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Weather - Challenging Risk Factor

Key external drivers of the car wash industry are real disposable income, motor vehicle population, fuel prices, non-residential demand, and the weather.

By Robert Roman

04/01/18

Key external drivers of the car wash industry are real disposable income, motor vehicle population, fuel prices, non-residential demand, and the weather.

For example, experience shows people who own newer vehicles tend to wash more frequently than people who own older vehicles. So, if new car sales increase, we would expect this to have a positive effect on revenue of the car wash industry.

On the other hand, rainy periods usually translate into lower business for car wash operators because most rational people don’t wash their car when it’s raining.

Consequently, we can view the variables mentioned as business operating risks. For example, if unfavorable weather patterns prevail, will the site produce sufficient gross sales? On the other hand, rain would be welcome in regions where severe droughts have persisted.

FORECASTING

Arguably, weather is the most difficult risk factor to mitigate because it’s the hardest to understand and predict accurately.

Weather forecasting is an inexact science just as store turnover forecasting is. The principal reason is that weather is highly sensitive to initial conditions which are simply too complex to be predictable over the long term.

This is not to say that weather forecasting hasn’t improved. Today, meteorologists have access to global weather satellites, Doppler radar, and numerical models (i.e., three dimensional grids) to specify current state and mathematical models to predict future states.

Consider Denis Phillips, chief meteorologist at ABC Action News, Tampa, FL. Denis has scored “Most Accurate” weather forecast with the most accurate overall score in the nation for the past five years. However, Phillips will be the first to mention that models flip flop all the time and that storm-track errors can be huge. His advice is not to get caught up on forecasts that are far out or you’ll go crazy. Look for trends; don’t look at individual model runs.

For example, Florida is the fourth largest state in the nation, and while it is known as the Sunshine State, it can be a difficult car wash environment. According to the Florida Climate Center, the state receives between 2,800 and 3,200 hours of sunshine annually. Divided by 10 hours a day equals 280 to 320 days of sunshine. Sounds great until one considers the number of days it rains and when the sun shines.

SEASONS

Most of Florida has only two seasons. This includes a five-month rainy season — from June through October when 70 percent of the year’s rain falls — and a seven-month dry season from November through May. Consequently, car wash operators in Florida must make hay during the winter and spring and save their money for the summer and fall seasons when it’s rainy and the tourists and snowbirds are gone.

Like the states that border the Great Lakes, Florida’s weather is greatly affected by land/sea breezes. Sea breezes are caused when wind blows from the higher pressure over the water to lower pressure over the land. The strength of the breeze will vary depending on the temperature difference between the land and the sea. At night, these roles reverse, and the air over the sea becomes warmer than the air over the land.

Florida car wash operators must also deal with extremes. For example, Florida has a winter maximum in dense fog conditions (advection and radiation). The maximum in Florida contains roughly half of the annual fog occurrences in the southeastern United States per year on average. For example, the annual number of heavy fog days in Tallahassee is 50. During the dry season, smoke from brush fires and fog can combine to reduce visibility to nearly zero.

CLIMATE CYCLES

Florida car wash operators must also deal with the effects from climate cycles. For example, when the state is experiencing El Niño, it means above average rainfall in spring followed by a wildfire threat when rain dries up. It also means below normal temperatures from an increased number of low-pressure systems in the Gulf of Mexico during the winter, which “almost always” reduces the frequency of storms and hurricanes.

The flip side is La Niña. Here, dry conditions often prevail in late fall, winter, and early spring increasing the risk of wildfires in spring and summer months. The temperatures average slightly above normal, and the chances of hurricane activity increases substantially.

There is also the nature of weather forecasting to consider. For example, a forecast of 30 percent probability of rain does not mean there is a 70 percent chance it won’t rain. Rather, the forecast implies that 30 percent of the area should receive some level of rain.

RISK MITIGATION

So, what can car wash operators do to mitigate business-operating risks due to unfavorable weather conditions? One best practice is to maximize operating capacity to better service demand during peak operating conditions.

For example, when I operated a full-service wash, we processed about 30 cars an hour, on average, during the slower summer months. During winter, we processed over 90 cars an hour on a busy Saturday.

Consequently, car wash operators would want to look for equipment solutions that are designed to increase hourly throughput.

Here, the principal constraint of the system is the wash-bay. For example, a 100’ conveyor equipped with soft-cloth brushes has the capacity of about 100 cars an hour. Whereas a 100’ conveyor equipped with foam brushes may have an hourly capacity of 125 cars because foam can spin faster than cloth allowing for higher line-operating speeds. Twenty-five more cars an hour over five hours is over a 100 more cars a day.

Another best practice is multiplicity of products and services. For example, consumers may not purchase a car wash when it’s raining but they will certainly continue to shop and purchase other things like gas, food, personal services, etc. Consequently, additional profit center may help offset revenues when the demand for car washing dries up.

Experience shows that profit centers capable of filling a profit gap of 25 percent usually have start-up expense of between $50,000 and $250,000. This would include things like contract postal unit, food concession, convenience store, gasoline, drive-through coffee, detail shop, mobile detail, etc.

Of course, all additional services are not created equal. For example, exterior express is often designed for high-volume with capacity to process 150 cars or more an hour. Consequently, larger sites may have a third of an acre or more of the property devoted to free-use vacuums. Of course, these vacuums produce no direct revenue, and during unfavorable weather conditions the area is basically an empty parking lot.

 

Bob Roman is president of RJR Enterprises – Consulting Services (www.carwashplan.com). You can reach Bob via e-mail at bob@carwashplan.com.



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