Valuing a nearly abandoned SS site

[Washwannabe]

Hello to those in the know. Looking at my first venture into the SS Wash world. Trying to put a value on a 7 bay wash that has fallen into disrepair. The pump room looks like a WWII submarine, half the bays don’t operate, etc. A complete redo with no history of past business.

I plan to get a feasibility study if I can get the site under contract, but before that, I would like to get a ballpark figure on the number of washes each bay might get per month so to estimate revenue. The only thing I have found is on the Dultmeier site. They say the national average is $1000-$1500 pre bay per month. Is this a good estimate? They also have an point system based on the attributes of the specific location. When I work the numbers I come up with 840 washes a month per bay. That works out to be 28 customers a day per bay. Seems lofty. Is there a better method?

About the site, Midwest, lots of clouds, salty in the winter, stable neighborhood of 70+ k within 3 miles. Average daily traffic 13k, great visibility and access. Two 6 bays within 3 miles, both seem to be busy.

Any help would be appreciated.

 

[soonermajic]

Ask the other 2 washes what they gross yearly

 

[MEP001]

How far is the nearest McDonald's?

 

[Washwannabe]

Maybe my question should be more specific. How many washes do your bays average monthly? What is your traffic count?

 

[SuperSuds04]

That going to depend heavily on town size, traffic count and many other factors. I believe the last big study I remember seeing a Kleen Rite expo stated something around industry average being $22,000 per self serve bay per year, this is from memory but that seems to be the standard nation wide from what they stated.

 

[Dan kamsickas]

The $1000-$1500 per bay per month is the number I have always seen throw around. From talking to good operators, it seems reasonable. In my opinion, the site is worth the dirt. If not used as a wash the building really has zero value. Assuming you are going to have to completely replace every bit of equipment and most, if not all, of the plumbing/electrical you're probably looking at around $100k-ish. Minimum. It could easily exceed that if your pits and sewer and/or incoming water supply needs any work.

 

[Washwannabe]

So has inflation hit the SS industry yet? Are operators increasing prices? What is the average start price and time? Do these numbers reflect say a $3 start and a count up system? Probably not. What is the trend?

 

[Dan kamsickas]

So has inflation hit the SS industry yet? Are operators increasing prices? What is the average start price and time? Do these numbers reflect say a $3 start and a count up system? Probably not. What is the trend?

It's all over the board, to be honest. I've seen some operators decide to raise prices. Others haven't. It's absolutely driven by the local micro economy. The price you can charge in some areas of the northeast is in many cases double, at least, what you can charge in middle America. Here in Michigan it seems to be hovering around the 25 seconds per coin range. I've seen it as low as 20 seconds per coin and as high as 30 seconds per coin.

 

[Rfreeman]

I would base it off the $1,000 - $1,500 per bay as referenced above. If your seriously interested in this location I would ask the neighboring businesses to see what they can tell you about business in general and activity at the wash. In your situation I would say you are just valuing the dirt from this location considering it will be a complete remodel.

 

[Washwannabe]

I appreciate the input. Not sure I understand the position that it is only worth the value of the dirt. The building will definitely need a major facelift, but the cost will be significantly less than the cost to build a new structure. If I built new, I would still need to buy all the wash equipment just like I will need to replace in this location.

Has anyone built a new facility in the last few years? Will you share how much that cost? Going this route I feel like I would be saving 100’s of thousands.

 

[OurTown]

You will most likely save a lot by buying a project wash vs building new. The issue is that new SS only washes won't pencil out because you will probably have over a million dollars in it. The newest one around here that I can think of was built over 35 years ago. If you put an automatic in it that's a little different story but still not easy because now you are adding hundreds of thousands more cost. If you are serious then you really need to check out the competition. What are they charging, what selections do they have, what do they look like architecturally/cosmetically and how well do they work? Then ask yourself if it looks like the market is good enough to get the business back.

 

[Randy]

It kind of sounds like the car wash is only worth land value. Not being there and seeing the condition of the property or knowing demographics of the area it’s difficult to say how much the car wash will do per bay. Figure the national bay average and if it does more than great, if it does less than that then you have a challenge to get the numbers up. Why is the property in such bad condition? Is this property currently on the market? How much are they asking for it?

 

[MEP001]

So has inflation hit the SS industry yet?

All the parts and chemicals I use have gone up about 20% in the last two years.

Not sure I understand the position that it is only worth the value of the dirt.

Because it's not an operating business. If someone were to buy the property to bulldoze it and build something else, they'd most likely make an even lower offer.

 

[Washwannabe]

All the parts and chemicals I use have gone up about 20% in the last two years.

Because it's not an operating business. If someone were to buy the property to bulldoze it and build something else, they'd most likely make an even lower offer.

Yes, that I do understand. But for me wanting to refresh the business, it is definitely worth more than the dirt. If I were to start from scratch the cost would approach or exceed 7 figures.

Why haven’t you raised your prices 20%?

 

[edredtop]

Yes, that I do understand. But for me wanting to refresh the business, it is definitely worth more than the dirt. If I were to start from scratch the cost would approach or exceed 7 figures.

Why haven’t you raised your prices 20%?

One of the washes I obtained was a 6 bay and it looked exactly as you described, a "WWII submarine." Water on the floor, electrical wires run in impossible directions, rat dung, etc...
Because this was my fourth and I had the luxury of time, I decided to approach it with a different mindset. I picked the best looking bay and rebuilt it one step at a time starting in the equipment room, then went outside and painted the bay pure white and put up all brand new signage with a big "OPEN" sign for that one bay.
People noticed immediately.
I had all of the other bays coned and taped off. That took me 5 days for that bay. After fixing the first bay I started on the next and found it became easier, like a production line, and also that some of the bays weren't as bad as they looked and lots of the equipment was salvageable. I still have a CAT 310 running 12 years later that looks like it took a direct hit from an anti-submarine mine. I've resealed it once in that time. This approach allowed me to interact with curious customers and let them know they could use the equipment with confidence because someone was there to address any problems. This approach saved me tens of thousands of dollars as opposed to tearing everything out and putting all brand new equipment in. As the money started to come in, I was able to get the inside of the equipment room as organized and tidy as the outside, sans one CAT pump that cracks me up every time I think about it.

 

[bert79]

Others have said it already but it bears repeating. This place is VERY likely only worth land value. No history of past business and major mechanical fixes to be done means that everything there is a potential liability/junk. The business value has to be proven by the previous owner, not speculation on your part. When we bought our wash it was in similar if not worse condition. Had been closed for 7 years and frozen repeatedly. It had zero customers and therefore no business value. We paid land value. We had to replace everything except the vacuums.

 

[MEP001]

But for me wanting to refresh the business, it is definitely worth more than the dirt.

Then you're going to pay more when realistically you shouldn't.

Why haven’t you raised your prices 20%?

Because my net has come up about twice that much without raising prices.

 

[Washwannabe]

Others have said it already but it bears repeating. This place is VERY likely only worth land value. No history of past business and major mechanical fixes to be done means that everything there is a potential liability/junk. The business value has to be proven by the previous owner, not speculation on your part. When we bought our wash it was in similar if not worse condition. Had been closed for 7 years and frozen repeatedly. It had zero customers and therefore no business value. We paid land value. We had to replace everything except the vacuums.

Are you happy with the outcome? Would you do it again?

 

[Washwannabe]

Then you're going to pay more when realistically you shouldn't.

Because my net has come up about twice that much without raising prices.

How have you increased your net by that much?

 

[bert79]

Are you happy with the outcome? Would you do it again?

Yes, we are very happy with the outcome. That was four years ago now and I would do it again. We tore out an old Hydrospray IBA when we bought it and installed a used Laser 4000. About a week ago we tore out the Laser 4000 and will be installing a Razor in about a month. I will say that a feasibility study or a concept study is a GREAT idea. We did this and it was the absolute best money we spent on the entire project. Even if it was only confirming what we already thought was true.