However, with a cost of $3 million to start up a conveyor, a small-footprint car wash might be the way to go for mom-and-pop investors to enter a competitive market.
All things being equal, a smaller car wash will result in fewer door swings needed per hour and is therefore much more likely to be financially feasible. For our purpose, we define a “big” car wash as requiring a 3,750 square foot building and one acre of prime real estate whereas we define “small” as one fourth this size.
Thus, big would have overall cost factors of $69 per square foot (land) or $800 per square foot (building).
Consequently, our small-footprint would have start-up expense of $750,000, which lowers the cash or equity injection from $1 million for big to $225,000 for small.
Benchmarks suggest a big car wash has target revenue of $640,000. So, the target for a small-footprint wash would be $160,000. A way to estimate how realistic this sales level might be is to figure out how many washes are needed to hit the target. This is calculated by dividing the target by the expected number of annual days, average price, and hours open daily.
So, $160,000/312 days/$8/14 hours equal five cars an hour or 70 a day for a small car wash, whereas the numbers for a big car wash would be 18 cars an hour or 256 cars a day. Seventy cars a day, or 21,840 washes a year (70 X 312 days), is within the production possibilities of an in-bay automatic wash system. However, an IBA isn’t going to provide the kind of experience customers expect at a big wash. By experience, this means less waiting, faster process, clean-shine-protect with hand-finished qualities and preferred pricing.
Since smaller capacity would constrain revenue potential, the small-footprint car wash needs to be maximized for extreme performance. For example, color combination, pitched roof, and a false tower component can help make a small wash box look bigger than it actually is. A high-performance five-touch system with all the amenities is preferable to a three-touch system that can barely get the job done.
Menu design should include only a few services that not only please customers but also generate good margins without customers taking much time to make a choice.
If space doesn’t allow for much of a side yard, the design of the wash box and entrance queue should not be compromised to accommodate the recommended number of free vacuum parking spaces.
The small-footprint wash needs more than pass-by traffic. This means embracing the digital world by using state-of-the-art POS and management systems, loyalty programs, mobile marketing strategies, phone apps, and a responsive website.
Humanize the business. Unlike self-serve sites that have mostly absentee owners who usually hire a janitor as part-time attendant, a small-footprint wash would be owner-operated.
Consider leasing instead of buying land, building, and equipment. Leasing would help lower the initial capital investment and maximize cash flow by providing a robust depreciation tax shield.
Since the construction trend is flat, and equipment is being sold on the basis of price, work with vendors to negotiate the best deal possible but give the bid winner all the business.
In the final analysis, a small-footprint wash is not a market-clearing device. Instead, it targets the prevailing market share with a business model that requires a smaller initial investment and has less overall risk.
Bob Roman is president of RJR Enterprises – Consulting Services (www.carwashplan.com). You can reach Bob via e-mail at firstname.lastname@example.org.