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Would you like one lump or two?

October 11, 2010
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Although slightly overshadowed by the express exterior conveyor, the in-bay automatic remains a growing force in the carwash industry. According to a study conducted by Booz, Allen and Hamilton, IBAs accounted for roughly 55 percent of exterior carwash equipment spending in 2005 (about $322M). The percentage of drivers who prefer an IBA is expected to climb from 12 percent in 2000 to 16 percent by the year 2011.

It is now possible to equip an IBA with practically every feature that you can find at a conveyor carwash. This includes touchless, friction or hybrid cleaning; undercarriage and wheel cleaning; foaming polish; spot-free; automated tire shine and forced-air drying. Add coin-operated vacuum islands, vending machines and a wash-card system, and you can create a highly functional and modern carwash facility.

Income and Expenses
With the right location, a free-standing single or dual in-bay can produce solid returns year after year. With average operating expense of about 40 percent of gross sales and an average price of $7, a dual in-bay that produces 50,000 washes annually would yield EBITDA of $210,000. Depending on the cost of the facility, this could provide an ROI of 75 percent or more.

A single IBA can go in on a pad site as small as 6,500 square-feet (20,000 square-feet for a dual). This is ideal for out-parcels and fill-in properties which are too small or irregularly shaped for most other retail uses. Potential locations could include shopping centers and strip malls with national or regional brands, gas stations, convenience stores, auto dealers, etc.

The typical cost for land, building and equipment for a single IBA is roughly $450,000. With a ground lease, modular building and integrated equipment package, you can lower construction and maintenance costs and time to market. This approach would provide a good depreciation tax shield to fatten up cash flow.

Given the relatively low cost of entry, a single or dual IBA is an attractive value proposition for beginners who want to get into the carwash industry with a limited budget or little or no related experience.

According to a study of consumer attitudes and habits by the International Carwash Association (ICA), in-bay users want a clean vehicle, don’t want to get dirty, favor speed of service and want to avoid interaction and pressure to buy more.

IBAs are the quintessential people-less business. Sales transactions are processed automatically, the equipment does the work and customers have the option of cleaning the insides of their own vehicles. With a responsible and diligent care-taker, surveillance cameras and internet telemetry, this business can be monitored and managed to a large extent from a remote location on a 24-hour basis.

The basic IBA components include a good location/pad site, 900 square-feet modular building and durable equipment package loaded with all the marketing features. If you’re a self-starter and get some professional advice, you can design and build your own carwash without the need or costs associated with a franchise or licensing agreement. On the other hand, there are a number of suppliers who are capable of engineering and providing a complete turnkey solution specific to your land and market demographics.

Regardless of the approach, in-bays are now almost as easy as getting into the vending business.

Bob is a consultant and market analyst for RJR Enterprises – Consulting Services, Clearwater, Florida ( Bob is also a member of PC&D’s Honorary Advisory Board.

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