On the Wash Front - July 2008

Falling Profits: How to Fight
the Drop at Full-Serve Washes?

By Anthony Analetto

Full service menu.

Lower labor costs. Increase profits. Reduce stress. Jim Gorant, owner of Prestige Auto Wash, recites these three rather compelling reasons when asked why he chose to add an express-exterior lane to his full-serve wash.

Occupying only half an acre on a busy street in South Florida, Jim’s business grew in both volume and profit for 16 years straight before slowing, and then shrinking. Watching his profits begin to fall, Jim decided to reinvent his car wash without ever closing his doors for renovation.

Having made the modification just over a year ago, Jim was kind enough to share some of his experiences with the rest of us. Below are some excerpts from a conversation we had on successfully adding an express-exterior lane to a full-serve location.

ANALETTO: What led you to make the investment to add an express-exterior lane?

GORANT: I’ve owned the location for 19 years. For the first 16 years straight, both volume and net profit grew every year. In year 17, volume was stagnant and net profit started to drop in response to rising costs, predominantly labor. In year 18, both volume and net profit dropped — I had to do something.

There’s a lot written now about adding an express lane to a full serve — I expect you’re going to be seeing a lot more. The funny thing is that about five years ago, just when express-exterior free vacuum sites were really taking off, I took a road trip with two other full-serve operators. We came to the conclusion that nearly any full-serve that wanted to remain profitable would eventually have to put in an express-exterior lane. The other two did so immediately and have had tremendous success. My site is only half an acre, half the size of theirs, and I chose to wait.

Putting in an express lane would require me to cut out half my wipe down area to make room for an exit lane. At the time, my full-serve volume was strong enough and I was using every square inch of space. Once my full-serve volume started to drop I realized I could no longer afford to wait.

Having made the decision to add an express lane, what was the first step in remodeling the site?

Express-exterior menu.

First and foremost, you have to be able to deliver a clean, dry, shiny car on line, with no manual prep. Fortunately I have spent a lot of time refining my equipment package. My tunnel is only 80 feet with a 100-foot conveyor. When planning for the additional volume from the express lane I wanted to be able to deliver a consistent product at a peak 120 car per hour chain speed. I had already added tracking wheel blasters, extra brushes for the front grill, and on-line tire shine. To handle the additional volume, I installed a second wrap-around. These upgrades, along with fine tuning my wash media selection, detergent application, rinsing, and drying systems allow me to run with no manual prep for most of the year.

Once the equipment is running right and you’re able to process the volume you think you can achieve, you have to leverage that to eliminate any wasted motion on the full-serve side of the business. At the entrance we lengthened the vacuum hoses to reach all sides of the vehicle in a two-car stack. Combined with more formal training procedures, we were able to process the same full-serve volume from two lanes, freeing the third for express exterior. Eliminating motion at the finishing end to create a safe exit lane for exterior only customers was more challenging. Again, training was crucial, but we also revamped our grid stacking procedures, supply carts, replenishment practices, and a whole host of other small details that gave us what we needed. Where there’s a will there’s a way.

What final preparations did you have to make before opening your express-exterior lane to the public?

Once the full-serve side of the business is running right it’s relatively easy. We simply added a cash register outside that’s tied into our tunnel controller. Eventually, I plan to invest in a video kiosk and gate. Kiosks are expensive; I want to see how the volume grows before I invest the money. Really, the hardest part is creating your signage and marketing. Customers want value. Unfortunately it’s not enough to offer a great product at a great price. You have to communicate the benefits to your customer.

How did you communicate the new service offering with your customers?

First I created separate menu boards to differentiate the express-exterior lane and packages from the full-serve, and used painted lines and signage to direct traffic. Also, there are now only two full-serve options with the base package priced 20% above my previous full-serve wash. Customers that want full serve now pay a price where it makes sense for me to deliver the service.

On the exterior side, I changed the street sign to promote the $5 base price point for the express lane. The sign is designed with a flip where I can change the price to $3 for an ongoing Wacky Wednesday promotion. I also stopped advertising and discounting full serves and started to promote the exterior lane with early bird and happy hour specials. It’s working. We’re building volume and competing against gas stations and self-serves that before served a customer base we completely missed. Last Wednesday we posted a location record for the number of cars ever washed in a single day. After 19 years, never in my wildest dream would I have believed that our single best day would happen on a Wednesday, but it did, and the business is once again growing.

What other site improvements have you made?

The real difference is that the customer stays in the car. I’ve put up white plastic wallboard and more lighting to brighten the tunnel. Before, all the tunnel signs pointed to the lobby so a customer could see what services were being applied to their car. Now, I also have signs that customers can see as they ride through. A lot of time was also spent training the loader on how to properly guide customers onto the conveyor.

We’ve also changed the way we deliver our full-serve. In South Florida, four months of the year are rainy in the afternoons, and traffic is slow. In the past, every day, I had to try and determine when it no longer made sense to remain open. Now, I’ve installed vacuums under our express detail canopy. On slow days, full-serve customers still exit the vehicle, but all interior services are done in the aftercare center. This lets me cut one cashier, one supervisor, two vacuum, and two wipe-down employees. Cutting six people lets me stay open on marginal weather days when in the past I might have closed.

How did your existing customer’s react?

Existing customers didn’t like it at first. Our full-serve volume initially dropped 30 percent. Exterior volume however has climbed every month from the minute we put it in. After one year, exterior volume is now 60 percent of our business. What’s also changed is that our fully-burdened labor expense has dropped from 45 percent to 30 percent. Overall net volume has increased dramatically, and I’m back to making the same money I was four years ago. The most important difference is that we’re once again a growing business.

Initially, there was also a decline in revenue from our express-detail shop, which accounts for 30 percent of the wash’s overall revenue. Fortunately, with strong marketing, our detail sales are back to what they were when we were 100 percent full serve.

What is the most important detail in launching the express lane?

Your equipment package must be able to process the volume and deliver a consistent product. In many respects, good signage, advertising, promotions, and overall site appearance will ultimately play a bigger role in the business taking off.

In your opinion, what is the future of the full-serve industry?

In my opinion, the industry has changed more in the last four years than in the previous 15 that I’ve been an operator. Each day, the expenses associated with delivering a full-serve wash seem to be going up faster than many customers are willing to pay. I believe the full-serve market is out there, but it’s hard to grow your business year after year only catering to that potentially shrinking segment. Personally, I think the flex-serve model is the ultimate format to maximize income from a property but at this location, I simply didn’t have the space. For me, adding the express-exterior lane was the next best choice. It has let me grow revenue, reduce labor, and probably added years onto my life because it’s much less stressful to manage on a daily basis. I think there are a lot of guys in my position. Labor is a little easier these days, but it’s still a no-win situation. If you’re going to continue operating your full serve like you did for the last 20 years, I think you may find yourself in trouble.

Questions can be sent directly to Jim at: jgorant@comcast.net.

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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