Interested in the Industry

[nathand]

Hello everyone,

I've been considering entering the car wash industry for a couple of years and have spent time researching some different options.

I have a background in industrial automation and have even done some controls work with existing washes in the past, so I feel like I have a thorough understanding of what goes on "behind the scenes" and feel confident that I'd be able to handle most of the maintenance. I've also got an interested, retired family member willing to help with the general up-keep as well as managing the business.

I'm currently looking at a town in Ohio close to my hometown, with a population of about 25,000. The town currently has a total of 18 self-serve bays and 5 touch-free IBAs spread out over 5 locations. There is also a sixth location with a tunnel and free vacuums. Within the last 5 years, the town has lost three washes (each with self-serves and IBAs) due to new retail development. With the exception of the tunnel wash and one of the self-serve washes, the others are all fairly "tired" and not very inviting.

I have located a couple of potential sites, but one in particular stands out to me. This site is a corner lot on a 4 lane road and is located 1/4 mile from a large chain grocery store that opened last year. According to traffic data, in 2016, the location saw an average of 22,700 cars per day. This location is currently home to a former used car lot/auto repair garage with 3 bays and a good size office. Due to the circumstances with the current owner, I suspect it could be acquired for less than the value of the real-estate.

I'm now considering whether it would be worth tearing down and starting over, or if the existing building could be converted? Has anyone been involved with a conversion? There are tons of changes that would have to be made for infrastructure, but the overall shape of the building seems correct. It should be fairly straightforward to build walls to divide the bays and to install rear overhead door openings to allow for a pull-through design. With current new-construction costs, the possibility of achieving similar results at a lower cost certainly is appealing, at first glance.

What do you guys think? Does it sound like a crazy idea to consider opening a new wash in this town? I feel that the town could really benefit from a newer, inviting wash with updated technology. I'm thinking start small, maybe one self-serve bay and two IBAs (possibly even a soft-touch, as the town currently has none and the tunnel is on the other end of town). I appreciate any thoughts or insight!

 

[robert roman]

“….background in industrial….able to handle most of the maintenance….family member….to help with….up-keep as well as managing the business.”

This means about 20 percent of the location problem is solved as long as family member doesn’t steal.

The other 80 percent is going to be tougher to solve.

“Within the last 5 years, the town has lost three washes….due to new retail development.”

Most likely, half the market or more went under because of express with free vacuums (new retail development).

“The others are all fairly "tired" and not very inviting.”

Most likely, owners aren’t making enough to keep up.

“Has anyone been involved with a conversion?”

Yes.

“Due to the circumstances with the current owner, I suspect it could be acquired for less than the value of the real-estate.”

Small used car lots are following same path as small c-store/gas sites, shut down because they can’t compete.

These sites are good for detail shop, flower shop, niche food service, bicycle shop, beauty shop, coin laundry, bail bond, etc.

There should be strong public demand for new wash in mature market.

 

[nathand]

Robert,

I appreciate the feedback. As far as the three washes that closed, two of them were purchased by chain retail stores and torn down to make room, as they were located on prime real-estate. The third seemed to do very well until a traffic light was installed at a nearby corner, making it almost impossible to get in and out. The owner was older and I believe they were just ready to retire.

It's hard to say for sure how well the other locations in town are doing, but the well-kept self serve/IBA location seems to always have activity. It and the tunnel are really the only two located on the main drag. The location I'm considering is on the opposite end of town, in another shopping area. It also happens to be right on the edge of relatively dense middle-class residential (with some lower-class mixed in) neighborhoods. It sits on a primary route for daily commuters and has driveways to three streets and the building is situated fairly well for the wash traffic.

What was your experience with a conversion? Is it worth the time and money to utilize the existing structure or was it a complete nightmare?

As far as public demand, that's what I'm here to learn about. Are new, small washes with self serve and IBAs feasible in a market like this? In general? Or are they a thing of the past, replaced by tunnel/express washes?

Thanks again for the input!

 

[robert roman]

If you are interested, then I recommend following process (put the cart before the horse).

First step is to build a team (advisors). Initially, this should include consultant, attorney, and real estate agent. Consultant could be someone like me (unbiased 3rd party), equipment dealer or broker.

Second phase is to solve site location problem. Site refers to property and location is market.

Market is suitable if it has sufficient size, potential value and is sustainable. This can be determined with trade area analysis (i.e. index of retail saturation).

Site is suitable if it has sufficient characteristics (i.e. size and shape, visibility, access, traffic flow, yield, zoning, etc.). This can be determined with checklist (i.e. analogue-based model).

If a property is suitable, the next step would be to determine its highest and best use as a carwash site.

And so forth.

 

[getnbusy]

nathand
Robert is right, you need some people you can trust, and that know what they are doing. You are talking about spending a TON of money, for up to a year, with NO INCOME at all. Gotta be pretty strong for that, and it does work on you emotionally and physically as the months go by. I would caution you in your dealings with your equipment provider, don't forget he's a salesman. There are some good ones out there, and there are some that just want the commission.

At first glance it sounds like you have a good site for what you want to do. I would not try to use the existing building at all. You're talking well over half a mil for sure, and i'd hate to have all that tied up in the same old building that's been there for however many years. I understand a good contractor can make it look good, but its still the same old building and the people who drive by it everyday will know this. My feeling is that you want a nice new building (and image) for all that new equipment.

Digging deeper, you should consider what else you could do with that same money. Being in the carwash business is ok, but a deal is a deal in my book. If you can buy prime real estate for less than market value, and there is substantial growth in the close proximity (enough to build a brand new carwash), you should jump on that property before somebody else does. You at least need to tie it up in contract while you do your due diligence. Id hate to see you spend months and months researching only to find out the property got gobbled up by a property guru. You might make more money in the short run with a property flip, or a long term lease, than you will ever make in the carwash business. How cool would it be to collect a $4000 check every month from a McDonalds franchisee ??? or how good would it feel to make 100k on a property you only owned for 3 months ?? Pretty good I suspect, without ever emptying a trash can, or washing a muddy bay, or repairing a busted machine in single digit temps.

just my 2 cents. There are a lot of people on this site with excellent knowledge and differing opinions. Good luck on your quest. If you do go carwashing, you'll have this site saved in your favorites because running one of these things sometimes takes a village.

 

[mac]

Converting a repair shop to a self serve usually doesn’t work well because the bays will be real tight.

 

[robert roman]

Since I have some time today, let’s simulate a scenario.

New to industry wants to redevelop former auto service building as commercial carwash.

Building is approximately 1,500 SF with three service bays, waiting room, business office and small mechanical room.

Proposed business model is location-based waterless hand carwash.

Estimated start up expense is $125,000.

This includes expense for land lease and utility deposits, support equipment, building renovation, inventory, website and phone app, training budget, and operating capital to cover six months worth of expenses.

Population of 25,000 and traffic count of 22,700 are easily supportive of 18,000 washes per year.

Assume 50 percent exterior ($20) and 50 percent full-service ($40).

So, expect gross sales of $540,000.

Expense ratio for waterless is about 65 percent so net operating income $189,000, less capital cost.

If you don’t mind work, this model is capable of 100 percent ROI.

 

[getnbusy]

Ok i'll bite for the sake of discussion.

I'm missin somethin. That's 50 cars per day at a $30 average. Also for a 3 bay thats 16.66 cars per bay per day, hand
wash. no water. Or did I totally misunderstand your example ??

 

[robert roman]

Ok i'll bite for the sake of discussion.

I'm missin somethin. That's 50 cars per day at a $30 average. Also for a 3 bay thats 16.66 cars per bay per day, hand
wash. no water. Or did I totally misunderstand your example ??

18K CPY is 58 CPD or maximum hour of 17 cars. This would require 8 washers working in teams of two, plus management and hostess.

Unlike in-bay or wand, the number of service bays isn’t a constraint on capacity because you can wash anywhere on the property with waterless.

18K CPY is attraction rate of 12 percent of the vehicle base assuming 1.5 cars per households. This is only 300 homes or some mix of homes and businesses.

Target is people who drive nice cars, people and businesses that are environmentally conscious, and people 30 to 60 years old (DIFM crowd).

So, yes, $30 average is required for viability.

This is a low volume, high priced, full-service carwash/detail not intended for blue collar market.

However, consider value proposition of product/service.

100 percent natural, plant-based ingredients, requires only one cup of water, and contains special polymer that leaves behind a glossy finish that works like wax.

Attributes of business model are don’t have to wash a lot of cars, can fit on 15,000 SF, no expensive equipment to buy or fix, low capital investment, short learning curve, and most everything can be purchased over the counter.

However, location-based waterless hand wash is an occupation business requiring emphasis on labor management and customer service (before, during and after).

Consequently, growth of waterless has been mostly the mobile web-based operators.

 

[Jeff_L]

Move to KC and I’ll sell you my 3 established washes!

 

[I.B. Washincars]

Move to KC and I’ll sell you my 3 established washes!

Don't you mean KY?

 

[robert roman]

Robert,

What was your experience with a conversion? Is it worth the time and money to utilize the existing structure or was it a complete nightmare?

As far as public demand, that's what I'm here to learn about. Are new, small washes with self serve and IBAs feasible in a market like this? In general? Or are they a thing of the past, replaced by tunnel/express washes?

Thanks again for the input!

For sake of argument, say we get past location problem. As Mack implies, there are also site problems to solve or physical constraints to consider.

One is tight bays. Another is pass-thru capability. Often there is not enough space between rear end wall and property line to permit exit without having to make three point turn.

Another is structural integrity of building side walls and load bearing walls as well as sanitary sewer connection to consider.

For example, I have clients that have retrofitted c-store into tunnel by going end to end but not buildings constructed in manner like transmission, oil change, body shop, car lot, etc.

Stick with fundamentals first - match development cost with market potential in area.

Determine potential and then highest and best of site as carwash.

 

[Jeff_L]

Don't you mean KY?

He can go to KY after KC, alphabetically it would be correct.

 

[nathand]

Thanks everyone for the responses, you have brought up some interesting points and things to consider. I will continue my research and may have some more questions along the way. If I decide to pursue the idea (whether it be at the mentioned site or a different location), I will definitely get some professionals involved before digging in too deep!

 

[JCSKelvin]

Hi guys, i am new to this car wash industry and residing in asia. The country where i am in are dominated by manual hand wash from foreign labours in our country. The existence of automatic car wash has since long gone many years then. But given with today much improved technology, i am thinking of bringing back automatic car wash, however i am bug with a few worries that i hope some may enlighten me.
1) Touch-Less Car Wash - After some read through the website, since like touchless car wash such as Laser360 does not have much of a good reviews.

2) Automatic Car wash with brushes - The most common search that always comes out ith associated with brushes are the capabilities to scratch car paints, e.t.c

What are your takes on the above? I would like to do away with manual car wash given our tight labour restriction in asia and introduce a automatic car wash

 

[robert roman]

I don’t believe there is enough private vehicle ownership in Singapore to cultivate a viable market for in-bay automatic.

For example, people have to pay excise fee of 1.5 times vehicle purchase price. They also have a transportation system that regulates vehicle use.

Moreover, almost 75 percent of population lives in subsidized high-rises and public housing apartments. Most of these people don’t drive cars.

From a distance, it seems like market environment for full-service conveyor. That’s going to be expensive because of real estate.

 

[JCSKelvin]

Hi Robert.

What is happening in Spore now is that there are plenty of vehicles that are either privately owned or if not leased from Uber rental company set up in Singapore. Especially with the number of leased cars from Uber which has climbed up to an unbelievable figures. The current trend in Singapore is that most of them goes to the manual car wash which are labours from India, China, e.t.c. Taxi in Singapore also goes to Manual Car wash. The manual car wash in Singapore is sort of like express cleaning, which no expertise in the car cleaning. Only spray of shampoo over the car, wipe down with sponge, rinse with high pressure water jet and drying with reused cloths. All this manual car wash are 24hrs * 7 Days

I am considering of bringing it into Singapore either a touchless car wash or the automatic car wash with brushes. With a kind of express car wash that i may lower the rate to entice customers since no manual labour is going to be involved here.

But about 5 to 6 years back, Singapore has the automatic car wash with brushes but i saw that reviews are very bad for the car wash such as scratching of paints, entangling of windscreen wiper, kind of related issues.

So what are you opinion here

 

[robert roman]

Commercial hand carwash in Singapore is not much different than hand washing in Middle East and other regions where manual labor wage rates are below subsistence levels and the investor class shows mostly distain for laborers.

However, as long as hand wash is lowest cost producer, in-bay automatic washing won’t win.

Build in-bay that can wash 12 cars an hour, and I will put 12 washers to work in a lot across street with hoses/buckets or waterless to clean cars for a fraction of the cost it would take to build and operate an in-bay.

For the cost to build express conveyor in Singapore, I could hire a small army.

Generally speaking, if you want to penetrate a market with an innovative product or service, you have to be able to deliver the goods.

For example, let’s say you designed a new widget and can build ten of them a month in your garage. However, when you take the product to market, you immediately get several orders that add up to 100 widgets.

Guess what, you’re screwed because now you have to tell customers “no” and opportunity cost becomes profit on 90 widgets and possibly future sales.

Developers in M.E. are trying to overcome this by building conveyor washes and multiple profit centers that mirror those here in U.S.

This requires considerable investment and commitment of time.

 

[JCSKelvin]

Hi Robert, what an insight! Guess i would probably have to hang that idea for the time being.

My subsequent idea is building of self DIY washing bay. In Singapore, most of the house are high rise storey flats. As such, multi-story carparks are erected to accomodate the residents living in this high rise storey flats. Since multi storey carparks are erected by Singapore government, however they only build a coin operated water dispenser only. What is your opinion say if we are to provide a self DIY car wash with facilities like mat cleaning, coin operated steam machine, e.t.c

Ag

 

[robert roman]

Self-service carwash in this country is a low-yield business that has been dying on the vine for the last decade and more.

Conveyor carwash now commands over 70 percent of total available market and is growing and taking retail space mostly from self-service and in-bays at petroleum sites.

Consequently, there is a lot more mom and pop investors starting up mobile waterless carwash and detail operations.

Here is link to one minute slide show I made for Eco Green Auto Clean to help promote a start-up program that I am no longer involved with.

https://www.youtube.com/watch?v=r02YM_bIFO8

Food for thought