In October of this year, Professional Carwashing & Detailing asked its readers to complete a 10-question survey regarding their perception of business over the last two years. The results from over 300 operators across the country showed pessimism and optimism; hopes and fears. In some cases they were predictable, and in others surprising.
For instance, many conversations at trade shows and networking events would give one the impression that operators have found the weather to be a crucial component in their success or failure. But our survey found that nearly 60 percent of respondents blamed dips in volumes and revenues on the economy, while less than 30 percent thought that weather was the primary cause.
“The economy stayed the same, but it depends on the operator… hopefully things get better for everybody.”
— Marc Lave, Auto Goulet
Dissecting the data
Paul Fazio, president of Sonny’s Enterprises, Inc., a manufacturer of carwash systems, equipment and supplies, said the data may be misleading.
“I still believe that weather is by far the biggest reason for the dips,” Fazio said after previewing the results of our survey. “I have to believe that the survey is reflective of the constant negative economic news we hear, as well as a true lack of consumer confidence that anything good is coming anytime soon. It wears on you and gets to a point where you let it affect your thinking.”
John Lai, chief operating officer of Mister Car Wash, the third largest conveyor carwash chain in the nation with 65 carwashes and 24 quick lubes in seven states throughout the U.S., also believes weather has played a significant role in the last two years.
“We’ve found that the weather still trumps the economy and when the sun is out — demand is still there,” Lai told PC&D.
Lai and Fazio aren’t alone. Eric Wulf, executive director of the International Carwash Association, also agreed. “The conventional wisdom for many operators has been that the two biggest variables are weather, and then gas prices – with the macro-economy third,” Wulf said. “But, then again, this is the worst recession that our industry has ever seen…”
”It seems that consumers are repairing older cars instead of buying new ones. They don’t care about keeping older vehicles as clean as newer ones so business has dropped.”
Fazio makes a good point about consumer confidence. In the open-ended comments section of our survey, we fielded comments from dozens and dozens of operators who all indicated their frustrations with not only the economy, but also the government and banks. (You can see some of these comments highlighted throughout the article.)
Other figures to come out of the survey were more predictable, such as the responses regarding operators who have cut costs or failed to reinvest money into their businesses, Fazio said.
“The fact that only 20 percent said they have invested in the last year has been reflected in how hard the OEM community has been hit by all of this,” he elaborated. “In times like these you expect to see fewer start-ups, but you believe your current clients will do what is necessary to keep things current. Between the weather the last few years, the economy and the uncertainty, I believe spending by the installed base has been on hold for a while.”
Wulf also thought that operators should consider adapting their business to the new economic climate. “What I don’t see in the [data] is [operators who have] new offerings, or model changes – and that stands out to me,” Wulf said. “If you are not changing your offerings, I’m not sure decreases in revenue can then be totally attributed to the economy.
”The economy has had some impact on the wash volume because most people have less to spend. We rebuilt one wash wash and tore down and did a ground up and our volumes went up. Now a new carwash opened and it has taken volume away. Labor is still difficult to find in our market.”
— Jim Lynch, Mr. Wash, Burley, ID
Room for optimism
Like many of the operators who participated in our survey, Lai left some room for optimism.
“I think everyone was concerned about what would happen to non-staple discretionary spending during this last downturn, but knock on wood, people still love their cars and even in a tough economy, people take pride in driving a clean vehicle,” Lai stated. “It certainly would help if the environment was more robust, but given the new reality of our times, we’ve dug in and are focusing on the things that we can control like quality, speed and customer service.”
Lai predicted that the economic recovery will be slower and take longer than previous recessions, so he was cautious about expecting any immediate surge in 2011. As he pointed out, new car sales are still off by about 20 percent and home valuations are also faltering.
“I am a mobile detailer. Business is booming because I refuse to participate in any recession.”
— Mike Fesler, Burlington, IA
“The upside to this tough environment is that we’re seeing a lot of innovation and creativity by many operators who are doing things like leveraging new technologies, focusing on improving the customer experience and creating more value for the consumer,” Lai said.
Fazio agreed, adding that he hopes to see movement by some of those operators who may have been waiting to reinvest.
“On the bright side, I do think we will see a small uptick in new equipment purchases on the tunnel side in 2011,” Fazio explained. “No big change, but at least an end to the market shrinkage and a small move in the right direction.”
“I do believe the industry is recovering. In our area we’ve had to add new services to attract more business from unlikely customers, such as headlight restoration.”
He continued, “Many of those [operators] are changing their operation model to take advantage of the current trends. That is great to see an end to the market shrinkage and a small move in the right direction.”
And like the operators who left comments after the survey, he felt a great matter depended on the banks. “Here the biggest issue is still securing financing for your project,” Fazio said. “If money was more readily available I think the small increase we will see next year could have been larger. People seem to want to do the deal. They just can’t get the banks to cooperate.”