Due Diligence on Existing Car Wash

[503979]

Hi there! I’m new to this site and doing all I can to educate myself on self service car washes. I’m considering purchasing an existing self service car wash and want to get an insiders view of what I should be looking for.

- What are the most common pieces of equipment that must be replaced?
- How can I implement a loyalty program with self serve (no automated bays)?
- What kind of inspections should I perform when doing due diligence?
- What is a common monthly sales for a self serve car wash (4 bay with vacuum stations)?
- What is a common valuation for an existing self serve car wash?
- What is something you wish you’d known before owning your car wash?
- How can I market the location?
- Any advice you have, I’m all ears. Thank you!

 

[Eric H]

You’ve asked some great questions. Let’s get a little more information. You stated 4 SS bays with vacuums, how many vacuums?
Do you accept credit cards? Vacs and bays?
Do the bays have bill acceptors? How about vacs?
What’s the overall condition of the property?
Population of the city and traffic count on the road the wash has frontage on?
Some of the guys here have well established washes with all the bells and whistles (trifoam, air dryers, credit card and bill acceptors) that have been updated over the years, with great road frontage on high car count roads Others have very basic washes that accept coins only in a small town. I’d advise each of those owners VERY differently.

 

[Dan kamsickas]

1) Verify income. 3 years tax returns. Everything else can be cooked. The scrapheap of history of this industry is littered with buyers who took the sellers word for what the wash really did and got burned.
2) Hire a couple local service companies to look at the equipment. Preferably at least one of them who reps the manufacturer of the equipment. You'll most likely get different opinions from both. Keep in mind they rep manufacturers but you'll still learn a lot and it keeps the seller honest.
3) Get pictures, serial numbers, model numbers, etc off of every piece of equipment. Contact the manufacturers directly to see if the equipment is still supported or the manufacturer is even in business. I've had far to many new owners call me about equipment the seller assured them was top notch only for me to tell them it's 40 years old and no longer supported.
4) It's not an unattended business. It's 7 days a week, 365 days a year. Some of those days may only be a couple of hours, some are going to have you wondering if you should hang a hammock in the equipment room.
5) How mechanically inclined are you? If you have to pay someone to do every repair at the wash, don't buy it. Even if you have a great, affordable service company near you the odds of them having someone near your wash when something breaks is somewhere south of slim and none. Things also don't break at 8am on a Monday. They break on Saturday morning after it's been raining/snowing all week and you're lined up at every bay.

 

[503979]

You’ve asked some great questions. Let’s get a little more information. You stated 4 SS bays with vacuums, how many vacuums?
Do you accept credit cards? Vacs and bays?
Do the bays have bill acceptors? How about vacs?
What’s the overall condition of the property?
Population of the city and traffic count on the road the wash has frontage on?
Some of the guys here have well established washes with all the bells and whistles (trifoam, air dryers, credit card and bill acceptors) that have been updated over the years, with great road frontage on high car count roads Others have very basic washes that accept coins only in a small town. I’d advise each of those owners VERY differently.

City has 13,000 people in it. The car wash has 4 bays for self-wash. There are 7 vacuum stations - and some are combination vacuum with fragrance and some are combination vacuum and shampoo. One additional bay remain closed as it used to be an automatic but they removed it for some reason so that breezeway remains closed. There are 2 dollar bill machines that output tokens. I have not inspected the vacuums yet but will soon. Car wash was originally built in 1999 and sits on 1 acre just off the highway and has 68 storage unit (sizes 5x10, 10x10, 10x20, and 12x30) as well. Their P&L claims that the car wash brought in $63k and the storage units brought in $56k last year. In 2003 the car wash sales brought in 72k and in 2022 it was 87k. I'm concerned I won't have enough capital to add back the automatic car wash which I'm sure would bring sales back up.

 

[503979]

1) Verify income. 3 years tax returns. Everything else can be cooked. The scrapheap of history of this industry is littered with buyers who took the sellers word for what the wash really did and got burned.
2) Hire a couple local service companies to look at the equipment. Preferably at least one of them who reps the manufacturer of the equipment. You'll most likely get different opinions from both. Keep in mind they rep manufacturers but you'll still learn a lot and it keeps the seller honest.
3) Get pictures, serial numbers, model numbers, etc off of every piece of equipment. Contact the manufacturers directly to see if the equipment is still supported or the manufacturer is even in business. I've had far to many new owners call me about equipment the seller assured them was top notch only for me to tell them it's 40 years old and no longer supported.
4) It's not an unattended business. It's 7 days a week, 365 days a year. Some of those days may only be a couple of hours, some are going to have you wondering if you should hang a hammock in the equipment room.
5) How mechanically inclined are you? If you have to pay someone to do every repair at the wash, don't buy it. Even if you have a great, affordable service company near you the odds of them having someone near your wash when something breaks is somewhere south of slim and none. Things also don't break at 8am on a Monday. They break on Saturday morning after it's been raining/snowing all week and you're lined up at every bay.

Which equipment specifically would you have me look at? The compressors? Vacuums?

 

[Eric H]

4 self serve bays is VERY likely two bays too many for a population of 13,000. If you have heated floors you may want to repurpose 1 or 2 bays to more storage. Heating all of that square footage really adds to the gas bill! You’re the guy on site with eyes on the place so you can best make that judgement.

I’d definitely research recommissioning the IBA! IBAs are a different customer base than the SS and the machine tends to make 3-4x what a SS bay makes if pricing structure is done right. Good used machines come up for sale from time to time.

I don’t think I’d pay more than 4x gross.

What’s the vacancy rate for the storage units? $56k seems low for 68 units but honestly, I have no knowledge of that business

 

[Dan kamsickas]

Which equipment specifically would you have me look at? The compressors? Vacuums?

Every single piece of equipment on the property. Vacuums, Changers, Softener, Boilers, Pumpstands, Meterboxes, light fixtures, compressor, everything. If it has the potential to cost you money to replace, find out about it. Again, I've had far too many new owners call me after signing on the dotted line only to have them find out they bought a business with a bunch of outdate, obsolete equipment.