On the Wash Front - July 2010

Remodel — Step-by-Step Plan
to Remain Competitive
By Anthony Analetto

I’m writing this column from the International Carwash Association’s 2010 Car Care World Expo where we’re breaking down the booth and packing up the trucks to go home. This year, I had the good fortune to be invited by the ICA to present a session titled “Maximize your Property’s Profit Potential — Keys to a Remodel.” Having made similar presentations in years past, something about this year was different. The needs were different. The questions were different. The expectations were different. What I learned is that more operators are looking to remodel not only to produce a better product but to reinvent their brand. To scream out to customers that what they do is different.

In the past, most conversations regarding a remodel centered on labor reduction and production efficiency. These two topics remain absolutely vital, but more operators are also sizing up ways to compete by delivering a superior customer experience. For example, three years ago operators looking to add an online tire-shine machine asked questions regarding chemical and labor cost savings. Now they’re evaluating speed of service and product consistency for improved customer satisfaction. A year ago, conversations regarding a flex-serve conversion focused on consolidating labor for reduction and ease of management. This year, more conversations seemed to examine how a flex-serve appeals to changing consumer preferences and to evaluate its competitive advantage in a given market. The difference was subtle but distinct. What I learned is that today’s successful car wash operator must be increasingly tuned in to consumer trends, and not merely the task of washing cars. So on that note, I’ve assembled some of the key areas of concern in planning a remodel, with special thanks to everyone who shared their input at this year’s expo to help elevate my understanding of the business.

DEFINE YOUR OBJECTIVE

Before starting, I’ll throw out my definitions for retrofit and remodel. They’re different animals. A retrofit refers to changing your equipment package to improve throughput, wash quality, and consistency, or reduce labor, water, utility, or chemical consumption. A remodel refers to changing the location’s service or pricing model to attract additional volume, add profit centers, or remain competitive. Remodels often include an equipment retrofit but not necessarily. Before starting, ask yourself what you intend to accomplish and how it will impact your revenue.

PLANNING STEP 1: SURVEY

Once you’ve defined your objective, the first step is to evaluate what you’ve got. Although a comprehensive equipment audit is a key component, it’s only one of three areas you need to examine. The second is your existing and potential customer base and the third is the condition of your facility. I recommend breaking this report into three parts.

Market and Demographic Survey
Absolutely use your personal judgment. Your ability to understand the preferences of your market is a primary reason you’re in business today. Don’t, however, trust only your instinct. Look to one of the many firms who can compile a market and demographic survey within a five-mile radius of your site. With your market and demographic survey in-hand, compare it to any old reports you may have (that are often performed in conjunction with a loan application). You’re looking for indicators that customer preferences have changed. What new retail or service companies have opened in your territory and which ones are excelling?

Next review your competition. Have any new washes opened? Document your existing competition, their service models, and any changes they’ve made to improve. Now research the latest trends being reported in the industry magazines, websites, trade shows, and your network of other operators. If all goes well, opportunities to grow your business should be going off like bells and whistles in your head.

Objective Facility Evaluation
Step back and compile an objective facility evaluation. Compare your signage, landscaping, and building appearance from across the street. Evaluate the uniforms and positioning of your staff and ask yourself: “Does my car wash look busy and inviting even with moderate volume?” Don’t trust your own eyes. Ask friends or colleagues both within and outside the industry for their candid opinions.

Equipment Audit
This topic warrants several articles itself, but here are a few of the main considerations. First and foremost, look at what can be maintained or upgraded. Once you’ve exhausted every opportunity to bring your existing equipment up to task, list areas that cannot perform their objective effectively on all vehicle makes and models. Expand this audit to include not only wash equipment but also support equipment, computer systems, motor control centers, and water treatment systems. At the same time, perform a complete utility audit. Review your electrical as well as water volume, pressure, and quality, along with available sewer capacity. Utilities can play a major role in the options available during an equipment retrofit and should always be evaluated in conjunction with your equipment audit.

PLANNING STEP 2: LIST OPPORTUNITIES

Don’t hold back here. Before starting the survey process you most likely had a clear idea of what you wanted to do. This step, however, is where you want to list every opportunity to improve your business. I like to group activities under two headings. First, things that will increase capture rate or acquire new market share. Second, items that will reduce expense or improve wash quality and consistency. For many of us, that first group presents more of a challenge. Unlike cutting costs or improving wash quality, it’s harder to predict the return on our investment for marketing or procedural changes designed to grow our businesses. Don’t hesitate to get help if this isn’t your area of expertise. Saving 10 cents a car is great. Increasing your dollar-per-car average 75 cents after implementing a loyalty program is even better. You might eventually get to both projects, but listing them helps you prioritize opportunities. Here are some of the main areas to consider.

Increase Capture Rate or Acquire Market Share
Starting off with the biggest investment of time and money, considering a format change can pay off handsomely when done correctly. As with most things, it’s easier to learn from the experience of others before embarking on a major project. Contact colleagues. Go to trade shows. Read the magazines and online forums. You’ll find no shortage of insight on today’s most popular transitions that include adding an express lane to a full serve, converting a self-serve to in-bay/tunnel, moving from express-exterior to a flex-serve, and adding any of the numerous profit centers available.

Growing your business doesn’t necessarily mean having to make a huge capital investment. List all facility improvements such as signage, building, landscaping, pricing models, and service offerings. Changes to your customer service policies, procedures, and training can have a huge impact on your bottom line.

Identify Opportunities to Reduce Expense or Improve Wash Quality and Consistency
Here’s where you want to prioritize what your equipment audit reported. Starting with wash quality, identify a plan to wash without any prepping. Next look to improvements that will ensure you can produce a quality product every time whether your customer drives a sub-compact or full-size SUV. Lastly, look for ways to maximize mechanical cleaning and minimize utility consumption for optimal efficiency.

PLANNING STEP 3: CREATE A PROFORMA

Once you know what you can do, it’s time to crunch the numbers to see what makes the most sense. When creating your financial estimates, take the time to break down all expenses for permitting, equipment, installation, downtime, and any manpower required. Estimating the impact on traffic flow, volume, and capture rate can be tricky, but the associations and other industry resources can help you become more accurate. With numbers in hand, you’re ready to determine your anticipated return on investment over a specific period of time and move forward with your project.

SUMMARY

Performing any major car wash retrofit or remodel presents a certain amount of risk. However, the old adage, “the harder you work, the luckier you get,” rings true. With careful planning and extensive research, you’ll be on your way to making your business more profitable.

Good luck and good washing.

Anthony Analetto has over 27 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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