Early in my career, a mentor gave me some advice I’ve never forgotten. He told me to imagine my market as a trampoline. Scattered around the trampoline’s surface are golf balls. My car wash would be one of the golf balls. He said that I must assume, if I was successful, someone would try to take my success away. Someone would eventually try to throw a bowling ball into the middle of the trampoline to suck the volume away from my business. Moral of the story: be the bowling ball.
A future competitor has a better chance of overtaking your position if they’re able to buy a better property. The single biggest mistake I see made on site selection is that individuals take a site they can afford rather than the best site in the area. They believe their service offering will overcome location deficiencies. And they fool themselves into thinking that a competitor won’t enter the market because they are already there. You only pay once for the best location; if you take less than the best location, you’ll pay for it every day you’re open.
FIND THE BEST SITE
Land is expensive. Raw land is rare. Think about all the restaurants, banks, and bowling alleys that are vacant in your area. Chances are you’ll be converting a business that closed. Why did it fail? Start with a demographic report. Site selection that wins relies on understanding the market. Know what properties might be for sale even if not listed. Experience and intuition are vital. Hire experts if you’re not one. Don’t overlook re-usable buildings. Strip malls, furniture stores, specialty department stores, and supermarkets; I’ve seen them all converted into a car wash with positive results.
Traffic should exceed 20K cars per day in a 24-hour period. This isn’t a hard rule. Not all traffic is created equal. Personally, I’d rather have 15K residents drive by my car wash than 25K commuters. Employees on their way to and from work stop less often for a car wash than residents. Also, too much traffic during peak hours isn’t always a good thing. When it’s stop-and-go, few people will pull off the road and further delay their commute. If it’s a divided highway, or without a nearby turning lane, only consider the traffic on your side of the street.
Visibility is crucial. The property should be on the right-hand side after a stop light, with the road bending to the left. Let’s dream some more. There should be a large pole or monument sign on the corner with an easy entrance onto the property. That can be a rare unicorn to find. Your goal is to get as close to the ideal as possible: visible from a distance and easy to access.
Zoning rules must allow you to prominently promote your brand. Don’t immediately be discouraged if a monument or pole sign isn’t an option. I’ve seen creative uses of building signs and even architectural enhancements to overcome this. That said, never make assumptions. Confirm with reasonable certainty that you will be able to effectively promote your business to customers driving by, giving them sufficient time to slow down and pull in.
Traffic speed shouldn’t exceed 45 mph in front of the ingress. Speed matters. If cars go by too quickly, potential customers will zip past. If there’s too much congestion, frustrated drivers will seldom pull in for a car wash. Are there exceptions? Of course. Stop lights and signs can create intermittent conditions that work well even if the posted speed limit is over 45 mph. That said, it is rare for a car wash to perform well without a flow of traffic moving by at a reasonable speed.
The market should have 25K to 30K people per car wash. The geographic size of a market in Manhattan is obviously different than in rural Ohio. Typically, there are traffic patterns, neighborhoods, or other features that help define a market. One colleague of mine used to joke that he considered a market any 10-minute drive-time radius surrounding a Walmart. Seeing that 90 percent of all Americans live within 15 miles of a Walmart; he may be on to something!
Mixed residential works best. Some apartment inventory, not just single-family homes, is preferable. Apartment complexes rarely allow driveway washing and can positively impact overall volume. Many investors will target markets with 35 percent or more renters so there are fewer driveways to compete with.
Total population and income should be projected to grow. You must enter a market at the right time and purchase land at the right price. If you buy too early, you may fail before the market takes off. Buy too late, and the cost of land may not fit your investment objective. See if the population is growing by reviewing census data. Visit the city planner’s office to see which, if any areas have been plotted for retail development. You’re looking for opportunities to get in before land prices surge that have sufficient traffic to support your businesses during that growth.
At least 55 percent of the total population should be between the ages of 25 and 65. Simple logic here: employed people typically have more disposable income than retirees and students. Ideally, 50 percent of your proposed market should make more than $35K household income per year. The rule of thumb for an express-exterior wash is to be at the average cost of living in the country. A flex-serve or full-serve wash will need higher-than-average incomes. If the income levels are lower, some investors find this to be an opportunity. In this type of market, the vehicle represents a higher proportion of total income. The thought is the vehicle will be of higher importance to be maintained and kept clean.
Car washing should be a permittable use for the property. Be prepared to spend tens, or even hundreds of thousands of dollars to get a land permit-use exception made, with no guarantee that you’ll have anything to show for it. Sometimes a great site is worth fighting for. If successful, it will be practically impossible for a competitor to enter the market. That process isn’t for the faint of heart, and the purchase should be contingent on getting that approval.
Required utilities should be available before you make an offer. Only consider properties with a 2-inch water main and sewer connection that does not have an exorbitant impact fee. Three-phase electricity must also be available. Do not assume that you can get access to a nearby transformer; check first. I’ve helped operators size diesel generators mid-construction because they assumed the three-phase transformer on the other side of the street meant it was available where they were building. That kind of drama wastes time and money so do your homework first.
Research existing and future competition. Check existing car washes and check with your town planning department and neighboring towns for applied car wash permits. Evaluate all in-bay, self-serve, or convenience-store rollovers that can be easily converted to a tunnel wash. They may not be direct competition today but would be if converted.
Analyze the return on your investment. Don’t let emotion get in the way of making a sound real estate investment. Do your research and rely on experience, either your own or hired, to identify the best site in a market. There is no bulletproof formula for determining a market’s highest performing piece of land for a car wash, but each one has one thing in common: Its owner believed it was the bowling ball that would suck in all current and future business when they bought it.
Good luck and good washing.
Joining the company in 2000, Anthony Analetto serves as the president of Sonny’s CarWash Equipment Division. In this role, Anthony leads the innovation of new products to drive client success and oversees all operations, engineering, and supply chain management. Washing cars for more than 30 years, Anthony was the director of operations for a 74-location national car wash chain prior to joining the company.