Good companies evolve with the times, altering their business approach to match current market conditions and consumer sentiment. The best among them set the pace for change.
As our society becomes less and less reliant on good old-fashioned cash, some cutting-edge car care companies have stopped accepting hard currency altogether — opting instead for a cashless approach that prioritizes ease of use, safety, and efficiency.
After experiencing multiple high-cost break-ins, Carnation Auto Spa has gone completely cashless across its 21-location chain, ushering in a new era of convenience for its customers and employees.
“We were dealing with multiple break-ins from criminals targeting cash,” says Carnation CEO Drew Shepard. “The cost to repair the building was more than we were collecting in cash from the site annually.”
From a dollar and cents standpoint, going cashless was an easy decision, but Carnation wanted to ensure the transition was smooth from both a customer experience and technology perspective.
“We rolled it out incrementally,” Shepard says of the cashless transition. “We tested it at one site first to see if it had any effect. It had zero impact on our car count or revenue. Once we knew it wouldn’t have a financial impact, we introduced it to another half dozen sites and eventually the entire chain.”
Shepard says that although a few customers were surprised by the decision to go cashless, around 98 percent had some kind of card on them to pay for their wash. Those rare customers who did not have a credit or debit card were given a one-time car wash on the house.
Carnation runs a flex-serve model across its sites, offering express and full-service detailing to augment its exterior-only offerings. One potential hurdle that had to be addressed as the brand switched to a cashless approach was detailer tipping.
Carnation detailers rely on customer tips as an additional revenue stream on top of their hourly compensation. “Historically, if a customer wanted to leave a tip, we would charge them for the tip on our POS and give them the cash, which they would hand over to the detailer,” says Shepard. “The tip would end up costing us around 3 percent in credit card fees.”
To help eliminate these costly fees and make the tipping process more streamlined, Carnation partnered with digital tipping solution Grazzy. Now, customers simply scan a QR code and can leave the detailer a tip with just a few quick smartphone clicks.
A minimal service fee is deducted from the tip, and the rest is placed into the detailer’s digital wallet. The detailer can transfer their tips to their bank account anytime they want for another nominal fee.
In addition to these service fees, the detailer must now pay taxes on what was once potentially unreported income. At first blush, the fees and IRS hit could be major shots to the detailers’ take-home pay, but Shepard says digital tipping has led to a significant increase in frequency and amount of tips — outpacing any potential income cuts. “We’ve seen a 20 to 30 percent increase in tips as a result of digital tipping,” he says. “It has been a win-win for the business and our detailers.”
To help attract, retain, and build its membership base Carnation employs three different marketing agencies, each with specific specialties. Carnation has a full-time digital marketing agency, a text club managed by a second agency, and a third firm that handles its social media and search engine optimization. In keeping with the brand’s digital commitment, it does no direct-to-customer mail — all of its marketing is 100 percent digital.
Carnation Auto Spa was formed in 2021, acquiring its first wash in April of that year. The Texas chain quickly scaled, acquiring washes in bunches, reaching its current size of 21 sites by the end of 2022. Rising interest rates and valuation run-up put a damper on further expansion in 2023. However, the chain is in active talks for a fresh round of capital and has plans to expand to 50 or 60 sites.
The brand should have no problem attracting new investors, considering the success it has seen in just two-plus years. Carnation washed more than 2.5 million vehicles in 2023, thanks in no small part to its extremely popular unlimited wash plan. The chain has more than 55,000 unlimited wash club members, which accounts for around 55 percent of traffic flow at the sites. While its membership roster is impressive, it is far from complete — the brand is still in its ramp-up phase and doesn’t expect to reach its final membership number for another 12 to 18 months.
To help further grow its revenue stream, Carnation recently launched a new program that is allowing it to generate even more revenue from its existing membership. This past fall it went live with a 50 percent discount on flex services for unlimited wash members. Across the chain, this has led to a six-figure monthly bump in revenue and should contribute handsomely to the bottom line in 202
In less than three years, Carnation has gone from a startup to a major player in the Dallas-Fort Worth market, with plans to expand its footprint and market area. Thanks to its out-of-the-box thinking, the brand is poised to more than double its store count while staying committed to providing customers with a trend-setting experience.