Need advise/feedback on location & plan for new car wash

[Andy]

I?m planning to build a car wash next year. Right now I am putting my budget together and hoping to have my financing lined up within the next month or so. I have a proposed location and have received several quotes for equipment, building, construction, etc. I would really like your input and feedback on the proposed location.

I?m specifically looking for feedback in regards to:
1. The location : great, good, just ok, or bad?
2. I know there are a lot of variables, but what would you estimate total project cost to be?
3. I know there are a lot of variables, but what would you estimate monthly automatic/self-serve business to be?

The Location:
- Located in a large city in the mid-west

- 2-bay touch-free automatic / 5-bay self-serve / 4 vac islands with dual vacs (8 vacs total)

- Corner lot at a main intersection with a traffic light

- Road #1 from intersection has:
----- Average car count is 31,000 per day
----- 45 MPH
----- Four lanes with turn lane from both directions
----- One direction leads to business district with large businesses (1/2 mile away)
----- The other direction leads to restaurants, shopping and freeway (1 mile away)
----- The site is next door to a Dairy Queen and across the street from a gas station
----- The site is located in an area with a carry-out, a bar and a strip mall.

- Road #2 from intersection has:
----- Average car count is 8,000 per day
----- 25 MPH
----- This road dead-ends into the intersection at the light (must turn left or right)
----- This road leads into a heavy, densely populated middle to lower class area
----- This is a main road for the residents traveling in and out of the neighborhood



... cont. next post ...

 

[Andy]

- Residential area has:
----- 46,500 residents within 3 miles in one direction (36,000 over the age of 18)
----- 60% are renters and 40% are home owners

- Competition
----- No competition within 1 mile.
----- Well maintained 2-bay touch-free / 4-bay self-serve 1.5 miles away on other side of the residential area on a different main road, however is hidden behind a strip-mall.
----- Run-down 8-bay self-serve 1.25 miles down Main Road #1 (toward freeway), however not on main road and hidden
----- Slight run-down 8-bay self-serve 2 miles away on other side of residential area on a different main road.

The Site & Building:
I was going to attach a drawing of the building and site plan, but since the forum limits the file size to be 500 x 350… it’s too small to see a thing. Moderators, could you please increase the file size attachment to be at least 800 x 600? Thanks.

 

[ScottP]

Your asking questions that some companies will charge thousands to answer for you. It sounds like you've already decided to do it and your asking for reinforcement from people here on the forum. If your convinced it will work, go for it. Good luck.

 

[Andy]

Your asking questions that some companies will charge thousands to answer for you. It sounds like you've already decided to do it and your asking for reinforcement from people here on the forum. If your convinced it will work, go for it. Good luck.

I haven’t completely decided on this location, however I am strongly considering it. You are right though, I am looking for feedback from those who have been in the industry a long time. I can take constructive criticism and good advise, but reassurance that I’ve made a few good decisions is always nice too.

I am new to the industry. I have been studying this industry for the past 6 months, speaking with distributors and have also been speaking with several car wash owners in the area (non of which would be direct competitors).

I guess I should have been a little more specific with my questions, so here it goes.

1. Based on my research of the area, I think this location is near perfect. My only concern is the three competitors that I listed above. None are within a mile, however all three are located within 2 miles. I still have reason to believe this location would still work based on:
----- There is a large residential population in the area, 46,500 within 3 miles.
----- Two of the three washes are self-serve, poorly ran, dark, dingy and look run-down
----- My main competitor would be the 2-auto (Laser) and 4-self-serve wash located 1.5 miles away on a main road, however he is expensive and has older equipment.

Question :
What is the general rule of thumb in regards to competition when it comes to selecting a location? For example, it’s best to be X miles away or a population of X,XXX per bay.

... cont. on next post ...

 

[Andy]

2. My number one concern at this point and the area I?m looking to receive the most feedback/advise on, is my total project cost. Here is a breakdown of my up-front costs:

$300,000 land
$400,000 building/construction
$400,000 equipment (2 - D&S QuickSilvers and 5 - self-serve bays)
$100,000 misc. (drawings, signage, permits, etc.)
------------
$1,200,000

With a 1.2 million dollar project, my mortgage payment will run about $10K and I?m estimating another $5K to $8K per month in operational expenses.

Question :
1.2 million seems like an awful large investment for a car wash. Although if the demographics will support at least $20K per month in sales, it?s worth it. Do you think this is a reasonable amount to spend on this project? If not, what is a reasonable project budget and where can I save money to make it work?

Thank you.

 

[Waxman]

Andy,

This is way too large a project for a first time investor like you. You have too many questions unanswered for a $1.2 M project. Go back to the drawing board here. Either scale these #'s way, way back or buy an existing wash whose #'s pencil out.

 

[soapy]

I think your over cost projection is pretty close for a experienced car wash operator. On a first time project many things come up that an inexperienced operator may pay too much for. You could start by attending the ICA workshops that are being given at the various regional trade shows in the next couple of months. THe WCA will host one on OCt. 6. If you ask some of the carwash distributors for site evaluation forms they will readily give them to you. Keep in mind that they will tend to be over optomistic in their projections but you can use them to analyze individual locations and compare them to each other. Check their websites as many of them have them posted there. Your soft costs to run a new wash will run between 40 to 50% of sales so your expense projection might be a little low. If you are looking to do 20 K in sales about 1/2 will be for expenses other than debt service.

 

[UGA]

It sounds like a good location, but I would be nervous about that large of a project for your first wash. I agree with soapy that it would be tough to go lower than 40% of sales on expenses. With those numbers you would have to do nearly 20k in sales to make anything and I think most will tell you it will take a while (years) to create a customer base and reach your max revenue.
It is your money and you are the only one who knows the ins and outs of your location and situation so if you feel that good about it than good luck and I hope to hear your success story in a few years. If you want to be a little more conservative, you could look at cutting costs. You don't have to have two identical autos from the get go. Build for two but only put in one for now. With a new location I can't imagine you will have an issue for a while. If the numbers start coming in then you can add the second. Also, you have no idea what some idiot will do in 6 months. If your locations is as good as you are hoping some yahoo can build another wash across the street from you. I know of a great wash not far from me that was doing phenomenal numbers and someone built another one 1/4 of a mile down the road on the same side of the street. This is a great industry and it can be alot of fun, but you do need to be conservative with your expectations because there are way too many variables that are out of your control.

Good luck and keep us updated

 

[Jimmy Buffett]

Andy,
I'm curious. What makes you think you will be doing 20k/month? That's pretty impressive for a brand new wash.

 

[Andy]

Andy,
I'm curious. What makes you think you will be doing 20k/month? That's pretty impressive for a brand new wash.

I didn?t quite say that. I was saying it would take $20K per month to make a 1.2 million dollar project worth it. Although, I would think within a year, along with some aggressive advertising, I could see $20K a month from this location? $1500 per self-serve bay as the national average, plus an average of 1500 cars per month through the automatics, would put me between $19K and $20K. The problem is, I think it would take at least a year to hit these numbers and I?m not sure I?d be able to feed this thing for 12 months and still stay a float.




I like your ideas about scaling back, maybe put in 1 automatic, but build for two. I figure I can save $130K in equipment if I do that. But, that?s only $1K per month in savings on the loan. I?m going to need to cut back a lot more then that. Any additional ideas on where I can cut expenses, without affecting revenue?

I figure I can put $200K down and finance $850K, that gives me a mortgage payment of $6560.44 (25 years @ 8%).

I still may be able to save a little on the land and possibly the building. Any additional feedback would be greatly appreciated. Thanks guys!!

 

[soapy]

$130,000 for a touchless automatic sounds pretty high to me. There are several good brands out there that will sell one installed for under 75K. Have you priced several brands of equipment and looked at several distributors? It is also a good idea to shop your general contractors. Most GC will pad their subcontractors bids by 30%.

 

[Andy]

$130,000 for a touchless automatic sounds pretty high to me. There are several good brands out there that will sell one installed for under 75K. Have you priced several brands of equipment and looked at several distributors? It is also a good idea to shop your general contractors. Most GC will pad their subcontractors bids by 30%.

The base price for the one automatic is $75K, however when I went through the bid and eliminated all the upgrades, accessories and labor for the one automatic it came out to about $130K.

 

[Jimmy Buffett]

If you are not doing this as a hobby or because you need something to do my advice would be to put your 200k in a nice mutual fund. There are a few million dollar car wash investments (for 1 wash) paying off, but damn few in my opinion.

 

[soapy]

The 75K should include trifoam wax, undercarriage wash, dryers,clearcoat pkg, 2 step presoak, spot free etc. THey are pretty loaded up for this rice.

 

[UGA]

There are probably ways to trim your signage and permitting from 100k. I don't know about construction costs near you but there are always alternatives. Once I saw your financing I have a few additional concerns. A 25 year mortgage seems like a long time for a car wash. At that pace you will never own it. If your autos are busy you will be replacing them every handful of years and the same with refurbing the building. You will have to constantly refinance to cover your expenses and will be, in effect, leasing your building from the bank. Also, most people I know of have put more than 20% down and they still got crappy terms.
I know we I may sound like a wet blanket, but there are alot of people who lose more than just their shirts in this field. Hopefully you can get some good advice that will tweak your plans into a big success.

 

[raisetheprice]

Not to be a party pooper here, but $20K per month probably won't make you any money the way you've proposed the loan structure. Possibly, you're going to spend $1.2M to make maybe $5000 a month!!!??? These things chew up money faster than a shiny LA women and you might not even see that much. I see 2 things that will happen for you under this scenario. A: Your current lifestyle won't want to change and this wash will challenge that. You'll be working for basically nothing week in and week out, weekends & holidays FOR A LONG TIME. If you're married I hope she's a good understanding one. B: Because of that lifestyle you & she desire, you'll go back to whatever it was that got the $200K in your bank account in the first place and the wash will be set to autopilot and scrape by while you slide in there sideways trying to keeping it going while lying to your office about where you've really been all afternoon. Sorry to be so negative, but these things can become a liability faster than they can become an asset.

 

[Andy]

...but $20K per month probably won't make you any money the way you've proposed the loan structure.

What would be a better loan structure?

With this type of car wash:
- (2) touch-free automatic bays
- (5) self-serve bays
- (4) vacuum islands w/ 8 vacs (4 of which are 3-in-1)
- vending at each of the vac islands
- car count of 31,000 per day
- no competition within 1 mile
- newer technology and more features then the other competitors located within 5 miles
- extensive direct-mail, door-to-door and marketing partnerships with instant oil changes

What is the estimated revenue for a new car wash owner? What is the estimated revenue for a veteran car wash owner?

Several of you have told me that a 1.2 million dollar project for this wash is too much, but until the question above is answered, I have no idea by how much.

Thanks again for all your feedback.

 

[OCSJOHN]

Andy,
I'm new to the business but I thought I chime in here with everybody else. I just opened a new car wash in North Carolina. Its a dual bay automatic with no self serve bays. When I first started planning my wash i was planning on doing a 4&1 and then reconsidered and did the dual bay auto. I'm certainly glad that I did that and I'll tell you why in this post. I know lots of people here will give me hell for this but here goes: You might want to consider scaling back your project and eliminating the self serve.

Here's Why:

First of all, it cuts down on start up costs. Its reasonable to assume that you could cut down your total cost to the 750k~800k range. This would cut your payments by over 1/3 and allow you to possibly finance for a shorter term. Also, since the automatics are the big revenue centers for the wash, its reasonable to assume that your overall monthly gross income would not suffer by much.

Second, from a maintainence/upkeep standpoint you would seriously cut down on the manpower requirements of your car wash. With self service bays, a customer can come in and with as little as a 1.50 investment in your wash, create a mess that will take you 30-45 minutes to clean up. I usually average no more than 8 hours at my dual bay wash in a weeks time, which includes all cleanup and most of the maintainence which I do myself. However, with your current business model I see it as needing at least 1 person, either yourself or an attendant, there at least 40 hours a week.

Finally, the self service bays can cannibalize customers away from the automatics which costs you money because despite what the self service guys say, the average sales price is much higher for an automatic wash vs. a self service wash.

Well I've definetly given you my 2 cents worth and I'm sure I'll probably get flamed for some of what I've said here but I hope that I've at least shown you a possible alternative. If you'd like to talk further I'd be glad talk by email.

 

[Andy]

Andy,
I'm new to the business but I thought I chime in here with everybody else. I just opened a new car wash in North Carolina. Its a dual bay automatic with no self serve bays. When I first started planning my wash i was planning on doing a 4&1 and then reconsidered and did the dual bay auto. I'm certainly glad that I did that and I'll tell you why in this post. I know lots of people here will give me hell for this but here goes: You might want to consider scaling back your project and eliminating the self serve.

Hi John,

Thank you for your detailed feedback, I appreciate it. You bring up several really good points which I?m going to consider.

I have a day job, that I was planning on keeping for at least 3 to 5 years or until the car wash business takes off. My plan was to stop by the wash for a couple hours each evening and then spend several hours there on the weekends. My plan was to do this until I could afford to hire a full time attendant.

The non self-serve option definitely sounds like a feasible option.

Anyone else have advise/feedback on this? Thanks.

 

[Waxman]

With 2 touch free bays, a new investor had better choose the right equipment and distributor as well as chemical distributor. get any of these three important factors wrong and your wash's customer base and gross income will suffer. You've got a very short window in which to 'dial in' a touch free to where it's cleaning well and is dependable, otherwise word gets out that the wash is poor quality. If that happens, you have to scramble to get quality high and then tell people you are better than when you started!

While ss bays require more cleanup, they require less maintenance and can produce a steady income stream as long as you offer plenty of soap and wax at a $2 startup cost, with 3-color foam in the bay, as well as spot free rinse and perhaps cc and token acceptance. ss bays require little customer education. people don't commonly run into the equipment in ss bays like they can in auto bays, disabling the wash until it's repaired. For awhile, my 2 ss bays out sold my iba daily. They still do on certain days, so that shows that iba's catch on slower than ss initially. At least in my experience this was the case. Like toady, for exmple; it's been raining here and while no one has been through my iba, customers have been in the ss bays and at my vacs. This small income stream can make a difference as far as paying bills!

It depends on the specific location, as far as how successful ss or auto bays will be. My opinion is that you should be able to build nice little 2ss, 1 iba including land and improvements for $550k-750k. Size the bays properly to accept another iba if things boom. But hey, I'm a new guy and was a new investor not long ago myself, so take it for what it's worth. I just didn't want to go broke with wash #1, ya know?