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Express Car Wash

12 replies created 8 months ago
posted by jessie.chimni 8 months ago

I am planning to build an Express Carwash in Northern California and I am looking for some consulting help to validate the site and associated financial projections which I already have. I have identified the lot and also had a reputed equipment manufacturer develop a performa for me. The key characteristics of the location are:

Traffic count - 31,000 cars/day
commercial area surrounded by residential homes
Speed Limit is 40 miles/Hr. But the location is between two traffic lights so the speed is slower in front of the lot
Lot size: I can buy either an acre or 1.5 acre
Competition - 1 full service car wash within 3 miles radius

It would be great if i can also speak with an existing express wash owner/operator for some advice.


Thanks,

Jessie

Replies

reply by Robert Roman 8 months ago

http://carwashplan.com/site_proforma_analysis

http://carwashplan.com/feasibility_study

reply by AutoWashUSA 8 months ago

Just by looking at the traffic count, I think it's a difficult site if you need to build from scratch. Nowadays you'll need about $1.5 to $2M to create a decent facility that can process cars fast, but 31,000 cars passing by will yield about 150 cars per day average (0.5%). Can you service your debt with those numbers and still pay for all other expenses? Unlikely. Be careful, don't become another statistic of failed businesses. Unless of course you have $2M burning in your pocket. If you won't have to service big debt, it might work.

reply by jessie.chimni 8 months ago

Wow! That's it?

My performa is based on the following number of cars washed:

Year 1: 77,000
Year 2: 104,000
Year 3: 112,000

This, of course, is for an express wash and not a Full Serve

Jessie

reply by AutoWashUSA 8 months ago

Your first year (77,000) translates to an average of about 214 cars washed per day. I'm not saying it's impossible because this isn't a big number. But my observation relates to the traffic count. It's too low to yield this 214 daily average. What's the wash average ticket you expect? Will it cover all your expenses even if you wash 77,000 cars? Of course weather, per-capita income of the area, demographics, etc... all play a role, but I'd stay realistic with a rule of thumb of 0.5% of traffic count capture. How much debt will you need to service after your doors are open?

reply by jessie.chimni 8 months ago

The average wash ticket is expected to 11.0, with the services being priced at: 7, 9, 13 and 17.

Per capita income in that area is on the lower end - 31,000

Based on the performa, the business is profitable with 77,000 cars being washed. The business will have debt of 80%. The land will be owned and debt payments amortized over 20 years. Is the .5% capture rate for first year only?

Thanks,

Jessie

650-678-0320

reply by AutoWashUSA 8 months ago

Low traffic count and low per capita income. If I were you I would not touch this.

Not to mention CA has its own tax structure, meaning any profits will be taxed twice (state and federal) depending also on if you will have a couple of LLCs or one Inc, etc.

Good news is you'll be able to amortize assets, but regardless of entity structure and taxes, as an example, my area is medium to high income ($120K average) and my street traffic count is about 55 to 60K. I have a short tunnel and I dry down at the end - this limits my count - but I've had decent growth over the years and I'm the most expensive wash in the area. My top wash is $18 with sales tax included.

Also, with 4 items on the menu and that per capita income, expect $7 sales to be at least 50%. Is sales tax included in the $7? 80% debt of how much? $2M?

See, I'm not trying to discourage you, but I bought my location from a guy who had to walk away from all his equity - I didn't pay a dime out of pocket, I just assumed his note (debt) and he was glad I did - don't be that guy.

Don't expect to sell express washes at $17 from such low per capita income area, unless you see new higher end developments coming in soon.

In my opinion you might get those volumes you project if your basic wash is $5.

reply by jessie.chimni 8 months ago

Thanks for your time and advice. Is there a number I can reach you at?

reply by AutoWashUSA 8 months ago

I rather not publish my number here.

Just keep in mind that when the rubber meets the road things get really different. If you get a $10,000/mo mortgage you need to be able to cough up much more than that every month - think of all the operational expenses you'll have, insurance, utilities, your salary (if any), employees, advertising, repairs and maintenance, not to mention all the very expensive permits to build, etc... Pencil out the numbers, nothing is impossible, it's just a mater of reason. Numbers don't lie. Good luck!

reply by Robert Roman 8 months ago

Sorry, I can’t stand by when someone tries to blow smoke up someone’s wassu.

“Nowadays you'll need about $1.5 to $2M to create a decent facility”

The last couple of express projects I worked on in CA the dirt alone was $1.0 million.

“….31,000 cars passing by will yield about 150 cars per day average (0.5%).…”

0.005 is capture rate for most in-bays.

However, this guy’s reputable equipment manufacturer predicts 112,000 cars or capture rate of 0.099 based on 365 days or .0115 based on 312 days.

If this guy is reading his OEM pro forma study, the prediction is would be made with an analogue-based model that considers 8 to 10 site location variables plus demographic component that also considers several factors.

What is your prediction based on?

Per capita income in CA is about $30,000. So, $31,000 is actually above average.

“Also, with 4 items on the menu and that per capita income, expect $7 sales to be at least 50%.”

Most of my clients with express average over $10, base price $5.00 or so, top package $13 of so. Usually, over 25 percent of customers buy top package.

So, your advice, none of which is based on standard research methods, is to abandon ship.

“If I were you I would not touch this.”

“I rather not publish my number here.”

My advice is to get some professional advice.

www.carwashplan.com

reply by jessie.chimni 8 months ago

Thanks Roman! Yes, I plan to get some professional advice!

Based on my research the, the closest EE is 5-6 miles away and closest FS is 2.7 miles. The pricing at the EE is

8,10,13,17. The FS also offers an exterior only wash at 12.99.

cheers,

Jessie

reply by AutoWashUSA 8 months ago

$1M to build from scratch, including land? Depends on what kind of facility is in your mind. Like I've said, good luck. I'm not trying to be an a$$ or anything, I think a dose of reality is paramount here.

reply by sraha 18 days ago

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http://www.pakrunco.com/launch-_car_wash-_%D8%B1%D8%A7%D9%87_%D8%A7%D9%86%D8%AF%D8%A7%D8%B2%DB%8C_%DA%A9%D8%A7%D8%B1%D9%88%D8%A7%D8%B4

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