Free Vacuum Concept

[TEEBOX]

OK, so this is my question:

I only have 3 vacuums at my exterior wash. I average between the 3 around 1500 a month and there is always a line to use them. I charge 1.25 for 4 minutes time.

I'm planning on expanding our vacuum section to 8-10 vacuums with diagonal parking, lot size prohibits me from adding anymore. Current ones are parallel with building which is not very efficient.

If I convert to free and my average wash ticket is $7, that means that I would need an additional 214 cars to make up the revenue.

What would be the formula used to calculate to convert to free vacs and if this makes sense to do it?

How much volume of cars monthly would I anticipate to increase!

Also would a central vac that always remains on more efficient than single units which you can turn on and off?

I know its fortune telling!

Thank you in advance!

 

[chaz]

Here's my thought. Add the vacs, and charge as you do now. Customers will appreciate the upgrade and not needing to wait. I'd guess if you keep the equipment well maintained, customers won't worry about the $1.25, and you'll make more money. Plus less wear and tear from needing the extra washes to make up for free vacs. Not to mention the fact that cleaning the vacs is no big deal when you make money on the vacs, but free vacs = more mess with no money.

 

[Ric]

You could put multi coin acceptors in all your vacs that allow you to accept coins and tokens. We do that and give a free vac token with our top wash, everyone else pays for vacs. Works well for us.

 

[Jeff_L]

1500/mo off 3 vacs? That's really good. I agree with others, don't give it away. Increase your vac count and leave your price alone. Solve the problem you have, lines for vacs. You didn't say you're losing customers to someone else giving it away. I have a competitor really close who gives away his vacs, it never impacted my revenue.

 

[robert roman]

I took the liberty to fashion a problem statement.

“How much volume of cars monthly would I anticipate to increase….If I convert to free vacuums…?”

Increase = express volume with free vacuum – exterior volume with pay vacuum

Benchmarks for express are 80K CPY sales volume, $8.50 average price and 125’ conveyor. Exterior is 65K CPY sales volume and 100’ conveyor. Your average price is $7.00.

Here, volume differential is 0.23 and average price is 0.21.

Express vacuum is sized at 20 percent of tunnel or 25 parking spaces (125 X 0.2) or 24 with 12 by 12.

“I'm planning on expanding our vacuum section to 8-10 vacuums…..I only have 3 vacuums at my exterior wash.”

In order to solve or provide an expectation of “increase” as well as answer your other questions (central vacuum, does this make sense), we would need to know the length of the conveyor and annual sales volumes.

Otherwise, it would be fortune telling.

 

[Earl Weiss]

Don't know what your base price is but can't help but wonder if the extra volue brought on by Free Vac Bargain hunters will help or hurt average ticket price vis a vis $7.00 Then of course you have extra costs for ore free vac opertion so you will need to off set extra expense and revenue. Even with a simple calculation of $5 average ticket making up $1500 is 50 cars a day for lost revenue. 10 Cars for extra expense. 21,000 cars a year. If your vacs are that Busy and space that tight I would add mostly combos to make more $.

 

[TEEBOX]

I took the liberty to fashion a problem statement.

“How much volume of cars monthly would I anticipate to increase….If I convert to free vacuums…?”

Increase = express volume with free vacuum – exterior volume with pay vacuum

Benchmarks for express are 80K CPY sales volume, $8.50 average price and 125’ conveyor. Exterior is 65K CPY sales volume and 100’ conveyor. Your average price is $7.00.

Here, volume differential is 0.23 and average price is 0.21.

Express vacuum is sized at 20 percent of tunnel or 25 parking spaces (125 X 0.2) or 24 with 12 by 12.

“I'm planning on expanding our vacuum section to 8-10 vacuums…..I only have 3 vacuums at my exterior wash.”

In order to solve or provide an expectation of “increase” as well as answer your other questions (central vacuum, does this make sense), we would need to know the length of the conveyor and annual sales volumes.

Otherwise, it would be fortune telling.

Robert,

My building is 128 in length and lot width is 75feet less building of 35 feet wide leaves me I only a depth of 40 feet for navigation. If we angle park for vacuums then I cannot have double row of vacuums. I'm only limited to 8-10 vacuums depending on how far I can space them apart without hitting doors.

I'm in the Detroit Area where the winter has been brutal the last 2 years. My annual volume is around 65K. My wash packages are $5,7,9, and $12. I have 2 guys in prep area and 2 towel dryers on staff. During winter months I have 2 prepping and one collecting with 3 towel dryers.

 

[JustClean]

Why would you go FREE if you don't have to? Okay, if there is fierce competition it's a different story.
You can do all the calculation on earth - do it and you more often than not end up with a different result than calculated.
That reminds me to the old saying: "In theory, theory and practice are the same. In practice, they are not!"

I totally agree with Chaz. Give your customer an improvement but charge. Nobody ever went broke by earning too much money

 

[robert roman]

People afraid of calculations are usually not good at math. It’s sort of like being afraid of the dark.

Let’s go back to problem statement; “How much volume of cars monthly would I anticipate to increase if I convert to free vacuums…?”

Restate this to; goal and objective is to increase sales volumes (car count) of exterior-only carwash.

You plan to achieve this by adopting one element of exterior express business model, free use vacuums.

What is preventing you from moving forward towards the goal and objective? There simply isn’t enough land available to accommodate 14 parking spaces.

“…there is always a line to use them…” and you are charging.

What is going to happen when vacuums are free and you don’t have enough?

How can you exploit this constraint? Land can’t be changed but business model can.

What could be anticipated by adopting all elements of exterior express?

Based on the information you provided, my calculations suggest there is the potential to increase net operating income by about $125K.

$50,000 of this would be needed to fund capital improvements. The other $75K goes to bottom line.

Calculations come from my spreadsheet models (saves time).

Why would exterior express work without enough vacuums and exterior-only not?

Because there are more differences between exterior express business model and exterior-only than free vacuum.

For example, I have several clients with express and undersized vacuum area and their volumes are much greater than industry benchmarks.

The reason is exterior express provides consumers with a stronger value proposition than exterior-only does.

 

[rph9168]

From my observations I do not see an easy answer to this one as some may. In some of the express exteriors I see at least far less than half the customers using free vacs while in others a large percentage are. While I think some of that may be due to the area's demographics I think it depends quite a bit by available space for the vacs. At express exteriors with a large number of vacs I believe vac usage is much higher than those with fewer vacs. While I never remember seeing anyone waiting in line for a vac it seemed like a cramped vac area may deter some customers from using it on a frequent basis. To reply to your original question I think that I would keep charging for the vacs. While you might see the average amount per vac decline I would think you would see greater frequency thus more revenue.

 

[JMMUSTANG]

Check this out from vacutech.

http://www.vacutechllc.com/car-wash/car-wash-products/

I'm thinking about adding this.

You can give your express car wash customers no token for your basic wash, 1 token (good for 5 minutes) for you next wash upgrade and 2 or 3 tokens for your top packages. If they run out of time they can put in money for more time.
This way if all your vacs are being used, due to space restrictions, they can come back at a later time when your not busy and just vacuum (which makes your wash look busy).
And it looks like a great upgrade versus the self serv vacs.

 

[JMMUSTANG]

Sorry I didn't mean to look at all the vac systems they have, just the Self-serve vacuum system.
To me it makes sense to be able to offer the coin op option.

 

[Earl Weiss]

>>robert roman
Bob Roman

...Benchmarks for express are 80K CPY sales volume, $8.50 average price and 125’ conveyor. Exterior is 65K CPY sales volume and 100’ conveyor. Your average price is $7.00.
....Based on the information you provided, my calculations suggest there is the potential to increase net operating income by about $125K. <<<

I don't follow the math. Based on above benchmark there would be an expected volume increase of 15,000 cars. If he kept his average which is questionable since IMO the free vacs will attract more bargain hunters gross income would increase $105,000.00

I would expect that whatever could increase the average ticket from his $7.00 to $8.50 could / would be done with or without the free vacs.

So, with a predicted 23% volume increase hopefully brought on by free vacs, he has to back out of the projected increase in income the definite $18,000 loss of Vacuum revenue.

Direct cost per car varies greatly. If you are selling a lot of extra services to generate the higher ticket, the average would easily be $2.00 or more. This requires an expense deduction of $30,000.00 So, the potential increase in NOI is $105,000.00 - $48,000.00. Or, $57,000.00 Still nice BUT unknowns are rampant. What if Volume only goes up 5%? How much more revenue can he generate with more pay / combo vacs? What is the extra cost to operate and maintain more free vacs? Will trash hauling expenses increase?

 

[robert roman]

Close, Earl.

However, NOI $125K does not involve change in sales volumes.

It comes from increase in average sales ($7.00 to $8.50) and decrease in labor expense from adopting exterior express model.

Sales volumes are normalized because there is no information provided to model it.

For instance, increase in volume could come from existing customers who visit more frequently (loyalty rate) and/or motorists and locals attracted by new value proposition (capture rate).

Likewise, there is not enough information to compare economic cost of exterior-only format with 8 to 10 pay vacuums versus exterior express with free vacuums.

Economic cost = accounting cost + opportunity cost

Accounting cost of 8 to 10 vacuums is equipment, install, etc. Opportunity cost is increase in income that otherwise could be earned with exterior express during the period.

Likewise, accounting cost of exterior express conversion is equipment, etc., and opportunity cost is income that otherwise could be earned with exterior-only with pay vacuums.

If vacuum area is expanded to 8 to 10 pay units, a reasonable expectation would be sales revenue of $36,000 or increase of $18,000.

This is reasonable because current vacuum area is satisfying only 11 percent of customers whereas normal is between 20 and 25 percent. Would it be reasonable to expect sales volume increase? No.

Is average sales revenue of $8.50 for exterior express reasonable? Absolutely, many operators are getting this and more all day long. The reason is valued for the money spent.

One example is the vacuum. If exterior-only and express price are both $5.00, the opportunity cost for express customers to use exterior-only is at least $1.25 (vacuum).

So, it’s basically, make a little investment for a small gain ($18,000) or make a slightly larger investment for a huge gain.

Neither would be a bad decision because each helps the company move forward towards achieving the goal and objectives.

 

[Earl Weiss]

Likewise, there is not enough information to compare economic cost of exterior-only format with 8 to 10 pay vacuums versus exterior express with free vacuums.

.

I think the above is one of the most important statements of the post and would extrapolate it to gross income as well.

 

[JMMUSTANG]

Earl you post at all hours of the day and night.
Do you ever sleep, lol?

 

[Earl Weiss]

Earl you post at all hours of the day and night.
Do you ever sleep, lol?

My life is eclectic. I am just glad there are only 7 days in the week. If the week had 8 days I would have to work another day each week.