2009 In Review – A record breaking year

[Randy]

We set a few records in 2009 I’d like to share with everyone.

We called the police 18 times in 2009. We called them for Burglary, Theft, Theft of services, Vandalism, Malicious mischief. We lost 14 cameras in 2009, they bring there own ladder at night and pulled them off the ceiling.

A record 60% increase in water rates, the city did this to force everyone to conserve water.

A 4% increase in property taxes.

.7% increase in sales tax that we have to collect on every sale

Gross revenue down a record 32%. With unemployment at over 9.3% and climbing daily, the general public as less discretionary funds for the extras, such as washing the car. The wash weather here has been excellent in 2009, the best weather in years, so we can’t blame the weather.

2 S/S car washes have gone out of business in the last 3 months, both have been for sale for the last 2 years. Another 3 S/S are on the fence they could go any day.

2005 was our last good year. We have seen a slow downward spiral in the last 4 years with 2009 setting the record as being the worse. I hope 2010 is better than the last 4 years or we’ll be pulling the plug on the car wash and put something else in its place. The land has gotten to valuable to be used as a car wash. I think the S/S wash business is going to go the same way as the Laundromat or Bowling Alley.

 

[motefam]

I agree. 2005 may be the last good year for awhile. There may still be some opportunities if you buy a distressed wash, rehab, and have a tax angle to increase your return etc.... Even then you will have to minimize leverage to prepare for unexpected government intrusion (e.g. property tax hikes, water restrictions) that will damage cash flow. In Indiana the surging property taxes and higher utility prices are choking the SS/IBA business. Tunnel washes in the perfect location seem to be doing well (Mike's Carwash). It's time to try to pay down debt and, as you said, try some other business.

 

[robert roman]

One of the things I discovered over the last two years is that the recession often seems to have little to do with most carwashes that go into default.

For example, I’ve analyzed a number self-service locations where the owners are upside down; in business 20 plus years and still owe the bank over $500,000 at + 12% interest plus several years of property taxes are owed. You don’t have to be a forensic accountant to figure out these folks created their own mess.

Overbuilding is another cause for distressed properties. I have over a dozen of instances where a distressed carwash property has as many as 18 competing carwash sites within a 3-mile radius. Most of these washes were built after 2006. Quite frankly, an owner who decided to build in an efficient market is now getting what they deserve.

Yes, a recession causes people to cut back on spending but it also forces them to consider alternatives. I know dozens of markets where a substantial portion of the self-service facilities are listed for sale and yet new washes are being built. What is being built; express exterior. Why? Because express offers the motorist a better value proposition as compared to a self-service carwash. DIY and DIFM aside, common experience has shown that it is difficult for a self-service carwash to compete with the bargain that a well run express exterior presents. This is especially so for the upcoming generation of self-service users.

 

[rph9168]

Robert has brought out some very important points on the problem. I would add that in many cases. operators have not kept their washes up to date with newer washes that are being built and in some cases have let normal maintenance and repairs slip.

I believe that express exteriors have had a greater effect on IBA's more so than self service washes. There are several well maintained self service washes in my area that are doing okay considering the terrible weather and economy but on the other hand, there have been several IBA's that have since closed or changed hands several times.

As far as building washes when there are some for sale in the area I think that may have to do with several points. Some people are just plain stupid when it comes to investing in a wash and are easily led by distributors wanting to make a sale rather than build a good reputation. The asking prices for those washes are often not realistic. If they are owned by banks they often are reluctant to take a big hit to sell them especially when in some cases they are being run on contract while on the block. Many of those washes also have come into disrepair or need some major upgrades to be competitve.

We all know the problem will take some time to be resolved. The smart operators will still be in the game.

 

[motefam]

Many SS/IBAs in small towns away from Express Ext. are still doing o.k. (except in overbuilt markets)....

In bigger markets with EE competition, the neighborhood IBA/SS could see a renewal if someone develops a truly good, fast friction machine that can fit into an old IBA bay. That would bring the neighborhood folks back to the convenient location.

I'd like a machine that will do an EE-quality friction wash-and-dry at 30 cph in a 40-foot bay, that can run unattended at night and on slow days. So I could retrofit a double-IBA setup to do up to 60 CPH. Lower utility and chemical costs might help offset the investment.

 

[smokun]

Inbay express

You may find this video of an INBAY EXPRESS interesting because it enables an inbay unit to be retrofitted with fixed arches and claims an increased throughput of 35-40%.

http://www.safetveyr.com/ie.html

It eliminates the delay areas and seems to maintain the inbay's ability to really clean a vehicle without all the lost time. It appears like an easy retrofit.

-Steve

 

[MEP001]

I believe that express exteriors have had a greater effect on IBA's more so than self service washes. There are several well maintained self service washes in my area that are doing okay considering the terrible weather and economy but on the other hand, there have been several IBA's that have since closed or changed hands several times.

I believe this completely. Since a new EE opened near us, the auto income has dropped 50%, but the self-serve is actually up. Neither the weather nor the economy can have accounted for the SS increase.

 

[Greg Pack]

Hey guys 2009 ain't over yet, there's still time for a turnaround!

 

[Waxman]

Hey guys 2009 ain't over yet, there's still time for a turnaround!

sounds like you and i are listening to the same self help cds!

 

[robert roman]

IBA's in any town need uniqueness of model in terms of competitive advantage. Convenience of a neighborhood location is a given.

Motefam identified the keys; in-bays need better quality and greater speed.

This has been a problem for OEM's because of layout pattern (job-in-place) and high incremental cost of providing additional capacity.

A conveyor has “stored-up” capacity but an in-bay has no such extra margin of speed to “catch up” to the random arrival of customers during busy periods. Catching up in capacity and waiting time usually means doubling of the cost.

Lower operating expenses and no attendant might help. However the key is offering all the bells and whistles, free vacuums and committing money and time to market the business. Unfortunately, some owners seem unfamiliar with or are unwilling to do this.

As for in-bay express, it may be portrayed as feasible because it makes money but it is no guarantee the project will be viable or financeable. Moreover, as with a higher volume conveyor, it would be advisable to have an attendant to help ensure an effective and safe operation.

Until OEM's find the Holy Grail, perhaps the best solution for self-service owners who are looking for better quality and speed is to consider a mini-tunnel.

Today, you can pull the technology “off the shelf” and create an affordable and powerful conveyor within the confines of a 40’ long structure.

Self-service owners who are considering upgrades should use 3 measures to evalue decisions; net profit (throughput - expenses, where throughout is selling price - cost of goods); ROI (throughput - expense divided by investment); and productivity (throughput divided by investment).

With these measures, you can make decisions by examining the effects of those decisions on overall throughput, investment and operating expense. A decision that results in increasing throughput or decreasing investment or operating expense will usually be a good decision.

 

[Waxman]

I hear alot of mention of bay length and if 40' is long enough for a powerful conveyor, what about width requirements?

 

[Washmee]

I hear alot of mention of bay length and if 40' is long enough for a powerful conveyor, what about width requirements?

Mine is 16 feet. Any less and you would have a problem.

 

[Bubbles Galore]

I think a small tunnel would be a good addition to my site, but the additional construction modifications that would need to be done to my building would push out the ROI so far that I can't justify it.

 

[Waxman]

what would need modifying besides everything i mean?

 

[Bubbles Galore]

Are you asking that to me?

 

[smokun]

Inbay Express Hybrid

Viewing the video provides some good ideas for those who wish to increase volume processing. The narrator makes some good points.

The company has a surface conveyor as well as a trench mounted unit.

The Inbay Express with the flat-belt conveyor increases the throughput and decreases the cycle time due to a fixed arch at the entry. The conveyor moves the vehicle so the Inbay unit can skip a few passes. Same can be true if a fixed air dryer is utilized. The lure of the moving-floor conveyor instead of steel guide rails will create a competitive edge, too.

-Steve

 

[Washmee]

Viewing the video provides some good ideas for those who wish to increase volume processing. The narrator makes some good points.

The company has a surface conveyor as well as a trench mounted unit.

The Inbay Express with the flat-belt conveyor increases the throughput and decreases the cycle time due to a fixed arch at the entry. The conveyor moves the vehicle so the Inbay unit can skip a few passes. Same can be true if a fixed air dryer is utilized. The lure of the moving-floor conveyor instead of steel guide rails will create a competitive edge, too.

-Steve

Thanks Steve!

 

[Greg Pack]

Just reconciled December's bank statement. Down 25% from 2007 highs.

Utilities up

property taxes up


Also had to deal with two acts of theft/damage. One forced me to replace all four Carolina Pride Doors- 6K in damages and out of business in SS for a several weeks waiting on replacement door custom made to fit Carolina pride hulls from another vendor. This wash is in a very good community where criminal acts such as this are virtually unheard of. Police say they are creeping into the area because so many people here have their guard down.

Gonna have to get lean and mean this year.......

 

[cebo]

I guess all of us with IBA's should pack up and go home according to the last 36 months of conventional wisdom over express tunnels. They may work fine in larger markets, but I don't see how they can do it markets like mine (9K county seat and 40 K county population - in the southeast) I have a 4 & 2. compete against a 40 or 50 foot tunnel and 2 four bays. I know all these guys and can tell you a nice 1-1.5m express across the street from walmart can't make the payment even if they get more than 50 percent of all the business, which they won't.

It seems 1/2 the washes in the metro area 40 miles north of me are either for sale or going under, including the expresses. The 80's all over. This is one good thing about the recession, the bankers are not as dumb (or maybe they just got scared) as they were. Maybe that will stop the overbuiliding. My good friend GP finally believes me about the bankers LOL. One economic principle is - Excess profits breed ruinious competition. I believe thats where we are. Weather, recession, and every a$$hole in the county opening up a 7 dollar hand wash has made it tough for me, but thank the Lord for a low payment. Dilligent and efficient operators will make it. Just be ready for the bad times, but I'm jumping up and down for 60's and sun this week.

Sorry for the rant, but I have been hearing of the demise of IBA's as long as I've been hearing of the demise of real estate appraisers (between 10 and 15 years) and I'm still here.

 

[Reds]

Sorry for the rant, but I have been hearing of the demise of IBA's as long as I've been hearing of the demise of real estate appraisers (between 10 and 15 years) and I'm still here.

I have a 2+2 that I opened in 2005 and have had positive sales every year. Have I been affected by the recession, lack of jobs, and weather? Absolutely. But the IBA is not dead. There are markets that suit IBA's, not EE, and visa versa. Proper site selection, good operations, sensible cost controls, and good financial health are all key elements for any retail business.