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Big sites, big business

October 11, 2010
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In some circles, it is thought that the growth in carwashing at gasoline super-stations and big-box retail super-sites will convince more consumers to leave their driveways and use a professional carwash.

In short, the theory is that increased competition is good and there is enough business for everyone. This theory is based on data that shows nominal growth in the carwash industry along with untapped potential (home washers).

The problem is that this theory may not ring true for many independent carwash operators. For instance, the underlying premise for a super-station is achieving trade area dominance.

In accomplishing this, super-stations may take some of their share of the carwash market from independent carwash operators.

Super competition
A super-station is typically a two-plus acre site that features gasoline, a 3,000-plus square-foot convenience store, multiple food services and a high-volume conveyor carwash. Super-stations are designed to capture 250,000 to 450,000 gallons or more of gasoline per month.

The development of the super-station follows massive consolidation in big oil and the industry’s need to seek scale economies and abandon low return segments of the business.

In theory, super-stations achieve trade area dominance by offering greater convenience, better value and better image than the competition.

This has led to higher per-store sales volumes and has allowed the industry to reduce the amount of assets necessary to distribute these goods and services.

Trade area dominance in the retail gasoline market is based on several assumptions:

  • The demand for gasoline will not significantly increase from year to year at the 2-mile trade area level;
  • Only a portion of the maximum potential demand will seek fulfillment at any particular gas station; and
  • Building a new gas station does not create new demand for gasoline at the trade area level.

Our business case is a fictitious two-mile trade area with a population of 45,000 persons. The automated carwash segment of this market includes three conveyor carwashes and three self-serve in-bays that have combined sales of 225,000 carwashes per year.

The petroleum side of our market includes nine gas stations with c-stores and in-bay automatics, with each site pumping an average of 125,000 gallons per month with an average of 20,000 carwashes per year.

To this market mix, we add two super-stations. One site will produce 250,000 gallons of gasoline per month and the other site will produce 450,000 gallons per month.

Then we applied petroleum industry gas/wash rates for high-volume sites to simulate what might happen as a result of the change.

Six of the older gas sites are shuttered, which reduces carwash volume in the petroleum side of the market by 120,000 cars per year. The two super-stations produce a total of 170,000 carwashes per year.

The petroleum industry realizes a 15 percent reduction in the amount of assets necessary to sell the same volume of gasoline and walks away with a net gain of 50,000 carwashes per year. The annual net gain of 50,000 carwashes comes at the expense of independent carwash operators.

Even in optimistic circumstances, it would take almost eight years for some of the independent carwash operators in this market to recover from the dislocation caused by the entry of two super-stations.

Super threatening
Are super-stations with high-volume conveyor carwashes a legitimate threat to local independent carwash operators? Arguably, yes.

The scenario described above is being played out daily as petroleum companies continue to squeeze greater efficiencies from their down-stream operations. By deploying super-stations, the petroleum industry can save billions of dollars in assets without sacrificing volume.

Modern super-stations have the capacity to generate huge gasoline throughputs and higher capture rates for carwashing. Super-stations may not cause local carwash operators to lose customers, but rather suffer from a loss of frequency.

In the final analysis, the gasoline super-station and the strategy of trade area dominance should not be viewed by local independent carwash operators as friendly or beneficial competition.

Bob is president of RJR Enterprises (, a leading consultant to the carwash industry. Bob is a member of the International Carwash Association and PC&D’s Honorary Advisory Board and can be contacted at

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