Expense Ratio

[PWT3TIME]

Currently looking at some existing washes. I see on here people use 50% bench mark for expense to income ratio.

Is there a resource to find what range actual expense categories should be? I am sure we can shave down the expenses, just seems like shaving 25% to 39% may be optimistic. I understand we have no control over, RE tax, utilities, sales tax. Looking for advice on where we can expect to find savings and make this a good investment.

Thank you for your input.

Location 1:
3 bay IBA
2 Bay SS
high gross sales
expense ratio - total expenses (not including principle, interest or depreciation) = 77%

Location 2:
2 bay IBA
3 bay SS
average to high gross sales
Expense ratio = total expenses (not including principle, interest or depreciation) = 89%

Location 3:
2 bay IBA
3 bay SS
average to low gross sales
Expense ratio = 60%
I think this is a function of volume. If we increase the volume, only expenses that go up are chemical(minor), salt & water. The increase of volume will decrease ratio. This site could easily get close to the 50% range.

 

[MC3033]

I would just note that (1) a lot of other expenses go up with volume (ie. Repairs). (2) the biggest ways to get expenses down significantly (unless the business is being poorly run) include doing a lot of work yourself to lower any labor/contracted costs or by making a capital investment to save on cogs.

The other approach would be making further investment into quality and increase revenue through price/volume increase. This will help with your ratio.

 

[Rfreeman]

I dont think there is an actual published resource. Hell even the survey data that SS car wash news would put out to me us questionable. From this forum I would say approx 40 to 50% expense ratio BUT varies with location. Additionally, everything is getting more expensive and will continue to do so therefore if the current owners are not raising prices or haven't raised their price that ratio is going to get higher and higher

 

[soapy]

The ICA has some old printed SS bay reports that give that. I would subscribe to the industry magazines like Self Service Carwash News, AUto laundry News and others. Most do yearly volunteer surveys that will give you some idea but remember most of the ones who volunteer info are not always completely honest.