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Find profit in your slowest hours
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From Volume 25, Issue 5 - May 2001
Feature
Consider income per hour and market creatively.
by: George Akers
 
 Related Information
  Use signs to promote specials
  Service industry comparison
  Average days open for full-serve and exterior-only

When carwash operators discuss revenue, the conversation usually begins and ends with sales per car. Sometimes they’ll talk about packages, specials, or anything else that may affect sales per car.

This is not completely unnatural. After all, when restaurant operators meet, they talk about their average ticket price. When hotel operators get together, they discuss average room rate, and hospital administrators ponder income per patient day.

However, the carwash business differs considerably from these types of service establishments. They are all open seven days per week, and have regular hours of operation. In contrast, the carwash industry has elastic hours and days of operation, even though our expenses are relatively fixed. Just looking at sales per car does not adequately address expenses per hour, per day or per month.

Let’s compare

Hotels and hospitals operate 24 hours per day, 365 days per year. This is a total of 8,760 operating hours per year. Restaurants average 14 hours per day, 365 days per year, for 5,110 total operating hours per year.

By comparison, during the 1990s the average full-service wash was open 308 days, and the average exterior-only operated on 324 days. Both wash types are open an average of 10 hours per day, which yields 3,080 operating hours per year for full-service and 3,243 operating hours for exterior washes. That leaves full-service carwashes 2,030 operating hours short of restaurants and 5,680 hours short of hotel and hospital operating hours. Exterior-only washes did not fare as poorly, lagging restaurants by 1,867 operating hours, and hospitals and hotels by 5,517 hours.

In addition, restaurants, hotels and hospitals are open an average of 30.4 days per month, while full-service washes over a 10-year period are open an average of 25.7 days per month, and exterior washes are open an average of 27 days.

This means full-service washes are giving up approximately 57 operating days per year to restaurants, hotels and hospitals and 4.7 operating days per month. Exterior washes are giving up 41 operating days per year, and 3.1 operating days per month.

Beyond sales per car

In the early days of carwashing, when nearly every carwash sold gasoline as a major part of the business, we could compensate for lost hours and days. However, even with detail shops and fast lubes, we are still hampered by weather. We must think and operate in a multi-directional fashion. That means looking at more than just sales per car.

When contemplating income, always consider expenses. Every morning when you stick the key in the door of your wash, it costs you money. It doesn’t matter if you wash one car or 1,000. For most of us, there are principle and interest payments, taxes, business and employment insurances, and salaries.

Operators should first look at the average days and hours of operation from the past 10 years and calculate the revenue per hour that must be generated to cover fixed costs.

Next, an average hourly rate must be calculated and added to the fixed expenses to determine a realistic income-revenue-per-hour requirement you need to meet in order to keep the doors open. By considering income revenue per hour before revenue income per day, we can react to volume and sales conditions immediately. If we look at income-revenue only on a daily basis, we have missed 10 opportunities to react each day.

In order to stay abreast of income-revenue requirements, it is necessary to know the amount of revenue income required per day, week and month. If you keep pace with the hourly requirement, you will be more likely to end the month with the income-revenue required to break even.

Making changes

Before filling in slow hours with time-consuming or costly marketing efforts and advertising dollars, understand your slowest hours, days, weeks and months. Compare data from week to week, month to month, and year to year. Most operators already keep such records.

For example, operators already know that opening and closing hours are the slowest. However, you can determine exactly how slow they are, and on which days these hours are likely to be slowest. In order to build those hours, try sending out a morning and evening coupon mailer that offers a special price during these off-peak hours. For instance, offer a special from 7:30 a.m. until 9:30 a.m., and from 3:30 p.m. to 6 p.m., Monday through Wednesday. Be sure to put an expiration date on the coupon.

A full-service wash may want to offer an exterior wash during slow hours, particularly during those times when the wash is not fully staffed. With the off-peak labor, it wouldn’t be difficult to offer an exterior-only wash with a towel-dry option.

Outside of Florida, exterior-only options have not been very successful at Southern full-service carwashes. However, as gasoline rollover washes become more prevalent, the exterior-only option may become a profitable endeavor for operators.

Have a plan

It is imperative to make use of your wash’s slow hours:

· Develop some ideas that are flexible and can be used at a moment’s notice. Have signage and products available at all times for such plans.

· Create a set of marketing plans that can be used on an extended basis. Remember that vehicle needs vary by season of the year and day of the week. For example, try Sunday or Monday hourly specials, vacation specials for summer or springtime “mud-off” specials.

· Be creative. You must remember the hourly income requirements needed to maximize revenues for your average annual hours of operation. If you fill up the hours, the days and months will take care of themselves.

George Akers is a Jackson, TN-based consultant and former partner in the Mr. Pride chain of carwashes. He is a former International Carwash Association president and a longtime contributor to Professional Carwashing & Detailing magazine.
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