In 2015, news about the U.S. unemployment rate, carwash sales and a growing U.S. economy, including increased momentum in retail sales and the housing market, continue in the right direction. An updated jobs report earlier this summer noted that the unemployment rate in this country fell to 5.3 percent, accounting for a seven-year low, according to the U.S. Bureau of Labor Statistics.
In the carwash industry there are other promising statistics to be mindful of. Car sales and consumer spending trends are two areas of particular interest. According to Trading Economics, using data reported by Autodata Corporation, from 1993 to 2015 total vehicle sales in the U.S. averaged $15.31 million. During the height of the Great Recession, total vehicle sales bottomed out to $9.05 million in February 2009. However this past June, total vehicle sales were at 17.16 million. Also reported by Trading Economics in June, U.S. consumer sediment rose more than expected and was at a five-month high.
New highs, new investors
If you have attended a carwash show in the past year, you do not need the above statistics to confirm the energy and excitement found throughout our industry. More cars on the road and more money in your customers’ pockets are welcomed sights.
“I would say the [carwash] market is experiencing a lot of growth right now,” interjects Robert Andre, vice president of training and education for SONNY’S The CarWash Factory. “Many carwash owners I have spoken with reported record highs this year. From the manufacturer side of the business, equipment sales across the board have been up tremendously, and there has been a ton of interest, especially from new investors.”
According to Andre’s predictions, barring any major changes in the economy or global affairs, this growth will be sustained. “Over the next three to five years we will continue to see tremendous growth in the carwash industry for two reasons: new investors entering the market and current owners looking to expand,” he says.
Steve Gaudreau, president of Brink Results LLC, confirms the good vibrations spreading throughout the industry. “At the [recent] International Carwash Association (ICA) convention in Las Vegas, our best estimates from talking to the conveyor manufacturers is that orders were placed for over 500 conveyors to be installed in the next 12 months, [which] is an extraordinarily high number. The industry is definitely in a high growth mode right now,” he states.
Industry research shows a significant number of new investor carwash owners now entering the market. According to the ICA, 37 percent of carwash owners have owned their business for less than five years. Industry professionals involved in training, such as Andre, believe this is a conservative estimate.
Drawing on his past experiences, Andre notes a heightened commitment among today’s crop of new investors. “We have a lot more multiple site [new owner] customers,” explains Andre. “[Having] three to five locations is more the norm today.”
What makes this industry attractive for new investors? Experts, including Andre and Gaudreau, offer a few of the following common reasons:
- Potentially high profit margins of a successful carwash
- It’s still a fragmented industry, so it is possible to build a strong regional brand
- Availability of capital for startup and lending
- It’s largely a cash business
- Unlike other industries, such as food service, inventory does not commonly spoil
- No receivables, payment is immediate.
Popular washes and technologies
Growth in the industry has resulted in increased investments in sites and equipment technology. “Operators are spending more than ever developing their carwashes by putting in all the bells and whistles,” says Brad Metcalf, northeast regional sales manager for Innovative Control Systems (ICS), adding these investments are being fueled by end customers who are willing to pay more for an express wash. “Customers value a wash based on time, quality and cost — the public is seeking faster, cheaper and better [services].”
Metcalf’s noteworthy technologies serving today’s customers better include: direct marketing with email and text strategies; constant contact with customers though website interaction to share information; and app-based payment gaining popularity. He also adds that owners can manage their businesses more effectively by controlling cash and labor through good software management tools and being mindful of credit/debit card security, including Payment Card Industry Data Security Standard (PCI DSS) compliance.
As for the type of wash models in the industry, express exterior carwashes remain the most popular model, noted experts we interviewed for this article. However, a newer model, “flex serve,” is also emerging.
“We see the growth is happening the most in the [express] model but we are also noticing that the flex service is starting to rise. Flex is gaining in popularity for owners that can add the extra labor; there is definitely money to be made if the demographics are right [for this model],” notes Andre.
Equipment and product technology have made a big impact in our industry over the past decade. The results of these advancements include satisfied customers, cleaner cars, reduced waste and healthier bottom lines. From better wash materials to reduced energy-consuming lighting, carwashes regardless of type are providing services that are above and beyond what was offered in past years at an overall reduced cost of operation.
Andre notes improvements in optimizing space through advanced tunnel technologies, resulting in smaller site footprints, and implementing multistage wash processes as notable industry advancements. “However, I think the biggest game changer in our industry that I have seen from a technology standpoint has been some of the control technologies, such as a system that scans and profiles the vehicle, allowing the equipment to make adjustments based on the vehicle’s design,” he explains.
Advances in customer service
While a positive visit to a carwash may result in repeat business, a negative experience will most likely result in lost business and possibly more. More customers are going online before visiting your carwash for the first time. Negative customer reviews are more visible and powerful today than ever before. As a result, attracting customers with signage and following through with a quality service are paramount.
Fortunately, on-site marketing has been the biggest area of advancement in recent years, suggests Gaudreau. “The greatly improved automatic pay stations have made for a much more convenient and pleasant experience for the customer,” he says, adding that the unlimited monthly pass program for a fixed price has also grown car count volumes significantly. “Customers love ease and convenience.”
Enhancing the customer’s carwash experience should also be part of your customer service planning. When looking to increase the price of a base package, or even when selling higher end packages, adding an LED feature, constructing a lava or waterfall effect or producing multicolored soap can go a long way.
Regardless of industry or economic performance, being good at the basics of owning a carwash is how to stay on pace with competition. For Gaudreau, it comes down to two factors: ensuring a quality experience and the people. Owners, operators and staff must produce a clean, dry car in a time-efficient manner to ensure a quality experience today.
“This requires properly equipping a tunnel, performing rigorous and regular preventive maintenance every day, making sure the chemicals are doing their job and constantly checking throughout the day to make sure that quality and production [are] at the highest possible [levels] achievable,” asserts Gaudreau. “The second variable is people. Although the exterior express and flex serve models have greatly reduced the amount of human resources needed, the fewer people on the property have become more important. Managers have always been important, and their skills are even more important in these new models. Hiring, training and managing successful managers [can] impact the bottom line as well as the customer experience.”
Gaudreau recommends asking the following questions when assessing your current staff:
- How diverse is your workforce?
- How is their appearance, such as are they friendly, communicate well and respond to customers’ questions or complaints properly?
- Do they abide by uniform and appearance policies you have set forth?
- What is the reporting structure and are there clear-cut roles, goals and job responsibilities?
Not only to fulfill the requirements of the modern wash and customers’ expectations, but Gaudreau also believes that customer satisfaction will become increasingly important as “excessive competition” becomes more apparent. Possible industry consolidation, more carwashes and other competition, such as the c-store industry, entering the market will present challenges to professional carwashes in the years ahead.
Training is still required
While industry indicators and experts report sustained growth, owners and operators need to be proactive in the areas of equipment and product investments and employee training. While new investors might see this industry as an easy opportunity for profits, those in the know understand that professional carwashing is not a soap and bucket, set it and forget it business.
“The carwash is a complex environment that features everything from pneumatics, hydraulics, VFDs and computer controls to chemistry,” says Andre. “Continuing education in this industry is huge, and I don’t think enough emphasis is placed on it. As competition tightens so too will the free flow of information among carwashes, making training programs even more important.”
Attending these training programs and industry events, such as ICA’s annual convention, can open your eyes to the equipment advancements and excitement throughout our industry. Today’s equipment is smarter and more effective, training has advanced and customers are expecting value when visiting. Keep pace and don’t be left behind.