When it comes to operating a car wash business, many aspects can be changed and adapted over time. If equipment fails, it can be replaced. If a marketing campaign fails, it can be removed. However, once a location is selected for your car wash business, nothing can be done to change that site-specific detail.
Site selection is irreversible and is viewed by many as the most important factor that could make or break your car wash business.
Taking the time to evaluate a location and determine its viability is crucial to setting up a successful car wash business.
HOW TO
How can investors differentiate between a bad site, a good site, and a great site for their future car wash business? Surprisingly, there is quite a bit of science and formulation that go into traditionally selecting a location.
First and foremost, the location should be the right size for your business, in an area that is zoned for car washing. Depending on how many services you are going to offer to your customer, you could be looking at lots up to two acres.
Demographic reports play a large role in site selection for reputable distributors and installation companies. Median income, household size, average age and several other factors are gathered into one large report. This report will give you an idea of what your potential customer will look like.
Using an expert distributor will give you an advantage, especially when that company is familiar with the locale. If you find a location that is the appropriate size and in an area with a demographic that can support your business, your distributor will be able to evaluate the functionality of the location by gathering additional data to be placed into a proforma.
A proforma is a points-based system that adds and subtracts points and gives the site a grade. While not as concise as a letter grading system, the system is definitely more complicated than a “pass” or a “fail” rating for the location.
Many factors can make a site desirable. Multiple, easily accessed points of entry are a plus. Lower speed limits, a nearby intersection, and lack of a median barrier are definitely positives. If you find yourself with all or most of the winning criteria, the last question has to do with the amount of nearby competition.
TOO CLOSE?
It’s no secret that over the past several years, operators have not been afraid to build closer and closer to one another. In some areas, you will find express tunnel vs. express tunnel, separated only by two lanes of the same street or, even worse, side-by-side vying for the attention of the same consumer in what is most likely an already oversaturated marketplace.
How does this happen? How can you avoid becoming “that guy?”
If you are eager to purchase a piece of land that is close to, as in across the street from, or even “next door” to, an existing location with the same or very similar business model, move on to a different location. At worst, you miss out on a great piece of land. At best, you avoid limiting your business to only serving a percentage of the existing location’s customer base.
How close is too close? The answer is more complicated than a radius.
If you live in an area with a population of 100,000 with 10 express tunnel car washes, five in-bay automatics, and three self serves, anywhere you build is “too close.” While there is no authority to limit you from erecting a new express tunnel car wash, you are aiming to wash cars of customers who probably already have a regular car wash. Not only will you have to convince them to leave what they know and have become accustomed to, you will have to outperform every operation, and do so at a price competitive enough for you to retain the customer. That’s a lot of work for a reward that will always be limited.
The great news is that the marketplace as a whole is not over-saturated, and there is a need to continue building car washes.
There has been a buzz about allowing municipalities to limit the number of car washes that can be built within a city or county limits. No business owner should be limited by another for fear of competition.
If you have a bad location, there is nothing you can do to change it. If a potential competitor has built in a bad location, and you have access to a better location that is more convenient, more accessible, and you are not in a completely saturated market, then you should consider building at the site. These factors are what prevent site selection from being a black and white process. There is an immense grey area, which is why working with an expert distributor helps navigate through the “what ifs” and “special circumstances.”
Ideally, you should be shopping for a location that has several great factors, but most importantly in an area that isn’t already flooded with options for your potential customer. Oftentimes, that means spending a lot of time searching, researching, and potentially building in an area you didn’t anticipate or predict. While data cannot give a perfect prediction of how a business will do, it can help you better understand the implications of selecting one area over another. Make sure you partner with someone who is able to retrieve the important data and use it to your advantage when building your location.
CONSUMER BEHAVIOR
The average consumer shops for goods quite a bit differently than ever before. Fashion, food, and other fundamentals that previously required consumers to leave home, can now be delivered at their doorstep with incredible ease and at little to no additional cost.
Appealing to the customer as a service and convenience means finding a location nearby the most frequented places and businesses.
What are those businesses? And how are ride-sharing services affecting your ability to capture the consumers frequenting those businesses?
Malls, shopping centers, and big box retailers still exist. If anything, they will continue to serve as warehouses for online orders and in-store pickup options for online savvy consumers. These businesses are adapting to the lack of physical presence of their target audiences. Car washes must now do the same.
Unfortunately, all cities are not created equally. Your area may show different trends than that of an operator across the country. Just like the site-specific details make all the difference, cityscapes and regional trends can help you decide where you want to be. Maybe your town is going through a major “revitalization.” Sounds great, until you realize all those houses and rooftops are meant for Air BnB and Homeaway, and other out-of-town tourists. Tourism is great for restaurants, hotels, and event centers, but not so great for a car wash business.
This is where doing your homework will really pay off. Join local groups such as Chambers of Commerce or Development Committees. Find out what your city has planned for the next five, 10, and 15 years. You will want to cater to local residents, so find out what is being planned to service the needs of those folks, rather than the needs of the traffic brought in with tourism.
BE ADAPTABLE
Finally, stay fluid. There are a thousand reasons why the “perfect location” can be passed up. With the economy ever changing and consumerism evolving hourly, having the ability to roll with the punches and adapt will be a saving grace. Work with people who aren’t afraid to tell you, “No!” when it is in your best interest. Rome wasn’t built in one day.
Kati Wilson Wright has been in the car wash industry as a professional since 2012. Kati works in chemical sales for Lone Star Car Wash Systems in Houston, TX. She has been featured in multiple industry publications, and also writes a blog series titled, The Science of Car Wash, which seeks to offer industry information in an easy to read format for investors and operators. She is also known for her role in bringing attention to and participating in educational opportunities to promote women within the car wash industry.