CHICAGO — Wash, rinse, dry, repeat. The car-wash membership model—unlimited monthly washes for a flat fee—has been growing in popularity among convenience-store retailers who have reached a certain level of expertise in the category.
In 2018, Greenville, S.C.-based Spinx launched its Spinx Ride ‘N Shine Car Wash Club and opened its first of many planned tunnel washes in South Carolina. And Las Vegas-based Terrible Herbst has been driving customers to sign up for monthly memberships.
“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,” said Scott Horner, Terrible Herbst’s vice president of operations, at an educational session at the 2018 NACS Show. 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.
At the same educational session, Jack Kofdarali, president of J&T Management Inc., Corona, Calif., said his chain is also doubling down on memberships, offering bonuses to the employees who upsell the most customers to sign up.
Car-wash consultant Robert Roman, president of RJR Enterprises, Clearwater, Fla., said everybody’s doing it. “I can’t think of anyone today, with a modern conveyor operation, that doesn’t offer an unlimited program in some fashion,” he says. “Even in-bay automatics, self-service car washes are getting into the game.”
The main benefit of the membership model is its ability to deliver a more predict- able revenue stream. “For example, if you have 1,000 members and the price is $20 for the program, that’s $20,000 you get each month at the beginning of the month, automatically,” Roman said. “Another benefit is it really builds customer loyalty, and it really increases the car wash’s market share. It attracts customers from other car-wash businesses that don’t provide that type of value.”
Kevin Collette, vice president of sales for automotive/petroleum and car-wash equipment for Sonny’s Enterprises LLC, Tamarac, Fla., agreed. The membership model also delivers traffic to the store on a consistent basis, he said, “creating additional revenue that is unexpectedly positive on a consistent basis.”
Collette can cite only one negative: an operator being too successful at selling memberships. “If the operator sells too many memberships ... he can overcapacity his site and/or equipment—then he loses customers because it’s not convenient anymore, which defeats the purpose,” Collette said.
Roman cited some additional challenges. If an operator’s wash competes with several operations that follow a low-cost, budget-wash strategy, it can be tough to demonstrate the value of the membership without lowering its price.
“There are markets that have become saturated with car-wash facilities to the point where they can’t handle any more stores, and they have to compete much more aggressively to maintain [their] share or grow,” Roman said. “The tendency is to lower price.”
Another con of the model: “It teaches consumers to shop on the basis of price,” he said. “It’s a discount model, like any other subscription program, just like Netflix.” That said, in the right markets, the membership model offers stability and consistency—business dynamics that fuel retailers can appreciate.
To launch a membership model, a site needs a few basics. First, the car-wash equipment should preferably be a conveyor wash. “It’s really hard to do memberships with in-bay automatics and not conveyors, because they just don’t have the capability of processing enough cars,” Collette said. “But with conveyors, we know we can keep up with most demand. We tend to sell enough subscriptions to cover the monthly overhead of wash operation.”
For example, a tunnel wash may have a monthly overhead of $12,000. The operator needs to sell enough subscriptions—say, at an average of $25—to cover that monthly cost. “Every cash transaction after that flows through to the bottom line,” Collette said.
A membership model also requires a vehicle recognition system, whether it’s a system that would read an RFID tag, barcode or transponder affixed to the customer’s windshield, or—more recently—license plate recognition (LPR) technology. These systems typically involve a camera that captures the customer’s license plate information with a software package that links the plate number to the member account and then processes the transaction.
An LPR system avoids dealing with hardware that could get damaged or requires employee assistance to install in a customer’s vehicle, said Collette of Sonny’s, which offers its own LPR camera and software package.
Roman said retailers can also partner with digital car-wash networks such as EverWash or Superoperator, which can provide the LPR system, software and hardware as well as a mobile app for a fee.
For the membership model, the car-wash setup is key in helping operators maximize capacity without causing congestion. “The limiting factors are equipment, the size of the car-wash facility—is it a tunnel or bay—and then the number of pay stations,” said Collette.
Set a Goal
From there, an operator needs to focus on a goal and a corresponding strategy to meet it.
“The goal of any car wash is to wash as many cars as you can with the highest ticket average you can get,” said Collette, pointing out that the main mistake operators make with the membership model is not sticking to their original plan.
Say a car wash introduces a membership model, and the number of cars washed skyrockets. At the same time, the average ticket falls as the share of members grows. In this example, the operator needs to focus on up-selling members to the next level of wash to raise the average ticket price. “It’s managing to meet your goal,” Collette said.
The typical customer with an unlimited membership visits on average three times per month, compared to only four to five times per year for the traditional, transaction-based customer, Roman said. With each visit, an operator has fixed costs, such as soap, water and electricity. So as the number of members grows, the operator needs to adjust to manage those costs and keep on track toward its goal.
“If someone buys a car-wash membership and they only come once and the average is three times a month, then the car-wash operator kind of makes out,” said Roman. “If someone comes five to six times, it’s not so good.”
Ride-hailing services could take this issue to the extreme. “These guys are 24-hour services, seven days a week,” said Roman. “They’re on the road all the time; some guys wash their car twice a day. If they get your unlimited program and they’re bombing you with 70 car washes a month, and it costs you $1.50 to $2 per car in variable costs, it’s unsustainable.”