What would it cost for a 80' tunnel say a Macneil with all the options. Not including land, but building and equipment. I would be the GC and sub everything out. Just trying to get some rough numbers.
Tunnel from ground up.
- Thread starter APW
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robert roman
Bob Roman
Figure $200K for base system, $100K support, $100K controls, electronics and software, $50K install and $50K mechanical, electrical and plumbing work.
2,400 SF building in area is $500K to $700K including materials, GC, overhead, architect and civil work. Also, figure $150K for site improvements.
So, roughly $1.0 to $1.2 million without real estate expense.
However, tunnel is completely different animal that installing wand or in-bay.
If you haven’t been involved in tunnel design and construction, you may want to reconsider being GC and sub-contracting.
Whatever you plan to pay yourself or hope to save on the project can quickly vanish in cost overrun and delays even if only a few errors are made.
2,400 SF building in area is $500K to $700K including materials, GC, overhead, architect and civil work. Also, figure $150K for site improvements.
So, roughly $1.0 to $1.2 million without real estate expense.
However, tunnel is completely different animal that installing wand or in-bay.
If you haven’t been involved in tunnel design and construction, you may want to reconsider being GC and sub-contracting.
Whatever you plan to pay yourself or hope to save on the project can quickly vanish in cost overrun and delays even if only a few errors are made.
I sort of remember about 10 to 15 years ago, that three of our socalled industry leaders decided to go in together on a state of the art tunnel. Can't remember their names, but they were well known. It went bust before it even opened. Maybe Bob remembers them.
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robert roman
Bob Roman
Mac,
When I wrote for Professional Carwashing & Detailing magazine, I penned an article that wasn’t exactly friendly to what these folks were trying to accomplish.
In fact, I believe the hubbub over this article among other things eventually caused PC&D to hand me my hat.
LOL
I believe one of their big mistakes was trying to sell something that wasn’t yet built.
It’s like trying to sell a pre-engineered building. People want to touch it, open and close the doors and turn light switches on and off before buying one.
Two years ago, I worked with a group that tried to bring NASCAR-brand carwash to Florida.
Existing NASCAR wash is in Michigan. Investors have to go to Michigan to see nice wash with lube, base exterior wash price $8.00.
How do you sell $8.00 express wash in most parts of Florida?
Lube price, forget about it.
When I wrote for Professional Carwashing & Detailing magazine, I penned an article that wasn’t exactly friendly to what these folks were trying to accomplish.
In fact, I believe the hubbub over this article among other things eventually caused PC&D to hand me my hat.
LOL
I believe one of their big mistakes was trying to sell something that wasn’t yet built.
It’s like trying to sell a pre-engineered building. People want to touch it, open and close the doors and turn light switches on and off before buying one.
Two years ago, I worked with a group that tried to bring NASCAR-brand carwash to Florida.
Existing NASCAR wash is in Michigan. Investors have to go to Michigan to see nice wash with lube, base exterior wash price $8.00.
How do you sell $8.00 express wash in most parts of Florida?
Lube price, forget about it.
Years ago there was a group out west that built car washes with the intention of selling them. They were experienced operators and distributors. They built from the ground up and opened the washes. They ran them for a short period of time, then sold them. They did very well. I don't think that would work in today's market unless you ran them for several years with positive results. There are too many existing washes for sale or that could be bought on the market today.
robert roman
Bob Roman
Actually, this is a more important question because need helps determine how much cost can be supported, not the other way around.
Need is determined based on analysis of demand/supply balance.
This analysis provides an indication of whether the market is under-served or over-served with stores within a defined trade area.
For example, if over-served, then acquisition or consolidation strategy might be more appropriate to enter the market rather than building a new wash.
If under-served, then the problem of what is the best site available can be solved.
This step requires a contraction of pro forma return on asset model (cost magnitude) for each possible site under consideration.
This is how the number of potential site locations is whittled down from say four or five to just one.
Need is determined based on analysis of demand/supply balance.
This analysis provides an indication of whether the market is under-served or over-served with stores within a defined trade area.
For example, if over-served, then acquisition or consolidation strategy might be more appropriate to enter the market rather than building a new wash.
If under-served, then the problem of what is the best site available can be solved.
This step requires a contraction of pro forma return on asset model (cost magnitude) for each possible site under consideration.
This is how the number of potential site locations is whittled down from say four or five to just one.
soapy
Senior Member
I am amazed by how many people who build these new express tunnels have no idea how many car they must wash just to break even. Over the years I have asked many new owners of these express washes how many cars per day they have to wash to break even based on average price per wash. I have never had one of these new owners be able to give me a figure for their wash. I try to attend all the trade shows I can and was at a appraisal class on these washes. I asked this question: How many cars per million of dollars invested does it take to break even per day. The instructor had never had this question asked but he did some quick figuring and came up with 112 to 125 cars per day per million invested to BE. In my area the 2 recent Expresses have cost between 2.5 to 3 million each and only offer car wash and not C store or gas. So the BE on these would be over 300 CPD to break even. That is 300 cars per day 365 days a year or figure 9000 cars per month.
robert roman
Bob Roman
“….amazed by how many people who build these new express tunnels have no idea how many cars they must wash just to break even…..instructor had never had this question asked….”
Assume the mean is 75,000 cars washed per year and one standard deviation is 25,000.
If population is normally distributed, then 68 percent of conveyors would have sales volume of between 50,000 and 100,000 washes per year.
At two standard deviations, 95 percent of conveyors would have sales volume of between 25,000 and 125,000 washes per year.
So, for sake of argument, say 5 percent of conveyors have sales volume of 150,000 washes per year or more.
If number of establishments is 25,000, 5 percent equals 1,250 stores.
Odds 1:20
Likewise, if mean is higher, say, 100,000 cars washed and standard deviation 25,000, then the odds would be 1:10.
Consequently, saying good ones wash 10,000 to 20,000 cars a month and showing a few income statements becomes a powerful selling tool.
Not many people think about buyer’s remorse before joining a gold rush.
I have clients washing over 125,000 cars a year but these locations don’t grow on trees.
“….but he (instructor) did some quick figuring and came up with 112 to 125 cars per day per million invested to BE.”
What instructor should have suggested is conventional break-even analysis instead of skewing numbers.
BEQ = fixed cost / (average price – average cost per unit)
BEQ = $350,000 / ($8.50 - $1.50)
BEQ = 50,000 / 312 = 160 cars a day
So, if average volume is 300 cars a day, it would take about five and half months before you turned a profit.
Assume the mean is 75,000 cars washed per year and one standard deviation is 25,000.
If population is normally distributed, then 68 percent of conveyors would have sales volume of between 50,000 and 100,000 washes per year.
At two standard deviations, 95 percent of conveyors would have sales volume of between 25,000 and 125,000 washes per year.
So, for sake of argument, say 5 percent of conveyors have sales volume of 150,000 washes per year or more.
If number of establishments is 25,000, 5 percent equals 1,250 stores.
Odds 1:20
Likewise, if mean is higher, say, 100,000 cars washed and standard deviation 25,000, then the odds would be 1:10.
Consequently, saying good ones wash 10,000 to 20,000 cars a month and showing a few income statements becomes a powerful selling tool.
Not many people think about buyer’s remorse before joining a gold rush.
I have clients washing over 125,000 cars a year but these locations don’t grow on trees.
“….but he (instructor) did some quick figuring and came up with 112 to 125 cars per day per million invested to BE.”
What instructor should have suggested is conventional break-even analysis instead of skewing numbers.
BEQ = fixed cost / (average price – average cost per unit)
BEQ = $350,000 / ($8.50 - $1.50)
BEQ = 50,000 / 312 = 160 cars a day
So, if average volume is 300 cars a day, it would take about five and half months before you turned a profit.
soapy
Senior Member
Sorry for trying to simplify terms into normal carwash speak. If you can't dazzle them with brilliance baffle them with BS I guess. Clearly if your cost to build is 3 million the BE is much higher than if your cost to build is only 1.5 million. The instructor evaluates these washes for a living and I feel comfortable relaying the numbers he quoted so people can a have realistic BE point based on the dozens of car washes he sees every year. ASSUME.... we all know what that means
robert roman
Bob Roman
If you believe this instructor’s off the cuff approach over the globally accepted equation, then I feel comfortable saying that I believe you have been baffled with B.S.
soapy
Senior Member
NO, just not baffled by yours.
Soapy, thanks for that succinct analysis of the break even point. To me that's a number that can easily be comprehended. I remember talking to people in our industry about express operations opening in the Orlando, FL area. They were telling me the operators were washing unbelievable cars per day, somewhere around 1,000. You might as well call that somewhere over the rainbow. Yeah, you can put a lot of money in a place and wash the heck out of cars, but if that full serve down the road is only doing 300 per day at an average ticket of $20+ who's ahead? And as an aside, I don't think that Robert is spraying BS all around, it's just the way he explains things, Works sometimes, others maybe not. It's nice to see a good conversation about a very important subject.
I don't think there is a definitive way to analyze a wash's success. Some proformas and formulas are more accurate than others but none are foolproof. We have all seen so-called "can't misses" fail and some unlikely ones succeed. There are a lot of uncontrolled variables that often make the difference between success and failure like changes in the demographic or local economy, weather patterns, unpredicted competition, personnel issues, poor marketing or performance and many other possible contributing factors.
I have been involved in many start ups and wish I could say that they were always successful. For the most part I think it is important for anyone thinking of building a wash to get an independent analysis from a knowledgeable third party not dependent on making money on the project before making a final decision and not make a judgement based on emotion or need. Probably the worst reason to proceed on a project is that the potential owner has always wanted a wash or has a piece of land that he wants to put something on. I have almost never seen a decision based on anything other than good information and rationale succeed.
I have been involved in many start ups and wish I could say that they were always successful. For the most part I think it is important for anyone thinking of building a wash to get an independent analysis from a knowledgeable third party not dependent on making money on the project before making a final decision and not make a judgement based on emotion or need. Probably the worst reason to proceed on a project is that the potential owner has always wanted a wash or has a piece of land that he wants to put something on. I have almost never seen a decision based on anything other than good information and rationale succeed.
robert roman
Bob Roman
Start with benchmark. 75,000 CPY, average sales $8.50 is gross $637,500. Operating expense ratio for express is 50 percent or $318,750. Average cost of goods is $1.50 per unit or $112,500.
$318,750 - $112,500 = $206,250 fixed cost
So, total fixed cost would be $206,250 plus debt service. A loan-to-value of 75 percent on $2.5 million enterprise value over a 20-year period financed at 5 percent interest rate equals annual debt service of $148,500.
So, $148,500 plus $206,250 equals total fixed cost of $345,750.
BEQ = Total fixed cost / (average price – per unit variable cost)
BEQ = $345,750 / ($8.50 - $1.50) = 49,392 cars per year
4,116 cars per month (49,392 / 12)
Let’s give benefit of doubt and assume developer is a predator that charges base price of $3.00 and average sales are only $5.50.
BEQ = $345,750 / ($5.50 - $1.50) = 86,437 cars per year
7,203 cars per month (86,437 / 12)
Since we’ve run out of low price, let’s jack up enterprise value to $3.5 million.
Here, debt service is $207,876 plus $206,250 equals total fixed cost of $414,128
BEQ = $414,128 / ($5.50 - $1.50) = 8,627 cars per month / 26 days = 332 cars a day
This equals 105 cars per day per million.
“I feel comfortable relaying the numbers he quoted so people can a have realistic BE point based on the dozens of car washes he sees every year.”
What scenario is more realistic and what scenario requires more equipment $2.5 or $3.5 million wash?
$318,750 - $112,500 = $206,250 fixed cost
So, total fixed cost would be $206,250 plus debt service. A loan-to-value of 75 percent on $2.5 million enterprise value over a 20-year period financed at 5 percent interest rate equals annual debt service of $148,500.
So, $148,500 plus $206,250 equals total fixed cost of $345,750.
BEQ = Total fixed cost / (average price – per unit variable cost)
BEQ = $345,750 / ($8.50 - $1.50) = 49,392 cars per year
4,116 cars per month (49,392 / 12)
Let’s give benefit of doubt and assume developer is a predator that charges base price of $3.00 and average sales are only $5.50.
BEQ = $345,750 / ($5.50 - $1.50) = 86,437 cars per year
7,203 cars per month (86,437 / 12)
Since we’ve run out of low price, let’s jack up enterprise value to $3.5 million.
Here, debt service is $207,876 plus $206,250 equals total fixed cost of $414,128
BEQ = $414,128 / ($5.50 - $1.50) = 8,627 cars per month / 26 days = 332 cars a day
This equals 105 cars per day per million.
“I feel comfortable relaying the numbers he quoted so people can a have realistic BE point based on the dozens of car washes he sees every year.”
What scenario is more realistic and what scenario requires more equipment $2.5 or $3.5 million wash?
soapy
Senior Member
RR a couple of questions, You stated a 50% operating expense ratio ( basic fixed cost before debt service) then a $1.50 per car variable expense (cogs). Why would the variable expense be deducted from the fixed cost, should it not be added to get the true cost per car before debt service? Or possibly the 50% operating expense already includes the cogs. Industry benchmark of 75,000 cpy or 6250 car per month are washed at the typical express wash. That is good information to know.
robert roman
Bob Roman
“Or possibly the 50% operating expense already includes the cogs.”
Yes.
For breakeven analysis, cost of goods should include chemical, water/sewer, fuel, equipment maintenance and selling expenses like credit card fees, sales commissions and discounts/refunds.
Fixed cost equals total operating expenses plus debt service less cost of goods.
Yes.
For breakeven analysis, cost of goods should include chemical, water/sewer, fuel, equipment maintenance and selling expenses like credit card fees, sales commissions and discounts/refunds.
Fixed cost equals total operating expenses plus debt service less cost of goods.
WarriorWash
New member
$700k for 2400 sf is almost $300 per sf construction cost. that seems to be more office building pricing. Car wash buildings should be a lot less expensive I think.
WarriorWash
New member
Interesting analysis. Thanks.
We are building our first car wash along a very busy four lane highway outside of Albuquerque NM. It will be next to a C-Store that averages 1,000 cars a day. We own the C-Store. We will be attending the CW show in Vegas next week to learn more. So far we anticipate building a tunnel wash (we don't know know how long) and don't want to get Shanghaied at the show. Do you have any suggestions on who we should see and how we should go about our adventures there? We will be attending the Investors seminar on Wednesday.
Thanks.
We are building our first car wash along a very busy four lane highway outside of Albuquerque NM. It will be next to a C-Store that averages 1,000 cars a day. We own the C-Store. We will be attending the CW show in Vegas next week to learn more. So far we anticipate building a tunnel wash (we don't know know how long) and don't want to get Shanghaied at the show. Do you have any suggestions on who we should see and how we should go about our adventures there? We will be attending the Investors seminar on Wednesday.
Thanks.
