There’s really no need to stress the importance of multi-profit centers at this point. By now you understand what they can offer your business, but choosing the right addition to your carwash can be difficult.
Adding a quick lube center is not for the faint of heart. It requires a hefty startup cost, highly skilled laborers and more space than many other profit centers, but if executed properly, the addition can be advantageous to your bottom line. Perhaps the main reason for this is lube centers and carwashes have opposite seasonal peaks, with carwashes peaking in winter, lube centers’ slowest time — not to mention the obvious customer crossover that comes with adding one car care profit center on top of another.
Keep in mind, because lube centers require more oversight, adding this type of profit center to your business might very well require you to concentrate more attention on the lube center than your carwash. When deciding if adding a quick lube to your carwash is a good idea, a number of considerations should be made.
Location, location, location
The setting of your carwash is the first consideration to address when deciding if a lube center is right for your company, beginning, of course, with available space. Harvey Miller, owner of Car Wash/Oil Lube Consultants in Newport Coast, California, says, “Full-service operations have to consider if they have the physical room, not only for a fast lube area, but also a stacking area for vehicles waiting to enter, a waiting area and restrooms.”
But physical space isn’t the only obstacle wash owners must look for — the type of carwash is an issue, too. Full-service locations are the best for adding a lube center, but many express exterior locations add them as well, though some experts disagree with this choice.
“I don’t believe that an oil lube business is compatible for the express exterior washing model. In many cases the customer does not even depart their vehicle unless they want a vacuum, and the purpose of this type of an operation is to get the customer off the property as fast as possible,” Miller postulates. “These types of wash operations want to achieve high volume, and an oil lube would only make a wash operation more difficult.” Express exterior owners considering a lube center addition should reflect on how speedy they want to be before adding an oil lube center.
Many variables exist in estimating the startup cost of a quick lube center. As to the cost of adding a quick lube center, Miller says, “Building from the ground up with a three-bay and a full basement, the cost would be somewhere around $450,000 to $600,000, including the required equipment.”
And Robert Roman, president of RJR Enterprises – Carwash Advisors of Clearwater, Florida, says, “A loan amount of $500,000 is not uncommon for a full-service quick oil change business.”
When adding a quick lube center, it is also necessary to decide whether to franchise or go it alone. One thing to consider is keeping your lube center independent allows for a certain level of freedom; whereas franchising requires you to follow approved programs, policies and procedures. However, independence comes with many more risks, and franchising offers built-in support.
“If the owner is inexperienced in this field, he should consider going to a major oil company who franchises — get properly trained, have a major company holding their hand and [be] a part of national marketing and operating,” recommends Miller. “Experienced owners are usually better off going independent since they have the experience, with the assumption that they were successful in their prior ventures.”
But independent quick lubes will have to make a name for themselves. “Brand is a promise that consumers can become predisposed to trust,” Roman points out. “Major brands also offer programs to maintain high standards of visual appeal and customer service.”
Keep in mind your competition will be traditional fast lube centers, meaning you’ll need to offer comparable services and quality of service to be competitive and credible. While, at one time, having only oil and filter changes might have been an option, it’s now necessary for quick lubes to offer ancillary services in order to really succeed.
“Besides basic oil and filter changes, it’s essential to offer services that are normally performed once every several years like tire and brake services, fluid exchange, etc.,” stresses Roman. But when adding these extra services, it’s important to stay within the preventative maintenance realm.
Bundling services — offering packages with lube center and carwash services together at a discounted price — will help increase per-car ticket averages, as well as promote your newly added service. “The carwash should use the lube department for cross-marketing, giving a free carwash with an oil and lube service,” recommends Miller. “Lube customers who come in off the street, and not through the carwash, should be given a free carwash with their lube service.”
Miller says challenges to the lube business should be taken into consideration. For one, he says, “Vehicles no longer need a lube service every 3,000 miles,” and he adds the fluctuating cost of oil affects the costs and revenue of the service.
“The rising costs [associated with lube centers] require more sales and volume to make the business model work,” explains Roman. He recommends owners contemplating a lube addition “perform a ‘sanity test.’ For example, a typical lube needs 20 cars a day to break even if average sales are $50. So, how likely are the 35 cars a day needed to make a 10 percent profit?”
Another consideration: Your labor costs will rise dramatically with the addition of a quick lube center, as its employees must be highly skilled. “Unlike in a carwash, lube management and employees must be properly trained to be able to work in this department,” Miller points out. “Mistakes can damage or ruin the engine, which could cost anywhere from $3,000 to $6,000.”
He adds, “If a lube is added, it should be with a separate, qualified oil lube manager who has had experience … The lube should be operated completely separate from the wash with its own personnel.”
They pay off
With car owners now keeping their cars for longer periods, they are required to better care for their property, which means regular under-the-hood maintenance in addition to keeping the exterior spotless.
Roman explains a major “benefit of adding a quick oil change is it helps retain current customers and acquire new ones.” Billing your carwash as a one-stop place for customers to take care of all their car care maintenance means more business for you since these customers are going to have these services performed, regardless of whether they do it at your establishment.
Amanda Hosey is assistant editor of our sister publication, Cleanfax. She can be reached at [email protected]