Revenue forecast or guess

[Sequoia]

I have a 3-bay SS that is the only game in town in a rural area. My nearest competitor is 12 miles away with a 3+1. His auto does a good business-- many folks from my area go there to use the auto. I do have a senior element in my area and lots of them drive by my wash to use his auto.

Because of the rural area, my bays do less than industry averages, but enough to pay bills and make a little money. I've heard that converting my 3rd bay to an in-bay automatic could dramatically raise my revenues, but I'm not sure how to forecast that.

Are there any rules of thumb for forecasting the revenues when adding an IBA to an existing self-serve? Percent of SS revenue multiplied by ???'

Any help?

 

[Waxman]

I'm in a fairly rural area, as well. I forecasted 3/10 of 1% of daily traffic count as a yearly average capture rate for my auto bay. That forecasting method has worked for me.

PM me and I can advise you further, if you'd like.

 

[Sequoia]

Thanks. That helps a bunch. All I am looking for are guesses at this stage.

My data on traffic counts is a bit sketchy so far, so I will have to pin that down more precisely. Best I can tell, being a bit conservative, my location gets 9,000 cars a day past my wash. Multiplying 9,000 cars times .003 times a $5 auto wash is $135/day or $4,000 per month. $48,000 per year. My competitor's auto wash is $6.

If that's true, I advance to the next question. Does adding a touch-free IBA to an existing location cost, say, $100k? If I could invest $100k to build, gross $48k, and net $40% of gross, it's a 19% ROI which ain't bad.

I haven't figured any loss of revenue from converting my 3rd bay from a SS to an auto and I don't know how to approach that. I know the revenues from the SS bays will decline by some amount simply because there are only 2 bays instead of 3, but gut feel about my location is that it won't be significant-- 10-15% probably. The bay I would convert is always underutilized anyway. So I lose some percent of SS revenue but pick up a decent new revenue source from an IBA.

I'm new to this-- am I off track here? I'm just looking for input and guesses from the forum's grizzled and knowledgable veterans. Thanks ....

 

[Reds]

I think you would be hard pressed to install a new automatic for 100k. By the time you add doors, RO system, auto cashier, bay heat, shipping, installation, etc. you will be be closer to 140k - 150k. Is your existing SS bay long enough, high enough, etc. to fit an IBA in it? If you need to construct a new bay you could spend close to another 100k on soft costs & construction.

 

[Sequoia]

I have plenty of height, and if needed could get an additional 4' of width pretty easy.

Length might be an issue-- I will have to measure carefully and then do some shopping.

 

[bighead]

What I did was take that .003 and divided it in half to .0015, the pro forma still showed the auto making money, so we went for it.

I'd charge a little more for an auto wash, and I'd figure on a higher initial investment as well. Unless you buy used...

 

[Jimmy Buffett]

9000 cpd with no competition for 12 miles I think you might do a little better than those numbers. I also agree 100k is low.

 

[bighead]

30,000 cpd, no touchless IBA competition for 30 miles... and i'm not at .003 yet.

 

[ted mcmeekin]

We are very rural with only 7200 cpd and no competition within about 30 miles and run between .005 and .006 capture rate for automatic. Be sure you are getting a clean car --flag them down and give free washes but be sure you can match his cleaning first.

Ted

 

[borumrm]

You might get that done if you buy a used automatic. The D&S 5000 can fit in a very small bay and is a work horse. They are easy to work on also. It is not uncommon for those to be refurbished and installed in lower volume areas for about half what new would cost. Depending on where you are you might not need doors. We are in middle TN and we don't have doors (sometimes I wish we did but have operated them for about 10 years without them....yeah it takes a bit more effort and we have to go down at night and blow out the lines and close them down until the next morning but I don't think we lost that much business doing that.

 

[Sequoia]

OK the numbers pencil out so I want to go deeper into this.

I analyzed at .003 capture, .00225 capture, and .0015 capture all based on 9,000 cpd. I think it is really 10,000 cpd though. .0015 is mildly interesting, .00225 is very nice, .003 is a home run.

My bays, from memory, are 14' wide by about 26' deep. What are the ... "top 3" in-bay automatic vendors that I should investigate and consider? Would the D&S 5000 unit plus two others be appropriate to shop for?

 

[Waxman]

Sequoia,

Shoot me an email about this if you'd like.