For carwash operators interested in developing additional profit centers, creating vehicle upkeep and maintenance synergies with added services will always be a best practice. Drivers today are accustomed to versatile businesses that offer quick turnaround and ultimate convenience via bundled offerings. Providing a one-stop locale designed to meet multiple vehicle needs is a car care industry trend that carwash owners ignore at their own peril.
When it comes to new additional services, many operators wonder if the investment and time required to add an oil change facility will ultimately prove profitable. To ensure a quick lube location is a good financial fit, carwash owners must complete research, calculate costs and consider a number of operational factors. In this article, find out more about the most important information operators should gather, and learn best practices that are integral to success when adding a quick lube service.
Gauging the market
For carwash operators looking to move into the quick lube market, the first step should be a SWOT (strengths, weaknesses, opportunities and threats) analysis, according to Chris Dykes, director of network development with Jiffy Lube International Inc. The SWOT analysis should cover both the market the owner wishes to serve as well as the internal capabilities of the existing business. Through a thorough identification of the operation’s strengths, weaknesses, opportunities and threats, a carwash operator will be able to determine if the quick lube industry is the right fit for a specific wash location.
“In addition, a good SWOT analysis will allow the operator to determine whether they have the expertise to ‘go at it alone,’ or if they should consider becoming a quick lube franchisee with the franchisor bringing needed expertise to the table,” Dykes continues.
Aaron Read, president of North American Lubricants, notes that the overall outlook for the quick lube market remains positive. Many businesses in the industry have regained or even surpassed pre-recession levels of business, and the strong economy and low fuel prices have driven market demand. Consumers drive more and are using disposable income to better maintain vehicles.
Further, drivers are buying additional services that some may not have purchased five years ago, and Read expects this spending pattern to continue. One market trend Read points out is that the quick lube industry has seen strong consolidation in recent years. The current outlook suggests that this will remain the case over the next five years.
Another trend is that the buying habits of consumers continue to change with new advances in technology. Read states that many of today’s drivers grew up in a marketplace where information and purchases were always available at consumers’ fingertips. Many are not likely to wash vehicles at home, much less perform an oil change. Another consideration is that time is now deemed more valuable than ever. If a driver can get a fuel fill up, an oil change and a carwash at one business, that can leave more time for family, friends and other activities.
After gauging the addition of a quick lube, the construction of a facility that includes a basement typically takes about five months, Dykes notes. This estimate does not include the time required by the permitting process. Obviously, the type and size of the facility will have an impact on construction schedules.
Dykes says, “In terms of the type of facility required, most quick lube centers should include two or more drive-thru bays and a basement. The basement is important in that it allows the technicians to simultaneously service the vehicle from both the bottom and top, although alternatives do exist, including the use of shallow pits or lifts with ‘baskets.’”
Additional facility requirements will primarily be dictated by other on-site services. The carwash’s other offerings may drive the need for additional bays, a customer waiting area, etc. In addition to the typical building codes and laws that any retail business operator should be aware of, anyone considering the addition of a lube shop should pay particular attention to the local fire code and environmental regulations, Dykes recommends.
Read explains that the typical quick lube shop will require a manager, assistant manager and technicians in the lower and upper bay. The number of technicians needed will depend on the number of bays in the location and the number of vehicles serviced per day. Much like the carwash industry, controlling labor costs can prove to be the main difference between taking a loss or making a profit.
As with many retail operations, the biggest employee and labor concern is turnover. Within the quick lube environment, turnover is an even larger concern, as technicians are servicing what is often consumers’ second most valuable asset: a vehicle. Dykes states that, while damage claims are certainly something that carwash operators understand, the risks and consequences associated with improperly servicing a vehicle at a quick lube with respect to the driver, automobile and the potential cost of repairs are much higher.
“Given the concern around turnover and potential consequences associated with servicing a vehicle improperly, a strong training program is critical,” Dykes says.
Upgrading business systems
Will the existing carwash require a business system upgrade when adding a quick lube? Dykes reveals that the answer will be driven by several factors, including:
- The customer experience that the operator is trying to deliver
- The services that will be offered
- The location in which the facility is located.
If the wash operator is only looking to provide a basic quick lube service and operates in a state that does not require the customer to be provided an estimate prior to performing the work, a common carwash business system can most likely handle the added profit center, Dykes states. As the service offer widens and the customer experience becomes more sophisticated, the probability of a carwash business system handling the added profit center decreases. In addition, many franchisors will require the installation of a particular point-of-sale (POS) system.
A carwash will almost certainly need a system upgrade or additional platform, because a quick lube profit center has unique needs compared to a carwash, according to Bob Kopko, regional sales manager with DRB Systems. There might be some overlap in functionality with an existing system, but most quick lube owners and managers require additional features in a POS system.
Needed features may include a technical database containing vehicle specifications, part numbers, service recommendations and diagrams. Additionally, the technical database should be cross-referenced to the specific brands of parts that the quick lube will use, in addition to the manufacturer’s OEM part numbers, Kopko continues. Common requirements can include a parts inventory capability, ability to generate work orders and invoices, production of the “static sticker” label for the consumer’s vehicle and profit center-specific reports.
Another consideration is integration with the existing carwash POS system. Here, a decision must be made between upgrading the existing POS system — if that platform has native quick lube functionality — or acquiring a separate quick lube system. Kopko notes that data in the carwash POS may include things such as the customer list, employee information, fleet accounts and historical sales information. Upgrading the carwash platform to include quick lube functionality will likely result in greater integration with existing information, such as customer history, as well as allow for easy “cross-profit center” promotion and sales.
Conversely, a stand-alone quick lube system may offer different or additional functionality but lack tight integration.
Selling the service
Finally, how a carwash operator intends to market to customers once the new profit center is open should be identified as a part of the initial SWOT analysis, Dykes notes. Ideally, the operator already has a strong CRM (customer relationship management) program that can be utilized as an effective first step. Other opportunities that could be considered include cross marketing and promotions between the two profit centers, paid search engine optimization (SEO) to ensure consumers can find the location when searching for maintenance services and advertising in other traditional media outlets.
An operator may think that getting customers on the carwash and quick lube lot would lead to sales in multiple avenues, but that is not always the case, Read states. Many owners who have multiple profit centers on-site struggle with cross marketing, since it is hard to be great at multiple services. The traditional carwash owner seems to focus on that aspect of the business, and the traditional lube owner focuses on his/her comfort area.
The most common marketing technique is discounting in some way to push the customer in the direction in which the business feels more deficient, Read notes. That is a tactic that has proven its worth, but it is usually done for a limited period of time. If a wash has great, well-trained employees who talk with customers, it is amazing the amount of cross sales that can happen via communication. That said, this type of marketing is easier said than done in a high-turnover industry, especially with multiple-site businesses.
Read reminds operators to remember the old acronym KISS: Keep it simple, stupid. A business can offer every service under the sun, but owners should pick the services that best serve the customer and make the most sense for a specific location.
“Be the best at your business, and don’t worry what the latest and greatest is,” Read concludes.
Thomas Hawkins is a freelance contributor.