Car Washes in Middle Tennessee in Crisis

[wardaddy]

Last year in December 2007, I wrote a thread here about the weather. This winter is just as bad, maybe worse. Clouds, rain, clouds rain.....80-90%

I know of half dozen operators in Nashville area who can't get chems or parts....accounts frozen.

Summer was lackluster due to gas prices I'd reckon but August was ok. fall sucked. November ...worst month in our history. December barely better.

revenues across the board.....tunnels, in bays and SS are all down at least 20-30% for the year 2008 over year end 2007

i also know several wash operators stalled in development plans.....exapnsions

it's the worst anyone claims they have ever seen since anyone can recall car washes starting to be around in numbers.....late 60s

i expect plenty to go bust with their banks, the only survivors will be those with little or no debt or those with other revenue streams or family cash.

it's not pretty and all this sorryassed manufacturer driven goofball numbers express wash on every corner logic has only made it worse

i welcome anyone to come visit Murfreesboro TN just to see how absolutely idiotic car wash operators and manufacturers can be give enough rope

gonna be a lot of buying opportunities coming up I'd reckon.

Banks are scared as hell of course unless one is very solvent with deep pockets

is it this bad everywhere else?

Hey Messiah Barry, where's our bailout dude?


one 80 foot Washtech tunnel...washes great

12 IBAs

34 SS bays

 

[Earl Weiss]

2008 was bad for Chicagoland washing. Perfect storm of $4.00+ gas and precipitation. 2009 seems like it is either snowing, just stopped snowing, is about to snow and / or temps are in single digits, or colder.

 

[rph9168]

The Southeast is also being severely affected by the weather and the $3 curse. Seems like we haven't had a weekend where both days are clear for many months. The only good sign is that when the weather is decent the washes seem to do okay but that might be due to the lack of decent weather. I am also seeing some of the $3 guys going up in price which I am sure is at least partially due to the drop in volume due to the weather.

 

[Greg Pack]

2008 was a challenging year for many in my area (southeast). In my metro area one wash has been foreclosed, another is being sold short by the bank for less than half of it's original price. I've heard rumors that another operator has quit making bank payments on four washes.

I'm hoping that lower gas prices and tighter credit will help. Maybe, if people can't buy a bunch of big ticket items on credit they will have a little more pocket money. And maybe, just maybe, some of that money will find its' way into our vaults. Just a theory there......

The wash is failrly busy today! Here's to a fresh start of the new year.

 

[Waxman]

CF

I like your attitude.

I'm happy I built a very modest 2/1 wash for my first carwash venture.

If I had built the wash I originally intended to build instead of what I finally chose, I'd be in trouble now.

My wash was pretty busy today, despite a high of 18 degrees F. Even SS bays; crazy!

 

[Bubbles Galore]

Mine too! I got to the wash tonight around 5 and it had been snowing on and off most of the afternoon, but I still had 5 wet bays! I was amazed, the wind chill was -23 when I got there. It was unbelievable, but I am not complaining, I am thanking the big man upstairs. I will take every quarter they throw my way.

 

[wardaddy]

Busy today here too in Nashville at 28 degree high.

Gonna be single digits or near zero next few nights and so that presents issues for our tunnels and far side SS bays

lots anti-freeze, no freeze CSI soap, hot water wash down pump with anti-freeze and the diesel torpedo heater fired up and aimed as well as overhead heating going...we are not as prepared as northern operators on the tunnel, it's not common to be this cold to justify auto doors, buffer doors and 100 foot of radiant heater

We are getting clobbered here not doubt about it but 80% is at least for now two horrible winters-springs in a row and the gas summer which allowed no recuperation.

When the weather is good now folks are washing like all hell.

Still, the bleeding here ain't pretty and I'd wager half our operators go broke or get restructured before it's over unless we have perfect snow Feb-March...

we are getting so much of this cloudy and cold all day and then clear at night over and over crap....just like last winter

 

[JJJakubowski]

WarDaddy:

Are you guys in Tennessee actually keeping many SS bays open when the temp's are well below freezing?!! Floor heat is rare down your way. But I do remember seeing (about 10 years ago) a few SS wand wash bays in Nashville with natural gas, overhead radiant heaters. Are many SS operators now trying to remain open during these freezes ... and rolling the dice on the ol' slip 'n fall game?

BTW --- global COOLING since '98, oceans COOLING for the last 6 years or so, expanding ice shelf, growing polar bear population, record cold and snow, and some reputable climatologists now actually predicting the return of the 100,000 year ice age cycle. Geeez, if man made climate change was not a myth, the Government should mandate a perpetually idling SUV (or two) in every driveway.

JJJ/SSCWN
___________________
The Poster Formerly Known

 

[Waxman]

If Al Gore finds out, you're toast, JJJ!

 

[wardaddy]

yes...very rare in Nashville to see self serve bays without floor and apron heat and anti-freeze and weeps etc

older rinky dink washes maybe

 

[Patrick H. Crowe]

I know nothing about car washes in Tennessee. For what it's worth I can report on the washes in the Kansas City area - - which includes Johnson County Kansas and Wyandotte County, Kansas.

The situation is GRIM at best. Many are closed down, abandoned, bankrupt and/or being foreclosed. Moreover there are many on the market but few are selling. It's very clear, any owner who bought in the last 4 years is probably upside down in the wash - - especially true if they went with SBA help - - too little down - - too long on loan terms - - so much wrong there's hardly space to report it.

I've looked at some of the ones in the foreclosure process. Here's an example. 1826 Minnesota Avenue, Kansas City, KS. Closed months ago, abandoned, now vandalized. It was doung 118K a year when the SBA helped the owner buy it. Had they read The Car Wash Appraisal Handbook (I wrote it) or known S from S about washes, the deal would never have closed, EVER!!!! How do I know? I used to own it. I sold it to my partner a tad below FMV. He called me for advice when the now bankrupt owner made the offer. My advice was to simply not appear too happy at the offer - - but sell FOR SURE. He did.

So the situation here is GRIM. Supply of washes for sale far exceeds buyers available to buy them. As the foreclosure process drags on, months after utilities are off, pipes are freezing and bursting. But there's the good news.

Opportunity knocks. The KCKS wash, and a second one, is being foreclosed by a Wells Fargo Bank in Minnesota. The process drags on. I've talked to the banker. It will eventually sell, probably at auction, probably for 10-15% of what is owed on it. An astute buyer, owner of other washes, powder kept dry, will pick it up, turn it around and make a ton. That's about how I got it.

Patrick H. Crowe

 

[Bubbles Galore]

Hindsight is 20/20

Your foresight must be 20/20

Can you tell me what I should purchase next that would generate the most revenue at my wash?

 

[Mel(NC)]

I would post something on this thread but I can't take my eyes off of Wardaddy's avatar long enough to read it.

 

[Bubbles Galore]

For the few sentences I wrote, it took me about 25 minutes for that exact reason.

 

[MEP001]

Too bad they're fake.

 

[Patrick H. Crowe]

Dear Bubbles Galore:

While I can't tell you what to purchase next and can tell you where I made the best investments in this industry (never mind stocks, christmas trees, and other gambles). Here goes and here's how.

I bought older, neglected, run down washes. I knew exactly how to determine their fair market value and did so. They are not worth much and there a few buyers. The best deal I ever did had been on the market over a year and six banks refused to loan me money despite a subsatantial net worth and decades in the bidnez.

Of course I checked the competition and discounted the BS reasons many potential buyers gave, e.g. it's in the hood, get a flack jacket and so on. I then rehabbed them using much sweat equity. In my Car Wask Appraisal Handbook I give a very detailed, actual example and it reports on the history of the following 7 years.

I'll note here I got washes three ways: 1. I built two new from the ground up. 2. I bought one operational wash which was doing well. 3. I bought 5 washes in need of serious rehab. I was patient. Most of the washes I looked at were priced way out of line - - many owners would seemingly rather go belly up than sell theor p of s washes for what they are REALLY worth. Walk away!

The rehabs were hands down winners in terms of making tons of money. In part this was because I finally caught on, after many years, that PROMOTION was essential and as my OPRAH for President promo proved a person can attract publicity and very, very, low cost. One wash showed a ten fold increase in gross income the first year.

So, if you have the know how and tolerance for risk - - though I never lost money on a single rehab - - then that's where to go IMO.

Patrick H. Crowe

 

[rph9168]

Pat, what years did you manage those turn arounds?

Seems to me that the environment in today's world makes it much more difficult. Costs of rehabs are going up due to increases in parts and chemicals and the poor economic conditions. I knew several people in the past who only did turn arounds and did very well but I don't think it would be as profitable or easy as it was in the past for several reasons. First of all, money is tight and it requires a substantial down to buy a wash. Banks are not very eager to finance a wash project even with very qualified buyers. As previously mentioned, costs for rehabbing are high and going higher. Volumes are not going up and in many areas the market has been saturated. Finally, if you try to flip the wash, there are not a great deal of buyers in the market.

No one knows how long this situation will continue. We all have our opinions. I congratulate you on your past successes but I think in the context of today's world things would be much different.

 

[wardaddy]

Too bad they're fake.

Keeley Hazell's breast is anything but fake hoss.


http://images.google.com/images?as_...letype=&imgc=&as_sitesearch=&safe=off&as_st=y

 

[Patrick H. Crowe]

rph9168:

I agree with most of what you wrote. It merits and deserves context.

Is your essential point that I must have done this years ago and that NOW things are different, costs higher, times tougher and so on. Here comes the context.

The place I wrote about in detail in the Car Wah Appraisal Handbook was done about a decade ago. That allows me to provide long term data on what has happened. Here's the context.

When I bought 1826 Minnesota Ave it had no vending machines, no bill changer. The in-bay options were soap/rinse off. Good news was that the owner had had bay floor heat (Rayco) put in about 4-6 year earlier and it still worked well.

Of course there were no credit card acceptors, there was no video viewing from remote locations. Here's my simple point: I could see the place was out of date. I could accurately estimate what had to be done NOW and the cost.

I tried loans from six banks - - all in the immediate area. One who really frosted me. Some MBA gal who had me listen to many minutes of BS - - then offered to loan me about 25% of what I had asked for. Thus if I sued under the Community Redevelopmenb\t Act, she had done CYA - - i.e. we DID NOT deny the loan.

So here's my overarching point. Many people gave me the rationalizations you just did but I saw opportunity. That's the exact situation today provided the potential buyer can determine the Fair Market Value, has the financial strength and technical expertize to know what to and can accept reasonable risks.

Lest I make it sound over simplified, I looked at every single wash (that would be scores of them) on the market in this metrople. I bought very few.

Patrick H. Crowe

 

[wardaddy]

Pat, what years did you manage those turn arounds?



No one knows how long this situation will continue. We all have our opinions. I congratulate you on your past successes but I think in the context of today's world things would be much different.

Pat is correct that in this overbuilt, poor economy and in my case more than anything else....bad weather patterns...scenario that opportunities will arise.

Course that ain't gonna help folks going broke now. I used to think that a loan to value of 50% or monthly debt servicing at no more than a third of expenses was pretty conservative model to stick by

in this climate right now, that will just barely get you by

in good times you might could pay more for a wash ...it's hard to tell...you can pay more for a good wash than a bad one multiples wise

this is the bottom line....right now at least in the Southeast.....it makes no sense at all to build from scratch a new wash.....combo or tunnel in a metro area on good dirt..it's just too expensive for projected revenue

1.5Million and up to 3.5M to maybe gross 200-600K per year in sales

and then after debt and operating expensing ain't much left

the only option right now is buy broke washes or redos with good restrictive zoning which will protect you from express idiots

I'm in this seriously and I plan to sell hard properties and buy more washes...the good opportunities Pat mentioned......for mostly cash to get my LTV down weather and Obama/Barney Frank/Carol Browner proof

this are tuff times...some self inflicted....but there are opportunities if one can survive

I for one blame the weather more than gas or economy....overbuilding is a big killer here too.

Car washes go thru so many phases and it all rides on the owner...prosperous, down, rescued, foreclosed, rebuilt, knocked down for a Hampton Inn, etc

but owning car washes strictly on cash ain't really all that great either.