Time flies. It doesn’t seem that long ago that I was being asked to write articles on the express exterior/free-vacuum phenomenon. Now I’m being asked how express operators can leverage new technology to maximize profitability.
Taking a few minutes to browse old magazines before writing this, it struck me that the first time I wrote an article on express exterior, my oldest daughter was in middle school. She’s now in college. Express exterior is no longer new. Rather than dwell on how that could have happened so fast, I decided to focus on changing my approach to this article.
Eliminating manual prep with hybrid tunnel equipment is widely accepted. Video transaction kiosks and automated gates have become commonplace. The free vs. vended vacuum debate has settled with proponents for each, but little passion left to argue which is the superior model. So what’s on the horizon? I predict a growing focus on managing the details of the operation and a slew of new tools to make that easier.
A few weeks ago, I saw a news story regarding cost cutting efforts by one of the major airlines. The company estimated that they would save $42 million in fuel this year by extending each flight by one to three minutes. Express exterior is really very similar. When you’re potentially washing hundreds of thousands of cars per year at razor thin margins, a few pennies per car can mean the difference of running in the red or the black.
I’m not alone in this thought. When talking with other owners of express exterior locations, rarely does the conversation focus on delivering a clean, dry, shiny car, offering a consistent service level, or managing labor. The format itself and recent equipment innovations seem to have resolved many of those issues. Instead, we talk about package pricing, signage, kiosk videos, promotions, preventive maintenance schedules, controlling detergent, and reducing utility consumption.
Right now, I doubt I’m alone in making most decisions based on my gut feeling and other operators’ experience.
I also doubt I’m alone in looking at the data from my tunnel controller in a whole new light. After running a Wacky Wednesday discount promotion for three weeks in a row, I want to know instantly how it affected my Saturday volume compared to the previous year and at what point in the month I can anticipate breaking even. The data is there to facilitate preventive maintenance, refine hours of operation for maximum profitability, improve the dollar per car averages, and even help manage customer perception of our business. Will the express exterior format make analyzing data so profitable that it’s worth doing?
Let’s take a look.
Improving your dollar per car average
Because it is typical for an express location to process more than 100,000 cars in its first year, the power of each penny is phenomenal. In this scenario, every penny you save or make is $1,000. It’s easy to think about using daily statistics and data to control expenses, which will be addressed shortly, but what about increasing revenue? There are three main pricing issues facing all express operators.
- First, how do you increase the base exterior price over time to reflect inflation?
- Second, how do you up-sell customers to increase your dollar per car average?
- Third, how do you cross-sell monthly wash subscriptions and gift cards in the absence of a live attendant?
Working backwards, it’s not a secret that on slow volume days, a well trained professional attendant can sell more monthly subscriptions, gift cards, and wash books than even the most perfectly executed signage and video kiosk. Personally, I’ve seen the best results by placing this person after the gate using a soft-sell approach with customers who’ve already purchased a wash. Even there, they still slow production in addition to increasing labor expense.
To be honest, at sites where I participate on the management team, the decision to have a greeter supplement the video kiosks usually occurs on a “play it by ear” basis. If it happens that volume is slow and a well trained employee is on duty, we’ll position that attendant with flyers and gift cards at the gate until volume picks up.
I wish I could say that I knew for certain that adding a greeter was most successful between 3 p.m. to 4 p.m. on partly cloudy Thursdays in April and between 1 p.m. and 2 p.m. on sunny Tuesdays in March. I can’t right now, but I can say that we are outlining spreadsheets and logs to track that type of information to aide in staffing decisions.
Carwashing may be inherently unpredictable, but there is no denying that in the sea of information, trends exist that can be used to increase revenue. I look forward to the day that we staff our most skilled greeters on days most likely to have the best potential return on that investment.
What happens when?
There’s a lot of experimentation going on in the express exterior side of the industry. With the large volumes being seen, the smallest change can have tremendous impact. Most operators I know are constantly tinkering with wash offerings, prices, and promotions. Occasionally, what works spectacularly at one wash may deliver mediocre results at another. It brings to mind a quote from Henry Ford, “Failure is simply the opportunity to begin again, this time more intelligently.”
This means running tests, logging results, making adjustments, and looking at the numbers again. Track your historical data. Take the extra time to keep careful records so that you can compare outcome to different time periods. It’s a lot of work, but the job of an express operator is to increase revenue and decrease expense, one penny at a time.
Never lose site of the amount of money that will be in your pocket at the end of the year for each penny per car difference you can make.
What is the right price?
In response to rising costs of production, some express operators I know are re-interpreting the right price of the base exterior package. At the same time, there’s a growing popularity to further discount slow days and even hours, to attract a broader customer base. Will it net out with higher base exterior prices with more Wacky Wednesday, Tremendous Tuesday, Happy Hour, and other promotions? We’ll have to wait and see. I am however, confident that these price changes will be done systematically with a careful eye to analyzing the data and making constant refinement.
Also, for as long as I can remember, conventional wisdom regarding video transaction kiosks has always been to offer a round dollar total that includes tax. I anticipate a growing number of operators testing the change in demand by not including sales tax in the advertised price and by experimenting with price points ending in 99 cents. Some kiosks will require retrofits and increased management or maintenance to accommodate the additional coins. It will be interesting to watch the affects these penny increases have on demand and volume.
Regardless, expect to hear a lot more conversations regarding experimentation, data collection, and analysis of pricing information.
I can remember a time when I changed the oil in my car about every 3,000 miles. Sometimes it was 4,000 or more; it really ended up being when it was convenient. These days, I change the oil in my cars exactly every 5,000 miles. Similarly, I predict a renewed sense of priority regarding preventive maintenance (PM), at precise intervals, at many express tunnels.
There’s no argument that meticulous preventive maintenance is difficult to implement. At the same time the cost of every consumable is rising as well as the transportation of supplies to your location. In the past, the labor and management required for accurate PM led many operators to round maintenance intervals for simplicity.
Today’s escalating costs and tightening margins have really put PM in the spotlight. It’s no longer just about reducing unexpected breakdowns. When managing costs to the exact penny spent per car, it simply makes sense to turn to controller data to schedule PM for each piece of equipment based on its service interval.
Controlling detergent expenses
Many factors can contribute to excessive detergent consumption. Improper controller timing, worn nozzles and small leaks are the usual culprits. What’s different about express exterior sites is that when delivering high volume production, you can’t afford to wait until you see a noticeable spike in the monthly bill to alert you to a problem.
Unfortunately, changes in detergent and transportation costs can mask subtle spikes in the monthly total and make it difficult to keep on top of usage. In a perfect world you would have a daily report showing the amount of detergent used per car for the day. This may not be feasible for many locations, but express exterior sites analyzing data on a periodic, if not daily basis, will gain a competitive advantage in the market place.
Another area to look at is your chemical distribution. The popular air pump/ hydrominder proportioning systems have many advantages, but dilution ratios will vary slightly as city water pressure changes during the day. Usually these fluctuations are negligible. However, at a high-volume express location looking to control expense to the penny, the slight additional detergent draw when water pressure drops can begin to add up.
I expect it to become increasingly common to add individual pressure regulators to each hydro-minder even at properties with relatively stable water pressure. When washing 10,000 cars or more per month, the effect of every slight change becomes more pronounced.
Know the details
The devil is in the details. Fortunately, today’s computers make analyzing those details easier than ever before. New technology will continue to wash cars faster and safer, but this year I anticipate more focus on using technology to get better control of all those valuable pennies at our express exteriors. After all, what’s better than using technology to gain a little more predictability in today’s fast changing economy.
Anthony Analetto has over 26 years of experience in the carwash business and is the president of SONNY’S The Car Wash Factory’s Equipment Division. Before coming to SONNY’S Anthony was the director of operations for a 74-location national carwash chain. Anthony can be reached at 800-327-8723 x 104 or at AAnaletto@SonnysDirect.com