Is Owning a Carwash a Good Business? Is It Easy?
Having owned full service carwashes for more than thirty years, I have been asked these questions many times. I would generally smile, and answer, “Other than being capital intensive, labor intensive, management intensive, and being completely weather dependent, it’s an easy business”.
Writing here as an industry veteran, however, I am committed to giving a much more professional answer to the same questions, and hopefully explain what owning a car wash, or a few car washes, is and isn’t.
It is definitely capital intensive. People are often surprised to hear that even a very small and simple car wash will involve a total investment—land, building, equipment and working capital—of one or two million dollars. A good full- or flex-service carwash will require, as a minimum, two to four million dollars.
The biggest risk in the carwash business is location. A good location is crucial to produce the results necessary to pay for the actual investment. Many new carwashes fail because they were built on a location that doesn’t have a market sufficient to generate an adequate flow of customers. Another risk is overbuilding. You need a nice and attractive facility, of course; but building a white elephant will make your risk even greater.
When evaluating sites, you need to do much more than look at a street’s traffic count, or spot a few fast-food businesses in the vicinity. A good, professional analysis will evaluate much more that the traffic flow in front of a proposed site. It will determine how many people live in a given radius, what the level of income is for that demographic, how many people actually work in the surrounding market area, and in which occupations. And, obviously, it will look at existing competitors, including the type of facilities they operate and their locations respective to your site. Each of these answers has a certain weight in the equation to determine what the actual flow of cars through your carwash will be. However, proven industry analysis models of this type, on new and/or existing carwash facilities, are very limited.
Post-investigation, you’ve found the perfect site. Perversely, though, the site that seems to yield the most volume is generally the most expensive one, and the one with the most zoning restrictions. In fact, by the time you get all the necessary approvals, you will have expended a frustratingly inordinate amount of time, patience and money.
After spending even more money and time, you have a site plan and a set of building plans in hand—now it’s time to buy the necessary tunnel equipment for your carwash. You attend all the industry shows, but each manufacturer assures you that they have the best equipment available. How do you make sense out of such a variety of producers? It’s not easy. Keep in mind, though, that when all is said and done, the equipment doesn’t look that different, with the exception of various bells and whistles.
So, what is your next step? Stay tuned for Part II.
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