Are These Performance Calculations Correct?

[ULTIMATE WASH]

I have been observing a Full Service car wash for a couple of weeks now. Present seller claims his wash is averaging 25k car washes a year.

I have observed averages of 60 washes on weekdays and Sundays and 80 washes on Saturdays. Will the winter months increase in washes bring the average to about 100 washes per day.

Based on 250 washable operating days, the wash needs to average 100 washes per day to get to 25k/ per year. Is 250 operating days a good number to go by? And will the winter average be high enough to attain the 100/day average.

Location is New Jersey. Can I expect the winter months to bring the average up to what the seller claims he is doing. Will the water and sewer bills help me determine this.

Other information:

Ask price: $375K

Gross volume: $325K

Location: Heavily traveled 4 lane highway.

Utilities, insurance and Taxes: $27K/year

Rent: $2600/month 23 years left on present lease and $50 increases once a year

Payroll: $70K/year Owner is absentee!!

Price point per wash averages $14-15

 

[ULTIMATE WASH]

Performance Calculations Continued.

Competition: with in 2 miles: one modern flex-serve setup only one and a half years old (seems to do similar volume of washes per day) and does not have access directly from highway. There is also another older exterior only wash that is also for sale but is very run down and does not do much business. It does not sit on the highway, it is just off highway on a cross street. There is also another more modern flex-serve about 3.5 miles away that does a very nice amount of business and it is located not on a highway but a heavily traveled road, it has been around for about five years.

Equipment in the wash I am looking at is older Hanna equipment approximate age is 18 years. It has been maintained very nicely but has quite some time on it. The Tunnel is 75 feet. Building is very solid but can use to be given a face lift, paint should take care of that. The property is not real big and can stack about 18 cars. Grounds are maintained but a little out dated. Overall the wash seems to have decent activity, does a nice job on the cars, and also has some regular government clientele.


Looking to make a $300k offer with half down and half to be held by seller @ 7 year term and 7% interest.

Concerns:

Is there to much competition?
Is equipment to tired and need to be replaced soon?
Can the cost of replacing equipment make this wash not a good investment?
No room on property to provide other flex-serve possibilities.



Pros:

Rent and lease seem to be very attractive.
Payroll should be brought down as myself and son will be very hands on.
Government clientele is a positive.
Present clientele seemed to be very happy with the present service.
With present gross the wash should turn a respectable profit.
There is no present advertising. Seems like the wash can do higher numbers if managed better, owner on site and so on!

IT SEEMS THIS WASH HAS SOME POTENTIAL BUT MY INEXPERIENCE MAKES ME UNSURE!!


Any input appreciated!

 

[ULTIMATE WASH]

this thread needs to be read first before the continued thread, so that it makes sense!

 

[MEP001]

Maybe Bill will combine the two threads into one, which you could have done instead of making two separate ones.

 

[robert roman]

Here?s my take.

This is a low volume carwash with an asking price of $375K for the cash business on gross sales of $325K. This is less than one times current profit. One-to-one is what you would expect to pay for a small personal business where the new owner will be the service provider.

Low property taxes, rent of $2,600 and $14 to $15 prices suggests two things; low valuation and weak retail market.

You are justified with your uncertainty.

I would place more emphasis on the trend in sales and profits, capitalized value of the business (what you could/should expect for the risk) and expectancy of ROI (is there an upside to this business/market).

After all, you are buying a cash flow and not the tangible assets of the business.

 

[ULTIMATE WASH]

Wish I could the site wouldn't let me because it was to long. What I should have done is posted the thread and then a second reply to get the rest in the same thread. Maybe your right and Bill can combine them.

 

[ULTIMATE WASH]

Bob please read the other thread. As far as the price point they do offer a 19.50 wash, but because the owner is not on site, there is not much up selling being done. The rent is low but the lease is now 8 years old. There are other washes within a 4-5 mile radius that are more modern flex-serve operations and have a much higher price point, but they work at getting it there. Their volume is also much higher.
Probably my biggest concern is that there is quite a bit of other car washes in town some much more updated. Is there room for another one maybe to be up dated and go after the competition (is it really going to be worth it). Or is it just going to become a price war thing! Kind like the gas station Biz. Again it seems like their current clientele is very happy and loyal! I would think you have to be careful not to disrupt all that. The town is very populated, and has quite a wide range from low to high income so the demographics seem good. Car count going by is very high but at 55 to 60 miles per hour.

 

[ULTIMATE WASH]

Need to keep this close to the other related thread.

 

[ULTIMATE WASH]

but below it!

 

[ULTIMATE WASH]

This one needs to be first! wow what a mess of a thread!!

 

[ULTIMATE WASH]

Bob please read the other thread. As far as the price point they do offer a 19.50 wash, but because the owner is not on site, there is not much up selling being done. The rent is low but the lease is now 8 years old. There are other washes within a 4-5 mile radius that are more modern flex-serve operations and have a much higher price point, but they work at getting it there. Their volume is also much higher.
Probably my biggest concern is that there is quite a bit of other car washes in town some much more updated. Is there room for another one maybe to be up dated and go after the competition (is it really going to be worth it. Or is it just going to become a price war thing! Kind like the gas station Biz. Again it seems like their current clientele is very happy and loyal! I would think you have to be careful not to disrupt all that. The town is very populated, and has quite a wide range from low to high income so the demographics seem good. Car count going by is very high but at 55 to 60 miles per hour.

 

[I.B. Washincars]

Why don't you copy and paste the original post in this thread to the other one and just have Bill delete this whole thread?

 

[ULTIMATE WASH]

CONTINUATION:

Competition: with in 2 miles: one modern flex-serve setup only one and a half years old (seems to do similar volume of washes per day) and does not have access directly from highway. There is also another older exterior only wash that is also for sale but is very run down and does not do much business. It does not sit on the highway, it is just off highway on a cross street. There is also another more modern flex-serve about 3.5 miles away that does a very nice amount of business and it is located not on a highway but a heavily traveled road, it has been around for about five years.

Equipment in the wash I am looking at is older Hanna equipment approximate age is 18 years. It has been maintained very nicely but has quite some time on it. The Tunnel is 75 feet. Building is very solid but can use to be given a face lift, paint should take care of that. The property is not real big and can stack about 18 cars. Grounds are maintained but a little out dated. Overall the wash seems to have decent activity, does a nice job on the cars, and also has some regular government clientele.


Looking to make a $300k offer with half down and half to be held by seller @ 7 year term and 7% interest.

Concerns:

Is there to much competition?
Is equipment to tired and need to be replaced soon?
Can the cost of replacing equipment make this wash not a good investment?
No room on property to provide other flex-serve possibilities.



Pros:

Rent and lease seem to be very attractive.
Payroll should be brought down as myself and son will be very hands on.
Government clientele is a positive.
Present clientele seemed to be very happy with the present service.
With present gross the wash should turn a respectable profit.
There is no present advertising. Seems like the wash can do higher numbers if managed better, owner on site and so on!

IT SEEMS THIS WASH HAS SOME POTENTIAL BUT MY INEXPERIENCE MAKES ME UNSURE!!


Any input appreciated!

 

[pgrzes]

I have a express Exterior in SE pa. With 7 ss bays and 7 vacs. and vending, similar volume. a bit less last couple years. I will sell to you for about the same money. Message me offline if you might be interested. My lease is half what you are looking at.