By: Anthony Analetto
Originally Published in AutoLaundry Magazine
“The best we can do is size up the chances, calculate the risks involved, estimate our ability to deal with them, and then make our plans with confidence.” Henry Ford
I’m writing from the 2010 ICA 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. And what I learned is that more
operators are looking to a 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 if it
was a competitive advantage in their market. The difference was subtle but
distinct. And what I learned is that today’s successful carwash 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 do you intend
to accomplish and how will it 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 & 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 &
demographic survey within a 5-mile radius of your site. With your market &
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 &
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 carwash 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 makes and models. Expand this audit to
include not only wash equipment, but support equipment, computer systems, motor
control centers, and water treatment systems. At the same time, perform a
complete utility audit. Review your electrical, 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 into 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 out 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
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 carwash retrofit or remodel presents a
certain amount of risk. The old adage however, “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
Anthony Analetto has over 27 years experience in the
carwash 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 carwash chain. Anthony can be reached at
800-327-8723 x 104 or at AAnaletto@SonnysDirect.com.
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