Self-Serve Car Wash Real Estate Ideas

[eda]

Hi,

As I drive around and also sift through the commercial real estate for sale listings I can't help but notice the amount of self serve car washes for sale. In my market it is mainly due to the amount of quality $3 & $4 express exteriors. It makes the bay & automatic offerings less appealing. Naturally there are other factors, but no doubt it is the main reason.

I have two thoughts & was wondering how you all feel. Assume the average configuration in my market is 6 s/s bays & 2 automatics that sit on .75 acres with a reduced price offering of $375,000

1) Would you consider buying one and roll back the bays to $1 and the automatic for $2 or $5 with all the options? Could you not take on the EE's with this pricing, knowing that you are buying the above description at roughly 50-60 % less then the original construction cost? Perhaps one of the other factors I glossed over could be that the public has become less interested in doing it themselves and its not just the EE price.

2) From a different perspective, do any of you guys ever wonder what could you do with an existing self serve that is closed or for sale at a great price? Meaning, what other type of business can these sites be turned into? I am not talking about converting to an EE. How about a laundromat, or something totally different but would fit in the same type of demographic that the self serve was built near.

Just curious if anybody has any creative ideas.

Thanks,
EDA

 

[robert roman]

“Assume….6 s/s bays & 2 automatics…..75 acres….price…..$375,000” ‘…..roll back the bays to $1…automatic for $2 or $5….Could you not take on the EE's with this....”

Using standard financing on price, debt service is $24,000 or $36,000 NOI at DSCR 1.5 or $60,000 gross sales based gross net 60 percent.

$60,000 may not seem like a big number but risk reward is only 0.16:1 ($36K - $24K / $75K).

At $120,000 sales, risk reward is 0.64:1. Risk reward of 2:1 would require $300,000 gross sales.

Competitive advantage can be created using cost, differentiation and/or niche strategy.

Self-serve can’t win low price (cost) because it can’t come close to matching express hourly capacity.

Express is differentiated and that’s why the customers defected.

DIY niche is no longer sufficient to support the wash otherwise it would not be closed.

It’s usually less expensive to lease a store rather than convert self-service because most areas have plenty of excess retail space.

So, it makes sense to first determine highest and best use as carwash site.

This requires determining what demographics have needs that are unmet.

 

[robert roman]

For a creative use of a 6 + 2 wash, I would consider conversion to waterless carwash format.

Remove all of the wand and in-bay automatic equipment from wash-bays as well as most of the support equipment in mechanical room.

Retain pay stations to process transactions in the two farthest bays. Three bays would be used for exterior waterless wash and fourth could be used for optional interior cleaning and express detailing services.

Since site is attended, vacuums can work for free with toggle switch and timer.

2-person team can process 6 to 8 exterior washes an hour. 2-teams can clean 12 to 16 an hour.

Waterless is more than just an exterior wash. It shines paint and leaves a glaze that works like wax. So, it is marketed as high quality “wash and wax” product at premium price.

Since 80 percent of self-serve sites are located in urban areas and suburbs, waterless can be target marketed to unlock sale potential from customers that value environmentally responsible consumer products and services. These consumers will pay more to get these products and services.

Say, conversion cost is $25,000 or an enterprise value of $400,000.

Process 15,000 CPY is gross sales $300,000, NOI is $120,000. This does not include revenue from interior cleaning or detailing services either.

15,000 CPY is about 1/2 the sales volume of a down and out full-service conveyor. NOI is more than double most self-serve washes.

Close at night, open in morning. No money to steal or stuff to vandalize. Open six days a week. No equipment maintenance, no stuff to freeze up. No breakdowns, no service calls. Requires only 2 to 5 persons (includes owner) to operate – same as express.

Wanna learn how?

 

[eda]

Robert:
Thanks for the replies.
The concept of rolling out a "waterless" car wash is very interesting. It has many benefits some of which you highlighted. The marketing of such would be a key element.
The concern I would have is the ability to clean effectively. I guess perhaps keep the prep gun station around for wheel wells, tree sap, bugs, etc.... Obviously it might go against the waterless concept. but "touchless", "semi-touchless" are promoted with a combination of light touching sometimes. Perhaps just don't state "100 % waterless" unless you are, kind of like the washes that highlight "100 % touchless" really operate that way.
The challenge is to effectively clean year round in the midwest. Since I don't see any retail locations around as a waterless carwash I wonder if that is a hurdle that can't be cleared at this time. Perhaps it is because we are discussing such a new concept, but then again waterless products have been around at least 5 years.
I love the creative thinking that's for darn sure, and I definitely think a viable option
Thanks,
Eda

 

[carwash11147]

I had a competing wash just down the road from mine that was failing about 10 years ago. It was purchased at a steep discount to replacement cost. The new owner slapped a coat of paint on the building and dropped the SS bays to $1 and the automatic to $3 to low ball the competition. He withered on the vein for 7 or 8 years. I purchased the property last year at a fire sale price, tore the old building down and rebuilt new, raised the price back up to where you can make a reasonable profit, and business has been great. If you aren't making enough profit to reinvest back into the business, customers notice, and you won't survive. My .02.

 

[Jeff_L]

My opinion, and my opinion only.

Cheapening the market by offering constant low prices does nothing more than drive the perception of self serves down, unless you're doing it to offer some other higher priced service/product. For example, $3 wash with the purchase of an oil change is reasonable, but $3 to just come in and wash? How does someone stay in business just selling that, even with high volume, not sure you could get enough cars through.

Change the playing field perhaps? Offer a clean wash, great products (lots of soap, show, hot water, smells, etc), add detailing, perhaps some young lads to hand wash the cars, etc. if we continue to support low prices in an already low margin business, we're going to continue to attract unwanted clients.

Again, this is just my opinion. I'd rather be a Starbucks-like car wash than a gas station coffee-like car wash. No offense to gas station owners! I'm referring to the old days when the coffee was just in a big metal percolator with a spout and stack of foam cups next to it.

 

[robert roman]

“The concern I would have is the ability to clean effectively.”

Waterless works great on vehicles with mild to moderate grime, not the filth possible in areas above Mason Dixon Line during the winter months.

So, it’s a business that attempts to create competitive advantage by differentiation and niche strategy.

Today, most waterless carwash businesses are mobile, on-demand service. Typically, these are small operations with between two and eight employees.

There aren’t many drive-through facilities yet but the ones that do exist are successful.

In many markets, 6 + 2 on 0.75 acres might have cost as much as $1.2 million ten years ago. Now, this property has fair market value of $375,000.

What does this imply about the quality of the retail market where this wash is located?

It says demand has dried up (economic) or been sucked away by something (competition).

So, if there isn’t an opportunity to reposition business (i.e. raze and build exterior express, in-bay express conversion), what do you do with low Grade B property and special purpose building?

I’ve seen people try to low-price a struggling full-service by offering groupons, a cheap exterior-only price, etc. only to continue the slow downward spiral.

My suggestion requires only 15,000 cars a year or about 3,750 unique customers. Daily, this is an average of 48 cars or average of about 5 cars an hour.

This is one-third the volume needed for 6 + 2 self-serve.

Since customer acquisition cost is about the same, it would seem a lot easier to attract 15,000 cars than 45,000.

 

[getnbusy]

you cannot wash enuf cars at those prices to make a return. focus on the dirt, not the carwash.

 

[JustClean]

robert roman:
For a creative use of a 6 + 2 wash, I would consider conversion to waterless carwash format.


I tried to find the photo but must have lost it. It shows one of the "Waterless" guys washing his truck in our self serve carwash. I just had to laugh and take a photo

I'd rather turn it into a boom gated "all-you-can-eat" installation. For quite a few people on this forum seem it seems to work.
But this all depends on your customer base...

 

[robert roman]

If you are enamored with exterior express format, another creative idea would be to consider repositioning the wash as flex-serve format.

This could be accomplished for about same cost as POP conversion and results would probably be twice as good.

End result of conversion is two in-bays (3-min/wash), two drying bays, one express detail bay, free vacuum area and one lobby/office, building skin package, roll-up doors, lights and signs.

Require owner/operator or manager and one employee.

I wrote an article on this a few years back based on a concept study I did for someone.

If site location can support POP or exterior express, it can support flex-serve which has far greater revenue potential.

Waterless hand-wash is like wands, a niche strategy. Flex-serve advantage is niche and differentiation strategy.

Flex-serve accommodates all DIFM and DIY, except dedicated wand-users.

 

[robert roman]

Another creative idea would be food services.

Over 1/3 of U.S. population is obese. Americans like to eat.

Many years ago, I was engaged by a c-store outfit in south to help them evaluate carwash as profit center for the chain.

End of presentation, president says to me, Bob, people don’t eat tofu here. People like fried okra, fried chicken, fried sausage, fried anything.

Bottom line, $250,000 fried food concession makes a lot more money than $400,000 in-bay automatic carwash.