Choosing A Car Wash Location – Do What The Fast Food Franchises Do!

Yesterday I spent close to an hour on the phone with a franchise developer for DQ. We discussed what locations are acceptable to build a new DQ franchise on. I was curious if one of my car wash properties was acceptable after I needed to shut it down when I sold another location I owned about a mile down the road as part of a non-compete in the sale. Having spent almost a year with a local commercial real estate developer, I knew many of the factors they would want in allowing one of their new fast food franchisee’s to build a new unit. Our phone discussion only touched on a few of their requirements but what we discussed are typically the main factors.

In choosing a retail location, the first factor typically looked at is traffic count. We spent a good bit of our time discussing this. DQ requires a minimum of 20,000 vehicles average per day by location (they might be OK on just a bit less if many of the other criteria are met). This is a  very typical minimum for fast food franchises and seems to always be the starting point as to whether a potential location requires further review. What has me still scratching my head is that I was able to build my first car wash directly across the street from a corporate McDonalds. This is the same street that I am discussing with DQ but located one mile away. The vehicle count is around 14k average vehicles per day. Why did McDonalds build here? I am still not sure. I know that the McDonalds seems very busy and actually just went under a complete and, what looked like an expensive renovation. When I was researching the feasibility of my first wash I read somewhere that if you can buy real estate near a McDonalds most of your market research is done for you and most likely you will have all the demographics met for a good car wash location. I think that this holds true if, in fact, you can buy the land for a reasonable price. If the land costs are too high, a car wash is probably not a best use for that particular piece of real estate as it will be difficult to achieve the revenues required to justify the land costs. I paid just over $100k for about 1 acre directly across the street from this McDonalds. A bargain in my mind.

Speaking of 1 acre, obviously this will need to be a consideration in choosing any car wash location. The segment of the car wash industry you are moving into: self serve, express, or full-serve will determine what footprint your building will have, how much stacking room you will require and how much land you will require. You obviously can’t build on too small of a parcel or you will struggle to provide adequate room for all of your service offerings and for customers to “stack” or wait in line on those busy wash days. In my mind, one acre would be a minimum although I have seen stand alone In-Bay automatic owners (without self-serve bays) build on much smaller lots.

Ok, if you are successful in finding a location that has an acceptable traffic count, is large enough, and is affordable, what else should you look for? Well, there a still a bunch of factors, but in my opinion there three remaining factors that can be deal killers and they are somewhat related:

What is the speed limit of the road you are located on?

When I was first being mentored by a local commercial retail real estate expert, I would always review properties that had high volumes of traffic but were located on 45 MPH+ highways and usually located in between, or on the outskirts of a shopping districts. I was always advised that, even with the high traffic count, these were not ideal locations for retail business based on the higher speed limit. My first location had a speed limit of 35 MPH.

Is it in a shopping district?

When you look out from your prospective location, you want to see multiple national franchises. Peering out from the first car wash I built, you can see a McDonalds, a Pizza Hut, a Dollar General, a Bottom Dollar Supermarket, a Subway, a Rite Aid pharmacy, a Kinder Care day care, and a local PNC Bank. As you can see, all these merchants decided that this was a good location. You also want to be located where people shop and run their daily errands.

What is the population density in a three mile and five mile radius?

Having enough population or what I call roof tops near your business is a critical factor. Most franchises will not build on a lot that doesn’t meet this criteria. In my opinion, one of the reasons that many of the national franchises that were located near my first car wash, were able to get past the low traffic count was because the population density was good in 3 mile and 5 mile radius. The three mile radius had 21,746 homes and a population of 53,134 and the five mile radius had 62,514 homes and a population of 147,526. As you can see, many homes with many cars to be washed!

If you meet the basic criteria listed above (and that many fast food franchises will require) you can move on to all the remaining factors for consideration. These include: divided highways and turning lanes, corner properties, traffic light locations, curb cuts, ingress and egress, visibility, competition, community growth vs non-growth, apartments vs single family homes, income levels, etc.. I discuss all of these factors in my book “Car Wash Business 101: The #1 Car Wash Start-Up Guide” available here as a hard copy on Amazon or here as a download from my blog website!

 

Buzz Glover is the author of “Car Wash Business 101: The #1 Car Wash Start-Up Guide” available on amazon.com and a downloadable version at www.carwashbusiness101.com. Buzz Glover is also available for consulting for new car wash start-ups.

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