New conveyor FS hand wash a good idea?

[Alan Bussey]

Hello, everyone.

I suppose that this question is for the folks who are familiar with the southern California car wash market. A prospective investor has approached me about financing a new full-service conveyor hand wash to be built in a Los Angeles suburb. The site looks OK, but not exceptional. My thought is that with the economic fallout in SOCAL that people there would be more receptive to an exterior, express, or flex. Am I incorrect that people even in the LA area would welcome a friction xpress wash more than a full-serve hand wash?

 

[mac]

Just my 0.02 worth, but I would be very hesitant to buils anything new right now. I would guess that there has to be some older washes for sale or lease that can be converted to a hand wash at a much lower cost.

 

[smokun]

YES... With A More Sensible Option

Actually, a hand-carwash can enjoy a great deal of success in the right venue. But the traditional full-service model is outmoded and passé due to its inefficient utilization of labor.

The Flex-Serve model would be a much more effective business model for investors who seek to operate a hand-carwash. Read this article about a group that already operates a Flex-Serve hand-carwash, and how they dramatically increased their profits by upgrading their After-Care component.

http://www.moderncarcare.com/articles/australian-carwash-innovates-down-under.html

That's not to say that building an effective hand-carwash excludes existing carwash technology. The only thing different is the actual manual washing that replaces the automated friction process. Applicator arches for basic and premium spray applications, rain arches, undercarriage flushing, and air drying still remain essential assets.

But for a driving public that has repeatedly shown their preference of manual washing, a well executed hand-carwash in the right marketplace can be a robust moneymaker.

 

[robert roman]

Hello Alan,

Whether they are in So Cal or elsewhere, people are most interested in value.

If you can convince motorists that an automated hand-wash process will provide them with a greater net value in relation to the competition, the wash will attract customers. This means providing customers with believable and meaningful benefits and at the preferred pricing points.

Every carwash format has its strengths and weaknesses, flex-serve included. Experience has shown that full-service remains a viable business model as long as the owner is willing to make the commitment to the labor and management requirements.

With this in mind, I would put a lot of emphasis on market and management feasibility.

Regardless of the wash format, the location has to be good.

In terms of market, does the business model solve the customer’s problems and target the needs of the different segments? Is there a competitive advantage?

Does the investor have the production management skills to handle the size of the facility and manage the labor force required of that size facility? Are the investor’s marketing skills good enough to handle the volume of production?

I believe these answers are far more important than “type of wash format” in terms of qualifying someone for financing.

 

[E1CARWASH]

Hand Wash In SoCal

Alan-
Something else to consider would be the labor laws in the part of the country it seems like everyday I see someone getting hammered or shut down because of wage issues. I know in my business we are seeing a strong resurgence of Hand Washes and the ones make it are doing very well; However the ones that do not it's 100% related to labor.

 

[Alan Bussey]

Steve, this experienced investor is spending much money here. He has considered the spectrum of conveyor car wash operations. I encouraged him to implement a low operating cost format, but of course the decision is ultimately his. 'nuff said about that.

Robert, having been around the block many many times, including in California, I know that the investor has to have the skills to run whatever kind of wash that it is going to be.

Southern California has had a higher proportion of conveyor hand washes than in other areas around the country. I am simply wondering whether that operating method has fallen relatively out of favor due to the soft economy and due to labor issues.

Have southern California drivers become more accepting of conveyor friction automatic washes, particularly exteriors or flex-serves with a low base price, relative to conveyor hand washes?

Thanks!

 

[robert roman]

“I am simply wondering whether that operating method has fallen relatively out of favor due to the soft economy and due to labor issues.”

This is like asking if people will stop paying for landscaping services because the vast majority of companies rely on migrant workers for the labor.

“Have southern California .... become more accepting of ... friction .... washes, particularly exteriors or flex-serves with a low base price, relative to .... hand washes?”

What motorists care about is how they benefit from a carwash versus all its competitors, including washing at home. Consumers evaluate a business relative to solving problems or meeting needs they have within their frame of reference. In other words, they are looking for what benefits a carwash has to offer.

Motorists could care less about the attributes of a carwash except to make sure the promises are “believable.” In this context, the key in selecting a type of carwash is being able to choose customers for whom you tailor the offering to offer the highest value.

All purchase decisions are based on value, even in commodity markets. In any purchase, the consumer compares supplier’s benefits against costs and chooses the one with the greatest excess of benefits over costs, which is net value.

The benefits of express over full-service might include faster speed, less waiting, free vacs, lower price or, say, less risk of someone taking something from a car. Cost would include the price plus indirect costs such as drive time, fuel, etc. When benefits exceed costs, net value is positive.

Do people think like this? Implicitly they do but the calculation and decision often becomes habit. Once we find a brand that suits us, it usually takes a big price reduction or “new and improved” to get us to try or switch brands.

Since So Cal people are really no different than other people, any format of wash that offers exceptional value will resonate with them.

 

[smokun]

To Many, Southern California is a State of Mind

In many ways, Southern California is quite different than most other marketplaces. There is a tremendous population of car owners who probably spend more time in their vehicles than anywhere else... mostly out of necessity. No real comprehensive public transportation system. And everything is spread out, requiring more driving, more often. So your vehicle becomes an attachment of sorts. It may even be how people identify you... or liken it to an image.

Plus, Southern California is the epitome of a culture that loves cars. And the mild weather and almost 12-month sunshine add to the distinction. There are more drivers in Southern California that identify with their vehicle as a statement of status... and many choose to drive vehicles like... accessory jewelry. It's been that way forever. And that's why it has been ground zero for enthusiasts who love clean cars. Many love the perception of fastidious attention that a hand-carwash offers. That perception is part of their value-equation.

And going hand-in-hand with a hand-carwash is another "hands-on" profit maker called Express After-Care where detailing that runs the gamut from a simple hand-towel-finishing after the wash... to a full array of premium interior and exterior services.

(continued)

 

[smokun]

Yes, the right location in Southern California would be a tremendous moneymaker! One thing that many carwash investors overlook is the product mix in a given marketplace. Although there may be several existing full-service and even express exterior operations serving that marketplace, a hand-carwash is a significantly different product simply because of the distinction of meticulous manual washing. It can truly be a "one-of-the-kind", if done properly. And resulting in obscene profits!

Another "must have" in a successful hand-carwash is a moving-floor conveyor that eliminates the high risks involved with protruding steel guide rails and roller assemblies that staff must avoid. The moving-floor flat-belt conveyor is also a significant draw for consumers who fear damage to their wheels, tires and undercarriage by guide rails.

http://www.moderncarcare.com/articles/conveyorized-detailing-offers-profitability.html

Lumping all carwashes together in an evaluation would be a mistake. With the scarcity of quality hand-carwashes, it would prove to be a major contender in any viable marketplace.

-Steve

 

[buda]

FULL SERVICE or FLEX SERVE vs EXTERIOR

Alan

Considering all the aggrevation that labor presents an experienced car wash operator; plus the California mandatory Registeration Law for carwashes and detail shops why would anyone advise a "newbee" to the industry to open a full service or flex service carwash with all the problems that labor presents plus the California Registration Law.

While Mr Okun says that a traditional full service is outmoded which I do not want to debate here, I would say that the Okun Flex Serve concept is also outmoded in that it requires labor, whether used at the front end or the exit end, labor is labor.

Why not operate an express/exterior with automatic pay stations and get by with a maximum of two people and labor as a percentage of sales that will be less than 15% and if you do 400+ cars a day even below 10%.

As we used to call our small exterior carwash packaged, when I worked at
Hanna, these express/exteriors are "MONEY-MACHINES."

Tell your investor to check out the El Segundo express/exterior right by the LA Airport, over 22,000 cars per month with 3 pay stations.

That is the car wash of the future.

If a person is set on having labor than open an express detail operation in conjunction with the express/exterior wash and get top dollar for your services:

a. $20 for an interior clean
b. $40 for a super interior clean
c. $40 for either an express carpet or seat shampoo
d. $40 for an express wax

If you can sell 10% of your car wash customers one of these services the operator is going to make BIG MONEY which will or should offset the aggrevation of labor.

Just some well intentioned thoughts on the subject of full service/flex serve vs express exterior car washing.

Bud Abraham

 

[Alan Bussey]

Bud -

I, too, believe that an Express is the way to go and I have explained that to the investors. But, what am I to do? If an investor INSISTS that they want to build a full-service conveyor hand wash all that I can do from a practical standpoint is to do my best to see that this is truly a viable option for this location. While I have financed many many car washes over the last 20+ years not every new investor cares about my opinion in the least. I just want to make sure with this new location that I am not steering the BANK wrong and at the same time make sure that I am not knowingly placing the investor in harm's way.

Bud, if the suburban L.A. public has turned away from conveyor hand washes in favor of express washes due to the high ticket at a hand wash, then I certainly want to know that. If they have come to accept conveyor friction automatic car washes more than they have in the past, such as in an express then I want to know that, too.

Thank you for your straightforward reply.

 

[buda]

That seems the way it goes with guys who have money they let their egos do their thinking and too many equipment sales people tell them what they want to hear.

As far as I know the SoCal experiment with conveyorized hand washes did not work out. American operators who stayed in the business went back to equipment others sold at a big profit to Koreans, Persians, Russians and other foreigners who wanted a cash business. Some maintained the hand wash others smart to figure it out went to equipment.

The exterior concept is only starting in SoCal so many newbees only see the FS and see it as the model to follow. Others think, "gosh I wud go to a handwash cuz I don't like brushes and I wud pay $20 for a wash so will others."

Not a good reason to follow that platform.

You don't sound to convinced abt the location. What's the 24 he traffic count?

 

[Alan Bussey]

Bud -

Again, thank you for your clear discussion.

Within the last five years or so have any conveyor hand washes been built in the L.A. area or anywhere in southern Calfornia that have proven to be truly successful? Where are they? What are the names of these hand washes? Would these same washes make more bottom-line cash flow as a conveyor friction express exterior or flex? Or are they make the most that they can make as they are.

 

[smokun]

Well Managed Labor Is Profitable

The Flex-Serve paradigm:
1. Outside-Only Carwash (express, deluxe, whatever yields a clean, dry shiny car)
2. Express After-Care (hands-on detailing)
3. Self-Serve Vacuum & Vending (optional)

Abraham's recommendation:
1. express exterior
2. express detail operation

What's the difference? Flex-Serve's use of labor is extremely cost-effective. The carwash and the Express After-Care are separate profit centers with different hours of operation. Yet, they both profit from the synergy created by their offering a wide array of sensible choices that consumers value.

http://www.moderncarcare.com/articles/management/carwash-analysis-express-exterior-flex-serve.html

I acknowledge and appreciate Abraham's endorsement and will continue (as best I can) to tolerate his double-talk.

Yes, to some, the trepidation of managing a minimum staff of two (2) cross-trained detailers that can generate over a thousand dollars a day... may be overwhelming. Those apprehensive investors will have to hire a talented manager who will follow the guidelines and be well compensated for overall performance. Talented managers seldom wilt from the challenges of labor, and benefit greatly by their production profitability.

I'm here to help!


-Steve

 

[buda]

EXTERIOR WASH vs Full Service & Flex Serve

If I understand Alan's question it had to do with which is better an express/exterior or a full or flex serve.

My commentary has nothing to do with express detailing. What I believe is that today car wash operators should open ONLY EXTERIOR carwashes, especially new-to-the-industry operators.

No agenda here to promote anything.

Regards