Industry benchmarks represent the average of key financial metrics collected from different businesses sorted by category or product class. Benchmarking is the practice of comparing processes and performance metrics to industry norms and best practices from other companies.
Start-ups can use benchmarking as a tool to help with planning, budgeting, and forecasting. For example, car washes work on retail hours meaning long days and weekends. Self-service is typically a 24/7 business and a conveyor is a 12- to 14-hour day. Across all categories, more than 50 percent of business is done on Friday, Saturday, and Sunday.
The car wash business is seasonal. In most of the country, as much as 60 percent of business is done during winter and spring. Overall, best months are February, March, and April. The slowest is summer except for the West Coast.
Expect competition. Regardless of category, most car wash operators have at least two to three competitors. Another form of competition is digital car wash networks (e.g., Everwash, Superoperator). Networks are formed by tech companies that have developed software platforms and mobile apps to apply the membership model to car washing.
Store attraction rates vary considerably. Conveyor typically captures between 0.7 and 1.4 percent of average daily pass-by traffic whereas an in-bay automatic (IBA) may only capture 0.4 percent. IBAs and self-service spray bays have small footprints and can process only one car at a time. IBA annual wash volume is usually in the range of 18,000 to 21,000 and self-service between 25,000 and 30,000 per year (five bays).
On the other hand, average tunnel length is 100 feet which allows the conveyor to process 100 cars per hour or more. Thus, high volume is possible in the range of 60,000 for full-service to 100,000 or more for exterior-only.
Car washing is not a big-ticket item. The average per car revenue for an exterior conveyor is $11.00, IBA $10.00, and full-service/flex-service $19.00.
Recently, earnings have been affected most by inflation including higher wages, higher supply and equipment prices, and higher construction costs (+ 20 percent).
Nevertheless, car washing continues to provide operators with great margins. Most washes have cost of goods in the range of 20 percent to 25 percent of total revenues.
Self-service and IBAs have a gross net of 60 percent, full-service 35 percent to 40 percent, and exterior conveyor 50 percent to 55 percent.
Staffing and management requirements vary considerably by product class. Exterior conveyor averages eight employees, flex-serve 15 employees, and full-service more than 20. Self-service spray bays and IBAs do not require attendants to operate. Wages are up. More than 64 percent of operators are now paying an average wage in excess of $15 an hour.
Marketing requirements are greater. Best practices are website, mobile payment, social media, and loyalty programs (e.g., frequency discounts, monthly wash plan).
Although express exterior has been the fastest growing segment of the car wash industry, the table at left points out there are many types of business formats to consider.
Bob Roman is a car wash consultant. You can reach Bob via e-mail at bob@carwashplan.com or by visiting www.carwashplan.com.