Rainy Days Capture Rate

[FNG]

Hello,
I am doing my due diligence for a new standalone EE wash and crunching some numbers.
I am using a capture rate of about 240 cars a day, using .075%, 35K+ ADT and basically an A location with income, rooftops, growth, etc.
but only for no precipitation days. Honestly, I have some doubts about .075%, so I have models using < .075%.
From my research, car wash business like many service/retail businesses appears to be highly weather dependent.
I have heard wide range of opinions about this, but realize that the only real
numbers that I will see is when I open the wash or someone would
be so KIND to open their books for me.

With that said, I am trying to get a rough figure for rainy days, depending on intensity of the precipitation, monthly rainfall, and rainy days.
Currently, I am using zero cars washed, but with 155 days of some form of precipitation, this is troubling.
Of course, your model is only as good as your data (GIGO). But using 240x365 = annual wash count, is too vague.
Or is it, "Make hay when the sun shines"? Any suggestions would be
appreciated.

 

[Waxman]

My suggestion is to hire a carwash consultant who can give a site-specific best, worst and hopeful average case scenario, based on his experience in this industry.

Capture rate is an in-exact method of determining what business will be like for a carwash and there are many other factors.

The guys here may be able to help, but their experience will undoubtedly differ from your specific location's outcome (gross sales).

If it were me, I'd put the rainy day capture rate at zero. And, I used 3/10 of 1% in my projections, not 3/4 of 1%. 3/4 is too high and not realistic, at least for me.

 

[robert roman]

Considering importance of unmet demand in designing and evaluating viability of a wash with value of $2.0 to $2.5 million, I believe your approach, with all due respect, is naïve not vague.

Benchmark (exterior auto) is between 0.004 and 1.5. 1.5 might be found where no competition exists and 0.004 in areas overbuilt like certain markets in Atlanta. So, how does one justify using median of 1.0 percent?

Consider a highway several miles long. Wash 1 and 2 on opposite ends each capture X percent of traffic. Now, Wash 3 plops in middle. How do you determine Wash 3 capture? Is it 0.004, 1.0 or 1.5 or Wash 1 X * 0.5 or ((Wash 1 X + Wash 2 X) / 2) * 0.75 or something else? You can’t because there is no cause and effect basis to do so.

This is why most retail developers begin by determining size, segment and sustainability of market. From this, they determine supportable stores and anticipated share (total potential sales, sales per store). Objectivity is created by comparing approaches to sales.

Assume you settle on your average of 240 washes a day. From this, you would determine peak hourly demand because practice is usually to build to process peak anticipated volume, a key to reaching anticipated annual volumes.

Since you calculated average number of washes a day, you need average days in year to calculate (average) annual revenue. However, this is a problem because during a year there will be days open, no precipitation and doing very little business and days open doing tremendous business.

Consequently, if you had market share and sales per store, you could use results to help reconcile any differences in capture rate or other approaches to volume.

There is a lot more to this but hopefully you see there is need to stick with business fundamentals, best practices and process in due diligence.

My advice is not to hamstring your project using a technique that is known as unbiased but inaccurate and unreliable.

 

[rph9168]

Waxman and Bob makes some very valid points. From my experience capture rates can vary greatly due to many factors and few prove to be as accurate as you would like. There is only a handful of times that I have seen them underestimate volume or be on the money. Anticipated revenue stream is also difficult to assess since it is based on many different factors beyond location and demographics.

For some reason it seems that new ventures are consumed with getting financed which is obviously important so they often put together a proposal that is more than optimistic. Then when the real world hits they are in a world of trouble. Hire a good industry consultant and look at it more from the standpoint of profitability rather than what needs to be done to get financing.

 

[mac]

FNG you could also put on a disguise and ask the operator for a job there, or have someone else work there for a week or so.

 

[Randy]

FNG, In what area on the West Coast are you planning on building this car wash? In our area when it rains there is almost no business.

 

[Reds]

My volume is almost zero on rainy days and it is off when the forcast is for rain the next day or heavy showers that afternoon. I am certainly at the mercy of the weather.

 

[Earl Weiss]

Don't forget those times when the precip is zero but the sky looks like it might open up any second. Capture still -0-. How do you account for that?