Quality Over Quantity

The “get big fast” mentality of the carwash industry has changed, making way for a more sustainable pace of growth through calculated mergers and acquisitions and selective green eld development. With continued, stubborn labor concerns, lingering inflation, and higher cost of capital, operational performance is now front and center.

As lenders and investors take a measured approach to development, most operators are pursuing “A+” locations only, and platforms target growth in MSAs with existing market control. Same-store sales growth outranks site count growth, and the importance is on quality over quantity.

For smaller independent operators, this is encouraging news. With the growth trajectory of larger platforms slowing, encroachment becomes a lesser concern. As such, independent operators can work toward establishing a dominant regional brand by focusing on a single market and creating more value-add for consumers with greater convenience and strengthening brand loyalty.

As the close of 2023 nears, here are strategies for operators to consider to help strengthen operations as well as insights on the carwash market ahead.

Leveraging technology and data

The carwash industry has experienced a tech boom in recent years. Capturing robust data and knowing how to leverage it into actionable insights helps operators gain an informational advantage. Integrating emerging technologies and solutions can help operators better understand consumer motivations and sentiment, which will become even more important in an environment marred by slowing retail sales.

Technology companies, like AMP Memberships, create branded mobile solutions for carwash operators, helping them gain valuable insights into customer behavior, preferences and patterns to create audience segments for targeted marketing. With a fully customized mobile app, operators can engage with customers on-site and off-site using the tech company’s advertising and promotion engine with access to powerful marketing tools to launch, grow, and maintain a successful membership program as well as nurture relationships with retail (non-member) customers.

Customer growth and retention

Monthly plan memberships have been a game-changer and a key revenue stabilizer for an industry heavily dependent on weather. Capturing and analyzing feedback about what motivates a retail member to convert to a monthly plan member and, if they leave, why they want to cancel helps operators understand the true reason for churn. But members aren’t the only important customers. Fostering the relationship with retail customers matters too and may generate as much or more revenue with fewer operating costs. Understanding the customer’s connection to the brand can help influence operational decisions.

Dedicating staff and resources to customer service support can be a pain point for operators. Companies like Retention Express have emerged to address that, providing operators with an in-brand customer experience support solution. With expertise in all POS providers, agents can close the loop with customers across all inbound customer touchpoints. Because all interactions are captured and documented, owners gain valuable analytics and actionable insight from the voice of their customers in real-time while keeping their teams focused on the primary roles on-site. In addition, they are more successful in creating win/win outcomes to keep customers coming back and to save operators money through a consistent negotiation process with customers.

By regularly collecting and monitoring customer data through various communication channels, operators can set trigger points and detect patterns outside the norm, creating the opportunity to address an issue early. Are retail prices too high? Does a new promotional marketing campaign need to be clarified? Are there employee complaints operators are not aware of? Developing an intentional customer retention strategy that enables operators to build deeper, stronger customer relationships reduces churn and grows the bottom line.

Looking ahead …

Operators can expect strong regional brands to see continued success with less risk of competition as the challenges of encroachment will wane. Solidifying regional brand dominance with a solid competitive position will be more important than growing the overall store count.

Carwash M&A volume will be down from the heights of 2022, but deals will still occur. For operators, it is important to understand that to the buyer/investor universe, not all carwash chains are created equal. Businesses with greater cash flows, efficient capital structures, stability in sales and attractive longterm growth will be more valuable.

Buyers will likely rely on tried-and-true cash ow valuation methods, which are influenced by the cash flow an asset generates, its growth profile and the buyer’s cost of capital. Important factors contributing to a premium valuation start with having “A+” real estate and include well-established site operations, consistent equipment maintenance and improvement, strong marketing and branding, and a focus on customer experience. The way to drive value is to drive more to the bottom line by focusing on operations.

Even in a softer consumer market, widespread adoption of the express carwash model remains steady, with continued value placed on memberships supporting the long-term thesis of the carwash industry. Technology will continue to innovate the space and create more efficiencies and opportunities to understand the customer better.

Focusing on operational excellence by improving existing site-level performance will be essential. Measured capital expenditures investment, enhancing operational efficiencies, and integrating new technologies and solutions to capture and leverage customer data will help operators make strategic business decisions with a competitive advantage and position for long-term success.

 

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Lanese Barnett is the senior vice president of business development at Amplify Car Wash Advisors, the number one advisor of carwash chains nationwide. With a mission of creating wealth for clients, Amplify helps carwash owners sell, partner, or grow using practical industry experience as operators coupled with expertise in mergers and acquisitions (M&A) and capital advisory. Keep up-to-date on the latest carwash M&A activity with Carwash M&A, The Podcast. Learn more at AmplifyWash.com, or reach Lanese at [email protected].

Read More on the Pulse of Car Wash M&A: https://amplifywash.com/car-wash-ma-the-column/

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