Express Tunnel affect on SS and IBA

[Waxman]

SURE............easily until something breaks, a car smashes into another car or your equipment or someone neglects safety protocol and gets caught up in some moving equipment and there is no other employee on site to help.

Bad idea, IMO to have 1 employee on site to easily handle a conveyor wash.

 

[JMMUSTANG]

Take 35 cars per hour (on a busy day) at an average of say $5.50 equals
$192.50 per hour x 9 hrs. (min.) = $1,732.50 (closed after 9 hrs.)
One employee for 9 hrs. x $9.00 per hr. (good employee) = $81.00 for the day.
$1,732.50 - 81.00 = $1,651.50 gross after wages.
If you have 2 employees you would end up with $1,570.50 gross.

IBA 12 cars per hr. x $5.50 x 9 hrs.= $594.00 add 3 cars for the next 3 hrs. x $5.50 (average) = $16.50. $594.00 + 16.50 = $610.50
No employees

You're right that the dynamics of running an express wash vs. an iba are different but to compete against another larger express wash I still think this might be one of the ways to go.
I believe we have to change to compete.

 

[eaglewash]

I appreciate everyone response. I will look into the mini tunnel. Although I don't know how much stacking I need for one. I only have room for 3 full size or 4 small vehicles. Plus I need what.... 10-15 ft of conveyer to load before it gets to the tunnel? I think the city may require min of 6 vehicles for tunnel and 3 for in-bay.

 

[robert roman]

“I appreciate everyone response. I will look into the mini tunnel. Although I don't know how much stacking I need for one. I only have room for 3 full size or 4 small vehicles. Plus I need what.... 10-15 ft of conveyer to load before it gets to the tunnel? I think the city may require min of 6 vehicles for tunnel and 3 for in-bay.”

Sonny’s 43 wash system is very similar to a McNeil 5-touch mini-tunnel that one of my clients installed at his wash in Kansas several years ago.

You may want to consider an installed price of $250K to $300K with capacity to wash 35 cars an hour as realistic. My client has done this, 35 car hour, without an attendant.

Can you compete against a full-sized express, fight fire with fire, mano-mano style, with a mini-tunnel?

To some degree, yes, because the full-sized express will not have scale economies unless it is washing high volume. If this is the case, then no, you would not be able to compete on basis of low price.

Can you make money with mini-tunnel? Yes, but you need to achieve high average ticket like $9.00 or $10.00 a car and not $6.50 or $7.00 like an in-bay.

An alternative to this is a faster in-bay. Problem, in-bay express requires at least 50’ long wash bay to fit. However, extending the building would probably cost less than doing the concrete work for a conveyor.

 

[eaglewash]

Mr Roman, sorry I don't quite understand can you explain your paragraph that "full-size express will not have full scale economies unless it is washing high volume".

You also stated i would need to charge $9-$10 to make money. I don't see how I could charge that when the full-size EE will have a big sign that says $3 wash free vacuums.

Also my bay is 14.8 ft wide. I saw in MacNeils mini requires a minimum of 15.6 ft. I will look up Sonny's 43 wash system.

Also your friend that has a MacNeil mini tunnel. Did he have to leave out some equipment to get it into a 35ft tunnel? According to their website the minimum length was 45-50 ft I believe. Does he have tie shine? Also is his a SS wash with one bay converted to a mini tunnel?

 

[DiamondWash]

Sonny's Mini Express in a 35 foot tunnel: http://www.youtube.com/watch?v=fZGZ2KOKH10&feature=plcp&context=C3f5d6f2UDOEgsToPDskJKYHl6umr1-MWQM7Y9Iq_X

 

[soapy]

Don't assume that a mini tunnel will average 35 cars per hour. That is the peak it can do. From my observations you might hit 35 cph only 3 hours of the day. And the days of this kind of volume are limited. Peak wash days are pretty limited in the real world.

 

[Waxman]

Don't assume that a mini tunnel will average 35 cars per hour. That is the peak it can do. From my observations you might hit 35 cph only 3 hours of the day. And the days of this kind of volume are limited. Peak wash days are pretty limited in the real world.

Good points, Soapy.

I will add this; the IBA wash I run is at its best when attended. There are SO MANY customers who require change, loading assistance, exiting assistance that I cannot imagine how you operators who have limited attended hours make any money at all in this business.

Besides the safety factor (and I'm surprised, Mr. Roman, that you of all people are not fully supportive of proper carwash safety protocol), employees are necessary for me to make quick repairs and best serve customers daily at my place. Are my customers dumber than everyone else's? Is my equipment more prone to breakdowns or less-safe than everyone else's? I doubt it.

Finally, there's nothing wrong with giving a few folks decent jobs at your wash. You can make far more money with the right attendant than without, I believe.

 

[tobaccofarmer]

How can you compete with a 3 dollar express tunnel unless you are priced the same, have same process times and offer same free services like vacuums and mat cleaners? Basically what Im saying is unless you are the 3 dollar express tunnel its a waste of time to try and think you are going to compete. Only thing would be the few customers that care about touchless vs friction but for the few that do its an uphill battle. I dont think they are competition but more like domination. Make no mistake these things take over self serve customers and theres no looking back, I am telling you this with real world experience. The one area I dont know about is how they effect full serve operations? Im sure it cuts into them as well? The worst part of the whole thing is how the perceived value of a carwash goes completely down once the market is exposed to the 3 dollar model for a while. In other words now everyone thinks 3 dollars is the norm and thats not good, when they see 7 or 8 its a rip off? Dont mean to sound doom and gloom but trust me its a deal breaker! Thought you might want to read this and watch this video pretty interesting atleast!

http://www.southlandautowash.com/3-dollar-car-wash.php

 

[JMMUSTANG]

Robert you say " Can you compete against a full-sized express, fight fire with fire, mano-mano style, with a mini-tunnel?"

I think the question is how to survive a $3 express tunnel wash not fight fire with fire, mano-mano style.

Do you honestly believe that a mini express can achieve $9-10 average tickets?
I'm sure you're more well versed in this than I am but the operators I talked to (before I made my decision to change over from full service to express) in larger express washes routinely told me that they average between $6-7 and on slower days $5.50-6. With promotional discounts included.

Soapy your right about the 35 cars per hour being peak hours.
There are many days that I average 10-20 cars per hr. and on overcast days I'm lucky to average 6-8 cars per hr.
The difference with a long tunnel vs. a mini is on busy days I can do 70-80 cars per hr. but there are not enough of those days in a year to worry about.
We must look at the basic car wash day, not the busy days, which for me is 10-20 cars per hr. There is no doubt in my mind that a mini wash can do the same volume and with the right chemical and equipment package put out just as good product. Still worried about drip and drying space though.

Waxman you are right about the use of 1-2 people for all the reasons you stated.
What I am trying to say is even with the additional employees I believe that a mini wash is one of the only ways to compete with a large express tunnel and still hold onto most of your customers and still make money, not lose your customer base to the express tunnel.

 

[1carwash1]

As an operator in the southeast, we have witnessed and experienced a staggering decline of the SS/automatic car wash model. The effect of $3 car washes and the downturn in the economy has driven many car washes out of business. Our landscape is dotted with defunct and bankrupt car washes that are being discounted by as much as 90%. Last week alone, I watched two car washes sell at auction for $45K & 67K. Prior to that, we were offered a bank owned car wash for 40K that previously sold in the 500K range. My best advice to any SS/Automatic owner is to asses your financial strength and plan for a 75% drop in revenue.
In these times, the best car wash is a paid off car wash. To put things in perspective, were running a car wash that is bank owned; this particular wash once did around 10K/month and is now down 70% from those numbers. We know other operators who are running REO car washes who are experiencing the same thing. If you have not witnessed or experienced what is happening in the southeast, it's hard to imagine it happening to you.
As far as mini tunnels are concerned, I'm not convinced they can compete with $3 exterior tunnels; in my opinion, it's like fighting a fire with a garden hose. I personally believe the perception of easy money with little to no employees has always been the driving force behind car washes. When the first express wash opened in metro Atlanta, cars were lined up for hundreds of feet and there was talk of doing 20,000 and even 30,000 cars per month; it was an easy sell to investors. Today, our market is saturated with express washes and I highly doubt they are doing the numbers they once did. In any event, the best thing you can do is plan an exit strategy in the event that things don't pan out as planned. Good luck!

 

[robert roman]

“…. I don't understand …. scale economies…”

This refers to factors causing average cost to decrease as production output increases.

Pacific Convenience and Fuel has 500 gas/c-stores and 150 washes. Because of size, Pacific buys chemical in bulk (low price) which gives it cost advantage in production.

Consider a wash with average cost $2.90 and monthly fixed of $20,000. At 4,000 cars a month;

(4,000 * $2.90) + $20,000 = $31,600/4,000 = $7.90, cost per car. If average revenue is $9.00, pre-tax profit would be $1.10 a car.

If the wash does 5,000 cars a month;

(5,000 * $2.90) + $20,000 = $34,500/5,000 = $6.90. At $9.00, pre-tax profit is $2.10 a car.

“… i would need to charge $9-$10 to make money.”

I said average, big difference. Express with prices of $3/5/7/10 are lucky to be averaging $7.00.

Owners that average $10.00 do so by identifying what price (and other marketing strategies) will allow them to sell the most washes and then use this to establish the necessary cost base.

“…. Did he have to leave out some equipment….?”

Instead of this, think about what he put in it. View the wash as a production plant.

An in-bay uses a layout similar to building a jumbo jet. The jet remains in place on the floor and everything that is used to build it must be brought to it.

A conveyor is like automobile assembly line - the product is moved along as it is being assembled.

How much you can build (wash) depends on length and speed of chain and distance between rollers that push or pull the car along.

Unlike an in-bay, conveyor equipment is arranged according to steps necessary to clean and dry.

Some years ago, a client designed a wash with 65’ conveyor and 40’ building. So, 25’ extended from bay and the plant had to fit in 40’ building. Inside, we managed 2 pre-soak and CTA, undercarriage, tri-foam, wrap, top, and rocker brushes, high pressure, total body, wax, spot-free, tire shiner and 75-hp dryer.

This wash has done 35 cars in one hour. It produces quality equal to an 80’ conveyor.

If an in-bay is 38’, 43’ conveyor would have a 5’ outside bay. Something has to give, there is not as much room.

In this case, this means front-wheel pull instead of rear-wheel push; one CTA instead 2; 3 brushes instead of 5 and 30-hp dryer instead of 75-hp.

Would 43’ produce the same quality as one in 40’ building? No way, there is simply less horsepower available to accomplish the same amount or work over the same period of time.

Could an in-bay conversion produce the same quality as a 150’ tunnel as some folks claim? Of course not, for the same reasons stated above.
Is the in-bay, mini-tunnel conversion a new innovation?

To my best knowledge, Robert Schleeter, who sadly passed away recently, with Broadway designed a 5-touch, soft-cloth roll-over back in 1977. Broadway used components from this to also build drive-through as well as mini-conveyors.

Happy President’s Day!

 

[eaglewash]

1carwash1

The washes that you have seen drop 70-75%. Where they SS with IBA or SS only or IBA only. On the other side of town i have spoke to SS only owners who said the EE hurt them 15-25% the first year but slowly picking up b/c customers claimed the EE damaged their vehicle. I have heard the EE hurting IBA as much as 50% but have not heard as high as 75%. Thanks for your input.

 

[eaglewash]

Also you said " a mini tunnel can't compete with a EE". If i can add a mini tunnel my investment would be significantly lower the newly constructed EE. Therefore, I don't need to wash near the volume as he does. He paid around 900k for his 1 acre site that will have a 165 ft tunnel with 3 pay stations and 20 vacuums. I'm pretty sure he will be putting close to 2.5 million by the time it is all said and done.

 

[robert roman]

“As an operator in the southeast, we have witnessed and experienced a staggering decline of the SS/automatic car wash model.”

“When the first express wash opened in metro Atlanta, cars were lined up for hundreds of feet and there was talk of doing 20,000 and even 30,000 cars per month; it was an easy sell to investors.”

The decline in SS/IBA, where it has occurred, was opined by industry leaders back in 2008 and it appears that some/many SS owners didn’t take it to heart.

Atlanta Metro is an interesting case study. I’ve studied the region, done a lot of project work there and also operated car washes there.

In the 1990’s, Atlanta was a place to be. In late 1990’s, I pegged the number of washes at over 300 units not counting in-bays at gasoline sites – pretty good carwash to population density, continued growth projected, some market inefficiencies.

Then express was sold with someone else’s P & L and development got ahead of rooftops, then the poop hit the fan.

“Today, our market is saturated with express washes and I highly doubt they are doing the numbers they once did. In any event, the best thing you can do is plan an exit strategy in the event that things don't pan out as planned. Good luck!”

I agree with you the former is true.

Although an exit strategy is always an option, there are other things to consider. This requires strategy and imagination. For instance, during my last trip to Atlanta, Cactus downtown was slammed as usual.

He must be doing something right.

Here in Florida the plug has been pulled in many markets. However, like Cactus, the perennial flagship washes in my region are washing lots of cars. Many of the other guys, not so much.

Some gas/c-store operators here don’t have a clue and have taken to boarding up their wash bays and calling it quits. Why? Because most of them don’t know how to compete and some are too cheap to do what it takes to compete.

I have watched carwash in this region for over 20 years and it has been as exciting as peeling an apple and watching the core turn brown as compared to some other regions.

Besides the flagship washes and owners who put on fresh paint and several renovation projects, a large portion of the carwash fleet here is about 20 years behind the times. How can you compete effectively like this?

So, in an overbuilt, saturated and/or distressed market, you get out and take your lumps or do what is necessary to change the customer’s experience were you compete.

Arguably, if you wait for things to get better, your wait may be extraordinarily long.

 

[rph9168]

There are a lot of sides to this story but basically I think Bob makes many valid points. I have lived in Atlanta for the past 14 years and had my initial contact with the area back in the early 80's. It has evolved from a rather small car wash market with many self serves and automatics and a few tunnels to a large complex market that has been overbuilt. In some respects it is a microcosm of the industry as a whole.

There is not an automatic on the market that can compete with an EE as far as throughput. I have seen some automatics do reasonably well (show a profit) due to the fact that they offered a touch free wash and marketed the difference as opposed to a friction tunnel. There are still customers out there that will not use any friction wash. I have also seen some do reasonably well by either upgrading their equipment, dress the place up and work at marketing the wash. There are also some in the area that just did nothing to compete that are now emissions stations, hand washes or just left vacant or torn down.

Can an automatic compete with an EE? As far as doing any volume the answer is no. As far as being profitable, with some expense and marketing the answer is yes. As has been pointed out, if you are considering replacing an automatic with a short tunnel you have to weigh the cost and method of operation against the potential of increasing your volume and possibly per car average. There is no pat answer. It is very much an individual choice based on many factors most of which have been discussed in several of the posts here.

 

[Greg Pack]

SURE............easily until something breaks, a car smashes into another car or your equipment or someone neglects safety protocol and gets caught up in some moving equipment and there is no other employee on site to help.

Bad idea, IMO to have 1 employee on site to easily handle a conveyor wash.

It's done all the time down here. If the attendant needs to do leave the tunnel entrance, they just put out a sign that says "please wait for attendant". It works...

 

[Greg Pack]

I'm in Birmingham, Alabama and the SS/IBA industry has been pretty much decimated here. Most "average" operators have reported declines of 50% due to the economy and the large number of expresses in place getting a slice of the pie. Washes I used to own are down 80% from the highs in the early 2000s. At my main wash, I am down about 20% from my highs in 2007. To top it off, they just broke ground on a new express about five miles away. Fortunately, because of the traffic in my area it is a 10-20 minute drive one way.

1carwash1 has some good points. I can't wait until my wash is paid off. Owners with long term amortizations have really painted themselves in the corner. The old "cash flow is king" model of the 20-30 yr amortizations dies when real estate values collapse. Many of them owe more than the wash is worth. Now they own an unprofitable wash and can't find a buyer that will pay the mortgage balance.

I will add that i don't see a mini tunnel competing head-to-head (like across the street) with a full blown express. The underdog will lose if they are trying to offer the exact same format. But it may give the new investor looking to build pause if you have one in a market that seems to be adequately serving the demand. It may also be worth considering if you're far enough away from other expresses to have a good shot and doing some higher numbers as a SS/IBA. You won't be doing 1000 cars a day but I have heard of some operators doing 300 plus on peak days. The added throughput may make the lines disappear that get the new investor's attention.

 

[Waxman]

It's done all the time down here. If the attendant needs to do leave the tunnel entrance, they just put out a sign that says "please wait for attendant". It works...

http://secure.gvmg.com/carwash/articleprint.asp?print=1&IndexID=6637196

Just because something is done doesn't mean it is recommended. People do lots of un-wise things all the time. That argument doesn't hold water for me.

 

[1carwash1]

Sometimes you need to walk a mile in someones Else's shoes to understand the full impact of what happened in the southeast. The problem is that most people who lost their assets on the court house steps are probably not partaking in forums elaborating on their losses; therefore, it's hard to ascertain, first hand, their anguish and grief. My intent was not to spread gloom and doom, but rather, tell it the way I see it. In my opinion, a SS/automatic car wash is a liability, not an investment.

The only ray of hope I see is the pay-one-price concept unfolding in Florida. However, I have never seen one first hand so I cannot lend an opinion. Perhaps someone else on this forum can chime in on this concept.