One of the first tasks during the planning phase of a car wash is to decide on the type of economic development.
For example, if the company’s mission is to provide customers with the highest quality car-care and preventative maintenance services, the development might be a full-service car wash with an oil-change facility and detail shop.
If the mission is to provide customers with the best products on the market, around the clock, the development might be a self-service wash with spray bays and an in-bay automatic — most often touchless.
Consequently, the business case of repurposing or adding a conveyor operation to an existing self-service site requires careful consideration.
From the customer’s perspective, we could argue a mini-tunnel provides better finished quality, faster, and has more value-added products than an in-bay.
However, with the exception of hourly capacity, this is no longer the case given the quality of the chemical and machines that are available today.
From the owner’s perspective, a mini-tunnel represents more work, time, and expense. For example, staff is needed to open and close, assist customers at point-of-sale and conveyor entrance, police vacuum area, maintain equipment, handle complaints, and participate in promotional activities.
In order to provide adequate coverage, an operator may need to budget 125 hours per week for labor, which includes line staff, site manager, and part-time employees to fill in scheduling gaps.
Consequently, dependency on staff subjects the business to operating risks such as absenteeism, tardiness, scheduling conflicts, performance issues (e.g., excessive cell phone use), and employee turnover.
Shown above is a summary of alternative business cases for a recent project to illustrate potential cost and anticipated performance.
Construction included expense for site work, 800-square-foot building addition/building renovation, bay paneling, architectural/civil, general contractor, and overhead.
Equipment included expenses for POS/software, car wash system, bay doors, signs, and vacuums, plus electrical, mechanical, and plumbing, and installation.
Addition of a second in-bay or mini-tunnel also requires additional marketing and promotional effort especially if the company offers a subscription program such as monthly unlimited wash option. For example, membership programs require a marketing plan, sign-up campaigns, advertising, billing, collections, Internet security, and customer service. An alternative to managing a membership program is to partner with a third-party software company that has a platform designed for this purpose.
In the final analysis, it may take more than benefit cost for a self-service operator to choose between a second in-bay and a mini-tunnel. Benefit cost analysis is a method to determine if the benefits gained for taking some action are greater than the cost of that action.
On the other hand, risk/reward tradeoff is the relationship between the amount of return gained on an investment and the amount of risk undertaken in that investment.
To illustrate, let’s assume in our example that the benefit cost ratio for the mini-tunnel is greater than the benefit cost ratio for adding a second in-bay. Here, we might measure benefit as an acceptable return on investment.
With risk reward, one of the rewards might be how impressed your spouse is with the extra cash that is going towards the retirement nest egg. On the other hand, one of the risks might be listening to your spouse complain every time you have to go to the wash because someone didn’t show up for work.