What's new

Corporate Express Exteriors are OUT of Their Ever Loving Minds!

OurTown

Well-known member
Joined
Nov 8, 2017
Messages
2,466
Reaction score
587
Points
113
Location
Dayton, Ohio
There's now one coming to town and of course the city bent the rules for them. After finding this out I wanted to do some research on why they are choosing to build here in this half baked location. 6,000 ADT on the access road (land locked and need permission from neighbor for access) but will have some visibility on 13,000 ADT road. Not anywhere near what I would consider high density population. Right next to a well established decent 4 bay SS/2 bay auto. We did some research on their other new locations and some are worse. This company is saying that they are going to triple the amount of locations by the end of next year. I'm not talking about going from three locations to nine, I'm talking adding over 30 locations and they are targeting Ohio. After driving around Eastern Ohio Saturday looking at four sites they are building, bought or announced building I have come to the the conclusion that they have gone mad. Most of these are below average household income for Ohio and one is in the bottom 10. Most have stable population with some having very minor growth in the last 10 years but one has gone down in population by about 4%. These are all under 25,000 population cities and three already have EEs in town. One has 15,000 population and there are two going in. Most of these locations are about 1.5 acres and are being bought for over $1,000,000. (one was $1.5 mil) I talked to a car wash appraiser last week and he said no EEs are costing under $4.5 mil now. A car wash mortgage broker about two months ago said the exact same thing. Here are my questions:

Does the rule of washing 100 cars per day per million dollars of site investment still apply? Do the memberships majorly change this rule? If the rule still stands then I don't see how a town of 15,000 will wash 900 cars per day with two new express exterior washes. Even if this rural town services a population of twice that amount how many cars are traveling there? One of the locations has 6,000-ish ADT and 8,500 on the main road that I'm not sure will be visible from.

Do they think they will vastly increase the car wash market in those little cities?

Are these things a type of Ponzi scheme where they are snowing investors into thinking there is major profit in these locations?

Do they think they can be the best and run the other EEs out of town?

Why are they still going crazy with building when the economy is jacked up and probably going down the tubes?

I heard they are buying new locations that others have put the effort into them (site selection, dealing with the city, getting it built) for sometimes double the amount that was involved in building it. Also along those lines I see where they sell the land and building off to a real estate investor after it is built and lease it back. How do these cashflow?

I don't think this is quite like the early 2000s when they overbuilt the SS/In-Bay washes around here because the vast majority of those were individuals and not big corporate.

One good thing about at least one of these corporate washes is that the retail wash prices are bonkers for around here (I think it is part of their strategy to sell memberships) so that might help the existing washes compete.



Feed me some thoughts.....🍔🍕🌮
 

mac

Well-known member
Joined
Sep 3, 2007
Messages
3,511
Reaction score
730
Points
113
Well yes they are bonkers. My guess is that there is one guy organizing this and the investors have money with no car wash experience. I a couple of years they will be for sale at a dime on the dollar. If they got the city to bend the rules it’s time to talk to a lawyer.
 

traveler17

Well-known member
Joined
Nov 5, 2019
Messages
477
Reaction score
272
Points
63
Location
SE NC
I agree w Mac. I think these guys are snow balling investors. I wish it would stop becoming “the thing” to invest it. They are everywhere, it’s ridiculous!!
 

Eric H

Well-known member
Joined
Aug 30, 2007
Messages
1,142
Reaction score
469
Points
83
Location
Leominster, MA
Judging by the posts some of those guys make on FB I don't understand how they have any money to their name. For the most part people do NOT understand this industry. There are some real "go getters" that have great sites and are great managers but once they get burned out who is going to take over?
I agree with others, once the bottom falls out of the market like it did in the mid-2000's there are going to be a lot of washes selling for pennies. I just can't see how this is sustainable.
I was at the ICA show in Nashville this year. Paul Fazio said that there is an estimated 14,000 carwashes in North America and there is room for another 14,000. WHERE?? To his credit he did say "Stop building right on top of the competition". Was that a dig at Tommy's who is known for building literally right next to an existing wash? Who knows?
I will say, I've run the numbers on a lot of properties over the past 20 years, most don't pencil out to a positive cashflow. If I was spending someone else's money maybe I'd be willing to risk, and lose, it.
Keep your nose to the grindstone and expect a rough 5-8 years.
 

eckert16

Member
Joined
Sep 11, 2019
Messages
82
Reaction score
38
Points
18
Location
...CA VA OH PA
Word is that Omaha Nebraska is the testing grounds for new products to market. Omaha apparently is considered the 'average' market and the location that companies go to get products tested on 'average' Americans. If a product fails in Omaha, generally it gets shelved, or modified and retested. If a product is successful in Omaha, then it gets marketed nationally with confidence that it will succeed.

When I depart the state 10 years ago, there were a few tunnels of course. Now, tunnels are popping up 'everywhere' in Omaha... even the Tiktok'rs are making those little video clips complaining about the number of new tunnels being built in Omaha.

It is interesting. Make an assumption that the initial construction and operational funding stream relies on memberships. With memberships initially priced to garner market share and to undercut any competition for the first 3 years (time to garner loyalty to the tunnel-not to profit). Monitor where tunnels are being built, and how quickly the competitors fold (how many can compete with an advertised $3 or $5 tunnel wash and free vacs etc?). Once the competitors fold, the tunnel wash price doesn't tend to stay the same, and profitability regains focus.
 

Greg Pack

Wash Weenie
Joined
Sep 3, 2007
Messages
3,410
Reaction score
794
Points
113
Location
Hoover, Alabama
I think that is the Becks and if so then they know what they're doing. Lamar has probably 50yrs plus in the business and was the second or third person to adopt the modern day express concept of free vacuums and automated pay stations. They sold Goo-Goo to an International concern. They had good luck building basic express washes in less than desirable areas with low land costs, high density and an underserved market. They weren't super fancy but functional.

ETA- the plan of most of these rapid growth companies is to sell to a larger one.
 
Last edited:

washnshine

Well-known member
Joined
Feb 21, 2014
Messages
1,343
Reaction score
654
Points
113
Location
NY
It is interesting. Make an assumption that the initial construction and operational funding stream relies on memberships. With memberships initially priced to garner market share and to undercut any competition for the first 3 years (time to garner loyalty to the tunnel-not to profit). Monitor where tunnels are being built, and how quickly the competitors fold (how many can compete with an advertised $3 or $5 tunnel wash and free vacs etc?). Once the competitors fold, the tunnel wash price doesn't tend to stay the same, and profitability regains focus.
True - many of these express exteriors will knock out single location, smaller mom and pops. But a lot of these companies are building in markets where the competitors are already other multi -site, nationally operated companies. They are going head to head with the same model. If neither is weak enough to fold, they won’t be in the position to shift focus to profitability after a few years and will remain in a perpetual mode of undercutting each others prices.
 

OurTown

Well-known member
Joined
Nov 8, 2017
Messages
2,466
Reaction score
587
Points
113
Location
Dayton, Ohio
Our Town, who is the tunnel opening all the subpar locations?

Ultimate Shine out of Tennessee. Then there's a Take 5 going in right across from that in one town. (There's already a Goo Goo in town) In another tiny town a Blue Hippo will be going in on the other end of town from the Ultimate Shine. Then in another smallish low income dying town there's a small chain that has two Bee Clean washes and one is brand new. An Ultimate Shine is going in there too.
 

OurTown

Well-known member
Joined
Nov 8, 2017
Messages
2,466
Reaction score
587
Points
113
Location
Dayton, Ohio
Why do these companies always have goals of how many locations they will build but not talk about profit or even sales? Who cares if they have 100 locations if they are all in the red. Speaking of that several years ago I heard of a chain that something like 12 of the 15 locations were in the red after being open for years.
 

Earl Weiss

Well-known member
Joined
Aug 31, 2007
Messages
5,811
Reaction score
390
Points
83
Have them buy our locations - we will all make more $.
 

washnshine

Well-known member
Joined
Feb 21, 2014
Messages
1,343
Reaction score
654
Points
113
Location
NY
Why do these companies always have goals of how many locations they will build but not talk about profit or even sales? Who cares if they have 100 locations if they are all in the red. Speaking of that several years ago I heard of a chain that something like 12 of the 15 locations were in the red after being open for years.
Yes - it’s the economics principle the “law of diminishing returns” At some point, once the input eclipses the output, it’s no longer a beneficial proposition.
 

HeyVern

Member
Joined
Jun 27, 2021
Messages
84
Reaction score
66
Points
18
My nephew built a tunnel. Within a year, he had been approached by both Mister and Quick Quack with offers to buy him out. He turned them both down and they built as close to him as possible. He initially lost some members to them because they were cheaper, most of those returned because they don't get cars clean. Several other chains came along over the next few years, one of them finally offered enough, he couldn't say no. After taking over, they ran for three weeks with no soap because they were changing chemicals and had to wait for their chemical guy to get around to switching it over. They stopped prepping cars, if equipment breaks down, the manager is not allowed to fix it, he has to report it and wait, usually weeks, for a maintenance tech to come. Most of his existing customers have dropped their memberships. When you drive by now, there is never more than one or two cars there. It makes no sense they would pay that much to buy him out and then destroy the business.
 

Greg Pack

Wash Weenie
Joined
Sep 3, 2007
Messages
3,410
Reaction score
794
Points
113
Location
Hoover, Alabama
The entities often buying these are PE groups, with intentions to consolidate and sell to a public company. To get large enough to be viable as a public company they have to be turning some serious numbers. As a result they have to grow rapidly and can't grow quickly enough by building their own, so they have been paying a premium for established sites. The express tunnels have been an investment offering a good return for these groups in comparison to other investments in their portfolio. What's the cap rate on commercial property right now? It's what I would consider ridiculously low in many instances, now sub 5% in some cases, but when you could borrow money so cheaply it still makes sense to some. Express tunnels are offering a better return than that and a much lower hassle than other businesses such as fast food, which have even lower margins than tunnels.

I think rising interest rates should probably temper this boom, at least for a short period, but there are many unfinished projects still in the pipeline. Rates have gone up over a couple points and a 4 million dollar car wash will likely pay an additional 100K in interest expense over the course of a Year. 1 Yr. Treasurys are now offering a fail safe 4%. I don't think it's going to be a complete washout and abandonment by larger groups. They have had a taste and see it as a more desirable business than many fast food franchises. But projects will have to start really making sense.
 
Etowah

GoBuckeyes

Self-Serve and Automatics
Joined
Aug 30, 2007
Messages
889
Reaction score
166
Points
43
Location
Cleveland
Then in another smallish low income dying town there's a small chain that has two Bee Clean washes and one is brand new.
The bee clean was just acquired by Express Wash Concepts which operates under various names like Clean Express, Moo Moo and Flying Aces.
 

OurTown

Well-known member
Joined
Nov 8, 2017
Messages
2,466
Reaction score
587
Points
113
Location
Dayton, Ohio
The bee clean was just acquired by Express Wash Concepts which operates under various names like Clean Express, Moo Moo and Flying Aces.

I knew Flying Ace partnered with Moo Moo a while back but the other day I was looking at their website and saw this:


Today, Flying Ace Express Car Wash operates under the parent company of Express Wash Concepts, which includes Central Ohio-based Moo Moo Express Car Wash, Greater Cleveland and Pittsburgh-based Clean Express Auto Wash, Toledo-based Meyers Auto Wash, Virginia-based Green Clean Express Auto Wash and east Central Ohio-based Bee Clean Express Car Wash.
 

OurTown

Well-known member
Joined
Nov 8, 2017
Messages
2,466
Reaction score
587
Points
113
Location
Dayton, Ohio
I think most of the ones being built now are late to the party. The pie slices are just getting thinner and thinner.
 

Roz

Well-known member
Joined
Oct 29, 2017
Messages
781
Reaction score
267
Points
63
Location
MD WV
As mentioned above individuals are building in the hope of a jackpot from a larger company who overpays them for the place or people sell the building after the first year or so. They establish a sweetheart lease deal at a low $100K-$125K per year for 20-30 years and then try to sell the place for a 5 CAP to people who just want to own a steady income stream. The sale pays for the building and construction so original people are left with a solid business that has a very low rent rate. Works until you oversaturate the area as there is a finite amount of washes for a given radius. Problem is that the 5 CAP is not a good investment with the current interest rates and the prospects of future hikes. Was not a mediocre deal when interest was almost zero but it was an easier sale to the uneducated with more money than common sense.
 

OurTown

Well-known member
Joined
Nov 8, 2017
Messages
2,466
Reaction score
587
Points
113
Location
Dayton, Ohio
Express Wash Concepts claims they are operating 67 locations and employ 950 people. I'm sure there's a lot of overhead office people in an organization of that size but that still seems like a lot of people for 67 locations. Yes I know many of them are part time but if you do the math the numbers don't make sense.
 
Top