3 million express tunnel

[Greg Pack]

TF, if you are kicking the tires on one, you need to go to the SECWA show in Orlando next month. Nowhere will you find a group of operators more experienced with the express format and will give you honest input. You will still find that the 10K sites are considered home runs. For every site that is doing 10K I bet there are ten sites that aren't. 15K sites are the Michael Jordans of the industry. They do exist, but for every one that does, there are fifty wannabes. If you've got a distributor telling you that all the sites are 20K/month you need to find another one.

For the equipment industry, Express is the new SS/IBA. If you don't sell express equipment you're probably struggling quite a bit more than those that do. It's even better now because you can talk those investors into 600K equipment packages to handle that 20K/month they're going to have. I know at least one conveyor salesman in the south that is still doing quite well with gullible investors hoping to hit those high numbers.

 

[tobaccofarmer]

Thanks CFCW, I Wouldnt mind going to that show, but with carwashes don't know how that could happen? I can't leave for a few hours or things start to happen. I don't think I could get my mind around 3 million dollars for a business that revolves around weather, I personally wouldnt do an express tunnel however I am interested in studying the impact they have on the rest of us. Much rather spend 3 million on something like a Chili's where it still makes as much money no matter what the weather outside is doing. at 3 million too much riding on one location day in and day out? just my opinion. Still would love to get ideas on how I can figure out what kind of volume this one the thread started about is really doing? ask the owner? ask employees several times and see how close they are? any ideas?

 

[rph9168]

Seldom do owners give out volumes and in many cases if they do they are inflated.

 

[norton]

What I figure from this discussion is that the average EE does about 6200 cars per month with a chemical cost of $1 per car. It looks like the average ticket will be around $6 each. That gives on average $37,200 per month gross income. I know expenses vary depending on the region of the country but does anyone have an average % as to what general operating expenses would run? It has to be somewhere between 30 to 50% before debt service and taxes. I would guess that operating expenses would run a little over 40%. That would be $15K per month in operating expenses. So you have 22K left for debt service and taxes. At a 2 million dollar investment you are just breaking even.
In my 2.5 million dollar example I gave earlier that did not include the land. The land owner is taking a % of the wash business so the investment is probably over 3 million. I see no way for this thing to ever make a dime.

 

[rph9168]

A lot of work and money for little if any return if not planned properly. EE's are a valid format but the location, size of the site, layout and building expenses have to be in line with expected volume. Like any other car wash project all too often EE's fail due to a lack of due diligence on any or all of those elements.

 

[tobaccofarmer]

Norton, at 6200 cars I agree it would never make a dime and be shut down in months, but we are not talking about 6200 cars its anywhere between 16000 and 20000 plus. Its the only EE in a city of 200,000 plus growing at 12% annually. Only 1 other tunnel (full serve) on a 6 lane road 85,000 cars/day. So far everytime I have counted its 1 car a minute or 60 an hour. According to distributor (I know this means nothing) he is already starting work on building his second one, so we'll see. If 6200 really is average than who in their right mind would look further into something that terrible?

 

[rph9168]

Tobaccofarmer what is your point? Are you contemplating building one? How many times do posters have to state that this wash you are talking about is about as rare as good morals in Congress? Where I live there are no EE's doing anywhere near that volume - most don't even do half that number. There is not much more that can be said than has already been posted.

 

[tobaccofarmer]

Don't really have a point other than obviously these things are much different depending on what part of the country they are and why? other than weather being the different variable why would they be doing so much more here compared to your state? Maybe because they are still just starting to pop up in the last few years so somewhat "new" compared to your area where they have been around for a while and many more have been built? So as more time passes and more are built on top of each other it will look like your area? I don't know but interesting enough. I dont know just trying to learn as much as I can.....If what your saying is true than I guess they are not building anymore right? with volumes like you speak of who would? Has it run its course in your part of the country? Like it will here to someday?

 

[rph9168]

Hasn't been anything new built here for a while. If someone really wanted one it would be a lot cheaper to buy any one of the number of them on the market.

 

[tobaccofarmer]

Sounds like the self serve/ autos here. Nothing new built in several years but almost all existing are for sale and non of them make any money. I have seen a huge decline in self serve around here over the last 5 years and continues to get worse. One interesting point the distributor told me about the express tunnel is that they have taken surveys at multiple sites and around 50 percent of customers surveyed said they have never visited a carwash until now. He was selling the fact that 50 percent of customers are driveway washers which I thougt was interesting he says the 3 dollar price makes them want to try. Interesting that there is still that much market share that doesnt visit a commercial carwash? Does this sound right?

 

[tobaccofarmer]

Check out this interesting link..

http://www.southlandautowash.com/3-dollar-car-wash.php

 

[Earl Weiss]

Don't really have a point other than obviously these things are much different depending on what part of the country they are and why? other than weather being the different variable why would they be doing so much more here compared to your state??

I don't know that the variable, aside form weather is the State.

I think it is demographics in general. For instance, my places in the city will have volumes start earlier and go later than the place in the burbs. Higher population density and more traffic early and late.

 

[Earl Weiss]

Check out this interesting link..

http://www.southlandautowash.com/3-dollar-car-wash.php

>>It is, simply, below market pricing, which is intended to build volume by bringing people out of their driveways to car washes, also by killing the self service carwash industry, and also by killing off higher priced tunnel competition<<<

There are other places that mya suffer like the IBA. BUT, if many locations go EE (No Flex) then their customers who want Full service will go to those who offer it on those occasions.

BUT this ignores a factor which I consider of the utmost importance. At a lower price point I think customers will wash more frequently. They are less concerned with weather forecasts. So, now, your once a month customer who didn't want to spend $10.00 and 20 minutes once a month may now spend $3.00 and 3 minutes 2,3,or 4 times a month.

 

[smokun]

A More Sensible Option

Thanks, Earl. Allow me to piggyback.

Your point further emphasizes the resiliency of the flex-serve operating platform... because it can do everything that the best express exterior can do, as well as anything that the best full-service operation can do. Flex-serve is the quintessential operating platform... that offers the greatest potential of maximized revenues and net profitability.

-Steve

 

[rph9168]

That was a very interesting link. Detroit was the first area to be hit by discounted washes. In Atlanta instead of existing washes discounting EE's sprung up all over the place. Some of the traditional full/flex service washes are still doing okay. Some switched to become EE's and some just added an exterior only wash to their menu.

The question I find most compelling is what the long term effect will be. Short term has been disastrous to automatics. Many of the automatics that are still in business have matched their pricing. Some have gone as low as $2 and offer a presoak and drying agent only. Many of the EE's here have gone from 3 to 4 or 5 dollars with little effect on their volume. While I think the economy has had its effect on volume it seems that long term the pricing will creep up closer to where the traditional full/flex serves are and some of the EE's will begin offering the same services as they do.

 

[Greg Pack]

Thanks CFCW, I Wouldnt mind going to that show, but with carwashes don't know how that could happen? I can't leave for a few hours or things start to happen. I don't think I could get my mind around 3 million dollars for a business that revolves around weather, I personally wouldnt do an express tunnel however I am interested in studying the impact they have on the rest of us. Much rather spend 3 million on something like a Chili's where it still makes as much money no matter what the weather outside is doing. at 3 million too much riding on one location day in and day out? just my opinion. Still would love to get ideas on how I can figure out what kind of volume this one the thread started about is really doing? ask the owner? ask employees several times and see how close they are? any ideas?

20K site means regular 500- car weekdays and 1200 car days on the weekend. The place will essentially be quite busy on weekdays and "packed" all the weekend if the weather is decent. It depends on what the carwash was built to handle volume-wise. But in the traditional 80-100 ft tunnel in the south,the queue will be cars stacked at least five deep pretty much all day on weekends, often ten.

In my metro area, we went from one successful express in 2003 to about twenty locations in 2010. Most are investors new to the carwash business that never thought about a carwash. But they saw one wash on the other side of town going gangbusters, so they thought they would try it in another location. By 2006, they were competing over development spots. Several expresses have failed and it hasn't been pretty. The collateral damage of the economy combined with all this capacity has been pretty heavy. No one is interested in building SS/IBAs any more. I do not personally know one operator in the area who is making more than they were five, or even ten years ago. Revenues at all IBA/SS are down. I'm down about 20% from my highs. My net is down 3K a month from just a few years ago at one wash. That's a huge chuck of profit to be without when you're trying to make a living. A few weeks ago I caught word of another express being planned about 3-4 miles away from my wash. I thought the market was mature and didn't plan on yet another express in the area. That will make three expresses within five miles of my wash. So I'm planning on losing another 10% of my gross in 18 months.

Having said that- If this express in this thread is the first, and it is TRULY going gangbusters, it is getting new investors' attention. They do not consider the SS/IBAs as competition your locations will not give them pause. Plan on many more in the area. Plan on an express coming near you within three-five years (if your area is suitable for an express). Plan on them eventually having a double digit impact on your gross. My advice would be to make the decision to get into the express business now, or be content standing on the sidelines watching the newcomers siphon off your business. If your debt is low enough that may be viable solution.

 

[smokun]

A Blind Man Could Have Seen It!

Quite a few years ago, before the Rapido Rabbit was conceived... and failed, I was recommending to a major equipment vendor that he should caution investors seeking the freestanding express exterior concept to also consider leaving room in their site plan for a flex-serve upgrade because the inevitability of dire consequences for most standalone operations to sustain themselves would dictate a sensible alternative. And while his response as an equipment supplier was indifferent, he admitted that while the flex-serve paradigm was his preferred choice, it was smarter to sidestep the fray... and simply sell what the customers wanted.

The logic of offering the consumer sensible choices is indisputable. So why would an investor choose the standalone express exterior model... when having the option of a planned upgrade available, if & when needed, could be part of the plan; maybe a plan "B"? It is an easy design option for those who would only deal with labor when they had no other choice.

I urge any investor thinking of building a standalone express exterior to upgrade his or her thinking... before the permits are obtained and the cement is poured. It might make the critical difference of succeeding... or failing.

-Steve

 

[rph9168]

Steve has hit on part of the problem. Many EE's in our area were built on sites that were so tight there was no room for accommodating a possible flex serve operation option. Like Steve, I have told anyone I have come into contact with that was interested in building an EE to allow for this type of expansion as a possible option.

That being said many of the struggling EE's were built in bad locations either too close to an existing wash or in an area with bad demographics and traffic counts to begin with. This hampered their success right from the beginning.
It seems that most of those that are holding their own were the first ones built in an area. I remember attending a seminar presentation when EE's first hit the scene. One person asked where the best location would be for one. The presenter replied that he would look where there was the highest concentration of automatics and build as close to them as possible. With that advice floating around it is no wonder why automatics are having a problem caused by EE's.

 

[robert roman]

As for your latest question Tobacco Farmer, many people believe the exterior express wash succeeds mainly because of low price for the base wash and free use of vacuums.

However, in discussing this with clients and friends who own exterior express, most believe they succeed because of faster process speed (3 to 4 minutes through the tunnel with a total average time on site of 8 minutes), virtually no waiting line and hand-finished qualities.

There is a lot of ego in the investor market and most developers are looking to hit home runs. Arguably, a model with cost of goods and operating expenses in the range of 45 to 50 percent of gross sales and stories of site locations producing 100,000 or more vehicles a year continues to fuel investment interest.

 

[tobaccofarmer]

I also believe that the speed is one of the greatest advantages. There are allot of reasons why I can see the express model being the leader in the carwash industry. I see spending 3 million the biggest reason as to why it would fail. Overall Theres no doubt that these things will continue to spring up
just interesting to see how many will prove the test of time? I also agree that atleast building a site to accomodate the flex serve platform would be very smart, as the site this thread started about is not setup to do this!