According to the National Association of Convenience Stores, average car wash revenues at c-stores recently grew by 1.6 percent to $4,150 per month. The bad news: wash revenues were $6,400 in 2004. Moreover, there are now 25 percent to 30 percent fewer wash units at c-stores as compared to 2000.
Reasons for this are Big Oil is out and c-stores have become restaurants that sell gasoline; per capita car wash spending has declined by 24 percent; and competition has raised the bar on menu, service, and experience.
Consequently, executives like Fred Higgins of Minit Mart are focused on what makes c-stores unique. According to Higgins, this means taking care of peoples’ needs 24/7. In order to grow, car wash needs to fit in with this strategy.
This presents several challenges. For example, JSO Valuation Group finds c-stores generate income of around $400 per square foot of floor space per year, a good portion of this income coming from food service sales.
Historically, the gallon-per-wash rates for c-stores were between 60 and 90 gallons with an average of 75. Experts now suggest to plan on selling one wash for every 125 gallons sold.
So, a c-store selling 3.3 million gallons of gas a year would attract 26,400 car wash customers. If average wash sales are $7.50, income is $198,000 or $132 per square foot of floor space per year. Arguably, car washing needs to generate more income today to be of interest to stakeholders.
Another challenge is cost. For example, cost to invest, own, and operate a quick service restaurant (QSR) like Subway is between $100,000 and $300,000. Subway executives believe it is the low start-up expense, flexibility, and simple footprint that are most appealing to c-store entrepreneurs.
The car wash at c-stores is usually a block-and-mortar building or modular-enclosure equipped with an in-bay automatic wash system. Cost magnitude is $300 per square foot or $450,000.
By comparison, a “limited-service” QSR drive-through requires an 800-square foot-building and 1/4 acre land. A double drive-through requires a 1,600-square-foot building and 1/3 acre land. Building and equipment cost for a double unit is about $550,000. Development takes about 6 to 12 months depending on site type, permits, and construction.
The big difference between a QSR drive-through and a car wash is income. Research group Technomic finds same-store sales from Subway’s in-store units are $136,000 whereas average sales for their stand-alone unit are around $480,000. By comparison, same store sales for a double drive-through like Checker’s are $900,000.
The income differential is due mostly to service speed and price. For example, Checker’s average sales is $5 and stores serve an average of 38 customers an hour at an average service speed of 45 seconds per customer, while it takes 3.4 minutes for a customer to get through a Chick-fil-A, but the average sale is $7.65.
So, it would seem a strategy for a car wash at c-stores would focus on service speed, price, and taking care of peoples’ needs 24/7 rather than cost. The reason for this is the competition today produces a car wash service that provides customers with a much better experience than they can obtain at most c-stores in terms of convenience, quality, and value.
The uniqueness of promising car wash services 24/7 without disappointing customers would require a simple operating model.
One possible schema would involve complexity reduction. For example: streamline the menu while maintaining perception of customer choice; reduce the need for employees by process simplification; outsource non-core functions; and adhere strictly to a single format and small footprint.
Today, car wash operators need to consider the needs and wants of a diverse socio-economic customer base including Millennials, Generation X, Baby Boomers, and Senior Citizens. Consequently, one tactic would be to capture value from multiple channels. This begins at the gas pump where the bulk of car wash sales transactions occur.
The gas pump topper is the first “point-of-contact” for most customers so it is crucial the message displayed establishes trust and earns respect of customers to achieve targeted sales goals.
For example, the topper must function as greeter and service advisor. It must welcome customers and create a sense of excitement. It would explain features and benefits of services and “experience.” It would also inform customers of any discounts available. That’s a lot to accomplish in a small space.
Quite frankly, my experience buying a car wash service at c-stores is usually as enticing as pressing the please print receipt button. Would you like a car wash today? Yes or no.
The only reason motorists visit a car wash is to clean and shine and protect their vehicles. So, a quick service car wash (QSC) would need to provide the right solutions. This means designing the product for the target market.
QSRs typically offer a three-tier value proposition including low-end (value meal), mid-tier (combos), and premium. Car wash selections at c-store are usually good, better, and best or a similar scheme (see Figure 1).
Figure 1 – In-Bay Service Menu
The problem with this merchandizing strategy is it imposes constraints on the quick service business model. For example, the menu is overly complicated and takes a long time to read. The menu emphasizes “products” rather than “solutions.” Perhaps worse, it makes production capacity a variable.
For example, as shown in Table 1, service time and revenue for an in-bay automatic car wash system is affected by its sale mix. As more extra-pay products are included in the wash menus, it adds to the total time to complete the wash process. Here,average time of 303 seconds equals 5-minutes per wash or 12 cars an hour.
Table 1 – In-Bay Performance
Ostensibly, throughput and revenue constraints would be broken by elevating service speed of the car wash from 5 to 3 minutes like a QSR drive-through.
Figure 2 shows why. Basically, the average length of the waiting line and the average waiting time for a 3-minute car wash service doesn’t grow exceedingly long until the arrival rate of customers reaches much higher levels as compared to a 5-minute car wash.
Figure 2 – Single-Server Model
According to Insula Research, the number of other vehicles in the waiting line for service is critical when assessing service speeds because it has such a dramatic impact on a QSR’s ability to process any given customer.
Figure 3 – QSC Pump Topper
For example, researchers who study companies like Starbucks find customers who wait in-store are more patient and measure the worth of their time differently. However, Insula found waiting in a car is a different story. “When customers see a line seven cars long, they’re more likely to drive to the nearest competitor no matter their price differences.”
So why does Chick-fil-A thrive with the QSR industry’s slowest service time, longest waiting line, and highest price? Obviously, it must be that its customers are happy and satisfied with what they are getting. Likewise, so should car wash customers.
Until digital signage at the gas pumps is widespread, the pump topper must be a quick and effective sell as shown in Figure 3.
It must also convey a strong value proposition.
This means offering products that shine, protect surfaces, and improve drying. Premium products would contain ingredients that impart smoothness, “wet-look,” and long-lasting hydrophobic properties on paint (beading water). The promise of solving customers’ problems with better speed, hand-finished qualities, value, and a guarantee helps seal the deal.
According to QSR, a fast-food trade journal, the four factors that make a good drive-through are service speed followed by menu-board appearance, speaker clarity, and order accuracy.
As shown in Figure 4, QSC has an attractive and well-lit pre-sell menu and reader board.
Figure 4 – Pre-Sell and Reader Board
QSC has a self-pay terminal with touch-screen. The terminal is bilingual-capable and speaker clarity, order accuracy, and fast credit processing is assured. The terminal also increases opportunity to sell a car wash by 33 percent as opposed to having only a code acceptor at the wash-bay entrance.
The point-of-sale system — and its software — is invaluable today because it provides capability for customer rewards, pre-paid services, virtual marketing, and remote monitoring and management of locations. Moreover, mobile payment is around the corner and the POS system will eventually need to accommodate customers using smartphones with Mashable technology.
Figure 5 – Self-Pay Terminal
Selling an exterior-only car wash service with a price between $7 and $13 or more requires a very clean, shiny, and dry product. In order to produce a shiny and dry product, the car wash operator must first produce a very clean one. Very clean means removing all of the thin film that covers a vehicle.
Experience shows the most effective and efficient means to clean and shine a vehicle is friction washing. As shown in
Figure 6, friction uses 33 percent less water, 42 percent less chemical, and 25 percent less energy as compare to touchless cleaning.
Figure 6 – Relative Usage per Car
Equipment for a QSC is a three- or five-touch system with wheel attachment and closed-cell foam brushes that shines paint as it safely cleans. An on-board dryer with contour design is preferred because it provides most consistent drying quality in the shortest possible space, which allows for the upgrade and retrofit of existing facilities.
In-bay capacity is raised from 12 to 20 cars an hour by designing each wash selection to be completed in three minutes. This means one phase to apply cleaners/polish, one phase to wash and apply protection/optional wax, one phase to rinse/set, and one phase to dry.
Figure 7 – Tri-foam conditioner and polish
This is possible today because products like tri-foam are siliconized soap and can be layered over detergent thus saving an entire step in the process. In addition, friction doesn’t require dwell time for chemical reaction as does touchless, and this saves more time.
This, along with some other techniques, reduces the complexity of the in-bay wash process to one that can produce hand-finished qualities in 3 minutes.
No attendants are required to operate a QSC. This means a single or double drive-through configuration (Figure 8) can remain open 24/7, rain or shine, and only some overall site labor is required to maintain and promote the wash.
Figure 8 – Dual bay set-up
Exploiting the exterior-only car wash market requires differentiation and niche strategy.
For example, around 1990 Checkers and other QSRs found a large dining room, large parking lot, and extensive menu were unnecessary drains on the restaurant. Reason being half the business was drive-thru and combo meals. So, stores were pared down.
The QSC is a limited-service car wash and “stay-in-car” experience. This means self-service vacuum islands, garbage cans, vending machines, and parking spaces are not required. So, the building can be as small as 1,200 square foot on a 7,000-square-foot pad site.
Marketing is crucial for a QSC. For example, Checker’s and Rally’s target market is adults, not children and teenagers like McDonald’s. Similarly, QSC products cater to specific segments.
Self-pay terminals are crucial because they provide the convenience of not waiting to order from a greeter or pay a cashier, which plays a role in guest satisfaction.
Suggestive selling is imperative as well as a loyalty rewards program. Landscaping should be impeccable. A website is a must have. WiFi access, “show” from extra-pay products, and a clean-car guarantee enhance the customer’s experience.
Combining all of these with a QSC footprint creates a distinct competitive advantage. How well does the quick service format perform?
Marketing experts find that every 7 seconds of improvement in a QSR service time amounts to an average gain of 1 percent market share. Based on difference in seconds between a 3- and 5-minute car wash, a QSC would realize a 17 percent gain in market share.
A QSC typical has a gas-to-wash ratio of 75 gallons and average sales of $10 or more. Thus, a store selling 3.3 million gallons would expect to attract 44,000 car wash customers or an income of $440,000 or $293 per square foot of floor space per year.
Replacement cost new for a single drive-through QSC with 1,200 square foot building is about $360,000. Consequently, a QSC is more profitable than a conventional in-bay because it has less business operating risk. A QSC requires fewer customers to produce sufficient sales, and no attendants are required for an effective and customer-centric operation.
QSRs are usually part of a chain or franchise with standardized ingredients, partially prepared foods, and supplies to each store through controlled supply channels. The same would apply to the QSC store design, layout, and implemented products and services.
Bob Roman is president of RJR Enterprises – Consulting Services (www.carwashplan.com). You can reach Bob via e-mail at email@example.com.