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Building/Buying Formulas

WishyWashy85

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Hey guys,

New to the site and the car wash business! I’ve been doing my research and am curious about a formula I have found regarding wash valuation (net profit). It goes something like this:

(AADT x Cap Rate) x Avg cost per wash x days open per year x average profit margin

There are a lot of averages in there I understand, and a lot of factors that can play into them.

Any thoughts on this formula? Anything to be taken into considering? Trying to use it in general terms at evaluating a purchase or potential build.

Thanks in advance for any input!

-WW
 

jrauth

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Yes, I think you are going down the right path. We normally use daily traffic count times a capture rate of 1% times 300 days a year you can wash a car, to figure out the annual number of cars you should wash.

If you are in a dryer area then you might be able to use 310 or 320 days a year.

Also if there is a lot of competition or if the access to the site is difficult, like having to do a u turn to make a left hand turn into the site then you should probably reduce the capture rate.

As far as cash flow we normally see a margin of about 40% before debt service.

Jeff
 
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