In the last 2 years i have seen Mod wash building within 1 mile radius of many established carwashs. I guess because they have new technolgy and unlimited and free vacs they are trying to push older washes out of business. These are 4-5 million dollar establishments. Corporate money is now gong to kill the owner operated business's. Dont get me wrong they have nice looking, big, and the lastest technowlogy. But they are so close to other brand new washes who also spent big bucks to build. If i spent 4 mllion to build a new wash, and they moved within a mile next to me, i would probably loose my mine. I would need guarantee from the town ot City that no one would be allowed to open within 5 mile radius?? Thoughts
Mod Wash Express Tunnels
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AnalyticWash
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Free enterprise is what this country runs on. As much as I hate corporate ruining mom and pops there is no one that can stop them. You just have to wait for them to go bankrupt which they all will eventually in my opinion.
washnshine
Well-known member
There is an exterior express chain in my region that is building a wash literally a few hundred yards away from another existing tunnel. The chain approached the owner of the existing wash and asked if he would sell - he said no and they broke ground next to him.
Greg Pack
Wash Weenie
The ICA gave a "state of the industry" presentation at the show and they had some interesting data. If I understood it correctly there is a projected downturn in new construction projects coming based on optimism of equipment manufacturers. Anticipated interest rate cuts have been postponed and that has given some people pause.
Some are still building aggressively with a plan to sell to larger PE groups. But some of the big chains have paid too much and developed too fast and as a result have closed some sites or scaled back development. Development costs have risen, and EBITDA multiple have dropped a bit too, making that a more challenging path for wash flippers.
I know at least one chain were using a sale-leaseback arrangement that was working well when interest rates were low. If you could gather the resources and develop a wash four 4 million, then sell it to a real estate investor for 6 million and offer to lease back for 300K per year, you could make a ton of money just on that model., Your operations don't have to wildly profitable, you just have to keep the party going and the washes cash flowing. This was working great when rates were low and real estate investors sitting on cash were happy to get a 5% return. I'm not sure how many will be buying with thirty years treasuries yielding 4.5%. If that chain went belly up they have likely already made a killing, and the grandma that wanted a safe 5% return will be left holding the bag.
Anyway, I feel like construction of new washes will continue, but with normalized interest rates the overbuilding will slow down. The express tunnel/membership model is obviously still the trend for the near future.
Some are still building aggressively with a plan to sell to larger PE groups. But some of the big chains have paid too much and developed too fast and as a result have closed some sites or scaled back development. Development costs have risen, and EBITDA multiple have dropped a bit too, making that a more challenging path for wash flippers.
I know at least one chain were using a sale-leaseback arrangement that was working well when interest rates were low. If you could gather the resources and develop a wash four 4 million, then sell it to a real estate investor for 6 million and offer to lease back for 300K per year, you could make a ton of money just on that model., Your operations don't have to wildly profitable, you just have to keep the party going and the washes cash flowing. This was working great when rates were low and real estate investors sitting on cash were happy to get a 5% return. I'm not sure how many will be buying with thirty years treasuries yielding 4.5%. If that chain went belly up they have likely already made a killing, and the grandma that wanted a safe 5% return will be left holding the bag.
Anyway, I feel like construction of new washes will continue, but with normalized interest rates the overbuilding will slow down. The express tunnel/membership model is obviously still the trend for the near future.
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Regarding your last sentence...
City's cannot pick winners or losers, nor can they prevent a business from developing/opening just because it is close to another similar business. City's cannot stop a Burger King opening across the street from a McDonalds. Same idea.
City's can only enforce the general zoning and use laws.
AnalyticWash
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This +1
It's worst than that though depending on your region. Obviously some large PE brands are crushing it, but I know of at least two large PE operators that are basically broke right now. Like no money for anything but payroll broke...and hemorrhaging members/cash with full stop on all development. They can't be the only ones.
Greg Pack
Wash Weenie
The local city here has a moratorium on car washes right now. Some municipalities are realizing they are gobbling up prime real estate corners but don't pay ,much in sales tax and don't want more washes.
Dan kamsickas
GinSan Technician
Municipalities do this all the time. I can think of at least a half dozen instances locally where they have come up with some really creative explanations for their decisions. The reality is that they know most times the aggrieved party is not going to take the time and $$$ it's going to take to fight city hall.
Of course that happens. City planners can find obscure reasons to deny or insist on unreasonable demands to make you go away.
I was responding to the poster who said he wanted a "guarantee from the city" that they would not allow a competitor to open within 5 miles.
Dan kamsickas
GinSan Technician
Sorry, I was probably too subtle. I meant he could get what he wants if he found the right officials and had deep enough pockets.
edcrawfordlv
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In my market council members most defiantly have an opinion on what should be developed in some areas and vote accordingly. Not necessarily legal, but even after losing multiple lawsuits, candidates for local offices campaign on "I will always support neighborhoods" (despite zoning laws). I believe my City is up to owing $250 Million in a losing land use case. (https://www.ktnv.com/13-investigate...badlands-called-propaganda-demonstrably-false). While this case is about a housing development, the same thing happens for commercial developments.
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