express wash investor

[texascanchaser]

Hi, I am new to this forum. I am looking at investing in an exsisting express wash in the southeast. The numbers were down in 2008 about 25%. I think most were but the numbers are off a little more in 2009. The explanation is the weather patterns for jan- mar. which makes sense I think it rained almost every weekend from mid Feb to mid April. The numbers did look better in April. Does anyone have any thoughts on this? Also is there a current earnings multiple to determine a fair price. Thanks for any insight.

 

[smokun]

Look... Before You Leap!

Although a bit off subject, if you're considering the purchase of an existing (or even new) standalone express exterior, let this word to the wise offer sufficient warning.

Be sure that the site layout allows you can ADD an express after-care component if and when the need arises. Standalone express exterior carwashes are quite vulnerable to competition that also offers an express carwash... as well as the optional hands-on after-care services found in the flex-serve operating platform.

Savvy express exterior operators are discreetly adding the express after-care upgrade in marketplaces where over-development of express operations have forced many to close... or do poorly enough to bleed green $$$.

If you're curious as to whether the site you're considering is able to be upgraded or not, we'd be happy to review your site plan and let you know... for FREE. Consider it a professional courtesy from someone who wants to see fewer carwash investors sold a pig in a poke. It's worse than swine flu!

Carwashing isn't rocket science, so if you snooze, you may also lose.


-Steve

 

[Chiefs]

The express exterior model has worked better in the northeast and midwest due to the presence winter washing washing conditions. To be as successful in the southeast with this format, I believe a site should have 50, 75 or even 100% more traffic going by than one in the midwest to be successful.

Also, for years, there were very few express exteriors in the southeast. Normally, car washes were either self-serve or full serve. Steve's comments are correct, that in the southeast, barring a great traffic count by the site, one should plan a flex-serve facility in order to appeal to a far greater % of those in your market area. However, if you can find a site with 40-50,000 cars a day without significant and similar express exterior competition within a 3 mile radius, then you can be successful with it. "Build it and they will come" however, is not going to be a successful marketing plan unless the site is absolutely prime.

 

[mac]

Everyone's wash were off in 2008, mostly due to the economy. Bad weather only compounded it. There used to be multipliers of three to four times gross as the asking price and it's still a good rule. Basically can you make the note payment on existing numbers and still ahve something left over?

 

[Greg Pack]

I'm in the southeast. I haven't heard of any expresses down 25% due to weather alone. The well positioned expresses I am familiar with were down only single digits or even flat for the year, they have fared better than the IBA/SS washes. I'd look at the addition of competition to the market as a possible factor attributing to the decline. Competition can be farther away than you think and have an impact.

In other words, I wouldn't be too optimistic that all of the 25% comes back when the weather improves. .......

 

[smokun]

North, South, East or West; It Doesn't Matter

Express exteriors are extremely vulnerable anywhere... and everywhere... due to one simple fact: they are a self-limiting business model.

If all you do is one thing, you can survive and even thrive in a stable marketplace with adequate demand for your service. Essentially, you are the only one at the bowl when it's time to eat. An easy meal often invites complacency. It also invites others who like what they see... and can copy.

Consequently, if "more" that do the same thing enter the marketplace, demand is affected and your individual customer-base is diminished. Hence, you are at a competitive disadvantage if all your competition are like you... and provide the same service. You're all eating out of the same bowl, constantly jockeying for a better position for sustenance. When the crowd gets bigger around the bowl and meal is too little to satisfy, you need a sensible alternative place to eat.

Accordingly, the more adaptable flex-serve model will provide a significant competitive edge in an over-served exterior-only marketplace.

Hence my point: If you can't upgrade to include the flex-serve's express after-care component, you will lock yourself into a format that is self-limiting... and attractively vulnerable.

Simply put, if you are more diversified, you are better prepared to serve your clientele; all of them... all of the time. North, South, East... or West!

 

[Chiefs]

A lot depends on just how much labor you want to deal with as well. I know Steve that it takes only two people to do flex-serve, but of course that's only if you're doing flex- serve services on 3,4 or 5 cars an hour. If you've got 25-30 cars an hour, you need 10-12 people to handle the volume.

 

[smokun]

The Key Is Diversified Format That Satisfies All

Bill is correct in saying the minimum hands-on staff for an Express After-Care component is two (2) cross-trained detailers. And if they can generate $200-$300/hr revenue, and four (4) can generate over $500/hr, where's the problem?

Did you ever see a popular restaurant owner cry because all his tables are full? If his only dilemma is too many customers... and not enough tables, things can't be too bad. His comment: I can only do... what I can do. Everything has limits. Meanwhile, business is good... and profits are up!

The target for optimum efficacy is maximized demand and supply. A staff of two (2) is fine; more if needed. The operator makes the bottom-line decisions. A constantly busy staff of 2-4 can be very, very profitable.

Anyway, the real key is providing your clientele with diversified choices that take each individual customer off-the-market, be it express hands-free washing... or optional hands-on after-care.