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1-800-327-8723 www.SonnysDirect.com
The Tunnel Experts
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STEP UP YOUR KNOWLEDGE Step 1
Real Training. Real Operators. Real Results.™
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ANNIV
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ANNIV
ERSARY
Hands-on Training
Expert On-Site Services
ü 1-Day New Investor Seminar: Strategically plan your entrance into the car wash industry. Evaluate the industry models for success, capital and operating costs to expect, explore financing options, equipment considerations, and how to avoid the 7 most common mistakes.
ü 5-Day Equipment Maintenance Training: Increase wash efficiency and throughput while reducing labor.
ü Car Wash Site Evaluation: Detailed written analysis of the
market demographics, competitive landscape, and necessary equipment and site improvements to calculate a property’s ROI before making an investment.
ü Car Wash Equipment Audit: Comprehensive non-biased report prioritizing recommended actions to elevate wash performance and consistency.
ü 5-Day Equipment Repair Training: Reduce business crippling downtime by taking control of emergencies.
ü 5-Day Management Training: Maximize employee productivity and elevate customer satisfaction.
ü 5-Day Management II Training: Increase customer retention and ticket averages while reducing labor costs.
ü 5-Day Multi-Site Management Training: Improve operations
CarWash College is on the Road! View Dates & Locations @SonnysDirect.com
with the tools and training you need to elevate employee performance and implement the daily operations/procedures and technology required to deliver a consistent customer experience across locations.
Hands-on Training to plan, manage, and grow your business.
Step 1
Best Selling Equipment to improve wash quality and simplify maintenance.
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Affordable Controls to deliver efficiency and profitability across your locations.
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Take the First Step! Call or Visit us Online Today!
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12,000 Parts with $12 million in inventory to keep your business running.
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www.SonnysDirect.com | 800-327-8723
What Can We Do to Help You
Grow?
As I look around today, I’m more excited than ever about the future for our industry. Having grown up in the car wash business, I’ve seen more changes in the past few years than ever before. I see new business models, new operators coming into the business, and a new fresh approach to the business. What does all this add up to? Some of the highest growth I can remember, and tremendous opportunities ahead. Today’s car washes are vastly different from the car washes of yesterday. The buildings are beautiful. The landscaping is lush. The tunnels are a kaleidoscope of colors and lights. In short, the car wash is not only a place to get the car cleaned - it’s an experience! Today’s washes are not just delivering a clean, dry shiny car; they are focused on creating an exceptional customer experience. Part of what makes this so much fun is the demand these changes have placed on us to step up our game. Within the last year, we’ve made several changes and improvements to meet the needs of our clients.
Our CarWash Parts team has grown our inventory from 10 to 12 million dollars and will be extending hours in order to ship all parts orders in by 6PM EST the same day. Our CarWash Controls team has built a new POS system, based on the latest technology, to provide a product which contains the promotional and management tools required for multi-site operations. Our CarWash College team has launched a new multi-site management class and increased the number of all classes to meet the growing needs of our clients. Our CarWash Equipment team is releasing eight new equipment innovations this year, with work already started on even more to help you maintain a competitive advantage in your markets. I’m honored by the trust the industry has placed in our company by making us the largest in the world at what we do. And the question I ask myself every single day is “what else can SONNY’S do to support our client’s growth?” With so much opportunity and so many options, I’m excited to be a part of creating the innovations in education, software, and equipment to help push our industry forward. Step up your expectations and let us help you capitalize on your opportunity.
Paul Fazio, CEO SONNY’S Enterprises, Inc.
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TOP
Reasons
More Conveyorized Car Wash Operators Choose SONNY’S Than Any Other Manufacturer in the World!
We Really Are #1 SONNY’S sells more tunnel equipment than anyone in the world with a product proudly designed, built, and backed in the USA. We are TRUE MANUFACTURERS, not just an assembly house, which allows us to be instantly market responsive with new product innovations, better equipment quality, and faster delivery.
Washing Cars Since 1949 SONNY’S has been washing cars for over 60 years and has more than 850 years of retail car wash
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operations experience in our network. We use this knowledge and unique experience to help drive your business forward.
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Financial Strength & Security Dun and Bradstreet have repeatedly given us their strongest financial rating, confirming that we’ll be here to support you for generations to come.
World Class Installation & Support SONNY’S industry leading network of Select Service Organizations (SSOs) is there to support your project every step of the way. Our distribution team has the
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experience and infrastructure to help you succeed.
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Hands-On Training SONNY’S CarWash College offers the industry’s only on going hands-on training, to plan, manage, and grow your business. We deliver the classes that teach you how to manage your wash, maintain your equipment properly, and make any necessary repairs.
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In Stock for Immediate Delivery SONNY’S stocks over 12,000 parts with $12 million in inventory ready for delivery. Inventoried
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parts orders in by 6pm EST are shipped the same day.
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State-of-the-Art Controls SONNY’S CarWash Controls delivers efficiency and profitability across all your locations. Detailed dashboard reporting allows you to access information about your wash anytime, anywhere to make real-time cost saving and revenue generating decisions.
In-House CAD Team SONNY’S CAD Team has designed more car washes than anyone in the world, and applies that knowledge to maximize your property’s revenue potential. Each tunnel system includes over 50
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pages of site-specific drawings to reduce costly construction problems and delays.
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Straight-Forward Design & Pricing SONNY’S equipment designs utilize open architecture – no proprietary parts. Our durable frames carry the industry’s only Lifetime Warranty, and our equipment pricing is published on the web and in our catalog so you can buy with confidence.
Our Total
Car Wash Offering
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So relax. SONNY’S is a one-stop shop with all the
education, equipment, software, and parts to keep your business growing. Join the thousands of
satisfied customers that will testify to the quality of
our equipment, and the level of customer service that sets us apart from everyone else.
The Tunnel Experts GoDirect
ASSISTANCE
Before
TM
You Buy
Going Direct with SONNY’S means more than getting great car wash equipment – it means getting a partner that will stand behind your success. Before you buy car wash equipment from any supplier, make sure you ask these questions: Do you have actual operational experience? LIKE SONNY’S? It’s true, we began as tunnel operators back in 1949 and then got into manufacturing and distribution. Unlike other manufacturers that have washes strictly as test sites, we have true multiple location operations experience dating back over 60 years. Do you publish all pricing so I know exactly what I will pay? LIKE SONNY’S? It’s true, we believe that our equipment offers the best value in the industry and publish the pricing on everything we sell. SONNY’S doesn’t quote a “System” that can unexpectedly increase in price as you modify your original plan. When you need to make changes, SONNY’S published pricing means you always know what you are getting and that it is priced fairly. See for yourself, visit www.SonnysDirect.com to price and configure a complete itemized car wash system quotation.
Development During ADVANTAGE GoDirect
Going Direct with SONNY’S means more than getting great service – it means getting a partner with 60 years of experience building successful car washes. Before you buy car wash equipment from any supplier, make sure you ask these questions: Do you provide site specific drawings for my project for FREE? LIKE SONNY’S? It’s true, to save you time and money, SONNY’S will produce as many as 45 pages of detailed site-specific mechanical drawings that can be incorporated into your architect’s full drawing set. These drawings include concrete conveyor plans, all plumbing (hot and cold fresh, reclaim water, and pneumatics) and car wash electrical drawings. Do you provide factory training LIKE SONNY’S? It’s true, to help make car washing easy, you can come to SONNY’S factory for real, hands-on training. Participants practice what they learn in a state-of-the-art equipment laboratory, gaining the practical experience to manage, repair, and maintain their car washes the day they return to work.
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ASSURANCE
After
You’re Operating
Going Direct with SONNY’S means more than getting expert advice – it means having the largest supplier of conveyorized equipment, parts, and supplies in the U.S. standing behind you – 24 hours a day – 7 days a week. Before you buy car wash equipment from any supplier, make sure you ask these questions: Do you have experienced operators available 24/7? LIKE SONNY’S? It’s true, SONNY’S posts the cell phone numbers of experienced operators at our company, on-line. They’re on-call 24/7 to help guide you through any emergency that happens at your car wash. Do you have a 24/7 Emergency Replacement Parts Program? LIKE SONNY’S? It’s true, SONNY’S inventories over 12,000 car wash products including nearly every replaceable item for our equipment, ready for same day shipment. Do you have an equipment swap program? LIKE SONNY’S? It’s true, if a vital SONNY’S manufactured component at your wash fails, or you believe it may fail, we will ship you a replacement. Simply put yours in the crate you receive and send it back for diagnostics and repair. If it’s still under warranty the repair is FREE.
Remarkable
Financial
Go
Direct
STABILITY
Since 1949
Go Direct
Come tour the factory and see why!
SONNY’S delivers thousands of site-specific drawings for Express-Exterior, Flex-Serve, Full-Serve, and Fleet car wash projects every year. Site plans are provided Free with any SONNY’S tunnel system purchase; one of 32 promises under our Go-Direct Program. Learn more at
www.SonnysDirect.com
Go
Direct
Go
Direct
to find out how SONNY’S can make car washing easy for you.
ColoringOutside the Lines
“Best Practices in Site Selection”
With real estate prices soaring, and the car wash industry booming, some have resorted to buying properties that wouldn’t have been considered even just a few years ago due to cost considerations. While it’s one thing for a newcomer to the industry to build in a location with questionable traits, it’s another thing entirely when we see industry veterans, some with several existing locations, breaking standard site selection rules. These folks appear to be coloring outside the lines when it comes to finding wash sites. Granted, some are posting record numbers, but is this the type of gamble for you? Well, before you pick an alternative site, you should be familiar with what the rules are before you break any of them. Most industry experts agree that site selection is the single biggest decision you’ll make regarding the success of your car wash. I have seen operators make money in spite of themselves when they have chosen a great location. Conversely, I have seen great operators believe that their marketing and management skill can overcome a poor location struggle to stay alive. The fact is that part of selecting a winning site relies on understanding that particular market. Experience and intuition play a role as well. Regardless, before you consider an alternative site for your next car wash project, you must know what criteria contribute most heavily to a car wash’s success. So, what are they? Let’s take a look. 1. Traffic should exceed 25K cars per day in a 24 hour period. That’s the bare minimum. When looking at a particular location always remember that not all traffic is created equal. Several conditions should be discounted from the raw number of cars. First is commuter traffic. Employees on their way to and from work stop less often for a car wash than local residents and should be discounted. Also, too much traffic during peak hours isn’t always a good thing. If the road you’re considering get so congested during rush hour that it’s stop-andgo driving, discount that traffic as well. Few people will pull off the road and further delay their drive so eliminate them. Also, when looking at a property on a divided highway, or without a nearby turning lane, only consider the traffic on your side of the street.
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2. The property must be visible from a distance and easy accessible with enough time to slow and make a safe turn into the property. Ideally there is a deceleration lane. In a perfect world, your proposed property is on the right hand side after a stop light with the road bending to the left. Businesses on the inside of a curve have limited visibility from either direction. That might be sufficient for a destination franchise, but car washes are often an impulse buy and visibility is critical. 3. Whether it’s a street sign or a building sign, zoning rules must allow you to prominently promote your brand and service. Don’t immediately be discouraged if a monument sign or a pole sign isn’t an option in a particular municipality. 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 with sufficient time to slow down and pull in. If that isn’t available, I’d recommend moving on to another piece of land. 4. Traffic speed shouldn’t exceed 45 mph in front of the ingress. Speed matters. Not too fast, not too slow. Too fast and potential customers will zip past never realizing your wash is there. Too congested and frustrated drivers, eager to get through the traffic, seldom pull in for a car wash. Are there exceptions? Of course. Stop lights and signs can create intermittent traffic 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.
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5. Population density should exceed 50K in a three mile radius. It’s not only the raw number that matters. Look for markets with high occupancy rates, meaning, the market isn’t saturated with unoccupied units available for rent or sale. Mixed residential with some apartment inventory, not just single family homes, is preferable. Apartment complexes rarely allow driveway washing and can positively impact overall volume. Some locations in rural communities, or markets not saturated with other washes, have found success with just 35K of population densities in a three mile radius. That said, don’t look below 50K unless you have the experience and intuition to back it up. 6. Look for markets with a working population with at least 55% of the total population being between the ages of 25 to 55. Simple logic here, as a general rule, employed people have more disposable income than retirees and students. 7. Ideally 50% of your proposed market should make over $50K household income per year. This is critical for a full or flex serve, though the higher income level is somewhat relaxed for an express-exterior wash. Even with an express wash however, rarely will you find success in a market where 50% or more of the market is below $35K annual household income. 8. Total population and income should be projected to grow over the next five years within a 3-mile radius of the property you’re considering. Enter a market too early and you may fail before it takes off. Buy too late and the cost of the land may not fit your investment objective. Review census data to see if the population is growing. Visit the city planner’s office to see which, if any land 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. Sometimes you’ll see a wash doing a great business in a growing market and think they got lucky and timed it just right. Don’t be fooled. Too often I’ve seen new washes build prematurely, only to finally find success on the second or third owner. Do your homework and don’t let this happen to you.
10. Required utilities should be available before you make an offer. This includes the presence of a two inch water main and sewer connection without an exorbitant impact fee. Three-phase electricity must also be available. Don’t assume. I’ve had to help operators size diesel generators mid construction because they assumed that the 3-phase transformer they saw 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. 11. Seek a property that has no direct competition within three miles of the wash. Don’t only look at existing sites, check with planning and zoning for your town, and neighboring towns, for new car wash permits that have been applied for. Also consider in-bay, self-serve, and c-store rollovers that may not be a direct competitor, but can be easily converted to a tunnel wash. Traffic patterns, intersections, and other market criteria such as population density and income lead many investors to dismiss the three mile rule of thumb. I won’t deny that many are finding mutual success operating much closer than the traditional guideline. Call me old fashioned, but I still don’t think I’d build less than 3 miles from a direct competitor. If you find sites with all of these characteristics you should fare well, provided you deliver a consistent quality product, good value, and a positive customer experience. If you’re going to color outside the lines on the rules of thumb I outlined above, then you’d better make sure you know what you’re doing. Let common sense prevail. Business is about making a sound return on your investment. As the market heats up and land is harder to find it’s easy to cut corners. Don’t fall prey to this tendency. Rely upon good, sound, business practice and common sense before moving forward on a property for your next car wash project.
Good luck and good washing, Anthony Analetto
9. Car washing should be a permit-able use for the property before you invest money. If it’s not, be prepared to spend tens, or even hundreds of thousands of dollars to get an exception made, with no guarantee that you’ll have anything to show for it. Sometimes a great site is worth fighting for, and if successful, it will be practically impossible for a competitor to enter the market. That process isn’t for the faint of heart, and most investors would do well to stick with land that is zoned for car washing.
The Tunnel Experts™ @ www.SonnysDirect.com
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Volume Navigating Site Selection in an Uncertain World. by Anthony Analetto President SONNY’S The Car Wash Factory - Equipment Division A fool thinks he needs no advice, but a wise man listens to others. When I first met John Dix on a trip to evaluate potential CarWash sites for QuikTrip’s first venture into the express tunnel industry, I spent a lot more time listening than talking. Operating in nine states, Tulsa-based QuikTrip Corp. recently celebrated both its 50th year in business and the opening of its 500th location. The company sells approximately 1.7 percent of all the gasoline in the U.S., employs 10,500 people, and sales last year totaled $8.3 billion dollars. They are masterful marketers with a famous reputation for picking winning sites to grow their business. Before his retirement earlier this year after 36 ayears with the company, John Dix was the man in charge of all site selection for all eight markets in which the company operated. John is a true competitor. He is one of those people who can see through problems and create success with decisive action. While talking to him recently regarding site selection, he agreed to do an interview on the topic for this article. Even if you’re not looking to build a new location, I urge you to read John’s insights on competition. He outlines the qualities of an incumbent business that would lead him to avoid competing with them and look elsewhere. These are exactly the qualities each of us must refine in our service offering as CarWash operators to ensure the success of our businesses. I want to thank John for sharing his knowledge; excerpts from our conversation are below.
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ANTHONY ANALETTO: With real estate prices falling everywhere, what factors do you feel indicate a market may have hit bottom and presents an opportunity to buy land at a discount; and are there any markets you feel may be approaching that point already? JOHN DIX: To get a feel for the condition of the commercial real estate market in a particular area, I would recommend doing the following. First, check the government agencies for the trends in permitting. Although higher income areas tend to remain somewhat insulated from permit inactivity, lower and medium income areas may show an increase in permitting activity that can indicate a downward spiral has bottomed and is on the way back up. Also, in tough times, higher income area land values tend to flatten without increasing or decreasing dramatically. These property owners are often better able to withstand the pressures of carrying costs over the long term and will just wait for better times to get their price. Low and medium income areas however, can change more quickly and potentially create some opportunity for a savvy buyer. Second, check the unemployment rates. Recently, in Tulsa, the rate went from 3.6% to 4.2% which is one of the first indications that the coastal downturns have reached the Midwest. Third, check the apartment occupancy rates. If they are in the 90% to 95% range, and housing starts are still going down, there could be a lack of confidence by developers and/or lenders.
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= Demand / Competition Fourth, check single family housing starts. If they have decreased from the previous year for the whole market by 10% to 15% or more in a time of high occupancy rates for multifamily units, it would indicate a lack of lending availability to developers and buyers.
the amount of demand (D) in a given area of influence divided by your or your competitor’s (C) ability to attract, service and keep that amount of demand or (V=D/C). Believe it or not, this simple truth is overlooked by businesses selecting a location more often than you would think.
As always, the best time to buy land is when one has high liquidity, interest rates are high, and appreciation is low. Sellers will look harder at offers without financing contingencies during those times because carrying costs are high and there are fewer qualified buyers. The best time to sell land is when interest rates are at the bottom. The land will never be worth more to a prospective buyer as when they can leverage a higher percentage of the purchase price and are willing to pay more, provided they can find a lender.
We’re in a tough economy and disposable income for many of your customers has been either reduced or eliminated. The difficulty in these times is to make a living with a one trick pony when there is no hay to feed him. Does it change what I look for? Not a chance. It only makes me examine each site more closely to make sure I don’t make any mistakes.
As per specific markets, I’m most familiar with the Midwest. Granted, the Midwest has been somewhat more insulated from what’s going on in the coastal market downturns, but I can say for sure that there seems to be no bargains to be had here. ANALETTO: What population characteristics do you evaluate when selecting properties, and has the current recession influenced or changed what you’re looking for? JOHN DIX: Having been a site selection guy for a convenience store company for most of my real estate life, finding the best of both worlds for a C-Store with a car wash is a bit of a dilemma. For traditional C-Store volume, lower income generally equals higher inside volume, to a point. Below that certain point of income, volumes decrease. For CarWash or gas volume, higher income generally equates to higher wash volume as well as higher gas volume. Both of these axioms are dependent upon so many other factors that they are not, by any means, the only truths in site selection. There are actually so many variables that I like to start the process of evaluating a property with a simplistic formula that’s true for any business, whether it is a bank, a flower shop, or a CarWash. To put it in a nutshell, a site consists of one thing, and that’s people. The more people, the more volume there may be, sometimes! So, to go back to the formula, let’s say that volume is (V). People represent potential demand for a particular product, which we can call (D). Competition for that demand is (C). Volume (V) is
ANALETTO: Is there ever a time you would recommend for someone to attempt re-zoning a property not already zoned for car washing? JOHN DIX: Permitting is not going to get any easier, anywhere! The future lies with express or automatic washes, with a few Full-service detail washes thrown in. Cities all go to the same seminars and belong to the same professional organizations. That means you can expect that policy-makers are going to standardize the zoning and permitting required for these types of emerging businesses. Currently there are still some gray areas in zoning which can be exploited by certain types of washes in some areas. For example, if one operates a C-Store, many cities allow any type of CarWash if it is an accessory use of the C-Store operation. In those same cities, a CarWash by itself may require a special use permit with special setbacks for dryers and lighting to protect neighborhoods. And, many planning and zoning or city council members will not vote to approve anything where there is even one person opposing it. Would I recommend re-zoning? Of course I would, if it was the right site, and you negotiate sufficient due diligence into the purchase agreement to avoid closing on the property until you have full building and use permits in your hand. That’s not to say I would recommend trying to re-zone a property in the middle of a residential area to a CarWash use. It has to make sense and conform to the city’s comprehensive plan. Spot zoning like that is not recommended, and buying or closing on a piece of property without full building and use permits should never be done under any circumstance. While sellers will balk at buyers wanting to have full permits before closing,
The Tunnel Experts™ @ www.SonnysDirect.com
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we routinely were able get six months to 1 year due diligence time to pursue our permits. We were willing to make payments for that right. Most often these payments were generally non-refundable. They were however applicable to the purchase price of the land, and we would have a strong indication of success before we made any of those payments. ANALETTO: When evaluating properties for a CarWash, what are the key physical characteristics you look for, and what variables do you think people most often overlook? JOHN DIX: As a C-Store operator we looked for high demand (remember D?), low competition (remember C?), access, and visibility. The size of the site had to fit our standard offer without compromising our optimum and/or minimum standards. We would never take a site which left us in a substandard or inferior position to our competitors. For example: If a competitor has a great corner site with twoway access (no medians), a 150 foot tunnel wash and a billboard with a changeable price sign which may be grandfathered and not currently allowed, and you’re left with an off-corner small site with one way access and a newer sign ordinance to deal with, which doesn’t allow billboards and only allows small signs, don’t bother. He’ll whip you! The single biggest mistake I see made on site selection, especially by individual investors, is they take a site that they think they can afford rather than the best site in the area. They look for “For Sale” signs instead of the best site. They believe that their service offering will overcome site location deficiencies and delude themselves into thinking that a competitor won’t open up to compete with them because they are already there. Well, I made a living finding facilities which ran a lot of volume on an inferior site with little or no competition. Then I bought the best site in the area to take their business from them. The fact is, you only pay once for the best site. If you take less than the best site, you will pay for it every day you’re open. Imagine a trampoline as your trade area and your business is one of a few golf balls scattered around the surface. You must assume that, if you are successful, someone is going to try to take your success away from you. Someone is going to try to throw a bowling ball into the middle of the trampoline to suck the volume away from your business.
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You must position yourself and operate your business to not allow that to happen. They might be able to match your physical offer, but don’t let them match your location or your operation. Make your customers want to come to you so badly that they will drive out of their way to get to you. Like I said before, I wouldn’t select a property that went head to head with a strong competitor on a great site unless there was a better site that could be acquired. Never handicap yourself from the start by picking anything less than the best location. ANALETTO: Corner lot, mid-block, ingress, egress, traffic count, residential, retail, professional, mixed use; with so many variables to consider, is there one ideal combination for a CarWash? JOHN DIX: No. Some time back we decided to come up with the four ideal factors that constituted a C-Store site. We said we wanted 25,000 cars a day, 4,000 households in 1 mile, 4,000 daytime population (people who work in the area) and major activity centers (high schools, recreation parks, malls, etc.). When we analyzed all of our stores for those four factors we found we only had one (1) out of (at the time) over 300 which had all these attributes. And it wasn’t even our best store! I pay more attention to who is my competition, where are they located, how much volume do they do, how do they price, how do they staff, with whom do they staff, how do they maintain, and the last and most important questions - can I beat them in all facets of operation? Are they vulnerable? All the physical characteristics of a property must work together with your site layout to make everything easy for your customer - that must be a given. There has to be sufficient access points, turning radii, parking spaces, lighting and more. Good site layout is an art form and a struggle for many, especially in
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conjunction with buying the right property. Do your homework, and don’t be afraid to get help from industry associations, equipment manufacturers, other operators, or consultants when you need it. ANALETTO: With signage and visibility so vital to a CarWash’s success, what should a prospective buyer look for or verify before buying a piece of land? JOHN DIX: Everything! I recommend having the discipline to walk away from a site and possibly, lose money doing it. Do not close or accept anything less in permits than everything it takes to make your service offer the absolute best within a given trade area. Most cities understand that you’re only trying to operate a business. Provided you’re not trying to operate a brothel (except in certain counties in Nevada) or an adult book store, or some other offensive use, they will have a zoning classification that will allow you to do that business if you’re willing to adhere to all their requirements of permitting, zoning and operation. We didn’t mind stringent requirements as long as they were applied equally to all applicants. ANALETTO: When it comes to competition, how close is too close in your opinion? JOHN DIX: If your product and service offering is what it should be (which is better than anyone’s) you shouldn’t care. If you’re there first, and a competitor wants to open across the street, so be it. It’s their problem to keep up with you. Assuming you selected the best location they must take an inferior position due to your site location advantage. It’s called “cutting them off” or “out-positioning” them. If on top of that you have a good offer, good pricing, good maintenance, and good staffing, they’re beat before they get started. The opposite is true if you’re looking to build next to an existing competitor. If you can beat them in all facets of operation, they have a lot of business, and a better site is available, then there is no such thing as too close. ANALETTO: With utility costs such a major component of a CarWash’s profitability, have you ever passed on an otherwise good location due to overly high sewer, water, gas, or electric rates?
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CheckList SITE PLANNING A. Have Land 1. Acquire proforma to help with projections. 2. Make sure the ideal use for the land is a car wash. 3. Select equipment manufacturer that can provide support on the above items. 4. Hire architect that has car wash experience. 5. Find a design-and-build firm with car wash experience. 6. Obtain financing for the entire project. 7. Get car wash specific training.
B. Don’t Have Land 1. Find a company that can help you with what to look for in a site. 2. Learn about car wash types to decide what model you want. This will enable you to purchase the required amount of land. 3. Investigate hidden costs on land before purchase; Permitting Fees, Utility Costs, Site Work.
C. Existing Site Purchase 1. Learn about car wash models and decide what model you want. This will enable you to budget for changes to the site. 2. Select equipment manufacturer that can provide support on the above items. 3. Acquire proforma to help with projections. 4. Have an equipment audit performed. 5. Obtain financing for the entire project. 6. Get car wash specific training. 7. Hire architect that has car wash experience. 8. Find a design-and-build firm with car wash experience.
BUSINESS PARTNER 1. Offers free site evaluation. 2. Delivers free complete site plans. 3. Delivers free mechanical drawings. 4. Offers hands-on car wash training. 5. Helps manage and coordinate construction. 6. Introduction to approved lenders.
JOHN DIX: Most growth cities are increasing their water, water meter and sewer rates and fees. As long as my pro-formas worked, I would not allow any of these to determine whether I took a site or not unless it gave a competitor an unfair advantage by being grandfathered at a lower rate.
7. Provides referral list of current customers. 8. Offers integrated software solution. 9. Company stability (check D&B rating). 10. Offers parts support. 11. Equipment is easily upgradable for future expansion.
Celebrating a Decade of Academic Excellence
ANALETTO: Any words of wisdom? JOHN DIX: Above all else, have the discipline to walk away from a site and possibly lose money doing it. Having been personally responsible for opening 100 of the 500 QuikTrip locations currently in operation, I had the luxury of being less emotionally involved in
Where the CarWash Industry Comes to Learn — 1 Week at a Time!
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selecting the best site than an independent investor looking to open a new CarWash. Emotional detachment makes it easier to walk away from any purchase agreement that does not contain a long enough due diligence period to acquire full building and use permits before you close. It makes it easier to evaluate competition realistically and know when it makes sense to go up against a deficient competitor and when you would be better off looking elsewhere. There is a lot of science behind site-selection. There is also a lot of art to it that can be easily manipulated by emotional attachment to a less than perfect site. My words of wisdom would be to keep the emotion out of it. Your financial success will depend on it.
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John Dix is available for assistance in site selection and development as long as it does not compete (in the C-Store category) with QuikTrip. Bio: Washing cars for over 30 years, Anthony Analetto serves as a President of SONNY’S The CarWash Factory, creator of the Original Xtreme-Xpress Mini-Tunnel, and the largest manufacturer of conveyorized car wash equipment, parts, and supplies in the world. He can be reached at Aanaletto@ SonnysDirect.com or at 800-327-8723 ext 104
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CarWash Building VS. Buying
10 Steps to Making the Best Decision by Anthony Analetto President SONNY’S The Car Wash Factory Equipment Division
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Evaluate the competition: Research all CarWashes located in the market you are considering. Search online. Check the magazines. Look at any and all CarWashes for sale. Map out every competitor and CarWash for sale in at least a 5 mile radius. Mark down their wash type, pricing, services, and any strong features. Next, visit the local city hall and check all permits in process – verify if anybody else is about to open a wash in your selected market.
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Decide whether to buy an existing or build a new car wash: Some markets are saturated with CarWashes with many up for sale. Other markets are booming and present an excellent ground floor opportunity. Before considering the construction of a new wash, carefully evaluate any existing washes for sale in the market you are looking at. On the next page you will find a quick EBITDA – Earnings Before Interest, Taxes, Depreciation, and Amortization guide to approximate the value of a CarWash. If there are not enough CarWashes in your market and no good values to purchase – consider building a new site.
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Research and visit:
Research what type of wash you want to operate. Visit as many washes as you can to see what you like as far as layout, equipment, and functionality.
Find all available lots: If you have decided to build a new wash go to your municipality’s planning and zoning department. They will usually have a zoning map that tells what areas meet the requirements for a CarWash. Enlist a real estate broker who understands commercial real estate to identify every potential site in the market you are considering. Calculate Car Count Conversion:
Once you have several potential sites, the evaluation process begins. The goal is to measure all known variables to select the most viable location. A good place to start is traffic count. The rule of thumb was to look for a two-way car count between 25 and 45 thousand cars per day. Expected conversion rate varies based on market conditions, CarWash type, and competition. For planning you can estimate between .075 to 3.0% daily. Prepare a pro-forma evaluation of a proposed lot..
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The first part of the process is deciding what type of CarWash to build. Many factors will contribute to your decision. Are you interested in the profit potential of a Full-Serve? Does the elimination of labor with an Express Exterior seem attractive? Have you weighed the pros and cons associated with a Flex-Serve location? Which one do you think matches your preferences and provides a competitive advantage in the market you’re evaluating? Regardless, the typical CarWash buying process is a calculated procedure. The goal is to investigate before you invest.
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Speculate the Economic Future of the Market: You can use demographic tools to aid your assessment, but there is no perfect crystal ball. Check all retail anchors; who is there, who are coming, and who are leaving. Gauge if the market is growing, improving, or degrading. Visit the site at different times. What are the car counts for weekdays and weekends during all hours? Is it too congested? What is the best angle of visibility? Many of these factors will influence everything from your decision to buy a property, to where you locate your building and signs.
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Evaluate Property Flow and Visibility: When looking at land pay special attention to the ingress and egress from the street. What is the distance to the nearest traffic light? Can you exit in both directions? Can you enter from both sides? If not, is there a median cut with a legal U-Turn? Make sure there are no setbacks that will put your building out of view or behind bigger structures. Check on all sign restrictions. Ultimately, you must guarantee that either the building or signage (ideally both) will be seen by passing cars.
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Get Preliminary Town Approval BEFORE You Buy: Once you are confident you have located an ideal site for a profitable CarWash, negotiate a price. It is important to get the property under contract with a due diligence period to complete your research. Contact SONNY’S. Send us the site plan with notes on abutting properties. SONNY’S CarWash design department will work with you to create the ideal Full, Flex, or Express layout for the land. You will receive a complete site plan you can use for preliminary site approval with the municipality. Do not take risks. Only after your have preliminary approval do you want to exercise your right to purchase the property.
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Research demographic Characteristics:
Before assessing a location’s value you must know the demographic characteristics surrounding it. When doing this don’t forget to also consider daytime population. A large population of people employed in an area can dramatically affect your hours of operation, pricing, and required speed of service. You can hire consultants for this service or use online resources.
Check All Impact Fees: Research any potential or costly surprises the land may present. Verify water retention requirements that may present costly solutions to address. Review all impact fees. If it costs $500,000 for a two-inch water tap, you have to review options and evaluate their cost. You may decide to abandon a municipality based on impact fees. The point is to do your research before you make a purchase.
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Evaluating
CarWash
Locations
Finding commercial real estate on which a successful conveyor CarWash can be built is extremely challenging. Actually finding a site is not that hard. Finding one that has a good chance of being successful is. And, in some areas, finding a site where a car wash can be permitted to build at all is also very difficult. After you finish reading this article, the task will be even more challenging, because you will have all of the major variables to consider, and the factors are more numerous than might have been previously thought for a CarWash. The most frequent difficulty potential CarWash owners have is that they fall in love with a piece of property before all the tough questions are asked. “Marry in haste, repent at leisure,” Ben Franklin is reported as saying. When spending $.5M to $1.5M on a piece of property, and $2M to $2.5M for the entire project, looking under every rock to see if there are any potential problems would seem to make a lot of sense. The good news is that the downside of building a CarWash where there is no realistic chance of success can be avoided. The further good news is that the task of finding a good site can proceed with greater success in the future when you know what to look for. 1. Zoning There are three general categories that your site for a car wash can fall under. The first, obviously, is that the site is zoned for a CarWash. In this case, the permitting process can usually proceed without much difficulty. The second situation is where the site is not zoned for a CarWash. In almost every case this situation will result in a long and expensive process to try to re-zone it, and there is no guarantee of success. Most new operators entering the business should try to avoid this situation. The third situation is where a variance or a special use permit is required. This is the most frequent situation that a person attempting to build a CarWash finds himself in. In this case it is strongly advised that you find a local attorney who appears before the local planning board with some frequency to help steer you through this process. 2. Site Itself There are 3 major considerations when assessing a site: first is the square footage, second is the exact shape of the site, and third is the access to the site. In terms of square footage, simply put, the site has to be big
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enough to build the type of CarWash that you want to build. In terms of shape, the dimensions of the site have to conform to the CarWash concept that you plan to build. Most conveyor sites need to be in a rectangular form, with the length of the site approximately 1/3 more than the width. Another consideration when evaluating the site is to look at the access to the site itself. Is it on a corner, mid-block, or in a shopping center? Is there a median to be negotiated, and if so, is there a median cut? What is the overall distance to the site from the point at which a vehicle, coming from the opposite direction, can turn into the site, etc.? 3. Site Requirements There are a large number of questions that need to be answered regarding site requirements. They are: a. What are the building setback requirements? b. What are the green spa ce requirements? c. What are the parking space requirements? d. What are the detention area requirements? e. What are the restrictions on curb-cut placement? f. What are the curb-cut allowances? g. Is this a planned development use? To assist you in navigating through all of the local codes and regulations, it is recommended that you engage a local engineering firm. Again, one of the chief requirements for hiring this firm should be the frequency with which they deal with local officials that govern the site approval process. It must be determined how much the setback requirements take away from the dimensions of the site before someone really knows how much property they have that is usable for building. 4. Signage All of the variables that affect signage can be found in a careful analysis of the local sign code. It is important to note that these codes are being revised continuously; therefore, when you visit with the officials that control this area, it is important to ask whether there are any intended revisions being discussed. Sign codes can also be slightly different, depending upon how the real estate is zoned. So, there are general requirements, as well as specific requirements. Of all the variables to be considered when looking at the
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HOW TO QUICKLY VALUE A CAR WASH BEFORE YOU BUY!
Assessing a car wash’s value should involve an accountant and careful number crunching. With that said, there are times when you just want a rough approximation. For that, turn to EBITDA – Earnings Before Interest, Taxes, Depreciation, and Amortization. You can quickly calculate EBITDA by taking gross sales and subtracting all COGS – Cost Of Goods Sold. Don’t forget to subtract everything except debt service and owner benefits. This includes labor, discounts, utilities, detergents, supplies, insurance, and landscaping etc. Once you have your EBITDA number, multiply it accordingly below for an approximate value of a typical car wash.If you determine the customer base is weak OR the equipment and facility require some repair.
• If you determine the customer base is strong AND the equipment and facility are in good working order • If you determine the site has tremendous growth potential due to an expanding market or other factors. Don’t forget, the EBITDA-based value is just a quick approximation in a stable market. Sudden changes in land or other values can impact on its accuracy and have to be accounted for.
total signage on the site, the setback requirements and the maximum size for the street signage are far and away the most important. If a street sign can’t be seen by approaching traffic until the vehicle’s almost on top of it, the size of the sign doesn’t matter. The objective is for the sign to be close enough to the street, and large enough to be seen from at least 300’ in either direction. Since the street sign is only one part of the total site signage program, there are many other variables that need to be considered as well. The major variables include the following: a. Total Signage Square Footage Allowed b. Maximum Size for Street Signage c. Sign Height d. Type of Sign (pole or monument) e. Signs on the Building f. Directional Signage g. CarWash Menu Signage h. Individual Product Promotional Signage i. Instructional Signage j. Any Other Signage on the Property The signage on a CarWash property is so critical to a success, and so much more complex than other retail establishments, that there are professionals who specialize in consulting on this one topic alone. It is recommended that you either engage such a person or make sure to work closely with your sign company before finalizing the purchase of the location in order to be sure what the sign code requirements are going to be for the property. 5. Traffic This item is one of the variables viewed by most operators to be the most important variable to consider. It is extremely important, because the higher the traffic count, the greater the potential for the property. It’s important to note that the type of CarWash that is being built dictates minimum traffic counts
needed, as well as what an individual operator believes that they need to be successful. Determining the trend of traffic counts is equally important to knowing what the current traffic count is. Basically, the question that has to be answered, “Is the traffic going up or going down?” Also, what is the rate of movement and, most important of all, what factors are driving the rate of change? Additionally, if there is no change over an extended period of time, what is the reason for that? And, the projected growth rate for the traffic is an important consideration as well. The speed of the traffic as it passes the site is extremely important to consider when evaluating a location. If the traffic is going too fast, a driver cannot react very well to the impulse created by signage to turn off and enter the site. The general rule of thumb that most industry observers would agree on is that 45 MPH or less is the ideal to strive for. 6. Visibility When considering site visibility, the ideal situation is when the street signage, the building, and the activity on the site can all be seen from at least 300’ in either direction. In my experience, it rarely occurs that all of these areas are visible. If you have to choose, the No. 1 consideration is visibility of the street signage. 7. Population After traffic count, the amount of the population within a 1-mile, 2-mile, and 3-mile radius is considered by many to be the second most important criteria in selecting a site. No matter how high you rank this factor, it is critical, and the evaluation begins with the obvious: the denser the population, the better the opportunity for higher volume. A better criterion for evaluation than 1-, 2-, or 3-mile radii, is to determine the polygon for the retail trade area in which the prospective property sits. A polygon is generally considered to be defined as the natural trade area in which people will drive to a site within 7 minutes, or approximately 2.3 miles, on average. Although it takes a little longer to construct these polygons, they are a more exact indication of potential customers. The amount of population within these defined radii that is required to have enough of a customer base for the car wash is determined by (a) the type of CarWash, (b) the percentage of customers that are local vs. drive-by for that type of CarWash, and (c) the amount of competition that already exists in a market and the amount of potential competition that can be anticipated to develop in that market. Another factor to consider is the growth rate of the population. Oftentimes a CarWash can be built today with the population less than what is required, because it can be determined with some certainty what is going to be built in the very near future. The percentage of daytime population and the number of households that are renting are two additional factors that can be very important, depending upon the type of car wash and the particular concept.
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8. Competition This factor is, in this writer’s opinion, one of the most important considerations to be looked at when deciding if a CarWash should be built on a site, what type of CarWash should be built, and what pricing should be on the menu. Interestingly enough, this is the area that is certainly looked at by new people entering the industry, but is most often quickly dismissed. Why? Everybody believes that they will do a much better job, and, thereby, vanquish all of the competition. What is recommended instead, is that every CarWash within the trade market be considered competition and that a share of the market be determined that is realistic for a new CarWash entering the market. Even if this share of the market is overly optimistic, it still works with the idea that competition exists, and more often than not, will fight back to stay in business. There are only so many people in a market, and they will wash their car only so many times. So, looking at total potential washes to be delivered in a market and analyzing your potential share is a more solid approach than feeling sad for all the competitors that are going to go out of business once you open up. 9. Nearby Businesses The more reasons that a CarWash customer has to come to the area surrounding your property, the greater the chance for increased frequency of visits. Keeping this in mind, the daily needs of local consumers are the first area to look at. This means that businesses like grocery stores, convenience stores, service stations, and local restaurants are first in importance. Right after that are the magnets for weekly shopping, such as big box retailers, malls, and chain specialty stores. As always, national names trump regional brand names, which in turn are generally more valuable than one-of-a-kind local entities. 10. Utilities The costs of sewer, water, gas, and electricity are critical for determining the viability of a CarWash location. Tap fees and hook-up fees are becoming increasingly onerous, and in some cases will knock out the viability of a project. There are some areas where these fees are running into the hundreds of thousands of dollars and making the building of a car wash impractical. Ongoing costs, although growing, are usually more reasonable and can be absorbed as a normal cost of operation. Also, many municipalities have a history with CarWashes and will use this historical information to begin the process of charging a car wash for their resources. When it comes to the cost of water, it is strongly recommended that a good reclaim system be installed and utilized for reclaiming a large portion of the freshwater usage. 11. Cost of the Land Surprisingly enough, the cost of the land is usually not the most critical factor in decision-making. For tunnel Carwashes successful operators have built on 1-acre parcels that range anywhere from $500K to $1.3M. The type of car wash and the
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expected revenues determine the decision to purchase a piece of land that will conform to the bottom-line requirements of a proforma. In some areas the cost of land is so prohibitive that no level of operational success can realistically make the numbers work. For the most part, however, operators are willing to pay a premium to obtain a site that meets all of the criteria. 12. Impact of Marketing When deciding whether or not to purchase a site, one of the criteria that should be considered, but often is not, is what the impact of a well-developed, successfully implemented marketing plan will be on site revenue. In most retail businesses the expectation is that this is the “chicken” that comes before the “egg”, and large amounts are usually budgeted for first-year expenditures. Unfortunately, most car washes do not achieve their proforma, often simply because they have not expended the funds necessary to achieve their targets, but rather, have operated on the basis of “build it and they will come”. 13. Impact of Successful Operation of the Car Wash The successful operation of a CarWash can affect volume in a positive manner. In my experience, new operators overestimate how much better the performance of their CarWash is going to be in relation to the competition. That is why competition is often neglected in deciding whether or not to build a new CarWash. An experienced operator usually has a much more realistic approach. Poor operators or even moderately successful operators will shy away from getting into an overly competitive situation. Superior operators (which all new operators believe they will be) will be aggressive, because they have a history of their better performance eventually overcoming competition they have faced. As you can see, the above is not a cookie cutter formula. However, simply knowing all of the variables to be considered before making such a large investment will guide you in the right direction in terms of decision-making. The following point may be the most important one that can be made in this article: Every evaluation has to be site-specific in nature. For example, a site could have 12 of the 13 variables just perfect, and one variable could cause you to pass on a site. On the other hand, you may be looking at a site that has only 5 of the key variables that are favorable, but they outweigh the problems represented by the other factors. When evaluating a location, it is recommended that you utilize the resources of someone who has evaluated many CarWash sites in the past. Given the size of the investment required today to enter the CarWash industry as an operator, it makes good financial sense to obtain the best analysis possible.
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EXPRESSExterior
Car Washing
Super Sized Profit Opportunity By Anthony Analetto
President, SONNYS The Car Wash Factory Equipment -Division
Your customer is boss. Before building your CarWash you studied them within geographic distances – you knew their per capita income, driving patterns – but did you ask them how they liked to wash their car and what type of CarWash they prefer? What would it cost to find out – do they know - does it matter – is it common sense? The fact is that it changes from state to state, neighborhood to neighborhood, and even person to person within the same household. What does not change is the desire for a fast, consistent, easy, predictable value. It is the reason companies like McDonalds’ and Dominos’ succeed in nearly every country, culture, and socioeconomic environment, and it is the foundation of the Express Exterior CarWash design. Many new investors are capitalizing on this newly improved CarWash business model that is sweeping the industry and being incorporated by some of the country’s most successful CarWash operators. Exterior CarWashing is not new. The innovations in equipment, chemicals, cleaning media, and philosophy are new and greatly improved. Express Exterior washing is a well-planned and engineered program proven to give extreme customer satisfaction, maximum wash volume, and easier owner operation. Designed as a freestanding operation, Express Exterior washing can be incorporated into a full-serve site. Stop! It is not as easy as putting out a sign with a low price and short time commitment. The philosophy of full serve and exterior is very different. The full-service CarWash is finished when all the employees finish touching it up at the exit end. The
Express wash is finished at the end of the tunnel by equipment and the objective is for the Express wash to be as good as a full-serve wash.
THE POWER OF FREE Many of the innovations for an Express Exterior are based on technological advancements in equipment, chemicals, and affordable computing power. One of them is not – FREE vacuums. To some it seems insignificant – to others a loss in revenue. Well, it is about as insignificant to increasing volume and profit in your CarWash as “Super Size” or self-serve fountain drinks were in fast food. Why free vacuums? Simple – it is less intrusive and gives total control to the customer. Although equipment packages can wash, wax, seal, tire shine, and dry upwards of 150 cars per hour, an Express Exterior site isn’t designed by cars per hour; it’s engineered to ensure a customer wait time of 5 minutes or less – regardless whether there are 5 or 20 customers in line. If land permits, initial site design and traffic flow are designed for future scalability with additional entrance lanes, vacuum spaces, and even tunnels to meet any anticipated volume requirement. The ruling principle is to reduce a customer’s initial investment to get a quality CarWash while giving the customer easy options to spend more time or money at your facility to get a better level of service. Customers in a car filled with sales literature or a sleeping baby may opt for an Express Exterior wash or increase service with an equipment-delivered tire shine, triple foam, or chamois dry offered by the automated attendant. From there they can choose to vacuum the car themselves at free stations or exit to an express detailing bay for interior cleaning, hand wax, leather treatment, or other value-added services. The phenomenon being witnessed is that customers are increasing the frequency of CarWashes, their washes are more evenly distributed throughout the week, and they are no longer waiting for a perfect weather day to maximize their “investment” in a CarWash.
BEST IMPRESSION FIRST The old adage “You never get a second chance to make a first impression” is even more critical with an Express Exterior design. Elimination of labor through automated computercontrolled equipment means if the car comes out of the tunnel anything less than clean, dry and shiny, there is no person to touch it up. Although exterior-only washing has been around for decades, it is only recently that equipment, chemicals, and computing technology have advanced to do it with no labor. Here is a short list of some of the technological advancements that
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let today’s Express Exterior CarWash exceed a customer’s cleaning expectations and safety requirements while lowering operating expenses and increasing volume.
AUTOMATED ATTENDANTS Two or more entrance lanes into multiple tunnels equate to unbelievable throughput, but many operators envision difficulties controlling which customer receives which addon services. Today’s automated attendants easily handle that and more. Customers, greeted by a video “greeter”, can easily choose additional services or volume discounts, before entering the wash to receive exactly the CarWash they paid for. For the operator, analytical reporting provides the control to modify good – better – best offerings and price points based on customer behavior and can even develop discount programs based on volume. Imagine being able to negotiate fleet wash agreements where fleet customers receive discounted prices for washing during hours when you are normally slow.
HYBRID TECHNOLOGY Customers stay in the vehicle, meaning a perfectly clean car must be delivered without the use of strong chemicals. Friction, combined with major advancements in high pressure zero degree nozzle design, delivers the hybrid technology necessary to accomplish this on wheels, mirrors, grills, license plates, grooves, and other hard-to-reach areas with no acidbased cleaners.
NEW WASH MATERIALS With the customer inside the car, materials must not only clean well enough to remove all dirt, they have to do it quietly so that a customer feels confident in the safety of the wash. New materials on the market accomplish this, as well as provide better reach into hard-to-clean areas without any harsh slapping noises.
ONLINE TIRE SHINING: This technology is not new but advancements in non-solvent tire dressing have improved performance dramatically. With new equipment and dressing combinations currently available, it is possible to dress oversized tires and low profile tires perfectly, regardless of your volume.
NEW FOAMING TECHNOLOGY: Getting a clean car at high volumes is like conducting an orchestra of how long a chemical has to dwell and act with gravity before being agitated or removed. Express Exterior has been designed in conjunction with chemical manufacturers so that not only are better chemicals availiable; they are applied and removed better.
NEW OZONE TECHNOLOGY: Water reclaim is fundamental to reducing utility costs and meeting environmental concerns, but nothing can Join owner Paul Fazio on this video case study as he takes you on a tour of this highly successful location.
turn a customer away faster than unpleasant tunnel odor. Compounded by the fact that a customer remains in the vehicle, odor control is of critical importance. Whereas ozone has been used for this purpose for years, the technology to produce enough of it to be effective in a car wash has been greatly improved. Today’s reclaim units are available in configurations that not only work well, but require little maintenance.
ONLINE CHAMOIS DRYING: Air dryers configured to move water off the top surfaces to the sides rather than from the front to the back deliver a dryer car. For customers desiring a hand-dried finish, online retractable drying curtains are now available in smaller footprints and provide a hand quality finishing touch without labor.
FROM THE GROUND UP When building a new Express Exterior site, think about space; the more the better. Ideally, you will have room to stack cars at multiple automated attendants with about 4 to 6 car lengths between the auto attendant and the conveyor entrance. If you have the land option, traffic flow and turning radius should be designed to easily expand to multiple greeter lanes, additional vacuum bays, and even additional tunnels if market demand warrants. Mirrored entrance signs combined with a downhill tunnel approach work to make customer loading safe and easy. From a labor perspective, Express Exterior approaches the same requirements needed for a self-serve or in-bay automatic facility. Live surveillance cameras permit one manager to monitor multiple sites with the reduced staff scheduling requirement, giving a foundation to stay open 24/7 365 days a year.
EXISTING SITE - NEW PROFITS For many full-service CarWashes, labor is exceeding 40% of the cost of operation, draining more than just profits; it is taking the fun out of full-serve car washing. You do not need to build a new site to capitalize on the increased volume, labor reductions, and cost per car savings afforded by Express Exterior design and equipment. Incorporating any of the equipment advancements, such as automated attendants, online wheel cleaning, tire shining, or bug removal, can equate to huge reductions in labor and wasted chemical costs. Additionally, the ability to add an express lane to an existing full-serve CarWash is a proven profit generator. With new franchises opening every day, Express Exterior, a new twist on an old idea, seems certain to grow both profits and fun for CarWash operators across the country. Washing cars for over 30 years, Anthony Analetto serves as the President of SONNY’S The Car Wash Factory, creator of the BayWash i5 and G2 rollover in-bay automatics, Xtreme-Xpress Mini-Tunnel, and the largest manufacturer of conveyorized car wash equipment, parts, and supplies in the world. Anthony can be reached at 800-327-8723 x 104 or at AAnaletto@ SonnysDirect.com
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23
By Anthony Analetto
Flex-Serve
President, SONNYS The Car Wash Factory Equipment -Division
Car Washing
The 30/25 rule and putting labor where the margin makes sense What is your style – Express Exterior, Flex-Serve, or Full Service? All three have pros and cons, but I often hear the question, “What is the best style of CarWash to build,” to which I answer, “What kind of CarWash do YOU want to OPERATE and MANAGE?” Selecting your wash style encompasses more than just market demographics and a competitive landscape; it also involves defining your investment strategy and management preferences. In the next few paragraphs I am going to focus on the Flex-Serve style and how its principles can control customer sharing, put labor where margin makes sense, and balance volume and staffing as traffic dictates. If your passion is Flex-Serve then I hope you find this article helpful.
A SIMPLISTIC FLEX-SERVE DEFINITION Although there are hundreds of variations, the typical flexserve is the combination of Express Exterior and Full-Service offerings on one property. The foundation of this style is an Express Exterior conveyorized tunnel with automated gated entry that requires no manual prepping and produces a clean, shiny, and completely dry car with no labor. Optional exterior services, such as tire shining and bug removal, are performed online via computer-controlled equipment. Customers select a base wash package at the automated computer attendant and then add additional aftercare services normally taking approximately 15-minutes or less. All wash customers stay in the vehicle through the wash. Exterior-only customers immediately exit, often passing vended vacuum stations. Customers that purchased offline services follow directional signage to an aftercare center where they turn over their car to an attendant and wait in a lobby while their vehicle is prepared. This selling opportunity for higher-end detailing services will be discussed later when I talk about putting labor where margin makes sense. As with Express Exterior, Flex-Serve also demands slightly longer tunnel lengths to accommodate automated equipment that replaces traditional prep and finish attendants common to Full Serve washes. In addition, unlike a Full Serve wash that offers a low price exterior-only option, the value proposition of a Flex Serve to a customer is both low price and short wait time. That requirement demands an equipment package and stack
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configuration that can deliver a 5-minute or less customer wait time during peak operation on the site’s busiest day. Do not interpret this as meaning a Flex-Serve operation necessarily demands an enormous tunnel length. Many operators are successfully converting or adding Express Exterior lanes to older Full Serve locations. Equipment, wash material, drying systems, and detergent advancements permit greater cleaning and drying within more condensed conveyor lengths, which an operator should examine with their equipment manufacturer.
CUSTOMER SHARING It is a fact, regardless what your business is, that you will always share your customers with your competitors. Whether you are a restaurant, doctor, or carwash, there are times when even your most loyal customer will go elsewhere for either faster service, more specialized service, more convenient hours or location, or a lower price. The problem facing many Full-Serve washes today is that rising labor costs are forcing reduced hours of operation in peak times on ideal weather days when it makes sense to be open. For a customer, this raises the cost of the wash, the wait time when open, and forces them to fit their schedule to the wash. Customers are increasingly supplementing their Full-Serve regiment with the growing number of In-Bay Automatics and Express Exterior tunnels that are opening every day. The Flex-Serve location style combats customer sharing by offering multiple specialties or services on the same property. When executed correctly, it can offer a diverse population of customers, with different preferences, a wash where they feel in control of both the time and money they are investing to get a clean car. If it sounds almost too good to be true, it is not. There is one major catch – management. This is where I want to reiterate my opening statement: What kind of CarWash do YOU want to OPERATE and MANAGE? In Express Exterior, the wash process is automated with relatively straightforward management and training for a very limited number of staff. In Full-Serve, training is relatively straightforward, but management of a large number of manual laborers is difficult and often strenuous. In Flex-Serve, the wash process is automated, identical to an Express Exterior, but training and management is both difficult and complex.
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PUTTING LABOR WHERE MARGIN MAKES SENSE Now, you have customers flowing into your wash, attracted by a low price, high quality, and fast exterior service. This base wash price averages between $3 to $7 dollars, is roughly equivalent to a value-priced lunch in the market, and is less than an exterior-only option at a Full-Serve in the region. As with an Express Exterior, customers can select higher wash packages at the automated attendant, with tire shining, wheel cleaning, triple foam, and other extra exterior services delivered by automated equipment online. Since there is no labor variable the wash can remain open even when the weather is not ideal, and can remain open for a greater number of hours. Increased hours of operation, shorter wait times, and lower price points have proven to increase customer wash frequency and spread that volume more evenly throughout the week. Here is where the Flex model breaks away from the Express Exterior. In Express, the customer has no interior option, and they exit into free vacuum bays for self-serve interior cleaning. In Flex, the customer can exit directly, normally past vended vacuums, or add quick interior and exterior services, requiring 15 minutes or less to complete. If space permits, additional detailing options can be offered that demand greater than 15 minutes. This is not the same as Full-Serve where the object is to get every customer to purchase as many extra services as possible. A properly executed Flex-Serve carefully manages and adjusts aftercare service pricing to maintain controlled flow through the property, hence, putting labor where margin makes sense. There are differing opinions as to the exact mix and ratio, but a good rule of thumb to start your planning with is that you want 30% of all exterior customers to purchase aftercare services with 25% or less of gross revenue going to labor cost. To understand how the 30/25 rule of thumb works, let’s start with a typical interior vacuum and window cleaning with some
very rough and hypothetical numbers to show the relationship. If for example, a very thorough interior cleaning takes 2 employees 15 minutes to complete, and in your market the labor rate is $7.50 per hour, your labor cost for the service would be $3.75. If you divide your labor cost by .25, the maximum labor cost as a percentage of sales you are willing to charge, the minimum retail price of the service would be $15. This interior service charge is in addition to the cost of the exterior wash selected, meaning if the customer added the interior service to a $5 exterior wash, the total amount, collected by the automated attendant, would be $20. Normally, three detailing packages are offered, all adhering to the 30/25 rule. Maintaining the 30% conversion in reality is, of course, never as easy as it is here on paper, and it will often take time for the site to mature and for customers to learn that they are getting a premium value for their money. One mechanism to increase awareness is to discount the base aftercare service for an introductory period while holding the other packages to the 30/25 rule. The opposite holds true if conversion begins to exceed 30%; you will raise the retail pricing for aftercare services, steadily reducing your labor cost below 25%.
AFTERCARE: BALANCING SITE FLOW AND WORKING “LEAN” Designing a Flex-Serve aftercare center is a book unto itself, and calculating the numbers can make your head spin. The outline below is very basic. If you are serious about building a Flex-Serve, you should contact your equipment manufacturer who can assist in making the calculations and design your site layout correctly. The basic concept revolves around teams of employees working in cells that can easily scale up and down for changing volume requirements and service levels. The first issue is determining the base number of cells needed, directly related to the anticipated average traffic flow. For example, if your analysis has determined you will operate 60 hours per week and anticipate washing 10,000 cars per month, the average cars processed per hour would be 38-40. You have
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planned pricing to convert 30% to aftercare services that take an average of 15 minutes each. If you do the math, an average of 12 customers will purchase aftercare services per hour. Since a typical cell with 2-attendants is designed to process four 15-minute services every hour, you would need three cells to process the 12 interior services. If space is limited, another alternative is to design 4-attendant cells with four vacuum drops, four air supply lines, and supplies available for all attendants. Although 4-attendant cells can cut both processing time and cell requirements in half, there is a greater training and management component to keep the 4-attendants working in unison. Most operators will, at minimum, double the number of required cells to scale up during peak operating times. In this scenario, the site would need at least six 2-attendant cells or three 4-attendant cells and a staffing plan to shift permanent team members to vacant cells supplemented with temporary staff as traffic concentration changes. I will describe staffing considerations in the next section.
“The Flex-Serve location style combats customersharing by offering multiple specialties or services on the same property. When executed correctly, it can offer a diverse population of customers, with different preferences, a wash where they feel in control of both the time and money they are investing to get a clean car.” - A.A. Once you have established the number of cells you need, how can you maximize their efficiency? Every second you can save your team members through careful design, will increase the quality of your service and ability for team members to identify and propose additional services to waiting customers. The first rule is that every cell always contains all supplies, with no employee needing to walk more than half the distance of the vehicle to get them. The second rule is that every cell can perform every service with no employee needing to walk more than half the distance of the vehicle to complete it. For the first rule, I like to use a Japanese “Lean” manufacturing concept called “Kanban”. The actual term means “signal”, and the process assists in maintaining an orderly and efficient flow of materials throughout the entire aftercare center. Every item, whether it is an applicator, chemical, or towel are organized in a supply lane that leads directly to the customer waiting area. All supplies are available at each cell and have a visible “signal” alerting the need to replenish them. For example, a colored board is installed between stacked towels at a height of 4 towels. Team members simply use towels as needed, when only 3 remain, the board is visible and signals the need to replenish them. There are infinite variations on setting up your signal and replenishment system but the principle of keeping constant supplies with absolutely no disruption to the workflow is vital in a Flex-Serve aftercare center.
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The second rule is to place all equipment in each cell. All vacuuming, air supply, chemical dispensing, and detailing equipment must be available to all team members simultaneously. This can be accomplished using carts and benches, or by delivering air and vacuum lines to each cell and dispensing chemicals from ceiling-mounted storage troughs with drop- down applicators.
BALANCING SITE FLOW: MANAGING TEAMS AND HIGHER END SERVICES The final aspect of the Flex-Serve I want to address in this article is staffing. I have referred to staff working in the aftercare center as “Team Members” and nothing is more critical to the overall success of this wash style. You will normally staff with a core team to handle 90% of the average calculated aftercare volume. Each member of the core team must be cross-trained to perform all aftercare services, and two to four members work as a team in each cell. Shifts are staggered throughout the day to begin and end so that the greatest concentration of staff occurs at the peak hour of each day, similar in fashion to a bell curve. As volume increases, additional cells become active as appropriate for the season and day of the week. When volume exceeds the labor available with the core staff, a temporary employee is paired with one team member in an empty cell to increase production capacity. Many new locations design aftercare cells with equipment, vacuum, and airdrops, to accommodate 4 attendants. The improved flexibility allows the manager to increase production efficiency and utilize available cell space to perform involved detailing services that exceed 15 minutes. The ability of the manager to cultivate a team mentality and train core members on how to identify and present higher-end detailing opportunities to waiting customers is the final aspect of maximizing the profit potential available at a Flex-Serve style car wash.
IN SUMMARY The Flex-Serve style of car washing is an exciting design that maximizes profit opportunities at an automatic car wash. It capitalizes on equipment advancements in automated prepping and extra-service application to create an environment that satisfies a wider group of customers’ needs. Is it the best style of car wash to build – it depends on what kind of car wash YOU want to OPERATE and MANAGE. Washing cars for over 30 years, Anthony Analetto serves as the President of SONNY’S The Car Wash Factory, creator of the BayWash i5 and G2 rollover in-bay automatics, Xtreme-Xpress Mini-Tunnel, and the largest manufacturer of conveyorized car wash equipment, parts, and supplies in the world. Anthony can be reached at 800-327-8723 x 104 or at AAnaletto@ SonnysDirect.com
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Finding full-serve success by going against the grain By Anthony Analetto President, SONNYS The Car Wash Factory Equipment -Division
Interview with Tim Jones,
Owner of Champion Car Wash in Nashville, Tennessee
“If a man does not keep pace with his companions, perhaps it is because he hears a different drummer.” -Henry David Thoreau Elimination of labor has been the battle cry of nearly every carwash operator I know for as long as I can remember. This passion has inspired equipment innovation and made automated kiosks a prevalent feature at many locations. Our industry has created self-serve carwashes and 24-hour unmanned in-bay automatics. Most new tunnel washes opening are either express-exterior or flex-serves, designed to minimize labor. And the traditional full-serve carwash, with its substantial labor requirement, has fallen from grace for most new investors. Now let’s meet Tim Jones, the owner of Champion Car Wash in Nashville, Tennessee. Starting with his first self-serve carwash in 1993, Tim is a visionary leader credited with helping build one of the largest self-serve carwash chains in our industry. Going out on his own in 2007 to open Champion Car Wash, and under his direction, the company has quickly grown to 5 locations. His first four washes all had combinations of self-serve bays and in-bay automatics. At two locations he has since converted some of the bays to a hugely successful express-exterior tunnel offering with automated pay stations and free vacuums. And for his fifth wash, Tim bought an older rundown full-serve, closed it for a
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complete renovation taking three weeks, and reopened as, the least likely thing anyone would expect – a full-serve carwash. After 17 years as a predominately self-serve operator, below are some excerpts from my conversation with Tim just a few weeks after opening his first full-serve location. Anthony Analetto, President, SONNY’S The Car Wash Factory: Were you having issues with your other locations that led you to want to enter the full-serve market? Tim Jones, Owner, Champion Car Wash, Nashville, TN: Not at all. We were a little late getting into express-exterior, but the mini-express tunnel conversions we’ve done have been very successful. I remember at first being concerned that the tunnel would cannibalize sales from the ongoing touch-free automatic and reduced number of self-serve bays. That didn’t happen. Inbay sales remained stable and self-serve revenue didn’t drop. Even our coin-op vacuum revenue remained about the same although we give free unlimited vacuums to tunnel customers on the same property. It’s really exceeded my expectations. That’s why we converted the second location to a 75-foot tunnel with one touch-free automatic, 3 self-serve bays, and a dog wash. And at the double touch-free automatic site, we’re converting one bay to be a 63-foot mini-express tunnel. That automatic will be moved to our other location, replacing one of the 6 self-serve bays, so we end up with a tunnel, a touchfree automatic, and 5 self-serve bays. I really like that model, having a touch-free automatic with an express tunnel, and selfserve bays on the same property. It appeals to more people and lets us bring in a different customer. Analetto: So if things were going well, why did you decide to buy a full-serve wash? Jones: When I came across this property I saw a real opportunity. It’s located in a thriving bedroom community in Nashville where people have money and there’s not another tunnel wash in a 10-mile radius. It was built 20 years ago and passed to the last owners 15 years back. They were tired of the business and it really showed. Everything was dark brown, drab, and dreary. Nothing jumped out. Although it was a 110-foot tunnel, the equipment was 20 years old and in really bad shape. Cars were mainly washed by hand and towel dried. And despite everything, they were still washing a decent volume of cars. The potential I saw with a modern equipment package and remodeled building was huge. Analetto: Were you able to salvage anything? Jones: I hoped to salvage some of the equipment, but ended up getting the entire tunnel. We put in enough equipment to eliminate all prep except for really heavy bugs and also invested in a POS system so that we can offer gift and loyalty cards. But a lot of the renovation was about changing the customer’s experience at the wash – building in a “wow factor”. Our logo Continues on page 30
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is bright yellow and red and we re-painted the building in those colors. It really jumps out on the street. Also, we lined the tunnel walls and ceiling with white plastic panels so that everything feels clean and safe. Lighted signage now tells customers what extra services are being applied. And the quality is there. Customers see their car go into a bright tunnel with lots of foam and come out clean and shiny. There were also three lube bays attached to the building that we turned into three express detailing bays. We’re offering a super interior for $40, an express-wax for $50, and a combo of the two for $65 that includes the $22 wash. When we first started, the staff were skeptical. They insisted that they could never sell those services. Well, guess what, they’re selling them, and with a little training, realizing it’s easy. Analetto: Did you keep any of the existing staff? Jones: I did. But it was total chaos. The issue was they didn’t have any training. Nobody really knew what they were supposed to be doing. All my friends thought I was crazy for buying a full-serve, and during those first couple of weeks before closing to remodel, I started to agree. Fortunately while we were renovating the property, I also had a company that specializes in training and consulting for the carwash industry come down to train my staff, establish our operating procedures and documentation, and create new wash packages with clearer incremental value. There was some resistance from my employees at first. But after they saw that it would make their jobs, and mine, easier, they bought into it. Now I have a great team that’s motivated to deliver a better product. So far, I have to say I love the full-serve model. The customer interaction is different. They scrutinize things and expect more than at an express. But when you provide them with a clean, dry, shiny car, they truly appreciate the work you’ve done — and will let you know what you’re doing right and what you’re doing wrong. I’m spending a lot of time there myself and that customer interaction gives me a lot of satisfaction. I have a good manager and the right people in place at the other four locations so that they can run without my daily involvement. Ultimately my goal is to do the same thing with this wash, but for now I’m really enjoying full-serve car washing. Analetto: You said you changed your pricing structure, how did customers respond? Jones: We’re seeing some really positive results and are only just beginning to market the wash. So far with the new menu, our average ticket has gone from $16 to $22 per car and volume is up. When we took it over, pricing was very confusing for the customer. There was a low base price wash, different pricing for cars, trucks, and SUVs, and a lot of a la carte services. Nobody actually knew exactly what they were getting. We raised the price of a basic full-serve to $13 and have online wash packages at $15, $19, and $22. We’re also offering an exterior-only option at $5, $8, and $10 with decent volume mostly driven by some of the local used car lots. And express detailing has been a huge success.
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Analetto: What issues did you encounter with the renovation? Jones: I thought we’d have problems with customers by being closed for 3 weeks and raising the price, but they just loved the changes we made. Also we were lucky in that we had no problems with permitting or the city. Unfortunately I thought we could salvage some of the equipment. After using it for little while however I realized it was better to replace it all which cost more than I had originally planned. The other issue we had was getting the existing employees to buy into the training program. We had a new direction for the business and they had to forget everything they knew in the past if they wanted to continue with us. There was some resistance but that was quickly resolved too as they became motivated by the training. In all honesty, the best money I’ve spent outside of replacing the equipment was on the training. It’s changed everything. It expanded my insight and afterwards was like a light bulb went on. My service advisors are now armed with sales techniques that work. They’re recommending services that customers need, and selling them with confidence. There’s no way I could have built this from the ground up for what I spent – I feel like I got a great deal. Analetto: What are your future plans? Jones: We’re already offering an exterior option, but in the next few months are planning to open an actual express lane. To begin, we’ll use a handheld POS where the attendant can swipe the card, but if the demand is there we’ll add an automated attendant. My big plans are for marketing the wash. Having shut down for 3-weeks for the renovation, we’re getting ready to have a grand re-opening in a couple of weeks after we make sure all of the procedures that we trained on are being followed consistently. From there, we’ll be doing moving targets, birthday connections, and some cable TV advertising which has worked well at our other locations. I’m also really excited to start the fundraiser program we have planned – it’s going to be a big part of how we promote the wash. Basically we’ll be signing up local charities to run a month long promotion. They’ll distribute fundraiser cards with a code and we’ll track every wash sold using that organizations number through the POS system. At the end of the month we write a check for 20% of sales which helps our community, and generates loyalty for our wash – which is what the full-serve business is all about. Questions can be sent directly to Tim at: championcarwash@ yahoo.com Good luck and good washing, Anthony Washing cars for over 30 years, Anthony Analetto serves as the President of SONNY’S The Car Wash Factory, creator of the BayWash i5 and G2 rollover in-bay automatics, Xtreme-Xpress Mini-Tunnel, and the largest manufacturer of conveyorized car wash equipment, parts, and supplies in the world. Anthony can be reached at 800-327-8723 x 104 or at AAnaletto@ SonnysDirect.com
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