Evolution, Growth in Car Washes
The professional car-wash industry experienced steady overall growth in 2013. Two data sets managed by International Carwash Association allow us to draw this conclusion. First, our annual equipment sales report, measuring sales by car-wash systems manufacturers, showed a second consecutive year of increases. (That information represents sales through the fourth quarter of 2012; based on preliminary reports we expect another year of overall growth in 2013.) Second, our Wash Count program, which allows operators to share their car-wash sales and totals for benchmarking, showed slight increases in both the number of cars being washed and average price per wash in most markets, for most of the year.
Other meaningful trends continued in 2013. Site ownership continued to be fluid, from the consolidation of independent operators to the acquisition and divestiture activities in the c-store segment. Particularly on the independent operator side, we continue to see more investors in the car-wash business, as opposed to the more traditional owner and operator.
Also, the service and distribution segment continues to be in flux. Some manufacturers remain committed to the exclusive-distributor model, while an increasing number of manufacturers and distributors are working within a more open model, in which multiple distributors may sell in a market and a distributor may carry multiple competing equipment lines. Regardless of strategy, the availability of consistent service and expertise remained an issue in some markets.
Operators remain committed to the three key components of any successful business--increasing revenues, reducing expenses and reducing risk--but with some new approaches over the past year.
In terms of increasing revenues, operators are implementing new product and service offerings to increase their ticket averages. Protectants, particularly glass treatments, have been popular for operators wishing to move customers toward the highest-price wash.
One newer strategy is offering online foaming waxes (or other chemistry) that are applied in a visual manner, typically using LED lights, thereby allowing the customer to see the value they get for these higher-end applications. Another option is offering an enhanced drying experience, such as the use of special gentle cloth, in addition to heated air at the end of the car wash (or, alternatively, a longer drying time for the top package). Again, this is a highly visible addition to the car-wash experience, both for the customer who chooses this option and others in line who can see these options in action—who we hope convert to those higher packages on their next visit.
In terms of reducing expense, labor management remains a paramount concern, particularly in light of the Affordable Care Act and recent increases in the minimum wage in some markets. The traditional “full-service” car wash, featuring a high number of employees for online prepping, drying and interior cleaning, remain viable—but only where customer demographics can support the higher ticket averages necessary to support the labor cost and complexity. Most new construction projects are based around exterior cleaning (requiring little labor for conveyor, in-bay or self-service models) or “flex-service” options, in which labor is dedicated to optional after-wash services (e.g., express detailing).
The primary risk in the car-wash business is that of weather, both the amount (the number of rainy, cloudy or “imminent weather” days) and the timing of weather (with Fridays, Saturdays and Sundays being the highest-volume car-wash days and thus the most important). One of the trends continuing in 2013 that some operators are using to address this risk is the implementation of prepaid or monthly unlimited-wash programs. Both can mitigate the variability of revenue due to weather by creating more consistent revenue streams by the week, month or quarter. Unlimited programs typically feature automated, monthly credit-card charges, with car-wash operators seeing customer wash frequencies ranging from two to five visits per month.
Overall, the car-wash business remains an attractive proposition, and the progress realized in 2013 should set the stage for an equally successful 2014.