What will it take to get more drivers to pull into a car wash, or to persuade those drivers who do pull in to come back more than they do now?
And how many of those car washes will it take to boost your bottom line on the car-wash page of your P&L ledger? The answer to these questions might very well be two words: management and marketing.
A quick view of car washes in the convenience store channel reveals a high-profit, high-expense traffic driver that is relatively flat. Figures from the North American Industry Classification System (NAICS) show a total of $979.7 million in car-wash receipts from car-wash operations in c-stores in 2013 and project a growth to $1.1 billion in 2014, a modest increase that is likely negated by higher costs.
Likewise, NACS State of the Industry data shows that car-wash income in 2012 increased just 1.6%, after a robust 23.8% increase in 2011.
Eric Wulf, CEO of the International Carwash Association (ICA), foresees a 4% to 6% spike in the c-store/car-wash industry in 2014, as long as gasoline prices remain stable. But he says it could be better.
A similar prediction comes from Dave Winert, senior vice president of sales, national service and marketing for Ryko Solutions, Grimes, Iowa, which manufactures and services car-wash equipment and provides car-wash chemicals. But the growth, he says, will not come from in-bay automatics—the traditional equipment employed at c-stores—but in the express tunnel segment.
Driving up the tunnel wash, he says, is its volume capacity, delivering a throughput of 40 to 60 cars per hour, compared with eight to 16 for an in-bay automatic.
Don’t Be Impulsive
Running a car wash is a “complex little business,” requiring dealing with water and electricity, equipment, chemistry, preventive maintenance and marketing, Wulf says. Yet when run properly, it has the highest profit margin of the other segments of the c-store industry, he says.
Experts agree that a car wash is often an “impulse” buy, and when the economy is tough—including lengthy stretches over the past two years of $4 per gallon at the fuel island—motorists are loath to “frill” up on a wash.
With the economy still sluggish and fuel prices $3 to $3.50 a gallon across much of the country, convenience operators cannot rely on impulse alone to drive sales, says Atlanta-based car-wash consultant Mike Perry.
Indeed, Perry says, many c-store owners have largely ignored or neglected the car-wash part of the business. “No one takes ownership,” he says. “Managers can’t do the work themselves and they let it go.” When he talks to convenience operators about the management of their car-wash operation, “the silence is often deafening.”
Chelsea Beyer, vice president of sales for Eagan, Minn.-based Zep Vehicle Care, the country’s largest supplier of car-wash chemicals and waxes, says there has been an explosion in the number of “express exterior washes” in the past 10 years. But the biggest problem with the industry is “themselves.”
Too many c-store managers, she says, “haven’t gotten involved” and “don’t market it well.” This is particularly disappointing because c-store/car-wash combos enjoy an inherent one-stop advantage over stand-alone washes, she says, yet they often fail to capitalize on this by not marketing their car washes.
As part of her service to customers, she often trains and checks on cashiers at c-store/car wash locations and describes them as “deer in the headlights” regarding the car-wash segment of the business when they are asked questions.
And she estimates no more than 5% of her c-store clients run any promotions, even though car washes promise a high yield. “Just giving a car wash away costs less than $1,” she says as an example. “But it builds goodwill, creates high volume at low cost and generates return service.”
Car-Wash Believer
You won’t get any argument from Richard Smith, operations vice president of F.L. Roberts, a Springfield, Mass.-based c-store chain.
F.L. Roberts has been in the c-store and car-wash business for 40 years, and Smith points to two main reasons for his car wash’s success: promotion and marketing, and management of the segment.
The company’s first combined c-store, gasoline and car wash opened in 1974, with a 58-foot-long conveyor wash. Its second was a 140-foot tunnel.
F.L. Roberts owns 20 Golden Nozzle car washes, including five stand-alone in-bay automatics, each 32 feet long with two bays apiece. The other 15, tied to the company’s c-store business, include three full-services washes, two tunnels and 10 express exterior tunnels with an attendant.
The diverse fleet, built via acquisition and investment, is equipped by PDQ Manufacturing in-bays and Sonny’s The Car Wash Factory, Tarmac, Fla.
Smith calls the car-wash segment of the business “very important” and says that if you run the business right, it can be as profitable or more profitable that the c-store or gas pumps. Indeed, while Smith and other operators are reluctant to discuss profits, industry experts say each wash can generate 60% or more gross profit, not including maintenance and other infrastructural costs.
“It’s important to have a profit center on the property that services the public,” says Smith, who describes the marriage of the c-store and car wash as “great synergy.”
One critical distinction between F.L. Roberts and many other convenience chains is that the company assigns a manager for the car-wash operation, running it as a separate business.
“Those that don’t do well don’t treat it as its own business,” Smith says. Some c-stores consider car washes “a pain in the [butt], and when there is a breakdown problem, they hang a ‘closed’ sign on it instead of calling for service to get it back running.” That kind of attitude, Smith says, drives away customers.
Cary, N.C.-based The Pantry Inc., operator of about 1,540 stores including 240 car washes across 13 states, runs a different business model. Robin Vaughn, company category manager of service, calls car-wash sales “very worthwhile.” Wash revenue is lumped together under in-store sales, in a subcategory that includes merchandise and fuel sales.
At the company’s stores, the manager is responsible for checking the car-wash operation daily and for ordering needed supplies and service. “We are absolutely trying to marry the two together,” Vaughn says. “We believe they play a large influence in the company’s future growth.”
The company uses mostly touch-free, in-bay automatics, many from PDQ, and customers have a choice of paying at the pump, inside the store or through an auto-cashier at the car wash.
The car washes, she says, are “an added service convenience” to the customers who come in for gas or shop in the store.
The Pantry updated 26 of its car-wash operations in 2013 and has budgeted for 30 upgrades in 2014, and Vaughn says she is “bullish” about the segment.
Marketing Matters
Atlanta-based consultant Perry and others say marketing makes all the difference. Treat your wash like a restaurant, he says, meaning use coupons, direct mail, social media and other promotional avenues to build business. And with fuel margins modest at best, offer a discount at the fuel island for a more expensive wash.
Yocum Oil of St. Paul, Minn., is a perfect example of how marketing matters in the car-wash business. This family-owned chain of eight c-stores/gas/wash combos is always looking for new ways to create loyalty among its customers and attract new ones.
A car wash at Yocum runs $6.99 to $14.99, depending on the service. But customers are also offered a monthly pass for $19.99 to $39.99 for unlimited washes.
Tim Yocum, Yocum Oil president and CEO, says he experimented with RFID tags on cars to make it more convenient for drivers, but he found that program too expensive. So it was replaced with debit-style cards. And by using direct-mail advertising to send these cards (which can be activated from home) to its stores’ neighborhoods, Yocum is capturing many new customers.
Yocum has found that drivers who bring their car into the wash an average of four times a month also make the accompanying c-store their “favorite store.” The company’s employees are a critical part of the marketing plan. Incentives at the store level yield employee rewards such as double commission and increased return business from customers.
The dual strategy of rewarding both employees and customers is winning. “We capture them with our loyalty program; we communicate with customers all the time with in-store specials and get them to at least try the car wash,” Yocum says.
And then there’s social media. The company’s Facebook page references improvements in equipment and services such as a new “elements” wash, which features an application of Rain-X and Blue Coral Polybond from Zep Vehicle Care, and updates about the company’s charitable work.
F.L. Roberts has also had great success with its loyalty program. Customers earn points by shopping at the c-store (or at company-owned Jiffy Lube locations) or car washes and can use the points for up to $1 off each gallon of gasoline. The company also has “Crazy Tuesday” washes for $5 instead of the usual $9.
Customers get free interior vacuuming at tunnel locations. And even though a few motorists opt for just the vacuuming without a wash, the goodwill built pays dividends down the road.
For The Pantry, its marketing is anchored by a 15-cent-pergallon discount on its high-end “ultimate” car-wash service.
And like Vaughn of The Pantry, Smith, an industry of more than 30 years, is excited about 2014. Smith says 2013 was his company’s best year for car washes. When asked about 2014, what does he predict? Another record year.
Follow the Drill
Chelsea Beyer, vice president of sales for Zep Vehicle Care, Eagan, Minn., says car-wash managers need only 10 minutes a week to make sure everything is running properly. Her suggestions:
▶ Check the entry box that accepts cash, credit cards and codes, and make sure they are working properly.
▶ Check the “back room.” Make sure you have enough chemicals. If you’re running short, order more.
▶ Take a look at the bay lights. Make sure they are working properly. If you see any debris on the ground, pick it up. Make sure the area is presentable.
▶ Watch a car being washed. Look at it from the customer’s perspective.
▶ Ask staff and customers if there are any service issues. If there are, call your service provider immediately.
▶ Check your signs. Are they up? Are the menus up? Remember, your menus are your marketing and promotion tools at your business site.
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