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In-bay Automatic

Getting the most from the least

October 11, 2010
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I know what you’re thinking: “Sigh, not another rollover article.” I mean give me a break, every month somebody out there is writing another “rollover” article, enough already. Give me something else to think about, not the same old data or lack thereof!

I agree; a meaningful discussion of in-bay automatics (IBAs or rollovers) should be like the one you would have with your doctor, lawyer or business partner. Just the facts, ma’am. Do I or don’t I want to consider an in-bay automatic in my future? No hype, no puffery, no hidden agenda — just a simple answer to a simple question.

Just the facts
According to national research conducted by the International Carwash Association (ICA), 23 percent of carwash customers frequent rollovers more than three times a month — no other statistical analysis supports other types of wash offerings with such performance. Analyze tunnels and self serves and no one comes close.

So what does this say about IBAs? We could draw the following logical conclusions:
  1. An IBA provides excellent value. In other words, the customer’s perception of money spent to value received is high;
  2. IBAs, due to their proliferation, are easy to find, convenient, easy to use, provide acceptable wash quality, are quick enough, and in many cases satisfy dual functionality: i.e.; purchase of gas, food or other services consolidating vehicle trips; and
  3. The customer can remain in their vehicle, purchase the carwash service with minimal personnel contact, use the wash 24/7 (for the most part), and not require any preparation prior to using the service.
According to nationally published data the average rollover washes around 20,000 vehicles a year. If you are a self-serve operator, you can expect one IBA to equal almost six bays of self serve monthly revenue. If you are a petroleum operator, you can expect around $.08 per gallon (100K gallons per mo = $8,000 in wash revenue).

Benefits
Comparing IBAs to other wash types, it seems a relatively easy business decision. IBA productivity is good, around 10-12 vehicles per hour under ideal circumstances. With the average wash, rinse and dry time about six minutes long it is definitely faster than a self serve or washing at home and overall wash quality is good.

Average gross profit is better than 50 percent, operating expenses and the ability to operate them unattended are definite pluses. Cost for equipment is reasonable, service is available (in most cases locally) and the average durability of most manufacturers’ equipment is good (assuming the system has had good maintenance).

Looking at the various growth opportunities in the carwash industry, IBAs have been the fastest growing segment with around 40,000 systems in operation today. Models are available as friction (cloth or foam), high pressure, medium pressure/ high impact, or a combination of the two (high pressure and friction). So, no matter what hits your customer’s hot button there is a rollover that will satisfy almost everyone’s desires or needs.

Elements of success
In addition to being profitable, as a business owner, you need to consider the other elements of a successful business, which includes:
  1. Matching investment with site opportunity (round peg in a round hole);
  2. Generating enough NOI (net operating income) to support current — not historic — values;
  3. Having in place an exit strategy that allows you to leave at the highest price (managing the balance sheet);
  4. Having revenue and NOI keep pace with inflation and appreciation;
  5. Profitably managing all the resources that are available to you;
  6. Not allowing other short term (non core) strategies to take your eye off the objectives and goals you have established; and
  7. Knowing what your opportunities are, who your customer is, and always meeting or exceeding customer expectations.
All the above is very helpful, but what happens when you discover that your site potential exceeds the productivity of a rollover? That’s easy, order multiple IBAs. But where is the cut-off point between the multiple order decision and a different alternative?

Going multiple
As we know, one rollover under peak conditions will produce 10 plus clean cars an hour. So if your site analysis tells you your demand could be 20, 30, 40 cars an hour, simple math says hourly potential times 10 equals Y machines! This makes it a no brainer until you realize that there is no such thing as exactly 40 customers. More realistically, if 40 cars are on your property during that hour chances are pretty good some motorists got scared away and sought a different site. It is important to note that the average human’s patience quotient is about 20 minutes, or around three vehicles. So the question of productivity becomes critical to maximize site potential.

In addition to the customer’s perception, what about the economic consideration of a busy site? Let’s assume the cost for one rollover with a structure is $250,000 (w/o land) therefore four rollovers would be somewhere between $800,000 and $1,000,000. The productivity would be a maximum of 40 cars per hour (cph). Under an incredibly perfect eight hour day, maximum production would be 320 vehicles. So instead of four rollovers what if we looked at one or two tunnels?

So that we don’t limit the site, what would be the comparison of a tunnel or tunnels to multiple rollovers? To produce 40 or more cars per hour, we built a sixty foot structure with a conveyor system. Let’s assume that the building plus equipment totals around $670,000. In this example we theoretically have a system that is capable of 60+ cph. A 50 percent increase in productivity at a significant savings in land and building cost. Assuming that perfect day again of 320 IBA washes at $8 versus one tunnel with the capacity of 60 cph - or 480 - washes the potential economic advantage of the conveyor is $1,280 per day.

The point of all this is maximizing your site, literally getting the most for the least. So is a rollover or multiple rollovers in your future? It really is identifying what is that best opportunity and solution for your site. Carefully consider your market conditions, including the type of competition in your surrounding area, to determine what is best for you and your customers.


Fred Grauer is currently executive vice president of investor market and tunnel carwashes for Ryko Manufacturing as well as an owner of Whistle Clean Car Wash, a full service facility. Grauer has over 40 years of experience in all aspects of carwash design,manufacturing, marketing and investment consulting. He can be reached atfredgrauer@comcast.
net
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