Reconsider the Car Wash

High profits with lower labor costs make the category an easy win for some retailers
Photograph: Shutterstock

LAS VEGAS — It offers a high profit margin and can also boost fuel volumes and convenience-store sales. And unlike a prepared food program, its labor needs can be almost zero. Car wash often gets overshadowed by foodservice as a promising profit driver, but for many retailers it offers a quicker, less labor-intensive path to improving site performance in the face of flattening store traffic.

At the 2018 NACS Show, two retailers shared how the car-wash category has been a valuable complement to their c-store business and offered tips for success.

Pick a Model

Scott Horner, vice president of operations for Terrible Herbst Oil Co., Las Vegas, grew up in the tunnel-wash business, which might be why the express mini tunnel remains his favorite wash format, even though his c-store chain has everything from in-bay automatics to full-service car washes.

Picking the right wash for a site depends on several factors, including how much money and labor a retailer wants to invest. The touch-free in-bay automatic is likely the easiest model for a beginner, requiring less labor and maintenance and “less headaches for me,” Horner said. It can also operate 24 hours a day and be a good option for days when tunnel wash is out of service.

Touch-free may, however, not clean as thoroughly as a friction in-bay wash, Horner said. However, with friction comes a greater chance of vehicle damage, more maintenance requirements and labor needs.

With the express tunnel, Terrible Herbst has seen not only the ability to increase car-wash volumes but also get the best cleaning results outside of a full-service wash. It can also pair up the tunnels with free vacuums, which has become a marketing point for Terrible Herbst. That said, this model also ratchets up the labor and equipment costs.

“Depending on what you want to get into, how much time you want to spend, this one can take a lot more out of you,” Horner said. But Terrible Herbst has happily made the investment; Horner pointed to a new express tunnel site that opened in Utah with dual wash lanes and free vacuums: “Customers are really enjoying it today.” 

Sales Driver

Beyond its profit potential, car wash can also be a sales driver for other categories. For example, Terrible Herbst has promotional signage at its tunnel wash offering a free 32-ounce fountain beverage with the purchase of the top wash package.

J&T Management Inc., Corona, Calif., has supported its fuel volumes with its car wash. The retailer had one in-bay friction wash site that was earning about $65,000 annually—which is on the lower end of its car washes.

“We thought, what could we do to increase car-wash sales?” said Jack Kofdarali, president of J&T. “We tied it with fuel pricing. What better way to be competitive on the street?” The retailer offered customers a 30-cent-per-gallon discount on gasoline with the purchase of a car wash, following California weights and measures regulations that require it to advertise the price of gasoline with and without a wash, and for its POS to discount the price at the pump. The effort was worth it.

“If the car wash price is $6.99 and they buy 10 gallons of gas, that’s $3 out of $7—I’m still making $4 on that car wash and bringing them in to buy gas in my store where they might go elsewhere,” Kofdarali said, pointing out that J&T often sees car-wash margins in the 80% range. In the first year J&T offered the fuel discount, the car wash’s annual sales doubled to $128,000.

Monthly Plan

A focus for both Terrible Herbst and J&T today is selling monthly wash memberships that offer unlimited car washes for a set amount.

“Some people wash their car [at a car wash] one to two times a year; if you can get these people into your program, every month you’re getting a shot of revenue from them,” Horner said.

To encourage memberships, Terrible Herbst keeps individual wash prices high enough to show the value of the unlimited wash plan. It also offers members a 20% discount at its quick lubes, and it awards employees commissions only on monthly pass sales.

J&T offers bonuses to employees who upsell the most customers to a monthly membership. And it is doubling down on express tunnel washes, which it is putting into 22 new locations, each generating $45,000-$60,000 per month in sales.

“You’re going to have more labor, but that’s the business we’re in,” Kofdarali said. “To me, it doesn’t matter if you have a few more people working if you increase sales by that much and profit margins are incredible.”

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