Over the years many articles have been written about how to increase revenue at self-service car washes. Operators continually look at ways to offer value and services to their customer base while increasing the bottom line. While there have not been any major technology leaps or new product offerings in the self-service industry, operators should make sure they have evaluated all relevant opportunities. Operators need to take the time to re-evaluate the business every three to five years. Customers value improvements and upgrades and respect ownership that re-invests into the business. A stagnant brand, site, and/or offerings can become a turn off to one’s customer base. This article will review existing upgrade options, pricing, branding, and other opportunities for self-service operators.
ARE YOU CHARGING ENOUGH?
Operators always look to add services or products to generate more revenue but when was the last time the pricing structure was evaluated for each product? What is the average charge per minute for vacuums, bays, vendors, and other products? What does your competition charge? Bottom line: is there room to charge more per service?
Operators typically cringe when raising prices is suggested. The immediate fear is the customer base will go elsewhere. So how does one go about evaluating the existing pricing versus the market? The key word in that sentence is “market” — looking at the market versus other self-service washes. While its important to compare direct competition, one also needs to look at in-bay automatic and tunnel pricing.
Express and full-service tunnels have found creative ways to increase package pricing. In some cases, express washes are charging in excess of $20 on the top package and $8-$10 for entry washes. In-bay automatics have followed a similar trend. Packages start around $8, with top washes costing customers $14-$16. These moves have increased customers’ expectations on what it costs to wash. These “market” price increases have opened up opportunities for self-service operators.
The higher average tickets at in-bay automatics and tunnels support self-service price increases. Even in rural areas where you have competition or average household incomes are low, there are opportunities to increase pricing. I am not suggesting that you go out tomorrow and change pricing by 50 percent, but coupling pricing increases with some small capital investments in the facility is a good play.
Express tunnel operators average $10-$13 per wash; in-bay automatic operators average $9-$11 per wash. Based on these numbers, what should the average ticket be for self-service operators? If operators charge $1.50 or less to start, while offering three to four minutes of time, the average ticket will be at or under $3. With rising utility and operating costs, is there any money to be made at that price point?
Self-service operators should be charging anywhere from $0.50-$1.00/minute. In suburban communities it is very common to see a minimum of $2-$3 to start for four to five minutes of time. It is also common to see operators’ minimum start amount for credit cards to be higher than for cash. For example, operators may set a $3 start for cash/coins and a $5 minimum per credit card swipe. With the average customer taking around 8 minutes to wash their vehicle, a $5 minimum start will be under the average ticket for the wash.
The average self-service customer is looking comparatively at the cost to wash at all three types of car washes.
If the customer has the perception that their car can be washed at a self-service bay for half the price of an automatic or tunnel, generally speaking this is attractive to them. While many customers are looking for speed and convenience, there is still a place for customers looking to save money and do it themselves.
As operators prepare to increase pricing, there must also be valued benefits or change in conditions that are visible to the customer base. This is where upgrades to the facility, new equipment, bay options, and so forth support and justify the changes in the eyes of the customer.
As an operator, if you have any piece of equipment without a credit card swipe, there is a lot of revenue being left on the table. The younger generation does not carry cash. Credit card swipes should be on bay boxes, vacuums, vendors, air machines, and any other equipment that can be retrofitted. It is common industry knowledge that credit card transactions will generate 50 percent higher tickets than will standard cash/coin transactions. It is also understood that roughly 50 percent of transactions in self-service bays are made with credit cards when the technology is available. There is no reason not to have a credit card option available on all equipment.
COINS OF THE PAST
In my travels this past year, I began to see several washes that no longer accepted quarters. This may seem like a crazy concept, but it is the direction the industry is moving towards. As a manufacturer of self-service meter boxes, one of the items inquired about and purchased more frequently in 2019 is dual bill acceptor boxes without coin acceptance (see picture on page 28). Operators are seeing the trend of the younger generation using credit cards and bills only. As you look to change startup pricing and upgrade your bay boxes, take time to think about the concept of moving on from quarters. While this may not be an option for all operators, it should definitely be considered.
Over the past year, there has been a significant number of customers that have moved towards bays accepting no cash — tokens only. Parlaying the idea of “no quarters,” operators have converted meter boxes to tokens only. There are several strong reasons why this works for operators. First, cash is paid forward as customers exchange $5, $10, and $20 bills for tokens, and there is likelihood they will not use them all. Thus, the operator has reaped the benefits of the cash prior to the customer using the offered services. Second, there is a high likelihood that customers will lose a portion of the tokens purchased. Just think how many are rattling around underneath car seats as we speak.
There is an obvious cost for a lost token, but the exchange way exceeds the loss. A token will cost around $0.30-$0.50 per unit and they will be exchanged for $1 per unit. That equates to $0.50 pure profit per lost token. It would be hard to argue a 50 percent profit for services not rendered.
CLEAN UP THE BAYS
As you approach increasing pricing, take time to evaluate the bays. Point blank: how do they look? When was the last time they were freshened up? As mentioned previously, every three to five years, operators need to freshen up the brand. A total makeover is not required, but there are some simple ideas to give the site a fresher appearance.
Self-service bay signage is one of the first things customers see as they exit their vehicles. Over the course of five years they will become “blind” to the existing signage. When was the last time you really looked at the signs at your favorite fast-food drive-by lane? If it’s been the same time and time again, you pull up and place the order without paying it any attention. If the signage is changed dramatically — different color schemes, sizes, and/or placement — it is sure to grab attention. Accenting a new product feature, such as a “Hot Wax” or “Rain Repel” products with signage can help increase bay usage and subsequently increase operators’ average ticket.
re-evaluate the business every three to five years.The cost to replace bay signage, such as instruction menu boards, foam brush, credit card, and other miscellaneous signs can run around $300 a bay. To help avoid this cost, talk with your local chemical supplier about them covering some of the burden. If you have a longstanding relationship with your chemical supplier, they should have a marketing budget that can contribute to the expense. In some cases, they can aid in the design and artwork of the signs.
Other basic concepts include new bay wallboard, replacement of old and tired lighting, painting, and new bay hardware. Operators need to show customers some form of visible justification for the price increase. Regardless of the spend, show the customer the continued re-investment into the business. With that said, one month’s average bay revenue goes a long way. With a $1,200 per-bay budget, operators can purchase credit card swipes, new lighting, signage, and bay hardware. These are all highly visible changes that customers will appreciate.
Operators are constantly looking for ways to increase customer traffic, profitability, and staying viable in a competitive market. The above ideas should spur thoughts on how to achieve these goals. While most operators cringe at the idea of raising pricings, putting a plan in place on when and how to execute the change is imperative. With the evolving car wash market, it is time for self-service operators to put value to customer options and, hence, adjust pricing accordingly.
Trent Walter is owner/CEO of Ashland, OH-based Car Wash Superstore and National Pride Equipment. You can visit the companies on the web at www.carwashsuperstore.com.