Business Model

[TheCluelessWasher]

Hi, I am a real estate investor looking to possibly enter the car wash business. Based in the rural midwest. My idea is to acquire old, pretty run down self-serve car washes in markets that are big enough for a 4+ bay wash but too small for a tunnel (so between 5,000 and 15,000 people?). These would be markets where it is unlikely any new washes would ever be built due to no population growth and the increased costs of developing car washes. I would be buying the car washes below replacement cost from sellers that are ready to get out of the business due to age and lack of interest in re-investing the needed capital to make the washes more appealing to the customer. I would be looking to add some technology but not go crazy. Some of the washes I see don't have air shamees and don't do any marketing. I would need to improve the aesthetics of these washes as they are all dated. I have seen so many of these washes on the market. I would think I would only want to look at washes that currently do over $100,000 in annual revenue?

What are the holes in my business model?

 

[OurTown]

in markets that are big enough for a 4+ bay wash but too small for a tunnel (so between 5,000 and 15,000 people?). These would be markets where it is unlikely any new washes would ever be built due to no population growth and the increased costs of developing

I can give you a list of stagnant cities in Ohio that have 10K-15K population that are now going to have a new EE built.

 

[traveler17]

Hi, I am a real estate investor looking to possibly enter the car wash business. Based in the rural midwest. My idea is to acquire old, pretty run down self-serve car washes in markets that are big enough for a 4+ bay wash but too small for a tunnel (so between 5,000 and 15,000 people?). These would be markets where it is unlikely any new washes would ever be built due to no population growth and the increased costs of developing car washes. I would be buying the car washes below replacement cost from sellers that are ready to get out of the business due to age and lack of interest in re-investing the needed capital to make the washes more appealing to the customer. I would be looking to add some technology but not go crazy. Some of the washes I see don't have air shamees and don't do any marketing. I would need to improve the aesthetics of these washes as they are all dated. I have seen so many of these washes on the market. I would think I would only want to look at washes that currently do over $100,000 in annual revenue?

What are the holes in my business model?

I wouldn’t bank on tunnels not eventually coming to a small town near you. I own a couple washes and can promise you these guys don’t care. They have deep pockets and a low volume no money making site will offset their busy sites. I don’t like it like most of us here but it is a reality.

 

[Earl Weiss]

................................... My idea is to acquire old, pretty run down self-serve car washes in markets that are big enough for a 4+ bay wash but too small for a tunnel ..............................t. I would think I would only want to look at washes that currently do over $100,000 in annual revenue?

What are the holes in my business model?

Biggest hole is expecting over $100k in Rvenue. Published industry average is $2K / Mo / Bay. 4 Bay would be $96K.. Could you do more in this type of market??? Possible - Yes - All sprts of factors come into play. Likely???

 

[Greg Pack]

Your business model is how I got in the business thirty years ago. There is a you tube content creator called investment joy that has done that and it offers the highest potential ROI, Probably the first five washes or so that I bought were purchased for less than the cost of construction. The washes were lower volume. Your plan will work but it is not a passive investment and you will either have to learn to fix everything or pay someone who will. It may involve more time than desired for the washes to recover their income potential, if at all. The caution about tunnels is legitimate concern, but a wash can still be profitable in those areas.

My caution is to not get stretched thin over a large geographical area. I eventually transitioned to higher volume washes in a relatively small market area.

 

[TheCluelessWasher]

I can give you a list of stagnant cities in Ohio that have 10K-15K population that are now going to have a new EE built.

Can those cities possibly support justifying developing an EE wash? It seems like you wouldn't generate enough volume, particularly if the demographics are mostly middle income or lower middle income.

 

[TheCluelessWasher]

I wouldn’t bank on tunnels not eventually coming to a small town near you. I own a couple washes and can promise you these guys don’t care. They have deep pockets and a low volume no money making site will offset their busy sites. I don’t like it like most of us here but it is a reality.

I feel like they are gonna stop this crazy building spree now that interest rates are high and real estate investors would have more difficulty affording to buy the developed real estate but perhaps I am wrong. I see so many real estate listings to buy EE washes with a long term lease from the operator but I feel like the investor demand for these is going to slow down...

 

[TheCluelessWasher]

Biggest hole is expecting over $100k in Rvenue. Published industry average is $2K / Mo / Bay. 4 Bay would be $96K.. Could you do more in this type of market??? Possible - Yes - All sprts of factors come into play. Likely???

These washes usually have 2 IBA and 3 ss washes. The IBA units though are extremely old and also the bay for them are so small they can't be retrofit with a unit that could wash large SUVs. They are limited to cars and smaller SUVs.

 

[OurTown]

Can those cities possibly support justifying developing an EE wash? It seems like you wouldn't generate enough volume, particularly if the demographics are mostly middle income or lower middle income.

I don't think so but they are building them anyway.

 

[Overachiever]

I saw this post on facebook the other day, probably not a small town but it's a good example of what tunnels are doing now days, I wouldn't ever want to keep dividing the pie between more car washes but they seem to think building new locations in slightly better locations is the way to go.

 

[traveler17]

I feel like they are gonna stop this crazy building spree now that interest rates are high and real estate investors would have more difficulty affording to buy the developed real estate but perhaps I am wrong. I see so many real estate listings to buy EE washes with a long term lease from the operator but I feel like the investor demand for these is going to slow down...

I hope you’re right, but it seems never ending. They are throwing them up like family dollars. I have one about to open near my high volume site but no way will that place wash enough cars to justify the 4 million or so they spent. Very annoying for small hands on operators like myself.

 

[Axxlrod]

Tunnel operators will def build in towns with 15k people. I've seen towns with only 5k people with two tunnels in it.

 

[tdlconceptsllc]

People are building mini tunnels in very small towns don't ever under estimate these guys.

 

[TheCluelessWasher]

Thanks for all the helpful and informative feedback. I guess if I move forward with any purchase of a self serve I am just going to have to do it on the assumption that at some point I am going to be competing against a tunnel.

 

[OurTown]

Here is a little reading material for you:

https://www.carwashforum.com/thread...ors-are-out-of-their-ever-loving-minds.21672/

 

[Randy]

I had a run-down dump of a tunnel 3/4 of a mile from me on the other end of town. The new owners spent 1.3 million remodeling it, all new equipment, 18 free vac’s etc. The first month special was wash all you want for $9.99 a month if you paid a year in advance, they sold memberships like pancakes on Sunday morning. My business is 1/3 of what it was before the remodeled car wash reopened. Now I find out that someone is going to build another tunnel almost directly across the street from my wash. All of this in a town of 10,000. The pie just keeps getting smaller.

 

[traveler17]

I had a run-down dump of a tunnel 3/4 of a mile from me on the other end of town. The new owners spent 1.3 million remodeling it, all new equipment, 18 free vac’s etc. The first month special was wash all you want for $9.99 a month if you paid a year in advance, they sold memberships like pancakes on Sunday morning. My business is 1/3 of what it was before the remodeled car wash reopened. Now I find out that someone is going to build another tunnel almost directly across the street from my wash. All of this in a town of 10,000. The pie just keeps getting smaller.

Randy did you have an IBA or SS only?

 

[Randy]

Randy did you have an IBA or SS only?

Self-serve only

 

[Kimberly Berg]

My 5-bay SS is located in Northern California, city population 87k. Within 2 miles, in each direction, I have 3 Express tunnel car washes (Quick Quack, Sunrise Express and Bubba's). They were built and/or remodeled within past 8 years. I've owned my car wash for 20 years now, and remodeled it 10 years ago. At first, I was a little anxious about them moving in. While I was concerned it might take away business, it has actually helped my business. My car wash is clean, modern and busier than ever! We take cash/credit/debit cards, have in-bay dryers, hogs-hair brushes, payment app.

Everyday I talk to new customers complaining about the Express car washes (how expensive they are, the poor wash, or how their vehicle was damaged). Their Disclaimer signs list what they're NOT responsible for (vehicles over 5 years old, antennas, bug shields, ladder racks, luggage racks, running boards, spoilers, windshield wipers, spoilers, non-factory accessories, side mirrors, sun visors, vehicle emblems, vehicle molding, wheel covers or center caps, pre-existing damage or loose parts, vehicles over 7' high). Our bays are 10' tall and we get a lot of construction trucks, Sprinter vans, older cars, custom cars, low-riders, travelers and motorcycles, that can't go through an Express car wash.

What am I missing? Maybe I'm being naïve here, or it's the demographics in my city, but I'm grateful I own a simple, modern SS car wash. Let the Express car washes battle for customers. I've found a nice niche, and know my pie has gotten bigger!

 

[Randy]

Kim I'll bet you'd be singing a different tune if you had a EE tunnel open a half a mile away from you.