Corporate Express Exteriors are OUT of Their Ever Loving Minds!

[OurTown]

They have burned the rulebook. In the next city over three more are going in. They will then have five express exterior washes in a 43,000 population city with slow-ish growth. There will be four on the same 21,000 ADT road within 3.5 miles and two will be almost next to each other. (just a bank branch separating them) Those two will be in the older lower income part of town that borders an even lower income city. There are very few new homes or apartments being built nearby nor any commercial growth. To me it is just bizarre. Currently there is one express exterior operating in a 6 mile radius from our wash but there will be 6 of them. The good news is most are not really close by and all seem to be in the 5-6 miles radius. I don't see how they will all survive. So is the new rule for a viable EE location to have 8,500 population and 5,000 ADT? I'm just dividing up what they will share.

 

[Roz]

You have different business interests at play here. The franchises and large chains just want to open more locations to say they are expanding even if it makes little to no business sense. Not looking at it the way an owner/operator would view the pie. Happening in many towns. May change as the higher interest rates start to cut into profits. We shall see.

 

[Islandwash]

The hard part is earning a living while waiting for sanity to return . The only part of the conveyor segment which is sort of safe is the traditional Full service model. They still do well but I did that for 20 plus years and have no desire to return to it.

 

[soonermajic]

They have burned the rulebook. In the next city over three more are going in. They will then have five express exterior washes in a 43,000 population city with slow-ish growth. There will be four on the same 21,000 ADT road within 3.5 miles and two will be almost next to each other. (just a bank branch separating them) Those two will be in the older lower income part of town that borders an even lower income city. There are very few new homes or apartments being built nearby nor any commercial growth. To me it is just bizarre. Currently there is one express exterior operating in a 6 mile radius from our wash but there will be 6 of them. The good news is most are not really close by and all seem to be in the 5-6 miles radius. I don't see how they will all survive. So is the new rule for a viable EE location to have 8,500 population and 5,000 ADT? I'm just dividing up what they will share.

Keep going.... They're now poppin up in VERY rural towns of 4,000!!!!!

 

[Islandwash]

My town of 30,000 has 3 Express carwashes all within a half to 3/4 mile of each other. It is fun. The retail carwash economy in the Northeast seems to be slowing down. Gas prices, economy

 

[washnshine]

The retail carwash economy in the Northeast seems to be slowing down. Gas prices, economy

Not in upstate NY!

 

[OurTown]

Keep going.... They're now poppin up in VERY rural towns of 4,000!!!!!

Surely that town services a much larger area being rural. Even with that I don't see how they can survive.

 

[washnshine]

Keep going.... They're now poppin up in VERY rural towns of 4,000!!!!!

That doesn’t surprise me. With over 75 or 100 locations, these companies can build some burners in small places that don’t necessarily take in what they are in the larger cities and towns, but they can gobble up enough of the market share in smaller places to make the cumulative effect worth it.

 

[MsR]

My nephew built a tunnel. Within a year, he had been approached by both Mister and Quick Quack with offers to buy him out. He turned them both down and they built as close to him as possible. He initially lost some members to them because they were cheaper, most of those returned because they don't get cars clean. Several other chains came along over the next few years, one of them finally offered enough, he couldn't say no. After taking over, they ran for three weeks with no soap because they were changing chemicals and had to wait for their chemical guy to get around to switching it over. They stopped prepping cars, if equipment breaks down, the manager is not allowed to fix it, he has to report it and wait, usually weeks, for a maintenance tech to come. Most of his existing customers have dropped their memberships. When you drive by now, there is never more than one or two cars there. It makes no sense they would pay that much to buy him out and then destroy the business.

I agree. Been thru Quick Quack and wasn't impressed at how my car appeared after paying for their top of the line wash

 

[Greg Pack]

Surely that town services a much larger area being rural. Even with that I don't see how they can survive.

When you can build a wash and sell it to an investor for 2 million more than it cost to build it, you made your money before you opened it. All you need to do is cash flow and keep the building boom going. Higher interest rates and better opportunities for investors are the only thing I can see slowing it down. I admit, I regret not jumping in. Some people have made a lot of money in a short period of time.

 

[Roz]

True. But now seeing ALOT of carwash properties listed for sale as a real estate play. Offering a 5 or 6 CAP with current interest rates just does not make $en$e as an investor.

When rates were near zero sure but how many of those loans are variable rate which will be reset soon? If a mass reset of variable loans happens in the industry you may see thjngs cool down with EEs.

 

[OurTown]

True. But now seeing ALOT of carwash properties listed for sale as a real estate play. Offering a 5 or 6 CAP with current interest rates just does not make $en$e as an investor.

I notice that too and can't believe anyone would buy at those cap rates.

 

[Roz]

Totally different mentality and perspective. Wall Street people just look at numbers with very little hands on experience. They value leverage over anything else as that makes the return on the money leaving their bank account look very good. They can get a much higher CAP rate on the money they actually invest since 80% is probably a fixed bank loan.

you do those type of leveraged deals enough and you can make better than average returns. All is good until a variable loan costs too much. If loan is fixed you do deals all day long until the return on your capital is at zero.

from their perspective they are laughing all the way to the bank.

Sometimes I wonder if we are the fools since we have to get up each morning and do some physical work to keep the cleaning magic happening for our customers.

 

[soonermajic]

When you can build a wash and sell it to an investor for 2 million more than it cost to build it, you made your money before you opened it. All you need to do is cash flow and keep the building boom going. Higher interest rates and better opportunities for investors are the only thing I can see slowing it down. I admit, I regret not jumping in. Some people have made a lot of money in a short period of time.

Not really at all.Aso, 70 miles away, opening a tunnel in my Large town of 5400!! They're the WalMart of the Wash industry!!

 

[Islandwash]

Can a self service with a touch free In bay compete ? Does adding a second Friction Automatic help?

 

[Wash4Life]

Can a self service with a touch free In bay compete ? Does adding a second Friction Automatic help?

Yes. In business, we you have three choices with competition: Be better than, less than or different. Less than should never be an option. In your case, you have the different than option. We have touch-frees and self-serves surrounded by express exteriors and did not see a hit.

As far adding what I assume to be an in-bay automatic, the question is can you be better than?

 

[Islandwash]

I have a good, fairly new Touch Free In Bay automatic, but adding a second In Bay which is friction would expand the customer base.

 

[MEP001]

Wall Street people just look at numbers with very little hands

 

[carwashlasvegas]

There's now one coming to town and of course the city bent the rules for them. After finding this out I wanted to do some research on why they are choosing to build here in this half baked location. 6,000 ADT on the access road (land locked and need permission from neighbor for access) but will have some visibility on 13,000 ADT road. Not anywhere near what I would consider high density population. Right next to a well established decent 4 bay SS/2 bay auto. We did some research on their other new locations and some are worse. This company is saying that they are going to triple the amount of locations by the end of next year. I'm not talking about going from three locations to nine, I'm talking adding over 30 locations and they are targeting Ohio. After driving around Eastern Ohio Saturday looking at four sites they are building, bought or announced building I have come to the the conclusion that they have gone mad. Most of these are below average household income for Ohio and one is in the bottom 10. Most have stable population with some having very minor growth in the last 10 years but one has gone down in population by about 4%. These are all under 25,000 population cities and three already have EEs in town. One has 15,000 population and there are two going in. Most of these locations are about 1.5 acres and are being bought for over $1,000,000. (one was $1.5 mil) I talked to a car wash appraiser last week and he said no EEs are costing under $4.5 mil now. A car wash mortgage broker about two months ago said the exact same thing. Here are my questions:

Does the rule of washing 100 cars per day per million dollars of site investment still apply? Do the memberships majorly change this rule? If the rule still stands then I don't see how a town of 15,000 will wash 900 cars per day with two new express exterior washes. Even if this rural town services a population of twice that amount how many cars are traveling there? One of the locations has 6,000-ish ADT and 8,500 on the main road that I'm not sure will be visible from.

Do they think they will vastly increase the car wash market in those little cities?

Are these things a type of Ponzi scheme where they are snowing investors into thinking there is major profit in these locations?

Do they think they can be the best and run the other EEs out of town?

Why are they still going crazy with building when the economy is jacked up and probably going down the tubes?

I heard they are buying new locations that others have put the effort into them (site selection, dealing with the city, getting it built) for sometimes double the amount that was involved in building it. Also along those lines I see where they sell the land and building off to a real estate investor after it is built and lease it back. How do these cashflow?

I don't think this is quite like the early 2000s when they overbuilt the SS/In-Bay washes around here because the vast majority of those were individuals and not big corporate.

One good thing about at least one of these corporate washes is that the retail wash prices are bonkers for around here (I think it is part of their strategy to sell memberships) so that might help the existing washes compete.



Feed me some thoughts.....

I can understand your concerns regarding the new car wash facility coming to your town. It is important to evaluate the feasibility of a new car wash location before investing in it, especially in terms of its location and potential customer base.

Regarding the rule of washing 100 cars per day per million dollars of site investment, this rule can vary based on factors such as location, competition, and market demand. Memberships can certainly affect this rule, as they can increase the number of cars washed per day and provide a steady revenue stream.

It is possible that the company believes it can increase the car wash market in these smaller cities, either through aggressive marketing or by offering a unique selling proposition. However, it is important to consider whether there is sufficient demand for car wash services in these areas and whether the company can effectively compete with existing car wash facilities.

It is difficult to say whether the company's expansion strategy is a type of Ponzi scheme or whether they are truly confident in their ability to succeed in these smaller markets. It is possible that they believe they can be the best and run other car wash facilities out of town, but this would require a significant investment in marketing, branding, and customer experience.

It is unclear why the company is continuing to expand rapidly in the midst of an uncertain economic climate. However, it is possible that they see this as an opportunity to gain a foothold in new markets and build a strong brand presence.

Regarding the sale and leaseback of car wash facilities, this can be a way for companies to generate cash flow while still retaining control over the property. However, it is important to evaluate the terms of these agreements and ensure that they are financially feasible for the company.

In terms of competition with existing car wash facilities, it is possible that the new corporate wash's high prices could be part of their strategy to sell memberships and differentiate themselves from existing facilities. However, it remains to be seen whether this strategy will be effective in the long run.

Overall, it is important to carefully evaluate the feasibility of a new car wash location before investing in it, especially in terms of its location, potential customer base, and competition.

 

[eckert16]

NE Ohio is limiting new carwash locations:

once such restriction:
would cap the number of car washes at one for every 12,000 residents with an additional limit that they be at least 1,000 feet away from another

www.clevescene.com/news/car-washes-are-opening-at-a-feverish-clip-across-northeast-ohio-some-suburbs-have-had-enough-41821018?fbclid=IwAR01KVGQMLCSbV-jpWD8U9ClAtayhVgJ1GbM671VAE4_nv0VYUFvfKLFxk4