Valuation of Touchless at Major Retail Gas Station Site

[kdersch]

Hello! I am looking for information on how to value taking over a current wash owners lease and business at a gas station site owned by a major retailer. The wash currently pay a monthly lease (deducted from their income) to the retailer. The wash is tied to the gas station point of sale system for wash codes from the pump with advertising allowed at the pumps (pump decals). There is also a drive up pay station for other customers.

There are 4 more years remaining and the lease is transferrable with notice to the retailer. The site currently has a Laser 360 that is a used unit but still in decent shape (maybe a few more years left on it). Replacement would be a discussion with the retailer as it would be a business risk as a lease. The doors are older acrylic airlift and one of my questions is how to see if the retailer or wash owner has to pay to replace them as they are well aged. The wash pays all utilities (water/gas/electric).

The easy answer is a valuation of current revenue and a multiplier but it becomes a little more complicated with a lease as there is no real estate attached for equity or transfer.

There is refurbished tunnel across the street that reopened a few months ago and Tommy's is going to build next year (say later 2024/early 2025 opening) next to the refurbished tunnel. This however is the only touchless in the immediate area. The owner is claiming numerous people took their $1 monthly trial and then canceled and came back to the touchless (the books should show this).

 

[Roz]

Hello! I am looking for information on how to value taking over a current wash owners lease and business at a gas station site owned by a major retailer. The wash currently pay a monthly lease (deducted from their income) to the retailer. The wash is tied to the gas station point of sale system for wash codes from the pump with advertising allowed at the pumps (pump decals). There is also a drive up pay station for other customers.

There are 4 more years remaining and the lease is transferrable with notice to the retailer. The site currently has a Laser 360 that is a used unit but still in decent shape (maybe a few more years left on it). Replacement would be a discussion with the retailer as it would be a business risk as a lease. The doors are older acrylic airlift and one of my questions is how to see if the retailer or wash owner has to pay to replace them as they are well aged. The wash pays all utilities (water/gas/electric).

The easy answer is a valuation of current revenue and a multiplier but it becomes a little more complicated with a lease as there is no real estate attached for equity or transfer.

There is refurbished tunnel across the street that reopened a few months ago and Tommy's is going to build next year (say later 2024/early 2025 opening) next to the refurbished tunnel. This however is the only touchless in the immediate area. The owner is claiming numerous people took their $1 monthly trial and then canceled and came back to the touchless (the books should show this).

You should negotiate a new lease as a contingency for the sale. Value with a new long term lease is probably 3x owners cash flow with the one caveat being the condition of the equipment. You may be leasing a sink hole for money if equipment is old and not well maintained. Good luck.

 

[Dan kamsickas]

Deeeeeeppppplllly investigate the equipment. Just had another conversation with another new owner who didn't and is now in debt on a business that needs a boatload more capital investment because of the age and condition of the equipment. Literally all of it was manufactured by companies that no longer exist and/or the correct parts to make it work no longer exist.

 

[kdersch]

Deeeeeeppppplllly investigate the equipment. Just had another conversation with another new owner who didn't and is now in debt on a business that needs a boatload more capital investment because of the age and condition of the equipment. Literally all of it was manufactured by companies that no longer exist and/or the correct parts to make it work no longer exist.

This is absolutely one of my concerns. I am not sure this equipment is anything better than "ok" condition. It is a Laser Wash 360 that was bought used from my understanding. I am not a fan of those machines personally and would like to get a WashWorld machine.

Also, I do understand looking to renegotiate the lease for me. They only seem to do 5 year terms.

 

[Roz]

This is absolutely one of my concerns. I am not sure this equipment is anything better than "ok" condition. It is a Laser Wash 360 that was bought used from my understanding. I am not a fan of those machines personally and would like to get a WashWorld machine.

Also, I do understand looking to renegotiate the lease for me. They only seem to do 5 year terms.

Everything has a value. With lease short and equipment old you can try to get creative on an offer and reference the issues. Wash your car there and see what you think about the experience. Make a low offer or perhaps a revenue share offer with minimal or no monthly rent?

 

[jfmoran]

Hello! I am looking for information on how to value taking over a current wash owners lease and business at a gas station site owned by a major retailer. The wash currently pay a monthly lease (deducted from their income) to the retailer. The wash is tied to the gas station point of sale system for wash codes from the pump with advertising allowed at the pumps (pump decals). There is also a drive up pay station for other customers.

There are 4 more years remaining and the lease is transferrable with notice to the retailer. The site currently has a Laser 360 that is a used unit but still in decent shape (maybe a few more years left on it). Replacement would be a discussion with the retailer as it would be a business risk as a lease. The doors are older acrylic airlift and one of my questions is how to see if the retailer or wash owner has to pay to replace them as they are well aged. The wash pays all utilities (water/gas/electric).

The easy answer is a valuation of current revenue and a multiplier but it becomes a little more complicated with a lease as there is no real estate attached for equity or transfer.

There is refurbished tunnel across the street that reopened a few months ago and Tommy's is going to build next year (say later 2024/early 2025 opening) next to the refurbished tunnel. This however is the only touchless in the immediate area. The owner is claiming numerous people took their $1 monthly trial and then canceled and came back to the touchless (the books should show this).

What kind of fuel volume does this site do, in other words how many gallons per month? You wash volume will be driven off the fuel volume. Fuel operators are notoriously bad car wash operators, and their buildings and machines are usually not well maintained. I would have the equipment evaluated by a local distributor. Typically, leases with the fuel companies, you are responsible for all the equipment, and they are responsible for the building.

 

[soonermajic]

Would be great if you could work out a deal to buy, & get an easement...