Episode 20: With Lanese Barnett

 

About the Episode:

What are the trends and themes of the car wash industry as we look toward 2024? What has 2023 shown us about the current market and landscape for car wash owners? As we wrap up our 2023 episodes, we’re taking a reflective glance at the insightful discussions that have shaped this year’s narrative in the car wash industry. Your host Lanese Barnett reflects on several key conversations she had this year with guests on the podcast.

Lanese looks back at episodes with Amplify founding partner Jeff Pavone and Amplify COO Chris Jenks. Lanese also reflects on conversations with founders of AMP Memberships and Retention Express, two Amplify Ventures partners who are helping to change and enhance the car wash space. Dennis Dreezsen and Adam Trien of AMP Memberships talk with Lanese about the latest advancements with their service, and Bobby Thomson and Michael Pelikan of Retention Express share with Lanese about how Retention Express support car wash owners through their customer service platform.

Listen in to hear Lanese’s thoughts about these conversations and highlights from the interviews as we look back over car wash trends from 2023 and look toward a great year for the industry in 2024.

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Check out the full transcript below:

Lanese

Hello, and welcome to episode 20 of Car Wash M&A, The Podcast. I’m your host, Lanese Barnett. To wrap up our 2023 episodes, we’re looking back on the guests we’ve had this year. I’m highlighting conversations we’ve had that show the themes of the year and that point toward what 2024 will look like for the car wash industry.

If you haven’t listened to episode 19 yet, be sure to tune into that episode to hear the latest from Amplify founding partner Jeff Pavone as he talks with Matt DeWolf. Matt is the host of CAR WASH, the Podcast, and he’s also one of my dear friends. Matt and I also chat about the latest trends and news, so don’t miss that behind-the-scenes conversation in addition to that recorded episode of Matt and Jeff that aired on Car Wash Magazine’s podcast.

Looking back over the year, one of my first conversations of 2023 was with Paul Sigfusson, Head of Capital Solutions at Amplify Car Wash Advisors.

As you can see in the clip that follows, Paul and I discuss what car wash owners can do in today’s market and how to stay competitive with those around you.

We also talk about the cost of capital and about the ways that the participants within the industry are changing as the market changes. Listen in to hear more from Paul.

Excerpt From Episode 12 with Paul Sigfusson

Lanese

As operators, which is who our show is geared towards especially, knowing what tools and resources they have available to them to strengthen their businesses and make sure that if they are looking to fund growth, if they are looking to make an exit at some point, that they’re really protecting the value of their business, and also protecting and increasing their cash flow now, so that they’re making money today, but they’re also protecting that value in the long run. Let’s talk a little bit about that. And then what your perspective, from an investment banker, what does the economic uncertainty that we currently have, and that we have for the foreseeable future, what does that mean for operators? And what can they be thinking about to protect their businesses or to strengthen them even?

Paul

I think it’s probably helpful, Lanese, to just kind of level set a little bit in terms of, you know, what’s happened over the last couple of years. And I viewed that time as more of an aberration, and we’re now entering a period of normalization. We were living in a very distorted time period over the past couple of years. And I can probably just share two examples in terms of how I think about some of the macro environment and what’s been happening, and then how that can shape some of the future thinking around it. I’m not a macro economist; I can’t predict the future. And I don’t think any of us should try, but we can control what we can control. The first real change over the past 12 months is cost of capital. You know, I, as an investor, was very focused on one singular primary metric when we evaluated investment opportunities, and that was return on invested capital. A simple way to just kind of frame what’s happened in the industry is the payback period of making a capital investment in this space. And so, you know, we can put some dummy numbers around this just to paint the illustration, but it’s really going to sort of change behavior longer term, which is as the Federal Reserve increased interest rates, and the cost of debt financing sort of materially increased over the past 12 months, and we’ve seen some inflation and building costs, you know, you went from 2020-2021, or even before that, building costs may have been slightly lower, and your interest costs were nearly zero as a base rate cost of capital on top of some credit spread that a bank would issue.

As you think about the translation into cost of capital and the impact of making a return, you used to get paid back for making an investment in the car wash space in two to three years, under some normalized scenarios, and they can vary greatly. But if you include a 50 to 100% increase in cost of interest rates of financing that car wash, as well as continuing to sort of double down the operations, that cost of capital and that return on investment is getting close to double where it was prior to the past 12 months and what we’ve seen. And so, what that’s going to force in this industry — and I think it’s a healthy thing, again, back to this period of normalization — that’s going to force investors as well as sort of operators to just make sure they’re thinking twice about capital deployment.

Is this a productive form of capital deployment in the space? These are capital intensive units. And I think that’s a very healthy part about the industry. It won’t be growth for the sake of growth. We talked about cash flow, and that’s an important piece. The other is valuation. And obviously, there’s various different ways to think about valuation. But, you know, let’s just take, for example, the one public comp in the space that’s out there, pure play public comp… If you take the valuation from the first half to the second half, for each 100 basis points of Federal Reserve increase, and we went from zero to four and a half today, and probably going up even more, that’s really reflected a pretty material decline in valuation to the tune of high single digits per 100 basis points. So that’s been a material impact on both capital, capital availability, return on investment, and valuation. And that’s distorted. So that’s just a level set, as we’ve seen the economic conditions change over the past few years.

But then as we think about forward looking, you know, how can an operator think about preparing? I love the way that Jeff at Amplify thinks about this and talks about Car Wash 2.0: focus on what you can control in the operations of the business, and start to scenario plan. I can’t be the one to predict the environment going; I can’t tell you, we’re going to have a prolonged consumer uncertainty or contracting spending behavior environment. Or maybe it’s the opposite: how do you plan for an alternative in a more resilient consumer? But what you can do is plan for multiple different scenarios. Understand how your business is going to behave from an analytics perspective in any of those different scenarios, and then focus on the data you have access to.

There are all sorts of different quotes that I love to sort of delve down into. But, you know, “what gets measured gets managed” is a great one. In these environments, it’s really important to double down into the data that you have access to and in how you can sort of manage your business better. And then, you know, lastly, just in terms of scenario planning, and starting to think about the future, it’s always been difficult in a rising tide environment. So the environment where everybody’s being lifted by low interest rates, the conditions are pretty benign, it’s very difficult to differentiate your brand in that environment. And I think about the conditions in a more uncertain conditions setting as an opportunity in this is to double down on yourself, your operations, your people, in how to go out-execute for the consumer, and at the expense of your competition. All those things will add up into helping, you know, prepare operators for the uncertainty that is in front of us, which no one can really sort of paint out in a clear picture.

Lanese

So Paul, you talked a little bit about some of the growth options for car wash operators. And I think it would be beneficial for them, too, to hear about how the change in valuations and things like that have have opened up doors for new entrants to come into this space. And, in particular, we’ve had some recent announcements that we’ve seen about acquisitions and new companies coming in. So what does that look like? And what does that mean for for the car wash owner themselves about these additional parties that are interested in the car wash space?

Paul

Yeah, it’s a great question, Lanese. I think capital is forming in different ways. And there continues to be plenty of capital looking and evaluating the space, so that’s a very positive thing for car wash owners. But I think it’s been evolving and will continue to evolve. And I’d characterize it really in three buckets. One, you have the small and medium size operators that, you know, are the vast majority of the space and will continue for quite some time to be that way. And they have existing and new growth that they’ll continue to fund, so that that’s a big source of growth in the space and big opportunity that continues to exist.

The second bucket would be private equity, which has been a material contributor to capital growth over the past decade and continues to have large sums of dry powder of committed capital available to them. I think I read a statistic in December that their dry powder, which is committed, unfunded capital, to private equity as a whole is approaching $2 trillion. So still a large sum of money out there and that goes across multiple different sectors.

And then a new entrant which I would call the corporate segment… And a good example, as you mentioned, would be the Couche-Tard acquisition of the True Blue portfolio, where you have a very well capitalized investment grade public company making in a small wave into the segment, and I think that is a very unique case study, and one that I don’t think will be the first or the last in the space. And these investment grade operators have access to very cheap capital; this is the highest grade of credit exposure, so the highest quality of credit exposure is how they would deem that, and these are well capitalized, well funded and strategic entrants into the space. And so there’s a new entrant coming in. And I think that’s very interesting to note.

Lanese

Right. And as you said, this is probably the beginning of additional groups that maybe had been kind of on the sidelines prior, that had been eyeing the space, are making an entry point, because the winds have shifted a little bit. And so that actually makes it more attractive for them and gives a greater opportunity to go ahead and make a meaningful investment.

End of Excerpt from Episode 12

Lanese

As you heard from Paul, there are many strategies that car wash owners can implement to ensure success in the industry by considering the changes within the space and using those to your advantage.

In episode 13, I had a chance to talk with Dennis Dreezsen and Adam Trien of AMP Memberships. AMP memberships, if you aren’t familiar, is a car wash membership platform that is more than just an app. You’ll hear more about that in the episode; they are also an Amplify Ventures partner.

As we discussed in the episode, AMP is a platform that supports car wash owners as they interact with customers on and off site. Between the white labeled app, the dashboards for owners, the powerful data, and more, AMP helps car wash owners take the next steps to grow their business with membership expansion and more customer interaction.

Listen to this clip to hear more from Adam and Dennis, and tune into episode 13 to hear the whole episode if you missed it. This is a really good one. Also, you can check out their YouTube page, where you can search for Autowash to see some demos of new AMP products, which they feature at Autowash, a car wash chain in Colorado where they beta test a lot of their products. There is a really cool YouTube video to check out.

Excerpt from Episode 13 with Dennis Dreezsen and Adam Trien of AMP Memberships

Lanese

While there’s other providers out there for to build apps, or you can hire a developer to do this, what seems really cool about what you guys are doing is making this available to car wash chains that are looking to incorporate some other platform to manage their memberships that — correct me if I’m wrong — is not tied to a POS, it’s configurable, it’s customizable, and you don’t have to have a developer on your staff to be able to figure out how to use it. It’s like an iPhone; you can turn it on, and you can start messing with it and figure it out because it is tailored for ease of use. So talk to me about what it looks like for a car wash customer of AMP. What can this do for them, and what power is behind the ease of use, the customization that it has? What does this look like for them, and what can it do for them?

Adam

That was so important for us. You know, every car wash runs differently. Their brand is different, the look and feel their messaging is different, their pricing, their products, what they offer when you get on site, so you know, it was really important for us to build a product that was completely white labeled, that felt… You know, it is the car wash’s app. You know, when you go to the App Store, it doesn’t say AMP, and you know, we’re on some platform, you know, managing multiple car washes. So when you advertise on our app, the only advertisements your customers will see are for that car wash. So we take this very, very seriously. Every single picture, line of text, pop-up deal, everything in our app is configurable by our self service portal. Because we’ve made it so easy to configure and so flexible. We could have a new app up and running in a couple of days, where it’s launched, and it’s on the App Store. What does take some time is you start working with the marketing team and getting all the collateral and the images and figuring out the messaging and then figuring out, on the marketing side, what deals we want to show, and promotions, and what the customer notifications are going to be. It’s a really super powerful platform. So there’s a lot of ongoing work to continue to refine your brand, refine your messaging, test new things, make changes, and things like that. And we really help along that entire journey.

Lanese

Yeah, that sounds like what a great partnership for car wash owners. One, it’s giving a push to get that content solidified, and get that messaging and that goal solidified. Because I know speaking from my own experience, sometimes until something is right in front of you that you need to do, it’s kind of pushed off, but messaging and marketing is so important. And so this gives that prompt to “Okay, let’s let’s let’s get that together,” if they don’t already have it already. But then knowing that that there’s the support to launch that without having to refigure out some whole thing… that it’s customizable, and it’s easy to do. I bet that’s a real game changer for car wash owners. What are some of the results that you’ve seen with your clients as far as they’ve not only adopted the app and started using it — or the experience platform, because it’s more than just an app — what’s some of the results that they’ve seen and some of the benefits that they’ve experienced from that?

Dennis

First, I think one of the biggest things that we’ve seen — there’s a couple of huge statistics out there that we’ve been able to expose — one is 93% capture of accidental or involuntary churn. Which is really awesome! My wife was asking me earlier this morning, she goes, “what about the other seven? What are we gonna do with those? Why aren’t we capturing that?” That’s like prepaid debit cards, things like that. So we’re capturing 93%. I think some of the competitive competitors grab about 60 or 65%. So it’s almost a 50% better capture, which is like… Those are real dollars for an operator. That’s huge. And so that’s money to the bottom line right away. So we’ve seen that. We’ve also seen some really, really tremendous growth of MRR using some of our tools like our attendant mode tablet tool, as much as like 50% increase of MRR, which is monthly recurring revenue for the month for the memberships… 50% growth and about a six week period of time. It’s mind boggling how fast you can move the needle by actually using the tools and using them properly in the app.

End of Excerpt from Episode 13

Lanese

As you heard from Adam and Dennis, the AMP platform is highly customizable and provides growth opportunities for car wash owners. With the ability to integrate with any POS, and with the valuable data that AMP provides car wash owners, this service can be a game changer. Listen back to episode 13 to hear more from Dennis and Adam.

Another Amplify Ventures partner is Retention Express. I had a chance to talk with Bobby Thomson and Michael Pelikan of Retention Express in Episode 18 of the podcast. As Bobby and Michael share, Retention Express is a white-labeled customer service platform that addresses the needs of car wash customers such as questions about memberships and issues they might have while they are off site, so they answer the calls for the car wash brand and are there to represent the car wash owners and to take some of that load off of what would otherwise be fielded through their sites and their management team.

Retention Express works seamlessly with car wash brands to solve problems and helps customers have an advocate on their behalf and to get that first call resolution. And so it’s a win win for the customer and for the car wash owner and just helps really set that tone for customer advocacy and a focus on customer experience.

Excerpt from Episode 18 with Bobby Thomson and Michael Pelikan of Retention Express

Lanese

In thinking about the advancements of technology, specifically as relates to the car wash space and how we’re able to capture so much more data between license plate recognition and these other different marketing services that have a different communication outreach and channel to customers. But still, the thing that’s different about Retention Express is that you have the the live communication component to where it’s not one set piece of data that maybe is captured kind of existentially about a customer, like a license plate, or a phone number and email, or things like that. You get to get their thoughts, their sentiment, their story. You can ask different questions on the phone based on where the conversation is going in real time and then categorize the information that you receive to then paint a better picture of your different types of customers or feedback, or that sentiment, which I find really interesting, that there is the opportunity for it to, you know, continue to grow and evolve. And you can learn to ask new questions based on that of what you’re finding out.

Michael Pelikan

Absolutely. And the one thing I’ll say is… and Bobby and I always note this to our brands: we are not an answering service. We are not getting on the phones to quickly get someone off of it; we are problem solvers. And Bobby and I refer to this all the time, it’s either the customer journey, or the customer story. It is more than just looking at, you know, their usage. It is really diving into their billing, into their issue that they may have. Hearing them out about their experience they had on site. And you mentioned it before, Lanese, if you’re an on site operator, and you handle a cancellation, it’s really viewed as a singular transaction. Always with our singular transactions, the data and the stories and the feelings that our agents are able to take from those calls, and then bring forward to our leadership team, we can make quick and effective change on site. Oftentimes, we hear that the sales component at the pay station is often not very clear. And when we’re here that several times our agents are aware enough to say, “Hey, this isn’t a one off. Something’s happening at this location where customers are not having a good experience in terms of how the memberships are being sold and articulated.” And we can provide that feedback to those operators, and they can add additional training to those attendance to clean that element of that interaction. Because you only get a few seconds with them. You’ve got to be clear, you’ve got to be concise about what they’re signing up for. And if they feel deceived, if they feel like they’ve been misled, that is going to lead to that negative sentiment, that quick exit, and they’re not going to come back. By us being able to, again, capture that customer journey and those true feelings, we’re able to give a lot of insight back to our sites and let them know how people are feeling in terms of just their overall journey with the company.

Lanese

As we started this, and just talking about the theme of this series that we’re working on of how data can be a tool and help boost your bottom line, it’s one thing to get the data, but then it’s another thing to categorize and organize it. And then it’s a further thing to have that make a difference in your business in a very impactful and meaningful way to enhance your operational efficiency and to provide greater customer service or enhanced customer experience. As we talk about these different actionable insights, one of them being what people or sales agents are saying when talking to customers, and you can reveal if there are incongruencies with what customers, their car wash customers, are saying back to you of of what they heard there, and then offer suggestions and insight on how they could adjust to those messages that they have. What are some other things that that you guys find?

Bobby Thomson

Typically, with new members, when they get signed up on location, it is easy to kind of pitch a promotional offer that you’re providing to them. And that is where the expectation has to begin to create the best experience. Oftentimes, you know, it happens quite a bit. It could be new people, It could just be people in contests, right? Whatever it may be… you never want your end user to feel like it’s a contest, like they’re getting hard sold, right? A lot of times, they will call in and go, “They told me it is only for 30 days,” and they just never take that next step to go, this will automatically renew in month two. And people, they want to blame it on the employee every time, because it’s not their fault, right? But those are things that you can just tighten up from a training standpoint that help out, and when we get a lot of feedback, we definitely pass it on to the owner and operator. We just go, “Hey, your churn is kind of going up, and we’re getting a lot of people that are upset because they felt like they didn’t get the correct information at the time of sale.” That is a very controllable thing for an operator. Much more than, “Hey, I’ve moved out of Scottsdale and went to Utah.” Things like that, you really want to identify, what are the controllable issues that you can manage and control at an employee level? And then look at the other things that are maybe uncontrollable, and sometimes there’s nothing you can do about it.

Lanese

And we don’t have to dive too far into this. But just to make sure our listeners understand, too, that your team and your agents have access to the point of sales of the brands that you represent, so that they’re able to take that resolution step.

Bobby Thomson

First call resolution. Yeah, the whole goal is first call resolution as much as possible. Part of the playbook that we build out with the owner and operators is the empowerment level. That was the one thing I learned at AT&T is you’ve got to empower people to solve issues if you want them to be problem solvers. If you just want them to answer the phone, but you’re not going to give them any empowerment, you kind of hold them down. They’re not going to solve customer problems, and it creates more time for somebody else to actually go fix it. So with empowerment, they get more enjoyment out of the role, and the customer feels much better about the brand.

End of Excerpt from Episode 18

Lanese

As you heard in the clip, Retention Express supports car wash owners by providing customer service support, and they address issues and concerns that arise for car wash customers. For more from Bobby and Michael, listen in to Episode 18.

After attending The Car Wash Show in Las Vegas earlier this year, Amplify COO, Chris Jenks, and I chatted in episode 16 about trends we noticed emerging from the show. We discussed the way that buyers of car washes are becoming more informed and more diligent, and they are now looking for quality platforms that have differentiated themselves from their competition.

Excerpt from Episode 16 with Chris Jenks

Lanese

We talked about that there’s still buyers coming to the table. Let’s talk about what we’ve seen and what we are seeing with platforms, growth strategy, and their scalability and their path to growth. How is that changing over what we saw last year?

Chris

Yeah, so the playbook up until the last year has been you get in, and you enter the space, and let’s say you pay a high teens multiple for an existing platform, You’re then able to blend that multiple down by way of de novo or Greenfield developments. For example, let’s say you know, a couple of years ago, you’re building a new car wash at, let’s say $5 million a unit. Let’s say that that car wash is expected to generate about a million dollars in EBITDA. So that new unit is essentially being built at a 5x multiple. Therein lies the blending down of that high teen multiple to get in by buying an existing, you blend it down by way of greenfields, and you’re at a little bit more of a reasonable valuation multiple in terms of your entry point. Those economics have completely changed here the last two years.

Lanese

Yeah, 5 million sounds cheap now!

Chris

5 million is cheap. I mean, we’re personally looking at budgets today with a seven handle on it, and it’s getting me a little queasy, but you know, you hit it right on the head. It’s now let’s call it six and a half best case up to seven and a half million dollars to build a new unit. I mean, again, it all depends on your market, how much you’re paying for real estate, and your above ground cost, and just your overall standard of quality of build. But for the sake of numbers, let’s just say it’s about seven and a half million dollars. So that 5x to build is more like 7.5x. I’m gonna further complicate that. Delays, right? It is taking longer to get these things built now. We’re in Chicago; we have a finite allotment of just concrete for our projects for the year ahead, right? We can’t take on more just because we have only so many resources. Rooftop units are still an issue, anything related to electrical panels… We’re still struggling to get transformers from our power utility providers on site.

So why does that matter? Well, it’s now you take into consideration your ramp up time and your build time. You’re now out of pocket for… You could be looking at two years before that thing has cashflow and you’re breaking even. So if you think about the opportunity cost there, that 7.5x maybe is more like 9x, right? Because you’re now sitting on your hands for about a year to get these things built, or more. You have a ramp up period of about a year to actually get to a point where EBITDA is at a point where it’s attractive. It’s more like 9x when you factor in those costs. On the other end of the equation, now let’s talk about acquisition activity. Multiples today we’re seeing on the bolt-on side are anywhere between 8 to 10, which is almost parity to your new your new builds, your denovos. As you think about the economics and the incentives there, it’s not paying a high teen acquisition of blending down by Greenfield. I think those add-on acquisitions are certainly little bit more attractive than they once were.

Lanese

Right. It’s just flipped. That’s bringing it down; the acquisition is what’s bringing it down.

Chris

Absolutely. The playbook is completely different today.

Lanese

And that’s not all bad news for sellers, though, because even though maybe it’s not those teen numbers that we were looking at, these are still fair, healthy numbers and multiples that sellers can expect. So it’s not bad.

Chris

Yeah, of course. I mean, especially if you’re a quality business today… And again, I want to emphasize: sellers, if you have a quality business, now’s a great time, because that buyer pool is so hyper focused on the quality of your business. If you could demonstrate, you know, prudent capital deployment, strong same store sales comps, just overall financial discipline, a clean balance sheet and a healthy profile and growth trajectory of your business, there are buyers out there today for you. I will tell you that for certain.

Lanese

And especially in certain geographic areas, or MSAs that are harder to get into, those are the ones that we’re seeing are the most attractive,

Chris

Of course. Absolutely.

Lanese

We’re seeing now that the people are still growing, but they’ve just kind of shifted the growth plan and how that looks. And then the other thing that was really apparent at this show, in particular, was this intense focus on operations and strengthening the quality of your operations, streamlining, optimizing… all of those things.

Chris

Yep. You know, it’s been interesting. Shows in the past have been focused more on the transactional side of things, right? How to get more deals done, how to pick up more units… I got a sense from this show that there was a heightened focus on just operations. And I think the reason for that is if you think about, again, multiples compressing… So that 15x today is more like 10x. You know, that’s a 33% loss to enterprise value just based on multiples compressing. How do you make that up? Well, you focus on operations. You improve your operating margins; you add more to the bottom line. And that’s how you make it up. And I think that that heightened sense of focus on operations was very evident in the show.

Lanese

Absolutely. And again, that points to the longevity and the health overall of the industry. As we’re strengthening the operations and providing the end user with a really quality service, that that’s protecting the car wash industry by making it and keeping it desirable for consumers. They’ve got ever-improving service that they’re receiving.

End of Excerpt from Episode 16

Lanese

As Chris and I discussed, there are buyers out there for quality car washes. However, the market is continually changing as we’re rounding out 2023, we see that we’ve experienced some ups and downs over this last year. But the overall thesis still remains the same: there is a demand for quality professional car washing services. And it really is about keeping up with the quality of your operations, the focus on your customer service, and providing that clean, shiny, dry car. So for more of the trends over the year, you can listen to episode 16, where I talk with Chris following The Car Wash Show in Las Vegas this year.

Speaking of trends throughout 2023, in episode 17, I chatted with Amplify Founding partner Jeff Pavone about the emergence or the re-emergence of gas and c-stores interest in the car wash space. We talked about how these buyers are a little bit different from some of the other buyers that have been in the space for the last several years and about what this trend could mean for car wash owners. Jeff shares about how these buyers are looking at potentially a long-term relationship with the car wash brands and how they are potentially looking to diversify their platforms and just strengthen their overall portfolio of their brand.

Excerpt from Episode 17 with Jeff Pavone

Lanese

We talked a little bit about the diversification for gas companies to have, as EV becomes more popular, to have these other profit centers. What are some of the other reasons that the car wash industry particularly has been attracting them? Some of the things I think about that we talk about often are you know the durability of the carwash industry and the resilience through economic downturns, through COVID, that that membership model has really given that a whole new stability in the face of economic headwinds that we’ve experienced.

Jeff

Well, first off, it’s no longer a little piece of their business. So if they’re operating it properly, it could be a major part of the revenue, driving profitability to their gas stations, right? Separately, you know, with competition in every business, even in the gas C-store business, they differentiate. If they’re able to add a car wash component and execute in a good way, they’re going to differentiate from from the other chains that are growing, and it becomes a huge win for them. For gas C-store companies in general, they’ve already got really good real estate, they’ve already got good real estate teams, they understand how to get stuff entitled, they know how to operate, so for them, this is just such a natural opportunity to grow this whole piece of their business.

Lanese

And what do you see… We’ve kind of touched on this, but why now? Why are we now seeing these C-stores like Circle K, like QuikTrip, it seems that those both came at relatively the same time, so there’s got to be a reason.

Jeff

It’s not only those two, but it’s… I can only tell that you every — not every, but I will tell you, a lot of major oil companies — even some independents with 100 locations, they’re all looking at ways to give them additional profit centers with EV coming in. That’s sort of that one piece. And again, they’re sitting there with more cash now than they’ve ever had in their history, and they’re looking at ways to really… the whole loyalty thing. And if you look at gas C-stores in general, you’re seeing a big emphasis on loyalty. Digital marketing! You didn’t see that before. This plays in imperfectly to help expand that whole business concept, right? They’re looking at the competition from Amazon, and all these other people out there for delivering foods. This is just another opportunity for them to become “Amazon proof” so to speak, right? Giving a consumer more reasons to come to their store, whether it’s for gas or one of the food products. They’re looking at this as really just a tremendous opportunity to build loyalty to the brand, and again, build stickiness. Before they just didn’t need to.

Lanese

Right. We talk a lot about the interest from private equity groups that have come into the car wash space. How is this group different than that in what they’re looking for, or their trajectory?

Jeff

Great question. Private equity groups typically have a timeframe, five to seven years, and they’re going to, typically after a five year window, they’re going to take that investment and they want to go back and monetize it. Oil companies are long term investors, so they could be looking at this thing as they have no gun to their head to get in and out from an operator standpoint. They could learn the business, they can invest in the business, because at the end of the day, they’re not looking to flip it. It becomes a much more longer term business proposition for them, which makes it, from a competitive standpoint, way more viable than a lot of private equity back groups out there.

Lanese

And with that, because it’s a long term focus, there’s likely more focus on building out the infrastructure, so having a stronger team there on site, not cutting labor or being as mindful about keeping those costs down when you’re looking at a longer term plan for growth and continued strength of operation, so I see that as a good sign for the carwash industry as well.

Jeff

Sure. And again, this is definitely another viable option in the car wash world, but we’re still going to see the really great owner operators and the brands in a market being able to offer memberships. This isn’t an easy business to learn, so there’s still a long learning curve to knowing really just how to get customers on your lot, how to process cars, and assuming you’re doing a great job, I still think those kind of operators will continue to flourish and win, but this is definitely something to make sure you’re taking in consideration as you build out your business.

Lanese

And it seems like, speaking to your point, that this is not the only path forward but this just adds another layer of people and groups that are interested in investing in the car wash industry, which for folks that are considering making an exit, this is a whole other group of interested buyers, potentially. There are more people coming in.

End of Excerpt from Episode 17

Lanese

As you heard from Jeff in that episode, the groups that are interested in the car wash space continue to evolve. As we look toward 2024, we can likely expect to see more interest. But to hear more specifically about that, be sure to tune into Episode 17.

And if you want to hear more from Jeff in general, be sure to check out that episode 19, where Jeff talked with Matt DeWolf on CARWASH, The Podcast, in an episode called “The Great Market Pause.”

And to all of our listeners out there, thank you so much for joining us over 2023. It has been quite a different journey than the years prior to that. But nevertheless, we see the resilience and the evolution of the car wash industry.

We see themes that are continuing to shape out like data enhancement, more ways to use and leverage information, how to provide an even better superior customer service and just the intense passion that carwash owners have for their businesses.

And we are very honored to be an advocate and voice in this community to just talk about what’s going on in the car wash market, what’s going on in the car wash world, and how we can be together to share information and continue to champion this great industry.

Thank you for letting me be your host throughout the year, and I hope that you have a wonderful rest of 2023, and I will see you in 2024! Thanks.

Jet Brite Car Wash

With decades of hands-on experience as operators, when it came time to sell our car wash business who we sold to was important to Sam and me. Chris [Jenks] and the team at Amplify listened to us throughout the entire process. They found the right buyer in ZIPS who would be a good steward of the brand and helped find the best path forward for us where we can continue pursuing our passion for manufacturing high-quality car wash equipment.  

Jet Brite Car Wash  
Dave Delesandro  | Founder

Quick N’ Clean

My relationship with Commercial Plus over the past 20 years has been a very professional and trustworthy relationship. The feel of trust is very important in this business, and Jeff Pavone and his staff have exhibited a level of trust that makes me continue to feel that they have my best interest front of mind. I deal with many brokers across the nation, and my best experiences and results have been achieved with Commercial Plus representation.

Quick N’ Clean
Richard Karle | Owner

Zips

It’s been a great experience working with Amplify Car Wash Advisors to bring these sites into the ZIPS portfolio. We look forward to serving Dallas area customers with an enhanced car wash experience unique to ZIPS, with the added benefit of our extensive network of stores. This year we have continued our aggressive growth track with the goal to truly shine in our efforts to be the best express car wash provider in the industry and it’s acquisitions like this that help us reach our goals.

Zips
Gene Dinkens | CEO

ModWash

It was truly a pleasure to work with the Amplify team on our most recent acquisition of three additional operating locations in our home state of Tennessee. Their team provided great support and ensured a timely and seamless closing process, and we are excited for the additional growth opportunities this relationship will produce in our near future. We know this is the first of many transactions we will successfully complete with the Amplify team as we grow from our current operating store count of 23 to well over 200 locations across 14 states in the next two years.

ModWash
Brian Thornton | COO

Busy Bee Car Wash

For years I’ve talked to a lot of brokers with the same goal; sell your car wash chain as quickly as possible. But I chose to work with Amplify because they were interested and invested in the emotional side of selling my business and truly value long-term relationships. They weren’t forcing me to take a deal just to take a deal. They listened to my concerns and goals then educated me on all my options. And that’s how I decided on the right partner for my chain specifically. I went to bed at night after I signed the papers knowing I got the best deal possible versus just having any deal put in front of me that is only about money.

Busy Bee Car Wash
Jim Mulholland | Owner

Q Car Wash

We really appreciate Jeff and his entire team at Amplify. Their expertise and deep industry knowledge helped us navigate our options and best showcase our strengths to maximize our value. Caliber is a good fit for Q Car Wash as they look to expand in North Texas.

Q Car Wash
Viran Nana | COO

Cobblestone Auto Spa

I have known both Jeff and Bill for over thirty years combined, and respect them both as experts in our professional car washing industry. Their unique and individual strengths bring very strong talent and advice to operators, sellers, and buyers with sharp knowledge, client’s best interest in mind, and an actual personal touch. They hold the expertise and performance track record to hold a very high level of respect within this rapidly-changing car wash industry.

Cobblestone Auto Spa
Tuck Bettin | CEO

Oasis Car Wash

Turning over a business you started from one shovel of dirt 25 years ago and grew to several locations is a difficult and even uncomfortable process. So, when it came time for Larry and me to sell, we chose Amplify Car Wash Advisors to guide us through the process because of their strong reputation and thought leadership in the industry. Their team was professional and did a great job walking us through each step.

Oasis Car Wash
Dallas Hawkins | Partner

Busy Bee Car Wash

Selling our business after 52 years is big deal and certainly not a decision I took lightly, turning over our family legacy was an emotional process and I appreciated that the team at Amplify respected that. They helped me understand my options and found the best deal for me.

Busy Bee Car Wash
Jim Mulholland | Owner

Ducky’s Express

I have been a multi-site developer and operator in the car wash industry for over 30 years. Four years ago, a partner’s health concern forced me to sell a portion of my portfolio, and during that process, I was introduced to Jeff Pavone of Commercial Plus. I was immediately impressed with Jeff’s knowledge of my industry and his volume of successful deal closings. In a very short period of time, Jeff found the right buyer at a very fair price, and the transaction closed shortly thereafter. I was looking for a team with honesty, integrity, and a proven track record of success, and I found all of that in Jeff.

Ducky’s Express
Richard Miller

Trademark Car Wash

These are some of the most exciting times for car wash owners. As we grew 350% in revenue in just one year, we recognized the time to partner up with a top-tier team that has mastered growth in retail and specifically the automotive industry. Amplify Car Wash Advisors had helped us acquire, raise capital, and was the perfect partner to help us reach this next chapter of the Trademark story.

Trademark Car Wash
Andrew Goldberger