The goal and objective of site selection is the same as Star Trek’s Mr. Spock’s iconic salutation, “live long and prosper.”

Large companies often evaluate location strategy by the survival rate of stores built from the ground up and the number of demonstrably successful sites. High rates for both of these factors are crucial for network expansion.

The site selection process includes a detailed evaluation of project needs, which are then measured against the merits of potential locations. Typically, this involves defining project criteria, evaluating neighborhoods, identifying land opportunities, creating a short list of sites, site analysis, and, finally, acquisition.

PROJECT CRITERIA

When defining project criteria, it is essential to consider the size of the project, construction approach, location, acquisition cost, and zoning.

Size relates to the level of public need for the subject business and capacities required to satisfy that need.

Construction approach refers to the type of structure to be built and whether the project is new construction or a renovation. New construction requires available and affordable vacant land whereas renovation requires substandard buildings to rehabilitate.

Location refers to land suitable for car wash development. For example, “drive-through” sites tend to be located near a major intersection with traffic signals and signs that are visible from two streets.

Such sites also have reasonable access to supportive service providers and key residential amenities that help to increase the attractiveness of the location.

Acquisition cost refers to the expense of acquiring or leasing a development site, which can be considerable. For example, the down payment is typically between 25 and 40 percent of the total cost. If a franchise, there are upfront fees, non-borrowed liquid-asset requirements, and subsequent royalties. Consequently, a maximum acquisition or lease cost should be considered during a site search. Zoning refers to rules and regulations designed to ensure that development projects are politically acceptable and meet community standards. Consequently, pundits often recommend limiting a site search to properties that do not require a zoning variance.

EVALUATE NEIGHBORHOODS

After defining project criteria, the next step in the site selection process is to evaluate neighborhoods and identify land opportunities.

One approach to this would be to engage a real estate agent or business broker with experience and knowledge of the car wash industry. The advantage of using an agent or broker is opportunity cost whereas the disadvantage is fees that increase acquisition cost.

Another approach is to search for sites independently by conducting a windshield survey, researching property records, and contacting property owners.

SITE ANALYSIS

Site analysis refers to methods and techniques used to narrow the search to a short list and final choice(s).

Historically, rule-of-thumb and checklist models were used for this purpose. Today, however, there are service providers that have created site-selection programs powered by geographical information systems (GIS) and, more recently, artificial intelligence (AI).

Proponents of the latter describe the traditional site-search practice as one that involves labor-intensive manual processes, static demographic analysis, inconsistent rankings, and decisions based on intuition.

The alternative approach is described as real-time, web-based technology that automates data sourcing, aggregation, analysis, and presentation to allow users to become their own site selection consultant.

For example, fast-food giant Wendy’s would spend as much as $350,000 per year for various analytical and market research services to support site selection decisions. Today, the company uses a geography-based program created by ESRI to quickly comb through volumes of data to predict how much a store might take in annually at sites across the United States.

In terms of cost, demographic ring studies can be purchased for between $20 and $80 per site or $250 for anannual subscription. GIS mapping services are a bit more at $150 a site, and annual subscriptions start at $1,500. Location-intelligence services are a lot more at $2,500 per month. Location intelligence has a lot of advantages but there are drawbacks.

AI technology is highly advanced, but AI cannot act or think like a human nor can it be counted on for predictable results when strong judgmental ability is required.

AI is designed in a way that allows it to learn by itself by exploring data. However, if there is redundancy in data, this may cause failures in learning and unpredictable results.

Lastly, AI can learn from data but it cannot mimic the human brain or invent things. The accuracy of AI-powered programs depends on the level of analytics used by their creator.

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