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Tough economic times

October 11, 2010
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The recent economic downturn has forced some carwash operators into a predicament. Higher energy bills and gas prices, loss of jobs, a weak housing market and rising insurance premiums have shaken consumer confidence to the point where many people have cut back on spending. This is causing some carwash operators to complain that sales volumes are off by as much as 30 percent.

How bad is it?
In Florida, insurers are abandoning the state in droves, causing insurance premiums for many home owners to quadruple. For the first time ever, the state has experienced a net loss of jobs.

According to Realty Trac, home foreclosures in Florida are up 77 percent and some analysts believe that repossessions could approach 200,000 by the end of the year. Throw in $3 gasoline and higher prices at Wal-Mart and its no wonder why a recent news poll indicated that 37 percent of Floridians are considering moving out of the state. Things have gotten so tough that a special session will be called by the Florida Legislature to cut skyrocketing property taxes. It isn’t a pretty picture and it is not going to get better anytime soon.

Cutting costs
For many carwash operators, surviving during tough economic times means cutting costs and/or competing on the basis of price. Cost cutting can help during lean times, but how do you increase profits once costs are minimized? One way is to take the time to do some competitive analysis to see how your carwash business stacks up.

Reinvent your wash & stimulate demand
If your facility is 20 years old or older, you may want to consider reinventing the wash and your company. In the county where I live, there are over 45 free-standing carwash outlets. Out of this population, there is only one express exterior with free vacuums; two free-standing in-bays; zero flex-serve washes; zero full-service washes that offer a 3-minute exterior wash; and few washes that offer foam brushes, on-line tire shine or surface sealants.

Another way to offset a weak economy is to stimulate demand by getting more from existing customers. This can be achieved with marketing programs that focus on repeat and referral business. This means advertising and promotional efforts that focus on motivating customers to purchase your services. Consider the old standard of buy eight washes and get one free. Big deal, most people are now used to shopping at places like Wal-Mart and they expect Wal-Mart type deals. How about buy four washes and get one free. Something like this would probably get more attention when times are tough.

Effective marketing
An effective marketing program has to be creative and provide meaningful benefits to customers. In my neighborhood, most operators have been sending out the same coupon deal for as long as I can remember; $2 off an exterior wash that can take twenty minutes or more to complete. This bargain isn’t likely to cause much attention anymore, especially in a county where traffic often slogs along at less than twenty miles per hour.

On the other hand, you can have a great program and it will mean nothing if the message doesn’t get in front of your customers. For example, the senior citizens and snow-birds who were the stalwarts of the full-service sector in Florida during the last decade are literally dying off. Their ranks are being replaced by baby-boomers, Gen-X (now in their 40’s) and the Y-generation (18 to 27 years old).

Most of these people, especially the X and Y generation, live part of their lives and do most of their shopping in a virtual world. However, in the county where I live there are about one million residents and only seven percent of the area’s 45 carwash outlets have an internet website presence.

In the final analysis, carwash operators need more than internal cost controls to survive during a weak economy. To prosper, operators need to take advantage of what the competition most likely will not do.



Robert Roman is an analyst and lead consultant for RJR Enterprises, a consulting firm based in Clearwater, Florida (www.carwashplan.com) and is a member of PC&D’s Honorary Advisory Board.

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