Auto Laundry News - June 2013

Business Model — Reinventing Yours

By Anthony Analetto

Last month I wrote about seven steps to improve your bottom line. What if, after all your ducks are in a row, getting in control of the basics isn’t enough? What if there is an opportunity, or dire need, to reinvent your entire business model? Need-based reasons are painfully obvious. Few of us would stand by and watch a competitor enter our market without taking steps to maintain our customer base. When fending off threats to your existing business, there are established practices to update, retrofit, or convert your existing site in order to remain competitive. I’ll later address some of the trends discussed in April at the Car Wash Show in Las Vegas.

I first, however, want to address the flip side of the opportunity/need coin, the side that inspires us to create new business models to reach new heights. I would argue that both the express-exterior and flex-serve car wash business models have reinvented the way people wash their cars. As with most innovations, they quickly become the new standard, with few people remembering that they didn’t even exist in their current form just over a decade ago.

I recently read an article chronicling the advent of Apple’s iTunes music store and how it shifted the industry to downloadable music. It went on to discuss the numerous attempts by competitors to build a better mousetrap, and ended by questioning who might make the next genuine shift to the business model of how we listen to music. My mind immediately turned to the realization that the express-exterior and flex-serve business models were every bit the game changer for professional car washing as downloadable music was for the music industry. Both took existing technology and repackaged it into a format that delivered greater customer value. I started to think that with all the new operators entering our industry, bringing new ideas from different backgrounds, that we could be about to see the next introduction of a new business model and genuine shift in how people wash cars. While no one can predict where the next new business model will come from, it’s fairly certain that whoever comes up with it, will follow an established thought process — the same process used by the early adopters of the express-exterior business model. Let’s take a look.

Create a Better Customer Value Proposition
Start with the basics. Cheaper, better, faster, and more accessible are the traditional avenues to improving customer value, but, like most things, success isn’t so straight forward. Many new business models have been created to offer more for less through automation, innovation, and efficiency. Express-exterior car washes are a perfect example. By eliminating labor in the wash, these operators were able to offer a faster, cheaper, better, and more consistent wash — but I would argue that a better automatic car wash wasn’t the biggest innovation that made this format the new default business model for most new washes being built. Express exterior included the advent of free self-serve vacuums and automated pay stations. During express-exterior’s infancy, you couldn’t open an industry magazine without finding a roaring debate about the foolishness versus the genius of offering free vacuums.  A decade later, free vacuums are now the standard, and it’s hard to find plans for a new wash being built that doesn’t include them. The last couple of years have witnessed a frenzy of new pay-wax services, wash enhancements, and never-ending additions to complimentary items provided for customer use alongside free vacuums. Time will tell if one of them takes hold of the industry as the basis for a completely new business model.

Create a Profitable Formula
Don’t overlook that the reason to create a better value proposition is to make more money. Giving away more than you can afford makes little sense. That said, creating a profitable formula can sometimes go against common sense. Along with the free vacuums that many criticized, there was another hallmark of the original express-exterior washes — the $3 base wash that many said was not sustainable. Early pioneers that fully embraced both aspects of the model, did their homework, and learned that they could, and did, make it up on volume.

Identify Resources and Procedures
Express exterior could never have evolved without major advances in both equipment and gated entry systems. Some aspects of your new business model may rely on leveraging innovations being created in the marketplace. Others will rely solely on your creativity and hard work. For those first express-exterior operators, old ideas related to site layout had to be reinvented to handle increased throughput and customer self-loading. In the absence of prep and wipe-down staff to detect problems in wash quality, those operators had to create the preventive maintenance training procedures to ensure consistent product quality and customer satisfaction. The point is that any shift in your car wash business model will require new resources, and demand new procedures related to the training of staff, and the marketing and operation of your business. These are not easy activities and should not be undertaken haphazardly. Basically, measure twice, and cut once — a practice that is always easier when you have an established car wash without a competitive threat on the horizon.

Mini-Tunnel Trend
Everything I’ve written so far has been about reinventing your business model to uncover opportunity for your business. That’s a luxury not everyone has. Right now, one skyrocketing trend seen at the show in Las Vegas is the interest in converting in-bay automatics to mini tunnels. Many rollover operators — freestanding, self-serve, and petroleum alike — have seen their revenues erode as express-exterior tunnels have entered their markets. The growing popularity of conversions for these locations may or may not make sense on a case-by-case location-specific basis. What is more exciting, though, is established express-exterior operators exploring the potential of leveraging mini-tunnel technology, and their regional brand, to build satellite stores on smaller properties. Similar in concept to Walmart’s neighborhood store program, these operators may be on to something.

Flex-Serve Trend
Seeing as many express-exterior washes were built with a site layout that could easily convert to a flex-serve wash, it’s no surprise that more of these operators are exploring that option to increase revenue. Having eliminated labor from the wash process, express-exterior operators, accustomed to managing small crews to keep the site running, seem increasingly receptive to the controlled addition of staff to perform interior and hand-wax express detailing services. Similarly, full-serves that previously added an exterior only lane are now looking at options to annex property next to their washes for the addition of free vacuums. Many areas, and operators, remain committed to the full-serve model. It will be interesting to watch if there is an uptick in full-serve conversions to flex at next year’s Car Wash Show.

Good luck, and good washing.

Washing cars for over 30 years, Anthony Analetto serves as president of SONNY’S The CarWash Factory, creator of the Original Xtreme-Xpress Mini-Tunnel, and the largest manufacturer of conveyorized car wash equipment, parts, and supplies in the world. He can be reached at Aanaletto@SonnysDirect.com or at (800) 327-8723 ext 104.

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