According to the Small Business Administration, a small business is defined as one with less than 500 employees. Generally speaking, this includes privately owned and operated convenience stores, restaurants, auto repair shops, grocery stores, and similar businesses.

            In the car wash industry, we could argue this includes private investor start-ups or a family-owned and operated company with one or two sites or a regional chain.

            In other industries, this level of investment and ownership has come under increasing pressure. According to Farm Action Movement, as Walmart and Dollar General have expanded across the country, independent grocers and farms have been forced out of business.

            In the convenience store industry, rising costs are catching up with smaller operators while consolidation is being driven by the same costs as well as evolving consumer behavior (food services) and the shift to alternative fuel options.

            In the car wash industry, an article by George Odden (Ardent Advisory Group) pointed out that all of the top 10 car wash chains in the U.S. are backed by private equity. This is up from only two in 2016. Moreover, the percentage of all conveyor washes in the U.S. operated by the top 10 has increased from 3 percent to 12 percent. Certainly not a hostile takeover but it is a trend most experts believe will continue.

Operator Sentiment

            There is more than consolidation that can affect mom and pop car wash operators. To discover the current state of mom and pops I posted requests for comment on private and public forums, and most of the responses were not very encouraging.

            Common amongst owners is the feeling that private equity has had a negative effect on the industry. This includes new washes encroaching in neighborhoods with established and entrenched businesses to feeling like small potatoes when it comes time to deal with equipment manufacturers and dealers.

            Operator sentiment apparently isn’t great either. Instead of the good ole’ boy network that would share information and help out, operators find relationships much less personal and there is a lot more pressure to buy. Some operators believe private equity has attracted too many entrepreneurs looking to make a quick buck but who don’t understand the business or how to operate a wash properly.

            Clearly, the days when competitors were careful not to encroach on a neighboring wash are over. For example, our city got its first express exterior several years ago. Currently, a different company is putting up another one around the block on the intersecting street.

Challenges and Opportunities

            Experts opine one of the big risks small balance properties face is large companies because they have economies of scale which lowers their operating costs.

            Another risk many mom and pop have experienced over the last several years is access to capital. This has included much higher interest rates and more stringent loan criteria. Operators are also very concerned about the cost of things including construction, chemical, equipment, and utilities.

            As for interlopers, there isn’t much that mom and pop can do when someone has very deep pockets. However, this doesn’t mean mom and pop are helpless.

            Mister Car Wash, for example, is headquartered in Tucson, AZ, whereas its branded store in your town has a for-hire manager that may have relocated from another state. Yes, Mister is a big company and has fundraising and in-kind donations, but it is not locally owned and operated. Arguably, this provides opportunities for mom and pop to thrive.

            As one owner operator put it; show up for work every day, take care of your customers and employees’ needs, and put out the best product possible. As for showing up for work, this is perhaps the owner/operator’s greatest advantage.

            I no longer visit the express wash that is located only two blocks away. It was sold recently and has already lost some of its allure. Car is too wet? All you get is an apology because the attendants don’t know how to adjust the equipment. The place isn’t nearly as clean. Nozzles falls off vacuum hoses. The towel program bucket is empty. One of the pay stations is down. However, one thing you can count on every visit is someone will suggest that you join the membership program.

            Arguably, the owner/operator who shows up to work every day can get a leg up on a site with an absentee owner. Another way mom and pop can attempt to create competitive advantage is through diversification.

            For example, most express washes are exclusively express. This means the facility provides no assisted services whatsoever. Satisfying unmet demand for these services can give consumers another reason to visit mom and pop rather than the express wash down the street.

            Some services such as paint and scratch repair, ceramic gel coating, etc. will require an enclosed service bay and clean environment. Others such as interior sanitizing, express detail, and interior cleaning can be performed under a pop tent.

            If space or some other constraint makes it impractical to provide such services on site, mobile operation can be an option. One attribute of mobile car wash and detail are the low start-up expenses. Launching from an existing business, the cost can be as low as $20,000 (excludes vehicle). Is there a market for it? According to my estimate, per capita spending on auto detailing services is around $33 or a little less than half the per capita spending on commercial car wash services.

            Mobile can be operated as a satellite business. There is cloud-based software available specifically designed for auto detail businesses. For $100 per month this software provides for online booking, automated messaging, payment processing, e-commerce site, and more.

            In addition, a mobile operation can be tailored to preferences. For example, you can clean cars with water, steam vapor, or with water-less car wash products.

            Perhaps the biggest positive attribute of mobile is the ability to command premium prices. There is mobile service in my area that is charging $150 for a two-hour service which includes an exterior wash and basically an interior super clean. Another mobile operator in my area has prices starting out at $40 for an exterior wash.

Staying Competitive

            Putting out the best product possible is a given. A new wash may have between $750,000 and $1 million of computer-controlled equipment. Considering the quality of chemistry available, no one can afford not to put out a clean, shiny, and dry product.

            Taking care of customers and employees can be achieved by personalizing the business. For example, operators should address customers by their first name and spend quality time on-site to hobnob and rub elbows with customers and staff.

            If a monthly subscription program doesn’t make sense for the business, offer a customer loyalty program that provides frequency discounts and other perks. Personalize the website with photos of owners and staff. Explain the company’s mission statement, goals, and objectives in an about us page.

            If you aren’t already, get involved in the local community. One of the most rewarding and fun things I did was to help sponsor my daughter’s recreational soccer team and participate as assistant coach for a couple of years.

            Domino’s, Pizza Hut, and Papa John’s have more than 50 percent of the $55 billion U.S. pizza restaurant market. Independent chains account for 34 percent and “mom and pop” sized pizza shops account for 16 percent.

            Some pundits believe a similar scenario lies ahead for the commercial car wash industry. Perhaps so, but several McWashes won’t happen anytime soon. In the meantime, the opportunity will exist for mom and pop businesses to thrive and secure their place in the industry.

Bob Roman is a car wash consultant and can be reached at bobr427@protonmail.com.