According to IBISWorld, between 2009 and 2021, the annual growth rate for industry wash revenues in the United States was 5.0 percent whereas store count was –0.25 percent.
Between 2016 and 2021, annual growth rate for industry wash revenues was reported as 2.0 percent whereas store count was –1.7 percent.
Consequently, we can infer the U.S. car wash industry is growing at a slightly decreasing rate.
Today, there are fewer commercial car wash sites located throughout the country as compared to years past but producing far greater wash revenues.
Since 2000, there has been more than a 40 percent reduction in the size of the self-service fleet. This can be attributed to an accelerated bankruptcy cycle that preceded and followed the great recession as well as a decided shift in consumer preferences from DIY to DIFM.
The other hollowing out occurred in the convenience store industry. Twenty years ago, car washes located at convenience stores that sold gasoline accounted for 46 percent of the U.S. car wash fleet and 24 percent of industry wash revenues. Today it’s more like 30 percent and 6 percent, respectively.
Here, consumers are more loyal when it comes to patronizing a convenience store and many popular brands such as Wawa, Sheetz, QuikTrip, Thorntons, and others aren’t into washing cars so much.
In fact, as fuel margins and tobacco sales have declined and credit card fees have increased, many convenience stores have become food destinations that happen to sell fuel.
According to the National Association of Convenience Stores (NACS), fuel sales dropped 26.1 percent last year amid a pandemic-induced decline in leisure travel and upswing in working at home whereas in-store sales increased by 1.5 percent as customers shopped their local convenience stores to fulfill daily needs.
Another reason for no car wash at many new c-store sites is size. To illustrate, our example is a re-purposing of land that occurred in my area a couple of years ago. The subject property was a former franchise hotel and franchise hibachi restaurant resting on almost three acres of contiguous land.
Today, this property contains two convenience-related businesses neither of which offers a car wash service. One parcel contains a Chick-fil-A quick service restaurant with dual drive-thru plus a 4,000-square-foot store with dine-in, carry-out, and delivery. The other parcel contains a Wawa with a 6,000-square-foot convenience store, 32 fueling positions, a Tesla recharge station, and 50 parking spaces.
The site is a hard corner on the going-to-work side of the traffic and a complicated intersection geometry often makes ingress and egress difficult. However, the supporting cast is great.
The site is proximate to a shopping mall. Population density is over 3,000. Roads carry between 25,000 and 45,000 vehicles per day, a nearby highway more than 100,000.
Today, considerable skin in the game is necessary to compete with the big players where the overall design objective is achievement of trade area dominance. This means offering the most convenience, best image, and greatest value as compared to other stores in the area.
Besides foodservice, the design focus is one-stop shop, store within a store, stay a while, and upscale concepts. The focus of one-stop shop is being the best store for customers in the particular neighborhood. For example, a one-stop in a rural area may have a convenience store, car wash, pet wash, propane, Dunkin’ Donuts, and gasoline.
Store-within-a-store is when the retailer acts as a host, allowing one or more other brands to operate independently within the store. Here, a store in a suburban location may have a very large convenience store with a lobby, deli, drive-through food service, car wash, detail shop, and oil change. The latter of which also qualifies as stay-a-while, meaning the store offers in-door and out-door dining.
With a store size of 4,500 to 6,000 square feet or more, the enterprise value of such properties has risen upwards of $7.0 million.
Although most convenience stores sell less than 100,000 gallons of gas per month, it is not uncommon for the larger sites to sell 450,000 gallons or more.
Consequently, a convenience store brand that forgoes a car wash to achieve store size may provide a unique opportunity for a private car wash investment if suitable land is located nearby.