A great business model requires a product and/or service that consumers need and want but not necessarily a great innovation.

Figure 1 – Failed Combination Business

People need to eat. So, if you sell a food product or service, it needs to taste great, be priced accordingly, and appeal to a great number of consumers to generate sufficient sales.

If the product caters to a niche market, like homemade Hungarian-style sausage, there will be less demand and a higher price than store brands that are tailored to domestic tastes.

A great business model is one that provides reliable income.

For example, one of the principal drivers of car wash demand is weather. Good weather, business tends to be good. Bad weather, not so good. Car washing is seasonal.

One method to mitigate business-operating risk of unreliable demand is multiple profit centers. For example, most full-service car washes have a lobby with car accessories and customer amenities, and many have an express detail program and separate detail shop.

One reason for this is these things are complementary products and services. Another reason is demand for detailing tends to be strongest when the demand for car washing tends to be weakest.

Of course, as shown in Figure 1, combination businesses or multiple profit centers have to make sense. For example, Big Oil companies used to be in the retail gasoline business and owned and operated convenience stores.

However, Big Oil did not excel at selling convenience goods and, when merchandise and gas margins narrowed, they exited.

Now, independently owned and operated c-store chains are gobbling up the smaller ones, and there is much greater emphasis on food services (e.g., Wawa, etc.).

Years ago, combining self-serve wand bays and in-bay automatics helped self-serve operators attract a broader customer base. However, demand has waned. Consequently, OEMs suggest self-serve owners consider converting in-bay automatics to mini-tunnels. However, this is more of a combining of businesses rather than creating a multiple profit center. For example, experience shows conversion increases attraction rate, generating new business, but it also cannibalizes a significant portion of existing customers. This is also the case when one bay of a multiple in-bay facility has been converted.

Equipment advertising says an in-bay conversion is simple, but the operator’s decision is often not because of cost, but other considerations. For example, if a Subway sandwich shop is added to a wash and is not rented to an experienced Subway franchisee, the car wash owner would need to acquire a franchise and operate the business.

Likewise, if a mini-tunnel is added to a combination self-serve, the car wash becomes a contact sport: Pace will quicken. Stuff, both good and bad, will happen a lot faster. Marketing as well as attention to a marketing plan will increase. Employees and procedures are needed. And so forth. It becomes a different business.

For example, I received an inquiry from an express car wash operator who said he over-built his wash and wanted to investigate adding another profit center to the property. His idea or business concept was to add an Italian fast-food drive-through window on the one side of the car wash building.

Initially, I didn’t care for the idea of a quick-serve Italian drive-thru because, except for pizza and calzones, subs, etc., Italian food is usually served at casual and formal restaurants. However, the area had a huge Italian contingent and was ethnically diverse. Like most single-window drive-thru with kitchen, estimated cost was about $250,000.

Some years ago, the owner of a quick-serve restaurant approached me. This person had developed his own version of Starbucks. Gourmet coffees, soups, pre-prepared pastries, and sandwiches served in wicker baskets with multi-colored taco chips. Service speed was like visiting a Jimmy John’s — fast.

He served 400 to 500 customers a day, each spending an average of over $7. So, his idea was to tap this traffic by building a fast car wash on the property. However, unlike an in-bay conversion, that might have a turnkey of $300,000 or more, this investor was looking at about $1.5 million in site work, building, and equipment.

Figure 2 – Multiple Profit Center

At the last SECWA show, I ran into Jim Rooney, who owns 3 Minute Magic Carwash. Magic is a chain of four express-exterior washes in the greater Knoxville area of Tennessee. Jim’s newest store is a multi-million-dollar redevelopment of a former Cadillac dealership.

According to Knoxville News Sentinel, it cost almost $4 million to repurpose the buildings into a two-tunnel facility that contains a 160’ conveyor and separate automated wax and polish tunnel — first in United States. Rooney brought the wax tunnel technology to east Tennessee from Amsterdam, the Netherlands.

Yes, it’s simple. Bring more professional services together and create an opportunity to do more and set the business apart. The key here is “professional.” For example, experience shows a dog wash can make money, but when I see one at a self-serve wash it sort of says to me: We can’t make enough money as a car wash, so let’s wash dogs.

Presently, there are over 530 self-serve establishments per state in the continental United States. With the exception of major cities, wand-bay and combination self-serve facilities are everywhere.

About 60 percent are located in suburban and urban areas and over 60 percent reportedly have middle and higher market income levels. Quite frankly, that is a lot of retail space to repurpose. Yes, a wand bay can be converted to a mini-tunnel, but it can also be converted for other purposes.

For example, shown in Figure 2 (see page 38) is Auto Styles, auto and marine accessory and upgrade specialist in Florida. Auto Styles is a former self-serve wash with wand bays and in-bay automatics.

The business now offers paint protection, paint-less dent removal, iPod and satellite integration, auto and marine upholstery, audio and video systems, alarm systems, and accessories plus auto, residential, and commercial window tint. The place jams.

It easily could have been another combination like in-bay, express detail, rollover vehicle polisher, chip and scratch repair, waterless car wash, or other professional car care services.

However, the assessment of profit centers is no different than assessment of real estate. Here, the highest and best use is always the use that would produce the highest value for a property, regardless of its actual current use.

Bob Roman is president of RJR Enterprises – Consulting Services (www.carwashplan.com). You can reach Bob via e-mail at bob@carwashplan.com.