Interview with Mike Black of Valet Car Wash in Guelph Ontario
If
Mike Black’s name sounds familiar, it should. As a past president of the
International Carwash Association and Canadian Carwash Association, Mike has
been actively working to help other carwash operators improve their businesses
for as long as I can remember. Finding himself at the hopeful end of a four-year
weather related downturn, Mike has managed to navigate Valet Car Wash through
this difficult period to post record numbers in the last several months. Valet CarWash, with two flex-serve locations both offering aftercare services, unlimited
self-serve wash bays, and express-exterior tunnels, is a prime example of
everything that is right about professional car washing today. They’re
beautiful locations, and what Mike has done to build and retain his business
during the downturn is insightful and inspirational.
I
want to extend my deepest appreciation to Mike for taking a few minutes to share
his ideas on surviving a prolonged downturn for this article. Regardless of
what type of wash you’re running or your current weather or market conditions,
you’ll find some lessons on operating in the black from Mike’s experience.
Below are some excerpts from our conversation.
Analetto: During a
prolonged slow down due to weather or some other reason outside of your
control, what’s the single most important recommendation you have for operators
to survive?
Mike Black, Owner of
Valet Car Wash in Guelph Ontario: As you know, along with most washes in
the Northeast, we have gone through 4 years of hell. Now, having just posted
our second highest monthly car count in 19 years at one of our locations, I
feel like we’re waking up from a bad dream. So far, for the first few months of
the New Year, we’ve had the highest car counts in our history. Having washed a
few cars, I feel more comfortable talking about how to not only survive a
slowdown that’s outside of your control, but how to actually come out of it stronger,
and with a larger share of your market. But before I get into all of that, my
first recommendation is probably what you’d expect – you’ve got to cut every
expense that makes sense.
The
other day however, when a colleague called to ask how much I was paying for a
drum of drying agent, I realized that there’s a lot of room for interpretation
on “what makes sense” when talking about cost control. I don’t know exactly
what I pay for drying agent and it’s honestly not my primary interest. I have
my equipment dialed in to deliver a consistent wash, have long term
relationships established with detergent suppliers, and know to the cent how
much it costs me to wash a car at each service level. There’s only so much time
in a day. When your business is off, putting forth a lot of effort to shave
pennies on variable expenses like detergent doesn’t make much sense. You’re
simply not washing enough cars. Personally, I’d recommend first getting control
of your labor expense. Each night I get an email with a detailed summary
showing my hourly labor cost per car. I adjust my operation accordingly and couldn’t
run my business without this information. After that it’s important to see if
you can acquire better financing from private lenders. Once that part of the
business is in order – spend every ounce of energy coming up with ways to get
people on your property to get a car wash.
I’m
a boater. When people ask me about surviving a long downturn in business I tell
them to imagine they’re out on the water and the boat springs a leak. You most
likely won’t have the tools or material to stop the leak. The best you can do
is slow down the water rushing in enough so that the bilge pump can keep up
with it. As long as you can do that, you’ll stay afloat.
Analetto: You mentioned
looking for sources of refinancing. Where should an operator looking for this
type of lending start?
Mike Black: First, understand
that there are people out there who’d be happy to invest in your carwash. There
are two sides to everything, and a recession is no different. On the one hand,
money is tight, hard to get from traditional lenders, and operators are
struggling under debt payments. On the
other hand, because of the low interest rates on invested money, there is tons
of private money out there looking for a secure place to invest with a decent
return. I'm talking about private individuals, charities, trust funds, estate
money, and the like. These people can't survive with a 1% return from
conventional investments. If you look, you’ll find some that are more than
happy to take your property as security with a 7 - 9% return on their money. Interest
rates may be slightly higher, but in many cases terms are longer, they are not
looking for much of a principal return, providing you extra flexibility to stay
afloat. By using contacts such as lawyers, accountants, real-estate agents, and
even customers - you can find these people. We replaced two of our bank loans
with private money last year. That move saved us over $200,000 a year in
payments and eliminated the tedious reports and projections that the banks needed.
To
be completely honest, I started keeping an eye out for alternative financing years
ago when we had just opened two washes. I kept a list of potential lenders. I’d
think of a person or different financial avenue and follow up. One financing
opportunity I found was with a local credit union. With a little work, you will
discover that a carwash can be a very attractive proposition for the right
lender.
Analetto: What marketing activities were most effective in driving
traffic to your car washes during the 4-year slowdown?
Mike Black: There’s really no
magic bullet. You have to do lots of small stuff and keep figuring out new ways
to get people onto your property. I remember stapling 1,000 business cards with
a coupon code for a free express wash to copies of our wash menu. Driving to every
realtor office I could find, I’d walk in, ask how many agents worked in the
office, and leave a free wash for each of them.
A
carwash is dominated by fixed costs, meaning that, to a point, it costs me the
same amount of money whether I wash cars or not. Giving away free washes
certainly has a downside, but it helped me keep the floor wet, and worked to
continuously build our customer base. Now that the weather has changed, other
operators I talk to are having decent months, while we’re breaking records! I
attribute our current situation to all the work we did when business was off.
Analetto: Would you
mind sharing some of the other advertising activities that worked well to get
people on your property?
Mike Black: Especially now that
the recession is in full swing, it’s important to realize that it’s not only
the carwash industry that’s getting hurt – everyone is looking to hold onto
their customer base. It’s important to search for advertising opportunities.
One example I remember was with the newspapers. Running regular ads was
expensive, and whenever we did run an ad, more often than not it would rain. Then,
one local newspaper started holding auctions. Local businesses could auction a
product or service for free. The newspaper kept the proceeds, and gave the
business the full retail value of the auction in advertising credits. We
auctioned 11 unlimited wash passes with a retail value of $4,000. Customers
learned about our unlimited wash pass program from the auction, it cost us very
little, we got 11 new customers, and a $4,000 budget to drive traffic with
advertising in the paper. Everybody wins. Now we’re doing this with several
other newspapers. Some of the local radio stations have also started a similar
program where every Wednesday they have an online sale of gift certificates at
50% off. We donate a $100 gift certificate, get visibility from the auction,
and $100 in free advertising on top of it. Basically, the rules have changed. There
are a lot of other companies in the same boat – struggling to stay afloat.
We’ve
been able to run cross-promotions with other local retailers where we offer
coupons to each other’s customers. One of the local oil change centers has
driven so many people to us that we’re now giving a free car wash with every
oil change. The other thing that’s big is bartering services. If you need your place
to look good, but can’t afford landscaping, try giving a local landscaper free
passes that he can give to his customers. You’ll pick up more business from
their customers, and your site will look more inviting to draw in more traffic.
Also,
don’t underestimate the huge upside of offering fleet accounts. Whether it’s
Joe’s Plumbing, or Mary’s Catering, we go out and bang on the door of any
business with a truck that comes onto our property. Once they sign up, they get
a free upgrade to the next wash package, a fleet card programmed only for the
wash they select, and convenient monthly billing. Small businesses understand
the value of keeping their cars clean but need to control cost. By being able
to deliver a tremendous value, we get a regular customer that’s connected to
the community and loyal for life.
Analetto: Wow – you just
threw out example after example of marketing
promotions to drive traffic, is there one common thread that ties everything
together?
Mike Black: Yes. You have to build
value. We did a package called the “Econoclean” which gave an $8 discount on
interior services on Tuesdays, Wednesdays, and Thursdays. Normally $28 for an
interior super clean with an express wash, the discount made this package only
$20 which has been a magic number. These normally slow days are now some of our
busiest. People stop in and ask “Don’t you have some special promotion today?”
Everyone is looking for something. When you deliver a great value they talk
about it.
We’ve
had similar success with our “Kruz Klean - Unlimited Family Wash Pass”. Rather
than try to control the pass to a single vehicle, we let customers register two
cars for our middle package at $29.99 for the month. Kruz Klean has become a
brand within the brand with its own logo and sticker. When the customer puts
their card into the automated attendant it gives them a special menu with
significant discounts. And now I’m going to other retailers and asking them to
give my Kruz Klean customers exclusive discounts. The customer gets a
tremendous value, and I get to sleep easier knowing that the revenue from the
pass now pays the mortgage at one of my properties whether I open or not.
Analetto: You’ve told
me before that you never changed your hours or closed early during the last 4
years that were slow. Can you tell us how you managed to do that?
Mike Black: At the end of the day
it comes down to the customer service. At Valet, rain days are “practice” days
when we do our training, maintenance, and preparation for the next “game day”.
Except Christmas day and on the occasional brutal snow storm when we’ll close
an hour early to get employees home safely, we never shut down. We were so slow
at times over the last 4 years that we had to create training programs just to
keep busy – but we’re in a better position now because of it.
Today’s
customer is often tired and in a bad mood. If he can leave your site feeling
like a winner, with respect, having received a great value – that’s the Holy
Grail. When you deliver that level of customer service, you’re not competing
for a carwash, you’re competing for the $10 that customer has in his pocket to
spend on feeling good that day. We may be educated in carwashing, but the slow
times are a chance to read, learn, and train in customer service. You’ve got to
train in the downtime to educate yourself and your employees to be ready for
the next “game day”.
Analetto: You’ve
talked a lot about getting people on your property. What have you been doing to
get more revenue from them while they’re there?
Mike Black: The real question is
what haven’t we done. For us, vended drinking water has been a great seller. We
installed a free standing, self serve, RO water filling station with an ozone
rinse for the cap & bottle, put out a great big sign on the road that we
refill 5 gallon jugs, and customers pull right up. It’s convenient for parents
who can back in and fill the jugs while the kids stay in the car watching TV.
And when a local business stops in to fill 10 jugs at a time, we’re out there
asking if they use our car wash, free coupon in hand.
Windshield
wiper blades are another great add-on. We offer free installation and when a
customer buys blades we make a big production out of it. The attendant pulls
out a tape measure to double check sizing, puts a towel down on the hood, lifts
the wiper arm and places another towel on the cowling. By the time we’re done,
the next customer in line is asking us to replace his blades too!
Analetto: So what’s
next? What are you doing now to be better prepared for the next slowdown?
Mike Black: The most important
thing I’m doing is building ways to communicate directly with my customers.
You’ve got to embrace the new stuff. You’ve got to get onto Facebook and the other
social networking sites. I don’t do this myself, my employees do! My job is
just to make sure it gets done. We also recently signed up for a text marketing service. Customers subscribe by sending a
text message to a number we advertise to receive special discounts. Once we get
the database built up, we can send a promo to every subscriber’s phone in a
matter of seconds. Now when it’s pouring rain, I can send out a text message
with a code for a free set of our discount wiper blades with an interior
detail. Once on my property I might be able to upgrade their wiper blades to
our premium brand or possibly offer additional detailing services. Most
important is that I’ll have an opportunity to make that customer feel good
about getting their car detailed on an otherwise wet and dreary day.
Conditions
like weather and economy are outside of our control. What you have to remember
is that everything you do during a downturn can put you in a better position
when things improve. Over the last four years, it seemed at times like we
weren’t getting anywhere. Now it’s obvious that everything we did prepared us
to take advantage of the change in weather we’re getting now. As difficult as
these times are, a good operator will come out more successful at the end
because of what he does during the downturn.
