A while back, I received an email from a reader who was thinking about getting into the carwash business. There was a carwash for sale near his home and he wanted my opinion about the carwash business in general and asked a few specific questions about the claimed expenses at the carwash that was for sale.
I gave him my standard answer: It’s a great business to be in. Where else can you make 50 percent profit and get cash in advance? The only thing that comes close is government (50-70 percent profit) or cable TV (30 percent).
Looking at the surveys
One of the questions he asked was about the water bill at the carwash he was researching. It seemed awful low. I answered his question by referring to the Professional Carwashing and Detailing 2006 Benchmarking Survey on self-serve carwashing.
Referring this guy to the surveys got me thinking about when I first started in the industry. When I first bought the carwash, 19 years ago, I didn’t know anything about the business and was looking for all the data I could find. I read all of the national magazines for their informational articles and I still do to this day; one is never too old to learn new tricks.
I had some information from the previous owner, but as you would expect, I looked at it with a little suspicion. As it turned out, ol’ Ned was an honest fellow and steered me right. In fact, a little later he became my stockbroker.
The earliest survey I have in my files is from 1993, but I know I had something from the time I bought the first carwash in 1988. I didn’t realize the value of the surveys until later, though, and started saving them in 1993.
In those early years, we attended most of the annual carwash conventions. We sat in on all of the self-serve seminars we could work in during the day.
In the early days, we would compare our averages with the national surveys to check our operation. It was a useful tool to see if we were doing things right. Over the years, we’ve developed our own figures and no longer compare our wash to the national average. Our goal was to increase the gross every year, and we did until we sold the washes in 1996.
Even now, with the one carwash I have left, the only thing in the survey I look at is the average gross per bay. We’ve always beat the national average significantly and I feel that I watch the expenses close enough that the bottom line should come out okay.
But maybe not — is there something else to learn by comparing the averages?
Looking at the numbers
There’s a lot of information in the surveys that although it’s interesting and informative, it will not help a carwash owner analyze or improve his/her business. Some of these might give you a feeling of where your business is in the big picture but are of little value beyond that.
The year that the carwashes were constructed is a case in point, locations owned is another. Although the overhead costs for a multi-carwash operator can be spread out over more bays, knowing that doesn’t help the 54 percent of the total that only own one wash.
The third and forth on this list is IRS audits and education of the owners. There’s only a ten percent chance of being audited and 31 percent of the owners only have a high school education. One is of interest if you’re planning on cheating on your taxes (to me no amount of money is worth going to jail over), the other proves that hard work can pay off.
The crime statistics are interesting, but meaningless to an individual operator unless you’re in the high crime area, of course.
A few of the numbers help prospective new owners rather than the existing owners. Such as: economic area makeup, traffic counts, distance to nearest self-serve competitor, area demographics and speed limits.
Looking at the averages
The carwash owner can get some real good information from studying and comparing the national averages to his own.
If your average monthly revenue per bay is less than the national average, is there a good reason? It could the location which you can’t do much about (advertising) but it may be the pricing per minute. Compare your price per minute to the national average price per minute of 41 cents.
Could it be personnel? Carwashes with attendants generally have higher revenue. Look at the national averages.
Take a look at your average expenses as compared to the national average. Are your water bills higher than the national average? Maybe its time to replace warn out nozzles, adjustment of the weep system or a weep conservation system.
The national average for electricity is six percent. Ours was 6.17 percent in 2005. This was a little surprising to be that close as we believe in extreme nighttime lighting. We have 6,000 watts of flood lighting for the open areas in addition to the lights in the bays and under the drying canopy.
You can compare the average monthly gross income for vending and vacuums as well as the price per minute for the vacuums.
The surveys also tell you the percentages for the various equipment in use. Are you missing out on some profit centers?
Last September we decided to change one bay into a dog wash. They don’t survey for dog wash revenue and expense yet, but it’s only a matter of time.
All in all there is a lot of information contained in the surveys that can help existing owners, potential owners and planers. They are certainly worth the effort and I know that I’ll get back to my old habit of studying them every year.
Dennis Ryan has been in the carwash business since 1988 and the construction business for 40 years. At one time he owned and operated five self-service carwashes. Currently he owns and operates American Pride Carwash in Casper/Evansville, WY. He can be contacted at email@example.com.