Car washing is big business. It always has been. But in recent years massive amounts of acquisitions and consolidations powered by an influx of private equity have transitioned the once mom and pop dominated industry into a major investment sector.
While there is no denying that the industry has evolved over the past decade and is attracting deep pocketed investors lookingto quickly scale and build mega chains spanned across thousands of miles, it is still possible to operate with an old-school love of car washing.
Industry veterans Darren Skarecky and JT Thomson founded LUV Car Wash a year ago and have quickly scaled operations to more than 50 express sites, all dedicated to providing customer-centric service fueled by a love of everything car wash.
“We love the car wash industry,” says Skarecky. “We love the people, the customers, everything about it. That how we came up with the name LUV Car Wash. We want our business to be a fun place that employees and customers love to come to.”
Skarecky joined the car wash industry a decade ago, following a long career working for a Fortune 500 technology company. He was the CFO of Mister Car Wash and met his future partner Thomson when Mister acquired Thomson’s chain of washes in Salt Lake City. The two collaborated on Mister’s first ground up build and struck up not only a mutually beneficial business relationship but a strong friendship as well.
Following their time at Mister Car Wash the business partners helped design and launch Go Car Wash, seeing firsthand the impressive power and scale private equity brings to the table. After two years at Go, Skarecky and Thomson left for new opportunities before reuniting last year to form LUV.
“We had an opportunity to reconnect and that’s how we started LUV,” says Skarecky. “We put the business plan together and presented it to a handful of different investors and ended up with Susquehanna Private Capital.”
The partners launched the business in the fall of 2021 and completed their first acquisitions in December. LUV closed on an impressive eight deals before the end of 2021, quickly growing from zero washes to 29 sites in the blink of an eye. Today LUV operates 55 locations spanned across the Southeast and Western states, with plans to increase to more than 70 locations by the end of the calendar year.
With a notable number of locations under their belt the LUV team is focusing efforts on rebranding the previous disparate sites under a unified LUV banner. The budding mega chain kicked off the rebranding at its Las Vegas locations with plans to quickly scale the initiative throughout the chain.
“We are about to finish up the rebranding in the Las Vegas market in the next couple weeks,” says Thomson. “All the sites there will be under the LUV banner. Once the rebranding work is complete in Las Vegas we will begin working through each of the markets to change from all the different individual brands that we’ve acquired into a single LUV brand.
“The goal is to have all systems, processes, and most importantly customer experience unified across the sites. I joke around with people that if you talk to 10 different car wash guys and ask them a question on how to do something, you’re going to get 12 different opinions. We must take the best of those 12 different opinions and create a single playbook that provides a more consistent customer experience.”
In the early going LUV has been laser focused on acquisitions, but with a critical mass of sites under their control, attention is shifting to building name recognition with consumers. It all starts with the chain-wide rebranding efforts, which is centered on not just updating signage, equipment, and operations at the sites, but getting the word out about LUV’s arrival.
“We have a grand opening strategy where we’re working with chambers of commerce, local press, and a lot of social media advertising to promote the brand and let people know we are here,” says Thomson. “We are moving away from more traditional print, direct mail type stuff and going with a digital strategy with our marketing.”
LUV is deploying a new-school approach to chain building and brand awareness thanks to their partnership with Susquehanna Private Capital. LUV’s story is representative of a host of private equity fueled aggregators that are taking the car wash industry by storm.
The days of the single store or small local mom and pop chain may be numbered, but Skarecky and Thomson believe there is still a place for the independent operator. “There are a lot of mom and pops out there that are great operators and can fight right alongside the bigger players,” says Skarecky. “But it is definitely getting harder and harder for them to compete with the continued consolidation happening across the industry even in smaller markets.”
Thomson believes there is a great opportunity for mom and pops to capitalize on their vast car wash and local market knowledge by building sites that will ultimately attract the eye of one of the big consolidators. “What you’re seeing is a lot of people at that level are building sites with the goal of eventually selling to private equity,” he says.
This idea of building independent chains that are sold at a huge profit to private equity backed consolidators is a major theme of Thomson’s “Scaling Car Washes” podcast. The podcast explores the challenges operators face when they grow beyond one or two washes, and the necessary infrastructure and investments that must be made to successfully operate a large chain.
“One of the reasons why I help these operators is because we feel like them building out their businesses the right way is a benefit for us,” says Thomson. “Eventually when they decide to cash in and sell, we want them to sell to us. And if they have built their business the right way, it makes the transaction a lot easier.”
As the industry continues to evolve Skarecky and Thomson want to ensure that LUV is on the leading edge of that progression, focused on streamlined operations and providing value and consistency to their growing customer base.
“We really do love everything about this industry,” Skarecky says. “We want to build the best company we can with the best people and provide superior customer experience and quality for our customers. We want LUV to be a fun place to be.”
WASH Profile:
Name: LUV Car Wash
Co-Founders: Darren Skarecky & JT Thomson
Founded: 2021
Concept: Express Exterior
Sites: 55
Employees: 600
Preferred Equipment Manufacturer: Sonny’s
Ideal Site Size: 1.25 Acres