Wash Your Step
Car wash can be a cash cow, if you know how to milk it.
Remember when washes were located behind the store? Not anymore. Visibility explains why many bays and tunnels are placed up front, often adjacent to the c-store or fuel island, where they can be easily accessed and are hard to overlook.
“Cross-marketing is key,” says SteveL’Heureux, CEO of Ryko Solutions Inc.,Grimes, Iowa, which has more than 8,000 installed car washes across the country.
He touts the seemingly countless positions that c-stores can use to promote their car wash. “C-stores have an opportunity to sell the car wash at the street level with signage drawing the customer in,” he says, “at the gas pump with signage and on-pump messages, on the forecourt of the store and inside at the cash register, at the activation point before the customer pays or redeems code, and at the end of the car wash to encourage repeat business.”David Dougherty, senior product manager for PDQ Manufacturing Inc., De Pere,Wis., says “offering multiple points of sale will increase your car-wash traffic, plus having a car wash will help be a destination point for fuel, which, in turn, can lead to more in-store traffic c.”
Wulf says he’s seen car-wash operations work most successfully at c-stores where the wash option is conveniently offered to the gas customer. “It’s rare to see high volumesites where the customer purchases the car wash inside the c-store. It’s mostly a play on gas sales, so marketing and selling at the pump is crucial,” says Wulf. “Marketing inside the store can support car-wash sales, particularly for products like monthly loyalty cards and unlimited wash passes, but roadside and pump marketing is the most powerful approach.”
To capitalize on in-store opportunities, employees must also be properly trained to promote car-wash sales by asking if the customer would like to add a wash during a register transaction, Perry says. Instituting car-wash sales commissions and holding sales contests that award prizes to employees can be powerful incentives.
Cut the Gas, Not the Wash
Lenard of NACS says retailers that have successfully grown their car-wash businesses have done so by tying it to the pump. One tried-and-true approach is to offer cents off per gallon for every customer who opts for a car wash.
“This is often much more enticing to customers than offering a discount on the car wash for those who fill up,” says Lenard.
And don’t try to be the cheapest guy on the street, says Ray Johnson, operations manager for 20 Las Vegas Speeded Mart stores, six of which are equipped within-bay car washes, each averaging 200 wash counts a day.
“You want the wash to be competitively priced and offer value at the pump,” he says. “If you give a discount on gas, it doesn’t affect the customer’s perceived quality of the gasoline, but if you discount the wash, people have a perception that the wash is a lower-quality product.”
Goyal of Vintners says his gas customers receive 20 cents off per gallon if they buy a car wash. They can also use a loyalty card awarding a free wash after five purchases. These and other marketing tactics have helped make car wash the second most important business component based on sales and profitability at his 13 stores.
“Traditionally, we used to discount $off the car wash when you bought gas, but we’ve found in the past five years that it works better to discount the gas, “says Goyal, whose sites offer a basic wash with a soap, rinse and dry cycle starting at $5; a middle option with underbody washing and wheel blasting for $7; and a premium wash that also provides aRain-X treatment for $9. His best locations average up to 5,000 wash counts per month.
Darrin Baum, senior vice president of sales and service for Zep Vehicle Care, anEagan, Minn.-based car-wash chemical supplier, says most c-store car washes offer three wash choice packages, with the average ticket about $7.50 per wash.
“The top package should be the most popular and profitable wash for convenience stores,” says Baum. “It’s important to use key products and branding to differentiate wash packages for consumers. A good chemical partner will help you develop your menu, analyze profitability and keep pricing and menus current.”
Threshold for Success
Not every c-store site is a worthy candidate for a car wash. Experts caution against taking the plunge if your operations don’t fit the right criteria.
“If a c-store has the space for it, a carwash is a great profit center to add and typically achieves the highest gross margin—65% to 70%—of any product or service category on a c-store site,” says Robinson of Mark VII. “A good rule of thumbs that you’ll sell about one car wash for every 125 to 150 gallons of gas. Plugging that assumption into [an ROI] calculation that includes building and equipment acquisition costs and typical car-wash menu prices in the area will indicate if it’s good investment for a specific site.”
Wulf says a common minimum threshold for car-wash sales sustainability is 100,000 gallons of gas sales a month. If your patrons pump less, it may not be worth the hefty investment.
Although adding a car wash can positively affect your bottom line, “it’s important to take into account the opportunity costs, existing competitive landscape and the customer base,” says Lenard. “The costs of running a basic hands-free car wash may not be that much: utilities, water and soaps. However, you also need to look at what else you might be able to do with the capital investment or the dedicated space.”
And seasonality should be carefully evaluated. In the Northeast, for instance, car washes tend to have a peak demand in the winter, when drivers want to get the salt and road grime off their vehicles.
Johnson of Vegas’ Speedee Mart offers this perspective: “Car-wash sales are smaller portion of our business, partially because people in this market don’t wash their cars as often and it only rains about five times a year. But it is a profitable category, and 90% of our car-wash sales are for the most expensive wash we offer.”
A well-developed and maintained carwash can be one of your top five revenue producing categories, says Perry. “But success is dependent on three things, “he says. “First, you have to choose a very customer-focused, well-established supplier whom you can rely on as a partner. Second, you need to conduct different types of promotions and advertising to build your customer base. And third, you have to see it as something that can differentiate your c-store and help maintain and protect your gasoline margins from your competition.”
Before committing to car wash, scout the competition carefully to prevent car-wash oversaturation in the market and to ensure you price appropriately, says Johnson. Finally, Baum says, remember that the best car-wash operators are those who are dedicated to the category for the long haul. “They choose to run their car wash actively by having a well-thought-out marketing calendar, an employee