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Business Operations

The Balancing Act: Cut cost without losing customers

March 08, 2011
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Last year, Professional Carwashing & Detailing surveyed its readers to learn more about the concerns they had about doing business in 2011. The number one issue they wanted to see covered in the pages of PC&D? “Improving cost efficiencies at the carwash.”

One of the smartest ways to float through tough economic times is to create a leaner and meaner business model. It’s not always easy, though, to find and choose the best methods for reducing expenses; especially when quality remains a top priority.

That’s why we tracked down the experts to help you identify new ways to tighten your belt without diminishing the value of your car care service. Follow along as we explore these methods and solutions.

Evaluate your entire system
Operators can no longer count on shear volume to make a profit, according to Mark Jones, engineering executive at PECO Car Wash Systems, a manufacturer of conveyor carwash equipment.

“Increased cost efficiencies are important for survival,” Jones explained. “In the past, high vehicle counts could mask inefficiencies in the overall operation. The present day economics require all businesses to measure and improve their operating efficiencies.

But where to start? Jones cautioned operators to consider their entire carwash system – not just one component or technology. “We see operators who insist on having a particular machine or technology in their wash while compromising on other aspects of the overall process,” Jones lamented.

“In the end, that insistence can come at the expense of wash quality, drying capability, or throughput volume,” he concluded.

Instead, Jones suggested that operators analyze their entire conveyor system. “It is critical to match the equipment configuration with the conveyor length and chemical program to achieve the highest wash quality to operating cost ratio at a particular wash site,” he said.

This is especially important for investors who may still be in the design stages of a carwash project. Jones said those operators should consider a system with less equipment in a smaller package, that still offers a top-quality wash service.

“Advanced planning is essential in order to improve operating efficiencies,” he explained. “Equipment arrangement and chemical application must be considered in the planning phase to optimize the wash quality.”

Take a hard look at your payroll
Dean Cheramie is vice president of sales and marketing for Ryko Manufacturing, a producer of a full line of friction and touch free in-bay automatic systems, as well as conveyor and self-serve carwash equipment.

Cheramie said that while it’s possible the economic recovery will move “steadily in the right direction” and the country might experience good washing weather, smart operators should still “work hard to squeeze more margin from the same revenue dollars.”

“For high volume locations, technologies and processes to reduce the usage of power, water, and chemicals represent good opportunities to trim costs and increase profits,” Cheramie said. “But for any carwash operator, the biggest opportunity has been and will continue to be the reduction and even the elimination of the labor required to deliver a consistent, high quality wash.”

In fact, Cheramie pointed out that to many operators, cost efficiency simply means more volume with less labor.

For instance, new IBA carwash technologies are streamlining the payment and loading process, Cheramie said, and also enabling drive-by, off-board for key wash functions, such as tire dressing and wax application.

“This allows an operator to increase throughput, and offer more wash services, while retaining the elimination of labor that has been the hallmark of the in-bay automatic,” he explained.

Similarly, Cheramie advised conveyor operators to install activation and point-of-sale systems that allow the site to switch between full-service operation, and unattended operation with perhaps only one employee on-site during express hours. As he pointed out, some conveyor operators have opened exterior-only self-service lanes that are available during full-service hours.

Consider your business model
To improve performance of a business by trimming costs, it’s important to think big,” he stated. “Otherwise the business will need many small adjustments, the execution will be hard, and the savings may not be realized.”

According to Cheramie, the opportunities for any carwash operator to cut back on labor costs depend on the business model.

“A convenience store chain with many locations might convert their chemical program to a guaranteed per-wash pricing structure, removing the incentive for their staff and service providers to solve water quality or other chemical or equipment problems by over-dispensing,” he said, while “a high volume conveyor location might reduce the full-service hours, and offer a completely unattended service 24 hours a day. Or install equipment that allows exterior-only self-service lanes to be available during the day.”

He concluded, “If an operator is going to invest in car wash equipment capable of a consistent exterior wash with no labor, it’s important to then remove the labor for that wash, not just reduce it.”

Reduce your utility bill
When it comes to reducing utility costs – like water and power – friction units have a clear advantage over touch-free models, Cheramie said. They even reduce chemical costs.

And new in-bay automatics, particularly in larger bays, can be configured for higher throughput by proper load sequencing, and off-board operation of many of the wash steps, he stated. “This can result in increased throughput while retaining the easy and familiar customer experience,” Cheramie said.

According to Cheramie, Some operators are considering replacing their automatics with small conveyor systems, to improve throughput. “For many sites, this is an excellent choice,” he said, “but it’s important to balance this with the availability of personnel at all hours to provide customer assistance.”

In the end, it comes down to the operational standards. “Operators need to look hard at which equipment configuration will serve their anticipated volume at the lowest total cost,” Cheramie explained.

Are your free vacs sucking up profits?
In addition to cutting expenses, carwash operators also have the opportunity to create new revenue opportunities. Steve Osborn is equipment sales manager for Fragramatics, a manufacturer of vacuum combination units. He said one such opportunity is to start putting a value on free vacuum services offered at express exterior carwashes.

“There are two products in the carwash business: the outside of the car and the inside,” Osborn explained. “You are losing one of your two profit centers when the vacuums are totally free with unlimited time.”

“Worse than that, the operator gets zero additional revenue from the vacs,” Osborn said, and no additional services can be ofto start putting a value on free vacuum services offered at express exterior carwashes.

“There are two products in the carwash business: the outside of the car and the inside,” Osborn explained. “You are losing one of your two profit centers when the vacuums are totally free with unlimited time.”

“Worse than that, the operator gets zero additional revenue from the vacs,” Osborn said, and no additional services can be offered – like shampoo or fragrance, which are high-profit margin menu items.

Instead, Osborn suggested that express operators give their customers a token to use for a free vacuum cycle. Additional time can be purchased by inserting quarters at the island unit.

Osborn said one of his customers in Pascagoula, MS, has 18 such stations and averages about $800 per month in additional sales and saves money on energy, too. “His electric bill is about $100 per month,” Osborn stated, “so about $10,000 additional revenue and conservatively about $1,200 less electricity costs per year.”

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