Why Albert Should Not Build His Self-Serve Car Wash

I have been meaning to write this blog post for a couple of weeks now. I hesitated because I did not want to squelch Albert’s dreams of getting into the car wash business. You see, Albert emailed me after purchasing and reading my book “Car Wash Business 101, The #1 Car Wash Start-Up Guide”.  He thanked me for my information and actually gave me a good review on Amazon as well. “Thank-You Albert!”

I traded a couple emails with Albert because he was having trouble downloading the business plan template I provide. In an email I wrote “I am assuming you are putting in-bay automatics, correct? If not, I would rethink getting into the business as self-serves wand bays will not survive on their own”. In the last email he said “I am starting fairly moderate with 3 self bays and convert or add automatics in the very near future.  My friend has been in the detail business for many years and I will using his detailing services on site to supplement the self bays”.  Against my better judgement, I did not reply back to his last email. 

While I am encouraged that he will have a detail center on site, there are a number of problems with building a 3 bay self-serve car wash without any automatic bays.

There are too many fixed costs with the building of a car wash that cannot be absorbed by the income of a 3 bay self serve car wash. Let me put it this way… the land costs, the site work cost, permitting cost, engineering cost, architectural cost, tap-in fees, as well as plumbing, and electrical cost will all be very similar to the costs of putting in automatic bays and a good automatic bay will do 5-10 times the revenue as one self serve bay. In essence, you have all these start-up costs that will be the same no matter what you build, so why not make sure you generate enough income to cover it.

The numbers will simply not work on a stand alone 3 bay self-serve. Here is my napkin analysis:

• Land – ($100k – $250K)
• Site Work – ($75k – $200k)
• Soft Fees Including architectural, engineering, impact, traffic studies, appraisals, loan closing costs, construction permits, etc. ($50k – $150k)
• Sewer/Water Tap-Ins – ($10k – $150k) Make sure you research this! It vary’s widely among communities and can be a deal killer.
• Site Work including earthwork, foundation, asphalt, and landscaping ($200k – $300k)
• Building Construction Including Electrical and Plumbing ($350k – $500k)
• Equipment – ($50k)
• Signage – ($15k-$25k)
• Security System – ($5k-$15k)

Ok, let’s take the best case scenario and say the entire project is done on the cheap and the total budget for the wash ends up being $600k and we’ll also reduce total expenses to only 25% of gross. Let’s say that Albert puts up a great wash and does double the national average for self-serves at $1200 a month per bay and grosses a whopping 3 (bays) x $1200 x 2 (double the national average) at $8,035 a month gross. Let’s even add in another $1,000 a month for vac and vending income. For a total gross of $9,035 a month. Now let’s deduct the monthly utility and chemical expenses at 25% of gross letting the business net $6776 a month. Now let’s see what the business will cash flow if Albert takes out a loan for $480,000 at 5% after he writes a check for $120,000 as a down payment. The monthly payment without property taxes would be $3,168 add in property taxes and insurance and the cost for an attendant and and you can probably easily add another $1,000 month in to the expense category. So now you are at $4,168 a month for debt service and insurance. When it is all said and done it leaves $2,608 a month in profit and that is if he is doing double the national average in sales for self-serve bays which is most likely a pipe dream. If he does just the national average at $1200 per month per bay it becomes a cash flow loser very quickly not to mention that he forked out $120,000 at closing to build the wash.

Lastly, while I still feel strongly about the future of modern self-serve car washes national trends show that consumer’s are more and more apathetic about washing their cars in “wand” bays moving more to automatic and express bay washes that offer more affordable cleaning solutions.

All-in-all, Albert only needs to rethink his washes configuration. If the land does not allow for additional automatic bays he could open up two automatic bays and only increase his equipment budget by about $350,000 and gain all the additional income and market share that an in-bay automatic configuration will gain without increasing his overall building and construction costs!

Albert, please rethink this!

Main add value’s from this blog:

The stand alone self-serve car wash model without automatic bays would be a very risky venture in almost every case. Today’s market place makes it a bad business play.

Buzz Glover is the author of Car Wash Business 101, a book written for people who are interested in getting into the car wash business. He has also built two self serve car washes with in-bay automatics, and bought a third wash.