One challenge facing car wash operators going forward is thought to be the increasing difficulty in finding additional revenue opportunities. The principal reason for this is the highly competitive car wash markets.
In 2000, conveyors consumed 55 percent of the total available market (TAM). By 2016, some experts believe conveyors will consume 75 percent. Moreover, the express-exterior format is expected to account for 65 percent of TAM.
Operators are hungry for automation and technology in order to differentiate their businesses and increase average sales, frequency, and customer retention.
To quench this appetite, there is liquid wax and delivery, LED lighting effects, drying equipment advancements, RFID retention, as well as new credit card options and cellular-phone and web-based payment technology.
Of course, most of this stuff is going into the $14.5 billion conveyor business that reportedly produces 1.2 billion washes annually, whereas in-bay automatic and self-service volumes have declined to roughly 400 million washes each.
Today, exterior conveyors outnumber full-service by almost two to one and clean almost three times the number of vehicles annually as the full-service sites.
Arguably, an unintended consequence and subtle challenge of increasing average sales, frequency, and retention across such a large swath of the country is increasing customers’ carbon footprint.
After all, the goal of the automation and technology mentioned above is to increase consumption. Making it easier for consumers to pay, buy-up, and visit more frequently simply uses more resources.
For example, if a customer who normally visits once a month joins a subscription program and then washes four times a month, this person’s carbon footprint for car washing increases by four times.
Here, monthly water usage would increase from 50 gallons to 200 gallons and chemical consumed from 1/2 pint to almost 1/2 gallon whereas the monthly value of the customer goes from $10 to $24.95.
Arguably, as the composition of the fleet and percentage of TAM shifts, the tendency would be to consume more not less resources.
Here, one could counter that reclaim and less driveway washing would offset this. Fewer driveway washers may mean less water consumption, but it also means more customers who will be encouraged to buy-up and more frequently.
Experience shows reclaim can recover about 70 percent of water used. However, it’s complex and difficult to get right, and greater efficiencies are increasingly expensive making it difficult to achieve ROI.
Given the industry’s labor cost, safety legislation, and unionization issues, it’s doubtful the pressure to find more revenue opportunities will lessen.
So how do car wash operators meet the challenge? On the one hand, the International Carwash Association promotes best practices and a maximum of 40 gallons of potable/fresh water per average wash package for conveyor and in-bay automatic washes. On the other, highly competitive markets drive operators to encourage customers to basically double or quadruple consumption of resources and generation of waste.
It’s an interesting dichotomy. Arguably, like many things, it may become an issue for discussion and debate on social media. The car wash: We can protect your paint using only 40 gallons of water. The consumer: So what, I can do the same with only one cup of water using a waterless car wash product.
It’s an interesting argument.
Bob Roman is president of RJR Enterprises – Consulting Services (www.carwashplan.com). You can reach Bob via e-mail at firstname.lastname@example.org.