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Go ahead

November 22, 2006
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Go ahead
Ryan Essenburg

Multi-profit centers are a great way to increase return on investment. Stand-alone carwashing works and has proven to be super successful, but there's nothing like increasing your return by using every square foot of space possible. In poker terms, you don't want to leave money on the table.

First, profit centers can feed other profit centers. By adding something like gasoline or a c-store, you can increase your wash volume and vice versa, more volume for gas and c-store by adding a wash.

Second, what you put on your land needs to be able to maximize a return per square foot. If you have unused land that is manageable or can increase your return per square foot, then you should take action to properly use the land.

And third, with the reduction in labor through technology (no prepping) and process (unattended loading at 180 cars per hour), there's no reason not to spread your wings.

First, let me point out a few concerns that come along with multi-profit centers. Distractions are never a good thing for a business. From what I have seen the most successful carwash operators in the industry are always hands-on operators. They understand the secrets of success and that to make it big takes personal, focused effort. When not handled properly, multi-profit centers can cause loss of customer service or distracted management.

I have also seen people build very successful free-standing carwash facilities and there surely is nothing wrong with this concept. In the situation of a free-standing wash only, it is surely important to maximize multiple streams of income, primarily vacuum income, and vending.

Should you desire to add an additional revenue source, it is very important the thought process be correct. It's hardly ever successful to add a carwash as the "add-on" to other profit centers if it's treated like a step-child. It is however, very possible to add other profit centers to your carwash if done correctly. There is a huge difference in operation and success rate and can easily be seen by driving around any town.

To ensure success, the most important thing is thought process and how you view your facility. Is the carwash the largest name on the sign you're putting out by the road?

Cross Marketing

When dealing with the possibility of adding additional profit centers, the goal is to not only add another source of revenue, but for all the components to feed off each other and increase revenues from your original profit center. In a situation of something like gas and a wash, we have seen a synergy where returns can be as high as 30 percent additional volume that gas brings to a wash or a wash can bring to gas. Every additional thing you can offer may bring in new people to purchase products and services from your other revenue streams.

Maximizing return on land

Land these days is not always easy to come by, and when doing carwashes on a site valued in excess of $1,000,000 there needs to be a high return for that area being used. We normally look for 37,500 sq. ft. (250-feet-by-150-feet) for a stand-alone express wash facility. But for a gas, c-store and carwash combination, we need 62,500 sq. ft. (250-by-250).

By integrating three, or any number of additional profit centers, we can increase return-on-investment or profit per square-foot of land being used. In the case where an express wash is the only thing capable of fitting on a property, it is still important to maximize return through vacuums and vending which require little space.

Reduce Labor

An exterior carwash can be operated with a single employee but should a multi-profit center be added, less than a full employee is needed. Through proper site layout and integration one can overlap an employee's role therefore doing more with the same amount of people.

Using a flight deck model in an express environment, money is collected by pay stations, clerks and even the gas pumps. We can prove operating speeds of 180 cars per hour and thousand-car days with the same number of employees that would be required to run a gas station and c-store alone. By using the flight-deck layout model and technology, the carwash doesn't require the management and labor it once did.

We now have many express wash facilities completely operated by a single employee and we operate combined express wash, gas station and c-store facilities with only three employees. Of course, for all this to be successful, the carwash must still be #1 priority.

New technologies and properly setting up the wash process can reduce labor requirements and allow you to spread resources to other centers. This is done through the use of self-loading modules, heated drying systems, effective cleaning equipment, pump station controls, site monitoring and other labor-eliminating systems. By doing this, you are able to save resources, increase or maintain the level of management and focus on your carwash, and tackle other profit centers.

It is a money-making equation: No prepping ever + no hand toweling ever + no loading ever + low maintenance + automated and integrated cash collecting = room to grow.

In the full serve environment, there are secrets of how to improve cars-per-man-hour which allow top operators to expand without losing focus. Top operators have figured out the secrets that allow them to not wash cars, but "process" high volumes of cars.

Conclusion

There are three main advantages to going multi-profit centers:

  1. The capability of increasing revenue through cross-marketing and synergy between profit centers;

  2. The leveraging of all available land for a greater return on investment; and

  3. Site integration which allows for more productivity per employee and, through the use of technology and science, reduce labor and save resources.

There's no reason to say no!

Ryan is chief operating officer of Tommy Car Wash Systems and is working to refine the express washing process through the Tommy line of equipment system. He has operated three of the industry's top carwash facilities in Holland, MI, and has experience in the development of high- volume express washes and has visited and trained among the top carwash operators in the industry.