There is a vast array of considerations for retailers when they are weighing the best car wash concepts.
By Howard Riell, Associate Editor
Convenience store operators are generating additional revenue both in store and out by selling car washes—and finding that success involves significant planning and a solid strategy that includes more than just stocking soap and paying for water.
Location, the available physical site, surrounding car wash competition, equipment and supply choices, good use of promotions, advertising, maintenance and more considerations must factor into the equation. However, retail operators can increase their chances of success by going with efficient equipment, water-saving systems and a savvy marketing approach that includes discounts, bundling and loyalty programs.
According to research from the National Association of Convenience Stores (NACS), as gas margins and tobacco sales continue to thin, one category that has seen an evolution towards higher profits is the car wash.
Part of that increase is the fact that c-store customers appear to be driving more. According to the latest NACS’ 2018 Consumer Fuels Survey, conducted bimonthly, those surveyed indicated they were ready to increase spending and driving over the last two weeks of the summer drive-season, due in large part to relatively low gas prices.
“One in four Americans (24%) say they will drive more—compared to only 8% who will drive less. In addition, more than one in five (21%) say that they will spend more on non-fuel items this month, according to the survey. Both numbers are considerably more than the start of the summer driving season in May when 18% of Americans said they would drive more in the coming month and 16% said they would spend more in the coming month.”
The three factors that most affect driving and related retail sales, NACS’ survey found, are weather, economic situations and gas prices. “All three are in a positive place as the summer ends,” said Paige Anderson, NACS’ director of government relations.
There continues to be a variety of car wash operations marking the c-store channel including tunnel conveyor systems, in-bay automatic offerings and touchless choices. Some retailers are committing vast resources to ensuring their car wash operations are driving traffic to their stores, resulting in more sales.
For instance, GATE Petroleum Co. this year began rolling out the GATE Express Car Wash, a company that will build and operate free-standing, express tunnel car washes throughout northeast Florida. The new GATE Express Car Wash locations feature a 125- to 145-foot tunnel system, the release continued, utilizing state-of-the-art technology and monthly membership packages to generate more steady traffic.
“There is no single best type of car wash or best way to market a car wash,” said Eric Wulf, CEO of the International Carwash Association (ICA), based in Chicago. “It’s like any other business; it depends on lots of factors.”
A major factor is budget. The cost of an in-bay, conveyor system can be built for less than $300,000. A new express system like the GATE is currently installing can cost well over $1 million.
Still the rewards can be worthwhile. According to ICA, profits can average from $41,000 per year for a self-service car wash to over $680,000 for a full-service wash annually.
DOLLARS AND SENSE
Neil Saunders, managing director and retail analyst at GlobalData Retail, a research firm based in Paradise Valley, Ariz., said to build car wash revenue, convenience stores should consider taking any of several steps, beginning with adding new features to the car wash itself.
“Customers like to have a choice of different programs and options, and will often trade up to features like hot waxes or special finishes.”
Adding more service options like interior valeting is another good idea.
“In the right location these can be a real boost to revenue,” Saunders said.
Offering small discounts on the car wash when buying other products, or discounts on other products when buying a car wash, makes good sense. “Many gas stations will knock a few cents off gas if customers order a car wash at the pump,” Saunders added.
Saunders also recommended convenience store operators offer ‘smart’ services like automatic payment or pay by apps available for use with the car wash.
“Offering discounts or loyalty schemes for regular customers with special prices for the car wash also works,” said Saunders.
At the same time, he warned against certain practices that he finds turn c-store shoppers off, such as having systems or washes that take too long.
“Convenience stores are about convenience, and most drivers want a quick fix and then to get on their way.”
Failing to promote the car wash at every opportunity—both in store and at the pumps—is another miscue.
“People often have to be promoted and reminded to get a car wash, as for many it’s an impulse purchase,” said Saunders.
Not having a range of car wash options can also cost an operator business.
“Sometimes people want a cheap, quick clean. Other times, they want a deeper clean, and will pay more for it,” said Saunders.
Depending on the space available to construct a car wash and the amount of resources at a retailer’s disposal—maintenance personnel on staff for instance—planning the most efficient car wash operation requires due diligence. The best offering is sometimes more subjective.
“I wouldn’t say one style of wash is better or worse than the others,” said David Crawford, vice president of operations for 53-store Green Valley Grocery in Henderson, Nev. “It comes down to climate, roads—or lack of roads—water use, what you want to offer, the noise level you are allowed by the city you operate in, the type and size of cars that will use the wash, rural versus urban environment, what price point the customers are willing to pay and the level of service you can get to keep your wash running well.”
Crawford said he has found that there is no single best way to market a car wash operation.
“There are so many ways to do this, and some operators are doing great things right now, so it’s hard to pinpoint one,” said Crawford. “That said, you need to start out with a good system and use quality chemicals.”
There are many new car wash competitors entering the market, Crawford pointed out.
“The base model wash systems are not enough to compete anymore,” said Crawford. “Many customers want options and a covered place to park, dry and detail their car. Saving water is a requirement for us, so any system we use has to have this feature.”
Fuel discounts for car wash users is, Crawford confirmed, a volume driver for Green Valley Grocery. “We have tied our offer to the Shell Fuels Rewards program and it has been very successful. If it impedes traffic flow on the site, or if there isn’t enough room, or if it isn’t easy to use for the customers, or if the city had very limited hours on operation, we would not build it.”
Car washes make sense only if they make a profit.
“I feel it boils down to what your goal is,” said Patsy Varpula, price book manager for Fabulous Freddy’s Car Wash, an eight-unit convenience store chain based in Las Vegas. “Our goal is to stand apart from our competition. There are a lot of local exterior-only washes, or self-serve washes. We like to capture any customer’s needs. We offer exterior-only, full-service washes to include the interior, and detail services to get your car back to its pristine condition.”
Varpula recommended that convenience store operators with car washes call out what makes them unique. “Car washes aren’t necessarily an impulse item. We run our business best through word-of-mouth campaigns and local business partnerships, as well as community involvement. My owner believes we can sell car washes in the rain because we offer the interior detailing service.”
Remaining profitable, Varpula said, is a result of keeping labor in check and working efficiently while keeping an eye on chemical usage and utilization.
“Damages are the biggest issue we have with the car wash, be it scratches from brushes or overusing chemicals on incorrect materials to just dents and dings due to carelessness in the bays,” said Varpula. “Proper training and heightened awareness to the surroundings is an easy way to keep damages down.”
Fabulous Freddy’s management considers eco-friendly water-saver programs very important.
“We proudly display that we are a water-smart car wash on our locations,” said Varpula.
The same holds true for loyalty programs to keep consumers coming back for washes and other store purchases. “We love rewarding our customers to get them coming back,” said Varpula. “Every 11th car wash is free, plus they receive our most popular wash for free during their birthday week, as well as saving on their gas with a car wash purchase.”
Eco-friendly water-saver programs can also be an important topic for car wash operators, depending upon the municipality that issues the permit and the utility that determines regular energy and water costs, Wulf said.
“But almost all car washes being built today are including water recycling technology,” said Wulf.
The operational part of water saving is accomplished through equipment and technology. ICA manages its WaterSavers program, which is designed to educate retailers about the benefits of water conservation and how this approach can be marketed effectively.