On the Wash Front - January 2009

Fast Growth: Site Selection is Fundamental
By Anthony Analetto

There are talented people who can create new ways to do things better. There are also good leaders able to execute a plan with extraordinary efficiency. Ronnie Corbin, founder and president of SourceOne Car Wash Company, is one of those rare individuals who can do both.

Formed in 2006, SourceOne has made it easy for a growing number of private investors looking to profit from the car wash industry to enter the business without the daily challenges of building and managing a location. Under the Legends Car Wash brand, Ronnie and SourceOne have already opened three express-exterior tunnels. As of today, SourceOne has another seven Legends Car Wash locations at various stages of construction, two of which are scheduled to open in the next couple of months. Within the next two years, SourceOne projects to have 24 Legends Car Wash locations running in four geographic markets, making it one of the industry’s largest chains.

Ronnie’s interest in the car wash industry first materialized with the purchase of an upscale, self-serve/in-bay automatic car wash facility built in 2000. Within six months, Ronnie broke ground on his second car wash facility and finished construction of the third in 2002. Ronnie and his associates have since secured interests in two full-service car wash facilities in Little Rock, AR and opened an impressive express wash, quick lube, and detail center in Tulsa, OK.

Ronnie agreed to take a few minutes to share his insights on growing a car wash business fast. In addition to car washing, his extensive career also includes notable accomplishments in leading public relations initiatives and spearheading multimillion-dollar corporate expansion projects, which have influenced his approach to the car wash business. Talk to Ronnie for just a few minutes and you’ll feel energized by his enthusiasm and vision for how to profit by washing cars. Below are a few excerpts from our conversation.

ANALETTO: With plans to open 24 car washes in four markets over the next two years, what property and proximity characteristics do you look for when selecting multiple sites to build within a single market?

CORBIN: For us, the acquisition of land is a key capital component that also provides value-creation potential. Correct site selection is fundamental to our success. We invest an enormous amount of time evaluating properties. Basic demographic information such as rooftop density, car counts, registered vehicles, and household income is all-important. Every Legends Car Wash is located in a residential trade area with a traffic count near or above 30,000 cars per day (CPD) or vehicle density of 35,000-plus in a three-mile radius. When selecting properties though, I recommend looking beyond the basics.

For example, one of several characteristics we weigh when selecting land is how active the community’s nonprofit organizations are. Large student populations and a high concentration of 503C nonprofits can provide some evidence of fundraising activity, but it’s also a good idea to talk to people and learn about the community before you build. We’ve spent a lot of time creating fundraising programs at Legends Car Wash to make it easy for local organizations to raise a lot of money promoting our services. If you ever stop and look at many successful car washes and regional chains, you’ll often see that they were started by someone who lived in, understood, and had strong ties to the community where they began. There’s no question that organizing fundraising events requires a lot of work, but it can really fast track your acceptance into a community and develop a loyal customer base quickly, especially if you build in a community with a large concentration of nonprofits.

What staffing and training challenges do you face trying to deliver consistent customer satisfaction across multiple locations?

The real challenge was to design a scalable system based on centralized management and total automation that eliminates nearly all manual labor from the business. We’ve done that. Legends Car Wash can deliver a consistent service to our customers in wash quality, time of service, and procedures across all of our locations. Everything is standardized from the point of sale terminals to the conveyor, daily operations, and the financial reporting. Each location requires approximately three onsite employees to make that happen. We’ve even built-in backup systems for the conveyor, hydraulic, and air systems that can be activated immediately to eliminate down time for the car wash.

That said, we still struggle with employee turnover. It’s still difficult to find hardworking, dedicated employees with some mechanical ability and superior customer service skills. Because we’ve intentionally opened in communities with large populations of high school and college students, they make up most of our labor force. This has some drawbacks, but we allow flexible shifts to accommodate their changing class schedules, and have had success actively promoting from within. We’ve also invested time and money to create a 12-module training program that we deliver onsite at every location. Each module is two and a half days in length and every employee completes one module per month, starting with car wash 101. Our focus on training has not only improved the operation of our business, but has helped to reduce employee turnover.

Have you had to make any equipment, process, or detergent adjustments to accommodate different conditions in the four states where you are building?

No, each of our locations is nearly identical. Our tunnels are all 135 feet, and we run them at a 130-car-per-hour chain speed. We don’t speed up or slow down for changing volumes. Both the tunnel layout and equipment room at each location is the same, and we have a webcam at each that allows an employee to perform emergency adjustments guided by a remote maintenance technician. I’m looking to eliminate variables and reduce the amount of labor I need to deliver a consistent customer experience. I don’t want to pay extra people to decide when to change the conveyor speed or remember equipment maintenance procedures at a specific location; it’s simply not profitable.

How did you decide upon your final service offering and prices?

We actually offer five wash packages ranging from $3 to $12 with an average ticket of $7.22. Our goal is to provide our customers with choices that fit their needs, from the simplest wash and rinse, to the most sophisticated combination of cleaning and polishing solutions that can be offered in an express tunnel car wash. Today, “do-it yourself at home” customers still represent about 45 percent of the market. We’re trying to drive those people into our wash by delivering convenience, consistency, and value. Offering a $3 car wash with free vacuums may be a great value, but it isn’t necessarily enough to get those people out of the driveway. For an express exterior wash to really succeed, especially in the beginning, it has to be combined with good marketing, advertising, and community involvement. One indicator that our customers really like our model is the growing popularity of our unlimited wash club. Once a customer signs up and receives their RFID tag, which can be read in any lane, the location will have improved cash flow, softened weather impact, and removed a little more labor from the business of washing cars.

What activities or advertising are you doing to establish your car washes in the communities they serve?

When we go into a market, we’re looking to develop a brand quickly. Although about 2 percent of revenue is invested in advertising, the real focus of our marketing plan is on fundraising. Advertising is great for building traffic and we’re getting especially strong results from our website and batch e-mail activities, but our goal is to build a loyal customer base that we can leverage within, and across, geographic territories. It goes back to becoming a true member of each community in which we open a Legends Car Wash. We’ve created an innovative fundraising program that makes it easy for any 503C or other qualified tax exempt organization to receive an ongoing revenue stream by urging their friends and family to visit our locations regularly. Anyone interested can read more about this specific program at our website, www.legendscarwash.com. What I think is most important for anyone looking to emphasize fundraising as a core part of their marketing, is to realize that they must commit a lot of time and effort to the project for it to succeed. Organizations that partner with us commit to staffing a kick-off event to create excitement, promoting us in newsletters, on bulletin boards, and working with us to promote our wash to their e-mail lists. We commit to make it easier for them to do that by continuously re-supplying them with banners, flyers, cards, and reminders customized for their organization. Logistically, it takes a big investment in both time and money to cultivate these partnerships and keep them moving forward, but like with most things, the harder you work, the luckier you get.

What are your plans for the future?

We partner with private investors and right now there are a lot of people looking to invest in the car wash industry. When we enter a new market, we’re pushing to open multiple locations at one time. Our plan is to build a brand so that when a Legends customer from Wichita, KS goes to a Legends Car Wash in Tulsa, OK, they receive the exact same service, can use the same fundraiser codes, and drive through with their unlimited wash RFID pass. Our ability to leverage that brand awareness in a geographic area gives us a foundation to attract fleet accounts, extend our community involvement with fundraising, and grow the business exponentially. It’s a good time to be in the car wash business.

Ronnie can be contacted directly at: rcorbin@socwc.com.

Anthony Analetto has over 26 years experience in the car wash business and is the president of SONNY’S The Car Wash Factory’s Equipment Division. Before coming to SONNY’S, Anthony was the director of operations for a 74-location national car wash chain. Anthony can be reached at (800) 327-8723 x 104 or at AAnaletto@SonnysDirect.com.

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