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Business Operations / Carwashing / Starting a carwash

How to value a carwash

January 01, 2013
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The reproduction approach as to the new build is just as with the full-service wash, only you are not likely to have any additional profit centers, like a quick lube or detail center.

All around, the express exterior wash model was crafted for speed, convenience, economy, and security for the carwash customer since they stay in the car during the five minute wash experience.

The market value of the express wash can rationally achieve a $4 million price tag and EBITDA of $400,000 (40%). If a buyer places $1 million down and finances $3 million at $20,000 per month, with a debt service of $240,000 minus the $400,000 EBIDTA, the investor should easily enjoy a minimum $160,000 profit — which is 16 percent before any deprecation, ammonization or any other deductions. Who couldn’t be excited about this, especially as an absentee owner?

Related: Multi-profit center articles

Self-service carwash values
Let’s get right to it. Valuing a self-serve (or coin operated) carwash is easy. The income approach is determined on a multiple of three to five the full amount of gross sales.

For a wash that seems to have inaccurate books (of which there are sadly more than a few in the self-serve segment), there are ways of determining the true gross sales dependent on the water usage, utility bills and chemicals. Consider hiring a carwash consultant to help you if this type of valuation service is needed.

The reproduction cost today is almost prohibitive. We would use the same formula as with the full-service of express, but the average revenues are much lower. The obstacle today is that the average customer in the self serve bay spends about $4.35 per wash and the automatic (which washes only one car at a time) generally generates only $5 per customer. These washes have to compete with the aforementioned express wash at a base wash of $5 with free vacuuming.

Notwithstanding the competition, there is an essential element of the self-serve wash customer especially in rural areas that cater to farm machinery, all-terrain vehicles (ATVs), duallie trucks, and other oversized vehicles.

   

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