maximizing margins

Carwash dollars compensate for shrinking gas profits.

Remember when convenience stores and gas stations used to give a free carwash with the purchase of a full tank of gas? Now, shrinking fuel margins are causing an increasing number of store operators to look to carwash sales to boost the bottom line. According to the International Carwash Association, this market shift is so strong that automated carwash services at gas stations now account for 46% of carwashes nationwide.

Larry McCarty, a sales rep with Mark VII carwash systems, says that in the past, the profit margin rule of thumb was one carwash sold for each 50 gallons of gasoline pumped. “With the rise in gasoline prices, the number now ranges from one wash sold for each 50 to 100 gallons of gasoline pumped,” he said.

McCarty points out even a basic carwash unit can return profits in the 60-70% range—and many of his c-store customers consistently sell 2,000 to 2,500+ washes every month. Carwash sales are greatest in stores where managers receive a percentage of the wash profits in exchange for keeping the wash bay clean, neat and ready for business.

Building Business
Driving high volume requires the right system, maintenance and marketing. The potential for washing high volumes of cars at convenience stores is huge, says carwash consultant Robert Roman, owner of RJR Enterprises, provided that storeowners choose the unit best suited to the marketplace, keep it well maintained and consistently market the service.

“C-store owners need to understand that because car-washing is not an essential service, they need to do everything possible to create customer loyalty and repeat business,” said Roman. “As with any strategic business unit, top flight results require top flight planning and execution.”

Choosing between an automatic inbay wash that handles one car at a time and a conveyor unit that rolls multiple cars through simultaneously demands analyzing the amount of money and room each system requires. To give storeowners an idea of startup costs for both types, Roman offers the following fictitious example (see chart).

C-store owners should immerse themselves in information before they start immersing customers’ cars, observed Brent McCurdy, owner of Blendco Systems LLC manufacturer and supplier of carwash cleaning products.

Wash speeds and the amount of cleaning products used vary greatly between units, McCurdy said, and though bargains are available, buyers need to know enough to recognize one. For example, a system that delivers a thorough wash in five minutes can handle 30 more cars per day than one that takes seven minutes to do the same job. In the winter, when drivers want to get the salt off their cars, that extra two minutes can take a big bite out of profits.

McCurdy added that distributor location and support are critical. “Buying from someone located two states away means paying big bucks for driving time when your unit goes down,” he said. “Buying from a distributor with a poor support record should be out of the question.”

Many convenience store operators don’t use enough detergent to get cars really clean—typically, professional carwashes use about twice as much detergent as convenience store carwashes. Increasing the amount of detergent doesn’t significantly decrease revenue, and cleaner cars keep customers coming back for more. “It’s a matter of shifting your focus from saving money to making money,” McCurdy said.

Pooch Power Fattens Profits
Offering combined canine and carwashing facilities is the hottest trend in the carwash industry today, said Troy Berry, sales and production manager for Washtech, a Canadian manufacturer of in-bay automatic carwashes.

“Last year, we built six multi-bay, self-service carwashes. Five of the six have at least one canine washtub, and most have two,” Berry says. “It’s definitely a growing market. Every carwash quote I’ve sent out for the past 18 months has contained a dog wash quote.”

Berry notes that a pet wash is substantially less expensive than a carwash to begin with, and the cost of running one is significantly lower as well because cleaning a dog takes a lot less water and chemicals than cleaning a car.

Some of Washtech’s dog wash sites make gross sales of between $800 to $1,200 per month per tub, Berry says, and the payoff time for the unit is less than a year. After that, any business is gravy.

Dave Grass, author of “Start Your Own Self-Serve Dog Wash,” cautions c-store owners with coin-operated carwashes against buying coin-operated dog washes. Coin-operated models, Grass said, cost between 2.5 to 10 times more than regular models. They also lack significant splash walls, making it difficult for owners to control dogs in the tub and leads to big puddles on the floor.

“Washing dogs isn’t the same as washing cars, and that’s really the problem,” Grass said. “Coin-operated systems strike me as having been designed by people in the carwash business, not people with dog grooming experience.”

Keeping Marketing Costs Down
Marketing a carwash is essential to its success, but successful marketing doesn’t have to be costly. Neil Hitchcock, owner of Oasis Development and Management in Ocean City, Md., suggests these lowcost marketing strategies that also encourage employee engagement:

  • Ask employees to design ads and coupon flyers. Getting your people involved gives them a creative outlet and supports success.
  • Boost employees’ sales incentive with a program that rewards successfully selling higher carwash grades. For example, figure out how many upgrades equal an employee’s monthly car payment and add that number to the employee’s monthly performance incentive.
  • Print flyers with coupons for a carwash at a reduced price or with a free upgrade. Leave some at nearby merchants such as dry cleaners, lube and oil change businesses, automotive parts dealers and doughnut shops. If the carwash includes a dog wash, distribute flyers to local veterinarians as well.
  • Invest in low-cost magnetic signs with a slogan such as, “I stay clean at Joe’s Convenience Store.” Ask employees to put the signs on their cars in exchange for free carwashes.
  • Sell “buy nine washes and get the 10th one free” carwash cards. Customers must bring their cards inside each time they want to wash their cars, making it likely they’ll buy something else while they’re there.
  • Include a free carwash with gas credit card application.

Dirty Dog Money

Maintenance, marketing determine petwash success

Self-serve petwashes offer dog owners a wallet-and user-friendly alternative to the mess of bathing Fido at home or paying a professional groomer $50+. They also offer c-store owners an opportunity to bank more of the $14 billion a year that U.S. pet owners spend taking care of their furry friends, notes Doug Empie, East Coast division manager for self-serve carwash systems manufacturer GinSan.

A self-serve petwash provides another service for existing customers, attracts new customers and fuels repeat business, Empie said, adding that not only are most of his customers adding a pet wash section to new carwash construction, some are converting an existing “slow” carwash bay into a petwash.

A typical unit allows do-it-yourself dog owners to lead their furry friends up a ramp and into a waist high stainless steel grooming tub fitted with a raised grate that keeps canine paws above wastewater. A short lead bolted to the back wall clips to the dog’s collar and swivels to allow owners to turn the dog in any direction for cleaning ease. Instead of towels, many dogwashes now have dryers that suck the water from the dog’s coat, leaving it clean and flu
ff dried.

Empie stresses that success depends on keeping the petwash clean and marketing the service. “You can build it, but people won’t come unless they know it’s there,” he said. “And if they come and find it dirty, they probably won’t come back.”

 

Costs for Adding a Carwash to an Existing C-Store with Gasoline

Assumptions:

  • Site can accommodate minimum building and vehicle stacking requirements.
  • Average monthly throughput of 100,000 gallons ($40,000 in-store).
Typical Start-up Expenses   
 In-Bay Automatic 50′ Touchless Conveyor
Land --
Site Improvements$25,000$25,000
Building$125,000$125,000
Equipment$175,000$250,000
Additional costs$25,000$25,000
Total Start-up$350,000 $425,000
Pro-Forma   
 In-Bay Automatic 50′ Touchless Conveyor
Volume16,00032,000
Gross Sales$88,000$176,000
Operating Expenses$20,000$48,000
EBITDA$68,000$128,000
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