Choosing the right location is an education every new carwash owner should learn before getting started in the carwash business. This lesson will allow investors to avoid mistakes that can cost hundreds of thousands, or even millions, of dollars.
Location is the first topic I typically discuss during consulting calls and a subject I wish I knew more about when deciding to build my first two carwashes.
I built two identical self-serve carwashes from the ground up. Each one had two in-bay automatics and three self-serve bays and utilized the same equipment, manufacturer and technology. When considering good locations to build the washes, I got lucky with the first, but I wasn’t so lucky with the second. Later, I discovered why (which we will discuss shortly in this article).
When I built my first carwash in the East suburbs of Pittsburgh, my only consideration was traffic count. My reasoning at the time: the more cars that drove by, the better I would do. The problem was that this standpoint was only partially accurate. The reality was that I lucked out; after considering many lots for sale near my home, I found a site across from a fast-food chain, which was actually reasonably priced at $110,000. I built the wash for just under $1 million, and it performed pretty well.
When I built my second wash in the North suburbs of Pittsburgh, it was actually on a road with a significantly higher traffic count. However, I was not so lucky with this location. The land cost much more, and the revenues were 30-40 percent less.
Simultaneous to me completing the second location, I had an opportunity to “shadow” a local commercial real estate developer who hired me as a retail real estate developer apprentice. I was required to get my Pennsylvania real estate license and spend several hours with him learning what constitutes a good retail location. He was the preferred developer for a few large pharmacy chains, fast-food chains and discount supermarkets in Western Pennsylvania. He taught me the right way to scout for solid retail locations and the criteria for considering the viability of potential retail sites.
Traffic count, while high on the list, is only a small portion of the overall factors for a good retail site. Many other considerations are required before offering an option for real estate and then taking it to market with various retailers.
I developed a checklist of what real estate developers look for when selecting a commercial property. Here is a sampling of this list, customized for the carwash industry, which features questions owners must ask when searching for a new location:
- Traffic count and traffic speed: Is traffic count over 20,000 or under 20,000 cars per day? Is traffic speed over 35 mph or under 35 mph?
- Competition: How many of the same carwashes types are there in a one-mile, three-mile and five-mile radius? How many similar carwashes are in the same radiuses, and how do they price their wash packages?
- Access to location: Is it a “hard corner” lot? Is it on a divided highway? How many traffic lights are in front or nearby? How many entrances and exits will the site allow? Is there a turning lane to enter? Does it have enough room for “stacking” of cars on busy days?
- Visibility: Is the location visible from the road? Is it visible from both approaching directions by 500 feet or more?
- Shopping district: Is the location in a shopping district? How many national franchises are located nearby? Are there any strip malls, malls or shopping centers located nearby?
- Community population: How many people and homes are nearby? How densely populated is the three-mile radius around the potential location?
- Community growth: Is the surrounding area growing or declining? Are property values increasing, decreasing or stable?
- Community profile: Are there many apartments nearby? Are there many single-family homes with one-car garages or street parking?
- Weather: Is the location in a part of the country that makes cars dirty? Are roads salted during the winter season? Is there salt from nearby water? Is there any dust or dirt from wind?
- Property price: Does the price for the property make sense for a carwash, and is it the “best use” for the property? Will the price of the site allow the economics of the wash to make sense?
Considering the culmination of the above factors before deciding on a potential site can be more of an art than a science.
Most, if not all, potential locations will not meet every criteria listed above. However, you can almost always eliminate a location if it fails to meet the majority of the above guidelines.
As illustrated in the site selection criteria, carwash owners must consider a lot more than simply traffic count. In hindsight, and even though the traffic count was somewhat light at only 14,000 cars a day on average, my first wash location met most of the criteria listed above. As examples: the wash was easy to get in and out of; many national franchises were nearby; a fast-food chain and shopping center were across the street; ample room was available for the stacking of cars; the area was densely populated within a three-mile radius; many single-family homes and apartments were nearby; and, the price made the economics acceptable among the other criteria this location met.
The second wash, which was more problematic when it came to revenues, had a traffic count of 24,000 cars per day but failed in meeting most of the other criteria mentioned above.
As a practice, before investing hundreds of thousands of dollars in your next carwash location, create a checklist of the variables mentioned in this article. Furthermore, talk to other businesses, such as a fast-food franchise, to learn their criteria for evaluating the opening of their next locations. This will teach a valuable lesson for what you should be looking for before launching your next, or possibly first, carwash location.
Buzz Glover is the author of “Car Wash Business 101: The #1 Car Wash Start-Up Guide,” a book written for people interested in getting into the carwash business. It is available at Amazon.com. Glover built two self-serve carwashes with in-bay automatics in the suburbs of Pittsburgh and owns a third self-serve location. He also blogs about getting started in the carwash business at www.carwashbusiness101.com. He can be reached at [email protected]