Private-Equity Backed National, Regional Chains Growth Continues Threefold

Just a few years ago, there were only a handful of car washes backed by private equity. Today, that number has dramatically increased with now more than 20 private equity backed platforms funding chains, all with an appetite for growth.

In 2021, we are finding the current aggressive growth is not marginally more than last year it is materially more than last year threefold more. The subscription model has dramatically changed the car wash landscape and the ability for chains to scale their business. Because monthly plans offer a consistent revenue stream – finally addressing the variability of demand caused by seasonality or weather incidents out of an owner’s control – more funding, be it from financial institutions, strategic partners, or private equity groups, is available. And with that funding, the car wash industry has become a very competitive space.

The growth and development of new express car wash tunnels is exploding because of the incredible success people are having. We’ve seen established national car wash brands like Mister Car Wash and International Car Wash Group (ICWG) grow mainly through acquisitions year after year. And now there are national developers rapidly expanding their footprint with greenfield development. Brands like ModWash, Tidal Wave, and Quick Quack to name a few are getting in the game of really building out nationwide. This is all new territory.

Additionally, regional brands are expanding further and further outside of their own markets. In the old days, there was a level of comfort that if you built a car wash somewhere and you were successful, you would be pretty safe and not have a competitor build right next to you. Today, that is off the table. With the emergence of new money entering the space, there are no rules. No market, large or small, is off limits, even if there is a solid, established car wash group there already.

In a small Western market with a population of 90,000 and chain of five highly successful locations, we recently saw a national player announce they are building several washes in the area. The business model before was build it and be as successful as you can be in your neck of the woods. Now national and regional brands are looking to replicate successful markets and scale up fast to fill out their footprint and give customers more access to their locations; and they are okay with having a few lower volume locations because they still contribute to the brand.

What we’ve also seen in 2021, despite the Covid pandemic, is that we have no idea what how high customer demand will continue to rise. Because it is easy, affordable, and convenient customers are washing their cars far more. With rising demand, we are also adjusting how much volume a car wash can do. It wasn’t long ago for us to look at a successful site doing 20,000 cars a month; we are now looking at sites washing 40, 50 or 60,000 cars a month. Membership has had a huge impact on volume. Though chains are in a race to get big fast, it’s not always a bad thing having a lot of car washes in your market. Because at the end of the day if the washes are doing a good job the customer will get their car washed, somewhere, once a week instead of once every four months. Now for $20 a month you can get your car washed every week. It’s super affordable. Consumers are also spending more and more money on their vehicles and prioritizing taking care of it. Take Starbucks. We never knew we needed coffee so much until a Starbucks opened one every corner. Back in the old days, you made coffee at home before you went to work. Now you stop on your way or make a special trip to go to Starbucks and get a coffee. Why? Because it’s convenient, is relatively cheap, and the experience is acceptable or favorable to customers.

What we don’t know yet is how many car washes in one market is too many. Take Phoenix for example. You have multiple chains with 20 or more washes in the Phoenix-area alone – Cobblestone, Clean Freak, Super Star and Raceway – and more are still being built because the demand and the profitability is there. So, we have not seen saturation yet. There is a difference though in having a market that is responsible, where new guys are staying a few miles away from their competitors, than other markets where new guys are building literally next door to someone. As the platform becomes bigger in a market so does the ability to continue growing through advantages in marketing and sales – as you get scale in a market you are able to flip a switch immediately on opening a new site, and that new location will be in the black in many cases, in 30 days. With monthly plans bringing in immediate cash flow, that timeline to profitability has shortened considerably. When customers are given the option to go to a car wash that has 40-50 locations in their general region versus a smaller operator who has four or five locations, they likely go with bigger brand that offers more options. This leaves smaller car wash owners without a pathway to growth at risk. These newer players have so much private equity money behind them and will enter a market and build 20-30 sites quickly. If it’s a good site and good location someone is going to build near you.

Here’s the bottom line. The car wash business is a different business today. Go back to coffee. In the old days there was no business of going out and having coffee. Starbucks created that demand by making it fast, easy, and cool to get coffee, and the car wash business has reinvented itself just like coffee did. Changing from a necessity you did occasionally to a convenient thing that you can do every week – because it’s easy and cheap. And because it feels good to drive a clean car. Coming out of Covid, we’ve seen that you can make money in the car wash business even in a recession or pandemic. And that, coupled with the scalability of express car washes with monthly plans, has not gone unnoticed by private equity and institutional investors. The acceleration of anybody of any size growing is a massive race. We are finding people in a fury to build sites. For small car wash owners that means there’s a good chance someone is going to enter your market in the foreseeable future.

So now is not the time to stand still. It’s certainly worth considering growing to protect your market, or perhaps selling, and in today’s favorable environment multiples couldn’t be any higher.

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

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

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