Car Wash M&A, The Podcast Episode 11 News Overview

What plans do you have for your car wash business as we begin 2023? In the last episode of 2022, host Lanese Barnett looks back on some of the conversations she had with guests on Car Wash M&A, The Podcast and reflects on the thoughts and advice they shared about how to find success amid changing market conditions. In 2023, many of those tips are still prudent advice as we map out plans for the coming year.

WHAT 2022 HAS SHOWED US

Although the industry is in a very different place than it was at the start of 2022, it continues to grow, and the mergers and acquisitions space remains active. Despite a tightening economy, the motoring public continues to find value in opting for professional car washes over a do-it-yourself approach, with the convenience and affordability of the subscription model offered by many express car washes still desirable. Private equity continues to be interested in participating in the car wash space; however, potential investors are far more cautious now than they were early in 2022, so clean books and records, strong memberships, and solid operations with a deep leadership bench are more important than ever for car wash owners looking to scale or sell.

This durability amid economic dips shows car wash owners opportunities for success are still there for strong operators, but as many guests advised this year, now is not the time to stand still and do nothing. The common theme was the importance of investing in your business by building up your team, infrastructure, and sales efforts to increase cash flow now and protect the long-term value of your business. As this period of economic uncertainty looms, with some economists suggesting the US will enter an economic recession in the second half of 2023, monthly plan memberships remain key to many operators due to the stability they provide by reoccurring revenue generated.

OFFSETTING RISING COSTS

As Chris Jenks highlighted, the temptation might be to pass the rising costs the industry is incurring along to the customer, but there are other ways to offset costs that won’t leave such a bad taste in the customer’s mouth. Chris states, “The knee-jerk reaction in a rising cost environment is passing it back to the consumer and increasing your prices. But as mentioned, the consumer is certainly feeling the pain here a little bit as well through inflation and everything being more expensive. One thing we’ve heard, or we’ve seen a lot of here lately, is car wash chains and operators increasing their prices to accommodate for their change in cost structures. You have to be a little more strategic than that, right? I think strategic price changes may make sense.”

Chris encourages car wash owners to consider increasing efficiencies in other areas, such as procedures, operations, and technology, to make smart changes that benefit both the consumer and the operator. He also suggests locking in long-term contracts with vendors to potentially keep a lower rate for a longer period of time.

SUPPORTING YOUR TEAM

As many guests on the podcast shared in 2022, growing and supporting your team is more important than ever. Industry veteran Bill Martin, owner of Metro Express Car Wash, talks about how important solid procedures and meeting or exceeding expectations are when it comes to creating a strong, supportive work culture. Bill shares, “In our company, we call it the Metro Way. It’s People, Process, Product, and Place. The time that a customer spends on your site is critical. You want to try to turn them around as quickly as possible. We measure that from the time the front tire hits the threshold of the driveway until the back tire departs the threshold of the driveway. We set standards and goals for how many minutes each process should take, or how many seconds.” Bill goes on to share ways that employees learn to manage that time with the customers so that they are both friendly and professional but also concise.

In a recent episode, Derrick Merchant and Michael Murry of Champion Xpress Car Wash shared many of the ways that they create a strong work culture and support their growing team. Support can mean many things, but one aspect that is important to consider when scaling is how to be ready to take on new sites. Michael shares, “We have a field ops team. And then we have a field training team. And the training team doubles as store openers. When they’re not opening stores, they circle around to all of our washes doing continual training. We have it fully planned out.”

Taking the time to build up your team and to ensure that you have the staff and training to support growth can make a major difference when it comes to long-term success, especially amid the current market conditions.

LOOKING TOWARD 2023 TRENDS

As we begin 2023, guests have shared expectations that trends such as consolidation and ongoing involvement of private equity groups will continue. Though interest rates and inflation will likely continue to affect owners and consumers, rather than letting that deter us, we can use it to make more informed and smarter decisions about our car wash businesses.

As emphasized throughout 2022 by guests on the show, now is not a time for complacency but is instead a time to create and implement an action plan that involves strong operations, a solid team, and a clear growth plan – whether it’s in strategic location growth or sustained revenue growth through increased memberships and retail sales. Because memberships are more important than ever, giving members every reason possible to stay loyal happens by providing excellent customer service and perceived value. For more tips from throughout 2022, 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 Lanese and her podcast guests. Want to dive deeper into car wash M&A information? View all Car Wash M&A, The Podcast episodes here: http://amplifywash.com/podcast.

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