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Business Operations / Carwashing / Starting a carwash

How to value a carwash

January 01, 2013
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The value system relies on the cost to rebuild the wash. The respected equation is reasonable for a new build:

Land + Building + Equipment + Convenience store + Quick lube + Landscaping + Signage + Water and sewer hook ups + Soft costs + Start-up = Cost of new construction.

The comparable approach is based on other washes that have sold on similar gross sales and time period. But there’s not enough of these sales happening to be a reliable indicator.

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In general, the full-service wash model has the most potential for income because of the average base wash of $10.99 and its additional profit centers, however that also comes with a penalty of 40 percent* of gross income as typical payroll. Therefore, a break even before seeing a profit is to monitor the payroll and deliver exceptional service all in balance to achieve a minimum of 4,500 cars per month (goal: 9,000 cars per month) with an average carwash ticket of $18 without other services, such as detail or quick lube.

Although service is the key ingredient for success of the full-service, on-site ownership and the ticket writer can also determine the rate of success or failure.

Express exterior carwash values
The express exterior carwash started evolving around 2006 as an alternative to the long wash time and high price format of the full-service carwash. It resembles the full-serve model, except it can wash six to eight cars at a time and offers free vacuums at a price point that starts between $3 and $5 and the national average gross is $6.30 per car.

The key point here is the payroll of 11-15 percent for express versus 40 percent for a full-service wash, which makes this wash investment a superior value for the absentee owner.

More from author: Financing for carwash in 2014

The income approach value is simple: Take the gross sales of the last twelve months (not the EBIDTA) and multiply it by four. Of course, the wash has to have a history of at least three years — which brings the wash into its prime. The goal is to begin the wash at 8,000 cars per month for the first year and at the end of the third year build a volume of 10,000 cars per month at $7 per car.

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