In only a couple of weeks, thousands of car wash operators, looking to improve the bottom line performance of their businesses will be in Las Vegas to attend the 2017 International Carwash Association (ICA) Car Wash Show. Some will leave with a plan to further dominate their markets and increase earnings from every square inch of their properties. They’ll be actively searching for new innovations and ideas to reduce operating costs, improve wash quality, and deliver a unique and compelling customer experience. Have you planned to be one of those operators?
Years ago, it was enough to just show up and learn what’s new. There would be one hot new innovation and the vast majority of owners would add that to their wash. In the 1960s, it was hot wax. In the ‘70s, it was polish wax. In the ‘80s, it was triple polish protectant. The ‘90s was all about total body protection. Later came express-exterior, free vacuums, new wash models. Now—well, that’s where things get interesting.
The outdated mindset that car washing is a commodity is dead. Operators seeing the biggest gains are less concerned with what commodity the guy down the street is offering and are focused instead on delivering a memorable customer experience and value that’s uniquely theirs.
Suppliers are scrambling to arm these innovative car wash owners and investors with the equipment chemistry, and training they are demanding to help them stand out from the crowd. Technology companies are rapidly delivering solutions to streamline customer interactions, stay connected to build loyalty, and leverage digital marketing and big data to drive sales.
The only word that comes to mind with how car wash operators are combining branding, wash package design, automation, equipment, chemistry and site management to deliver a more compelling wash experience is wow. I’ve been in the business for well over 30 years and find myself learning something new almost every day.
Here’s the deal. Installing the latest pay wax to keep up with the guy down the street doesn’t cut it anymore.
Our industry is exploding with opportunity. Those that are constantly evaluating their current situation, prioritizing investments to enhance their customer’s experience and executing ahead of the curve are poised to capture their unfair share of the market. Some of you may be reading this while standing on the show floor. Others may be conducting your research online instead.
Regardless of your methodology, before deciding on the next investment to grow your business, think about what do you plan to accomplish and how will it impact your revenue. Not sure where to start?
Let’s take a look.
Planning Step 1 – Document Your Current Situation
Delivering a clean, dry, shiny car is vital. Conducting a periodic equipment audit is a crucial component of successful planning but it’s only one of three areas you need to regularly examine. The second is your existing and potential customer base and the third is the condition of your facility. I recommend breaking this report into three parts, and conducting this analysis of your business before heading to the next trade show.
Market & Demographic Survey: Your instinct to understand the preferences of your market is a primary reason you’re in business today, however, don’t trust just your instinct alone. Look to one of the many firms or industry suppliers who can compile a market and demographic survey within a 5-mile radius of your site. You’re looking for indicators that customer preferences have changed. What new retail or service companies have opened in your territory and which ones are excelling? Document your existing competition, their service models, and any changes they’ve made to improve. Now research the latest trends being reported in the industry magazines, websites or blogs, trade shows and your network of other operators. If all goes well, opportunities to grow your business should be going off like bells and whistles in your head.
Objective Facility Evaluation: Step back and compile an objective facility evaluation. Compare your signage, landscaping and building appearance from across the street. Evaluate the uniforms and positioning of your staff and ask yourself, “Does my carwash look busy and inviting even with moderate volume?” Don’t trust your own eyes. Ask friends or colleagues from both within and outside of the industry for their candid feedback.
Equipment Audit: Perform this audit after all preventive maintenance procedures are complete. List any vehicle surface that is not cleaned consistently across all makes and models. Expand this audit to include not only wash equipment, but support equipment, computer systems, motor control centers and water treatment systems. At the same time, perform a complete utility audit. Review your electrical, water volume, pressure, and quality, along with available sewer capacity. Utilities can play a major role in the options available during an equipment retrofit and should always be evaluated in conjunction with your equipment audit.
Planning Step 2 – Rank Opportunities
While documenting your current situation in the previous step–if you’re like me–your brain will start to fill with many things you want to do to improve your wash.
Prioritize by ranking each opportunity based on its contribution to improving your bottom line. I’ll admit that it’s hard to not immediately prioritize opportunities to improve wash quality or lower variable expense. Saving 10 cents a car is great, however, new landscaping, LED lighting, billboards or even running a new digital marketing campaign to improve your capture rate may be the best move to grow.
It’s possible a new monthly wash club with RFID gate control is just what your customers want. So when assessing the hundreds of options before you, consider how you rank which investments will reap the greatest returns.
It’s funny. Any new investor to this industry will normally compile a careful pro forma analysis of a property to determine potential ROI before investing. After several years of operation, that same operator will install a new extra service based on a gut feeling without fully calculating the impact on labor, space or benefit to the customer’s experience; which brings us to the next step.
Planning Step 3 – Create a Pro forma
Once you know what you can do, it’s time to crunch the numbers to see what makes the most sense.
When creating your financial estimates, take the time to break down all expenses for permitting, equipment, installation, downtime and any manpower required. Estimating the impact on traffic flow, volume, capture rate, and customer retention can be tricky, but the car wash industry associations and other resources can help you become more accurate.
With numbers in hand, you’re ready to determine your anticipated return on investment over a specific period of time and move forward with your project.
Performing any major car wash retrofit, remodel or upgrade presents a certain amount of risk.
The old adage however, “the harder you work, the luckier you get” rings true. With careful planning and extensive research, you’ll be on your way to making your business more profitable. See you at the show!
Good luck and good washing,
Anthony Analetto has over 35 years’ experience in the car wash business and is a partner at SONNY’S The Car Wash Factory. Before coming to SONNY’S, Anthony was the Director of Operations for a 74-location national car wash chain. Anthony can be reached at 800-327-8723 x 104 or at AAnaletto@SonnysDirect.com