The Car Wash Show 2023: Key Insights and Technology Trends for Car Wash Owners

What’s new in the car wash space? Check out the key takeaways and emerging market trends from The Car Wash Show 2023. In episode 16 of Car Wash M&A, The Podcast, Amplify COO Chris Jenks joins Lanese Barnett to discuss the themes and sentiments that shaped this year’s event in Las Vegas.

As mergers and acquisitions gain momentum amidst high capital costs, it’s good news for car wash owners considering an exit. With demand outstripping supply, buyers are seeking well-performing car washes in desirable locations. Embracing new technology is crucial, as it streamlines operations and boosts cash flow. Businesses like Amplify Ventures partners Retention Express, AMP Memberships, and Merchant Advocate can strengthen operations, enhance customer experience, and improve the bottom line.

Don’t miss out on these valuable insights from The Car Wash Show to strengthen your car wash business.

Buyers Investing in Quality Car Washes

One significant shift observed at The Car Wash Show is the changing growth strategies and scalability of platforms. The old playbook of acquiring existing platforms and blending down the valuation through greenfield developments just doesn’t work today. The cost of building new units has increased, with budgets reaching seven and a half million dollars or more. Delays in construction and ramp-up time further impact the overall investment, making it more like a 9x multiple. On the other hand, acquisition activity is becoming more attractive, with multiples ranging from 8 to 10, offering a compelling alternative to greenfield developments.

With these changes, there is good news for sellers. Quality businesses have ample opportunities as the buyer pool remains focused on businesses with prudent capital deployment, strong same-store sales comps, financial discipline, and a healthy growth trajectory. This is particularly true for geographic areas or MSAs that are harder to penetrate. If you have a quality business, now might be an excellent time to explore selling opportunities.

There’s also a growing emphasis on operations and optimizing efficiencies within the industry. Multiples are compressing, making it essential for car wash owners to focus on improving operating margins and adding to the bottom line. This hyper-focused attention on operations was evident at The Car Wash Show, indicating the industry’s commitment to delivering high-quality services and creating a desirable experience for customers.

Focus on Operations and the Emergence of Support Services

As Chris and Lanese discuss, this year’s The Car Wash Show highlighted the growing importance for car wash owners to prioritize their operations in a tightening market. To address this challenge, there is an increasing emphasis on the need for support partners who can assist car wash owners by taking on certain tasks, freeing up time and attention to focus on crucial operational aspects. Two Amplify Ventures partners at The Car Wash Show 2023 were AMP Memberships and Retention Express, both of whom offer support services to car wash owners looking to maximize their efficiency and strengthen their operations.

AMP Memberships, a custom-branded mobile platform solution developed by car wash operators for car wash owners and operators. AMP Memberships offers an app to engage and nurture customer relationships while providing valuable data insights. By collecting demographic information and combining it with business insights, AMP Memberships enables targeted marketing, attracting and retaining customers based on their preferences and interests. This personalized approach allows car wash owners to connect with customers on a deeper level, fostering a mutually beneficial relationship.

A notable feature of AMP Memberships is the ability to assign a predicted lifetime value to each customer. By understanding the expected revenue, operating costs, and duration of the customer relationship, operators can optimize lifetime value through targeted actions. For example, if a customer is not engaging with the app while on-site, incentives can be offered to encourage usage and enhance the customer’s lifetime value. Additionally, factors like leaving reviews or making referrals can be leveraged to increase loyalty and maximize the value of each customer.

For more about AMP Memberships, check out Lanese’s interview with Dennis Dreeszen and Adam Trien in Episode 13, Talking Tech: Data, Marketing, & Memberships with AMP. (https://amplifywash.com/episode-13-with-dennis-dreeszen-and-adam-trien/).

Another Amplify Ventures partner, Retention Express, was at represented at The Car Wash Show. Retention Express is a comprehensive customer experience platform tailored for car wash owners. It offers white-labeled outsourcing services for handling customer inquiries, relieving operators of the burden and allowing them to focus on core operations. By leveraging professional call centers, Retention Express ensures that customers receive prompt and quality service across various communication channels like phone, email, text messages, and web chat.

This service solution is particularly beneficial during peak hours, preventing distractions and long wait times that can frustrate customers. Additionally, Retention Express captures valuable data from these interactions, providing operators with a comprehensive dashboard that offers insights into customer sentiment, preferences, and behavior. For instance, it tracks the exit sentiment of customers who want to cancel their plans, shedding light on their reasons for churn and enabling businesses to make informed decisions to enhance customer satisfaction.

With Retention Express, car wash owners can streamline their operations, improve customer service, and gain actionable insights that contribute to the growth and success of their business. By partnering with this platform, operators can optimize their business strategies without the need to reinvent the wheel, leveraging external expertise and technology to drive customer retention and business growth. For more about Retention Express, listen in to episode 5 of the podcast with Retention Express founder Bobby Thomson.

Amplify Ventures partners with best-in-class technology solutions providers to arm car wash owners with actionable insights that benefit both owners and their customers, creating a win-win scenario and driving overall industry growth and success.

Saving Money as Cost of Capital Rises

The enthusiasm and energy around Innovation Alley at The Car Wash Show this year was notable compared to previous years. As cost of capital continues to rise, car wash owners are turning more attention toward ways to save on the bottom line. Amplify Ventures partner Merchant Advocate is a service that offers significant cost-saving opportunities for car wash owners by diving deep into credit card processing fees.

In today’s credit card-driven world, the 2% difference in processing fees can make a substantial impact on a business’s bottom line. By leveraging innovative technology and machine learning models, Merchant Advocate analyzes your credit card processing charges, compares them to your historical data and industry peers, and identifies unusual categories. They then work on your behalf to negotiate lower fees with credit card processing companies. For example, they can detect and rectify recurring charges associated with declined credit cards, which can accumulate into substantial expenses for multi-unit operators. In one case study, they identified $60,000 in annual charges for failure to respond for an 80-unit operator, highlighting the potential for significant savings.

What sets Merchant Advocate apart is their forensic approach. They act as consulting-based forensic accountants, dedicated to finding savings without requiring car wash owners to switch credit cards or pay upfront fees. Their alignment with the operator’s interests ensures a mutually beneficial relationship, where they only receive compensation if they successfully bring savings to the table. With Merchant Advocate’s expertise and focus on transparency, car wash owners can uncover low-hanging fruit and significantly reduce credit card processing expenses, ultimately improving their profitability and enterprise value.

Adapting to Market Trends and Emphasizing Operations for Car Wash Success

The car wash industry is witnessing changes in growth strategies and scalability, making acquisitions of quality car wash businesses very attractive, especially those with strong same-store sales, financial discipline, and a healthy growth trajectory.

The industry is also placing a growing emphasis on operations and optimizing efficiencies. By staying informed about market trends, focusing on operations, and leveraging support services like AMP Memberships and Retention Express, car wash owners can position themselves for long-term success. Additionally, cost-saving measures, such as partnering with Merchant Advocate to analyze and negotiate credit card processing fees, can contribute to improving profitability and enterprise value. Adapting to these changes and implementing effective strategies will be crucial for car wash owners to thrive in an evolving industry.

For more information from Lanese and Chris Jenks, check out the full episode of Car Wash M&A, The Podcast.

Stay tuned the last Thursday of each month to hear the latest thoughts from podcast guests.

Want to dive deeper into car wash M&A information? View all Car Wash M&A, The Podcast episodes here.

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