Michigan - $2 Car Washes

[wood]

Just wondering, are there still some $2 car washes operating in greater Detroit? If so, can someone please provide me with names, and/or locations? Smaller lots preferred.

Anybody ever consider having two pricing formats in either of the following manner:

1) Wash and towel dry December-April, wash and go express May-November. Naturally, winter with towel dry would charge $1-$1.50 more.

or

2) Wash and towel dry year round Fri-Sun, and wash and go express Mon-Thur.

In short, my market has a few $3 car washes, can't match em, so want to be less then them. However, would still like to consider keeping my towel dry market niche when the season or weekend days are right. I know $2 is absurd, but my place is older, own it free and clear, the $3 washes in my market are 2.5 mil to build.

Wood

 

[robert roman]

“….my market has a few $3 car washes, can't match em, so want to be less….my place is older, own it….$3 washes in my market are 2.5 mil to build….towel dry would charge $1-$1.50 more.”

Landlords maintain their properties even when it’s costly in the short-run in order to attract higher rents and more desirable tenants in the long run. Consequently, a well-maintained property is worth more to potential buyers.

Conversely, slumlords do the bare minimum so they can offer low rent to lure folks who will not or cannot pay high rent.

Many slumlords practice property flipping. This means no one maintains the place or pays the property taxes or mortgage payments.

Consider economic distance.

If gasoline is $4.00 a gallon and car gets 20 mpg, it cost $1.00 to drive five miles or the market range or trade area for carwash.

$2.00 wash equals $1.00 savings. This would increase market range to 7.5 miles because $1.00 savings would allow customer to drive another 2.5 mile round trip.

This and other reasons are why the $2.00 carwash concept is a bankrupt idea.

Anyone can duplicate the strategy, including your closest competitor.

 

[wood]

Robert,

I appreciate your reply.

My location is in good shape. The equipment was renovated 3 years ago and the building is in excellent condition. The site is clean and well maintained. Slumlord I am not. My place was built 15 years ago. I made real good money for 12 years. In the last 3 years I have had (2) $3 washes open within 3 miles. My site was constructed for $850,000. The $3 washes were $2.25 mil & $2.5 mil to build.

I am $1.50 more then their basic which includes a towel dry. I am pleased with the volume from December - April, and on the weekends year round. My thought of going $2 with no towel dry stems from my poor volume Mon-Thurs from June - November. Was thinking I can grab the "price only matters" customer's on my cruddy days, but still offer towel dry on most days to keep my main customer base.

Like I mentioned in my first post, I am considering 3 options:
1) go $2, $5, $10 everyday (even the 2-3 extra employees suck)
2) offer my $2 concept based on season, while still having towel dry in the winter only
3) offer my $2 concept based mon-thur, while still having towel dry fri-sun

The (2) $3 washes are longer, appeal more to the eye, so meeting their $3 seems like a bad idea. Maybe if based on season or day of week meeting the $3 has some merit, but not if I offer it everyday. With their places costing 2 1/2 to 3 times to build I don't see them meeting me at $2

Lastly, the rational and formula you listed regarding the cost of gas and distance vs potential savings although accurate is way beyond the common sense of my general customer base. Plus, the other washes are 1.5 miles and 2.5 miles away, so i am declaring to go after those customer's. Expanding my market radius would be an added bonus to my plan.

I am not sure what my best move is. I just think it's time for a change. My volume has remained the same to down 7% the last 3 years.

Wood

 

[Washmee]

What are your current prices? What is your average sale per car?

 

[wood]

I am priced at $4.50, $7.00, and $11.
My average ticket per car is $6.45.

 

[Washmee]

Have you considered offering monthly wash plans? Do your competitors offer them? I started selling them a couple of years ago and they have really been a great boost to my wash. A friend of mine saved his wash from going out of business by selling monthly plans. Have you seen this video? Offering monthly plans accomplishes much of what you desire to do. The difference is that you get a guaranteed revenue stream from those bargain seeking customers instead of just hoping they show up more frequently for a lower everyday price.

[video=youtube;EuD0DXwCHA4]https://www.youtube.com/watch?v=EuD0DXwCHA4[/video]

 

[robert roman]

“My site was constructed for $850,000.”

You said $3 washes cost 3-times as much to build and are longer and more appealing to the eye.

You said you made good money for 12 years, now not so much. The reason - above average profit attracts new entrants (which it did).

More washes in a market tend to normalize firm’s profits unless they compete intensely.

For example, retailers like QSR franchises usually upgrade their stores every 9 to 12 years in order to help avoid what happened to you.

Upgrade means new skin on building and overhauling or replacing equipment. Without this type of major reinvestment, competing on basis of price becomes a self-fulfilling prophecy.

For example, it has been suggested to sell unlimited washes to prop-up sales volumes. Unlimited is a form of price discounting.

The strategy may remedy below average profits of under performing wash in short-run by extending life cycle of business (or save the business) but it is not growth.

Keeping up appearances is maintenance cost not reinvestment of cash flow to turn the clock back on technical and marketing obsolescence.

Without reinvestment, unlimited becomes like a drug. The older the wash becomes the more you will need it.

 

[wood]

I traveled around a 40 mile radius the last couple of days. It is amazing how many tunnels converted to the $3 format, as well as the share of ground up $3 washes. They also all copy one another and universally have the monthly program.
There were so many to be honest, the novelty can wear off. They were no busier then my establishment.

Robert, my place is in good shape. However, maybe get it in great shape, add a arch, improve the wash process, and raise my price a $1 while improving value. I also need to promote my staff, and how we assist at the entrance and towel dry and touch up at the exit. A catchy slogan that maybe highlights that we do more then send cars.
It is probably my best move to continue this concept, but attempt to grow my market niche vs. chasing the $3 concept.
I can institute a monthly program, but in an attempt to be different any thoughts if I become home to the buy 2 get 1 free?

Thanks,
Wood

 

[robert roman]

How a wash is personalized is a decision of business owner - to each his own choice.

“…any thoughts if I become home to the buy 2 get 1 free?”

One time after golf, my buddies and I went for fish and chips and beer. Bud Light was buy two get one free.

Our server was a blond-haired 20’s something in junior college. She asked for our drink order and mentioned the buy two special.

Of course, my smart ass partner goes and says you mean Bud Light is 50 percent off.

She quacks back, duh no, it is buy two get one free.

70 percent of consumers are well accustomed to and expect Wal-Mart type discounting.

Buy 8 get 1 free doesn’t work anymore. Now, it’s like buy 4 or 3 get 1 free.

Unlimited washing is interesting though because it’s like how much washing is enough and how much too much?

For example, one year I washed my Honda at the same commercial carwash over three hundred times. The clearcoat was pretty damaged – microscopic etching and chipping, dull appearance.

Today, I spend $5.00 extra for hot wax and rain-repel. This stuff works so well that I only need to wash the car once or twice a month.

Now, I don’t need unlimited.

 

[SErep]

Hi Wood.
Check out the article linked below. Not all of it pertains to your situation, but I think some of it could be of help.
You may have to copy and paste into browser.
http://www.carwashmag.com/index.php?id=35145&cHash=c8b63474ae91d9b8afcfd49d5639893a&tx_ttnews[tt_news]=35633

 

[MEP001]

Hopefully working link:

http://www.carwashmag.com/index.php?id=35145&cHash=c8b63474ae91d9b8afcfd49d5639893a&tx_ttnews[tt_news]=35633

 

[wood]

Thanks for the article & video. I plan on installing a few new equipment pieces and to stop competing with the $3 washes. Improving wash quality, cleanliness, marketing efforts (utilizing a new product with a character and "exclusively" available here language) will allow me to raise price slightly.
In running numbers with some operators who have the monthly, and comparing the revenue per wash vs my idea of promoting a buy 2 get 1 free, I think I should consider that offering in an effort to be different.
What do you think?

Wood

 

[robert roman]

The article referenced above provides a story where best practices had to be used to elevate the value proposition of an express wash so it could survive and eventually prosper.

Since commercial real estate loans are made within a range of debt service coverage, 100 percent of projections for express wash should provide several times the coverage that a traditional wash provides.

At 67 percent of projections, the selling price should pay off the loan and return all of the investments equity. So, the need to act as described in the article is probably due to irrational expectation like carwash was thought a recession-proof business when it was built.

“I plan to….stop competing with the $3 washes.”

Don’t stop competing against them just get better at - create a marketing plan.

For example, do seniors (people 65 years and older) represent at least 10 percent of the customer base? If not, a lot of money is being left on the table.

 

[Earl Weiss]

Thanks for the article & video. I plan on installing a few new equipment pieces and to stop competing with the $3 washes. Improving wash quality, cleanliness, marketing efforts (utilizing a new product with a character and "exclusively" available here language) will allow me to raise price slightly.
In running numbers with some operators who have the monthly, and comparing the revenue per wash vs my idea of promoting a buy 2 get 1 free, I think I should consider that offering in an effort to be different.
What do you think?

Wood

I would caution that just because you think your uniqueness , quality and cleanliness justifies the higher price does not mean your market will. You will have an issue getting people in the door if you are higher than the competition. If your uniqueness warrants a higher price, be price competitive at first and raise it later when people have experienced your better mousetrap and will return.

Bulk / discounted sales are a great tool.