market. Get in quick - it will be saturated and this is before the acquisitions begin.

East of the Hudson- similar situation - but pricier.

Ct. and NJ - would need to know where, but already experiencing acquisitions of existing washes and many “big name” express exteriors peppering the landscape in some locations.

Choose your location wisely - this region is not for the novice.

what multiples are you seeing in this area. thx for the thots!

 

[washnshine]

what multiples are you seeing in this area. thx for the thots!

This is not my area - I am on the other side of the state, which is a whole different world. However, I used to live there and had contact with several operators still in that area. I’m not saying you can’t be successful- it’s a tough place to get into - especially with the acquisitions and express market. But if you are looking for self serves, that might be more forgiving at this time.

 

[bkim13]

This is not my area - I am on the other side of the state, which is a whole different world. However, I used to live there and had contact with several operators still in that area. I’m not saying you can’t be successful- it’s a tough place to get into - especially with the acquisitions and express market. But if you are looking for self serves, that might be more forgiving at this time.

thx. in a perverse way that makes me somewhat more attracted to the market as harder to get into so if one has capital and can secure low cost funding, you prob feel a little bit more insulated from new entrants but agree...at first glance multiples are rich and it's not a geography for the faint of heart!

 

[washnshine]

thx. in a perverse way that makes me somewhat more attracted to the market as harder to get into so if one has capital and can secure low cost funding, you prob feel a little bit more insulated from new entrants but agree...at first glance multiples are rich and it's not a geography for the faint of heart!

Oh capital is not issue - lots of people have lots of that - the real problem is the second part of your statement- there will definitely be plenty of new entrants. They will be companies already running 30+ locations. Aside from opening their own sites, they devour investors washes who thought it might be an attractive business to get into but can’t compete on the big stage.
Bottom line is the owner with a few locations can never be insulated because he/she will be going head to head with regional or national chains that are have extreme presence, offerings and the perfect price point. No different than if you wanted to open even a large(er) hardware store. In many cases Lowes and Home Depot are going to make it a little tough- even if you are swimming in capital.
You stand a good chance of running in the red and then the offer will come from one of the big players to take your wash off your hands - and it will take a suffering business off your hands, but you walk away with 3-5 years of time and money that could have been spent more beneficially.
There are regions where operators can compete and stay in the game against The big players - plenty on this form. But the particular nuances and subtlety of the region you are looking at makes it more difficult.
Not trying to discourage you / just speaking with 35 years experience and decent knowledge of the industry and in the region you are speaking of. Good luck and let us know how it goes.

 

[bkim13]

Oh capital is not issue - lots of people have lots of that - the real problem is the second part of your statement- there will definitely be plenty of new entrants. They will be companies already running 30+ locations. Aside from opening their own sites, they devour investors washes who thought it might be an attractive business to get into but can’t compete on the big stage.
Bottom line is the owner with a few locations can never be insulated because he/she will be going head to head with regional or national chains that are have extreme presence, offerings and the perfect price point. No different than if you wanted to open even a large(er) hardware store. In many cases Lowes and Home Depot are going to make it a little tough- even if you are swimming in capital.
You stand a good chance of running in the red and then the offer will come from one of the big players to take your wash off your hands - and it will take a suffering business off your hands, but you walk away with 3-5 years of time and money that could have been spent more beneficially.
There are regions where operators can compete and stay in the game against The big players - plenty on this form. But the particular nuances and subtlety of the region you are looking at makes it more difficult.
Not trying to discourage you / just speaking with 35 years experience and decent knowledge of the industry and in the region you are speaking of. Good luck and let us know how it goes.

thx so much for this - this is helpful. i agree with u generally but a little surprised that's how you feel about the nyc/ny/nj area as i haven't seen that many large scale express washes from the big players in these states...real estate is expensive and relative to the cheaper real estate north carolina (spent a few days down there talking to a multi-site operator who has been in the express car wash biz for over 10 years and is building out another 6 new sites after selling 4 for an insane multiple (13x+ ebitda)...unlike the south, ny and nj seem to be have most sites leased (even those selling for 3mm+ and only 600k cash flow with leases) with a high percentage of the washes i see full service and not express....i've seen some small express locations in new jersey like glow express wash which seems to be owned by a family....given how hard it is to get real estate, i really haven't seen the larger scale express washes i saw during my few days in north carolina and what i see in my hometown of kansas city where you see some of the bigger chains like tommy's and tidal wave dominating the local express scene...what big chains are active in ny nj right now out of curiosity?

 

[washnshine]

thx so much for this - this is helpful. i agree with u generally but a little surprised that's how you feel about the nyc/ny/nj area as i haven't seen that many large scale express washes from the big players in these states...real estate is expensive and relative to the cheaper real estate north carolina (spent a few days down there talking to a multi-site operator who has been in the express car wash biz for over 10 years and is building out another 6 new sites after selling 4 for an insane multiple (13x+ ebitda)...unlike the south, ny and nj seem to be have most sites leased (even those selling for 3mm+ and only 600k cash flow with leases) with a high percentage of the washes i see full service and not express....i've seen some small express locations in new jersey like glow express wash which seems to be owned by a family....given how hard it is to get real estate, i really haven't seen the larger scale express washes i saw during my few days in north carolina and what i see in my hometown of kansas city where you see some of the bigger chains like tommy's and tidal wave dominating the local express scene...what big chains are active in ny nj right now out of curiosity?

I’m looking at your original post of greater NYC, which would include Foam and Wash, Valet, Splash and a few that I know are knocking on the doors as we speak. If you find an area that is landlocked and no physical room for someone else to come in, that would be your safest move.

 

[bkim13]

Thx for this!