As the year draws to a close, and operators reflect on the past twelve months, the big question remains: did 2007 mark a return to the golden days of carwashing? After a few years of hard washing (for reasons as diverse as weather to gas prices to market over-saturation), operators are eager for business to return back to the way it was.
But if you ask Mark Thorsby, executive director of the International Carwash Association, he’ll tell you no. He doesn’t need to consult facts or figures. He doesn’t need to know the average revenues or volumes for the year. Those days are simply gone — and we all need to move on.
If you ask Paul Fazio, president of Sonny’s Enterprises, Inc., he’ll tell you even if it was the rebound year many were hoping for, some operators are still about to get left in the dust.
Why? It’s simple, explains Thorsby, “the paradigm has changed.”
“It’s never going to go back to the way it was. It’s going somewhere different,” Thorsby said. “We’re going to continue to beat this drum for carwash operators. Carwash operators have got to wake up and realize that you cannot successfully operate a carwash today the same way you did 15 or 20 years ago.”
In every aspect of the car care industry, manufacturers and industry leaders are pointing to change, and not just for the conveyor market. From modernizing the self-serve with credit card acceptance, to new ideas for the in-bay automatic, experts stress this is a universal change for the industry.
“In the last five years, I think we’ve seen unprecedented differentiation within our marketplace,” Thorsby said. He pointed to differences in price points, which can range from a $2 wash in Detroit to a $30 wash in Connecticut, and also said differences in convenience levels and formats appeal to a wider-range of customers.
Manufacturers say change across the board has been met with some trepidation by carwash operators, though. Fazio said members of the “old guard” can be hesitant and fearful of change, while the new investor market anxiously soaks up the newest trends.
“I hear this all the time: ‘Don’t mess with what I’ve been doing.’ The operator says it’s been like this the last twenty years, and he hopes it stays that way the next twenty years,” Fazio explained. “He says, ‘Don’t come in our area and mess with it.’ And to that I say, what makes you think you have control over it?”
Fazio said he’s had some clients blame him for what’s “going on in the industry” concerning the growth of the express exterior and the boom of new investors. To those operators, Fazio explains he’s only capitalizing on the trends that he has seen. “If you think that it’s because of us that express is out there, you’re crazy. But if you ignore it, you’re even crazier,” Fazio said.
W. Herschel Kilgore, vice president of the tunnel division for Specialty Car Wash Systems in Pomona, CA, agreed. “Some operators can be so resistant to change that it is just amazing. And rather than trying to adapt or to advance with technology and trends in the market, they just simply clam up and say ‘It may work for somebody else, but it won’t work for me.’” Kilgore said.
“I don’t think the carwash market in three years will look anything like what it does today,” Kilgore explained. “Operators need to be willing to change with it.”
Trends in the industry
For IBA operators, the growing trend is toward friction and hybrid systems. For self-serves, it’s modernization through credit card acceptance and in-the-bay services like tire shine and dryers. For conveyors, it’s the convenience formats: express exterior and flex-serve.
Thorsby is careful to caution operators who jump from trend to trend, though. “I think what happens in our industry all too often is that we latch on to whatever the latest fad is and our industry becomes preoccupied with that one particular thing, thinking that if the wash just does this one thing, his business will boom. I don’t think that’s true.”
For carwash operators who have noticed a loss in volume this year, or a sustained loss in volume from years passed, Thorsby suggests examining the carwash’s business model and its customer base. Customers today want convenience, he said.
Thorsby also predicted a double-digit decline again in percentages of home washing. The ICA’s report, due some time next year, will likely show that the “poverty of time, plus the removal of concerns about vehicle damage” have new customers lining up at carwashes in droves, Thorsby said.
Conveyors mold themselves
For conveyor operators, the trends are not as significant as determining what sort of customer you want to attract and what sort of business model you want to operate. Much of this is common sense, experts say. If you do not enjoy dealing with labor headaches, it’s time to streamline your operation to an express exterior. If you want to be known in the community as a top-of-the-line service provider, you’re obviously leaning towards a full-service business model.
The devil is in the details, though. Menu options, vacuuming options, even your lobby choices will help differentiate your service from the next guy. Thorsby points out the potential for multi-profit centers, which seem to go hand-in-hand with labor and management-intensive conveyor operations.
Another small detail? Your customer loyalty program or club card service. According to Kilgore, these cards can keep you afloat when times get tough. His experience is with operators on the west coast, but it is easy to see how adapting this to an east coast operation struggling with weather-related issues could cause a big boost to business.
“This is a major change in the way that marketing is going to be done next year,” Kilgore said. “What we’re seeing at a few test locations are 30-35 percent of all of their customers are in fact on those club cards. This effectively ‘marries’ them to the carwash.”
Club cards work by offering the customer unlimited carwashing at a set monthly price. The program effectively takes the customer off of the market because, as Kilgore pointed out, what person would purchase the “Wednesday special” at a competing carwash when they have already spent $20 to wash for a month at your carwash?
Moreover, unlike a loyalty program that works by rewarding customers based upon the frequency of their visits, these club cards are an immediate value to the customer.
Moving on to in-bay carwash operations, the focus is competing with express exterior conveyors, which are priced similarly and offer a faster wash process. To do so, operators are looking at new friction and hybrid offerings, add-on services, and also an express format of their own.
“I see further activity in hybrids and in frictions,” said Craig Campbell, vice president of sales and marketing for Mark VII. Campbell predicts the market will balance out in the next few years, featuring a 50-50 split of touchless and friction machines, as customers start to embrace modern foam/brush materials.
Improvements in the areas of safety and efficiency are two driving forces in this growth, Campbell said. As technology advances, it has calmed customer fears of damage to the vehicle, and has also helped the operator to be more efficient in water and electricity usage.
“There is always going to be concern about water, there is this growing population, and I don’t think utility rates are coming down,” Campbell explained. “So I think you’ll see a focus on equipment and, at the operator level, processes and ways of managing business to minimize those costs and to minimize the use of resources.”
Sean Forsyth, owner of Mid-Atlantic Autec, an Autec distributor based in Virginia Beach, VA, agreed. “I think the hybrid wash will dominate 2008. We give people the choice. When we give people the choice, only about 10 percent buy the touchless-only option,” Forsyth explained.
The IBA express
Forsyth has been heavily involved in, if not solely responsible for, the development of the IBA express model in Virginia Beach, VA. The IBA express works by processing the car as it slowly strolls through the first phase of the wash. The vehicle then stops for the second phase of the wash and drives through the dryers as it completes a regular IBA cycle.
Their numbers pale in comparison to express exterior conveyor carwashes, but IBA express carwashes are slowly picking up speed. In Virginia Beach, VA, where the concept has really caught on and is slowly being perfected, the IBA express cleans 35 cars-per-hour. Operators with two units side by side, like Freedom Car Wash in Tidewater, VA, (www.freedom-wash.com
), are able to process more than 60 cars per hour, and their ticket averages are nearly double a traditional IBA.
“The IBA express gives operators the chance to have a high ticket average and to process more cars per hour, maximizing their realty investment,” Forsyth explained. “People want convenience. We’re giving them the gift of time.” And, apparently, people are willing to pay for that gift.
“I didn’t believe it myself until I saw it with my own eyes,” Ted Winchester, vice president of national accounts for Autec Car Wash Systems, said of the high ticket averages. “You just can’t believe how much money they’re getting for this wash.”
Winchester and Forsyth think the IBA express is one answer to the growing concern about express exterior competition. They are not alone. Campbell said many other manufacturers are recognizing the potential in IBA express.
“I think right now it’s a regional thing, but I don’t think that will hold,” Campbell said. “Certainly, Mark VII is looking at opportunities to capitalize on this sort of concept, and I’m sure my competitors are, too.”
Plastic. That’s the word of the year for self-serve operators as they seek to become competitive in 2008.
According to David DuGoff, former president of the Mid-Atlantic Car Wash Association and owner of College Park Car Wash, a self-serve location in College Park, MD, the credit card customer base is growing, and it’s becoming a more and more necessary part of the business. “Customers are telling us how they want to pay for product, pay for the service, and we do have to provide that,” DuGoff said.
Thorsby agreed. “I’m hearing guys crying and moaning about the self-serve business, saying it’s horrible. I don’t agree. If you want to be in the self-serve business, there is a market out there for people who want to go out and wash their cars themselves,” Thorsby said. A market of about 38 percent of the motoring public — who do it themselves at home, according to the most recent ICA consumer habits study, Thorsby said.
To attract these home washers, self-serve carwashes need to have new products and capabilities that might not be available at home. “Experiment with unlimited time, make sure your bay is clean and bright, look for the new innovations,” Thorsby suggested. “And make sure you accept credit cards.”
Some of the newest innovations? Dryer and vacuum capabilities in the self-serve bay, tire shine applications and total car protectants.
As operators anticipate what lies ahead in 2008, one thing is for certain: the customer base is growing. Environmental movements and time demands are slowly pushing Americans out of their driveways, and carwash operators are ready to reap the benefits.
Growth in our market also ensures there will also be increased competition from investors realizing the potential of the industry. Experts say your best bet is to differentiate yourself now and stay ahead of the curve to keep your business growing and thriving.