A Tale of Four Car Washes

Case HistoryDRB Systems, Inc. ran an interesting science experiment over the course of 18 months that produced some surprising and highly educational results.

Our goal was to test a market where one site replaced their greeters with pay stations while the other sites did not. What impact would the pay stations have on the site that installed them? Would volume drop or rise? How about revenue and labor costs?

Below, are the results of that study. You might find them quite interesting and perhaps a road map for your car wash working to survive in this economy. Before you look at the numbers, let’s cover a few details to make sure that we are comparing apples to apples.

  1. Each site was measured for two nine-month periods. The first period was prior to adding the pay stations at site #1, and the second period was after adding the pay stations.
  2. Each site in this study is in the same major metropolitan area, and all the washes are within an area with a diameter of 29 miles. In other words, the furthest two sites are 29 miles apart and the other sites are within a circle containing those two sites.
  3. Each site is run by a hands-on, single site operator. In our estimation, no operator was below a B minus. Meaning, they are all nice looking, well-run car washes with good locations.
  4. Three of the four are primarily exterior sites, while one is primarily a full service.
  5. When looking at the labor numbers, it should be noted that each site calculates their labor dollars-per-car slightly differently. The key point is that these operators all appear to have consistently measured that number between each period.
  6. Our agreement with these operators was that we could use their numbers, but not reveal the names or locations. For the sake of conversation, these sites will be referred to as 1, 2, 3, and 4.

Here are the results:

Site #1

  1. Site Demographics  

    1. Exterior only car wash
    2. In business for more than 40 years
    3. Average income per household in the car wash zip code as measured in 2009 was $37,597
  2. Big Changes?
    1. This site added three Xpress Pay Terminals on 9/1/2009, complete with FastPass (RFID). The site had been using the Automatic Recharge Module (ARM) for six months before the addition of pay stations, and continued to use that product in conjunction with FastPass.
    2. New signage was placed on a canopy that was built over the pay station area.
  3. Results

     
      9/1/2008 thru
    5/31/2009
    9/1/2009 thru
    5/31/2010
    Difference
    Cars 59,388 72,966 +22.9%
    $/Car

    $7.56

    $7.86 +4.0%
    Extra/Car $1.91 $2.31 +20.9%
    Sales $449, 122 $573,680 +27.7%
    Labor $/Car $0.54 $0.42 -22.2%
    Labor % 7.1% 5.3% -25.3%

Site #2

  1. Site Demographics
    1. 8 miles from site #1
    2. This site operates as a flex serve, offering interior cleaning as an after-tunnel service
    3. In operation since 2002
    4. Average income per household in the car wash zip code as measured in 2009 was $65,106
  2. Big Changes?
    1. Added Automatic Recharge Module in 2007
  3. Results
     
      9/1/2008 thru
    5/31/2009
    9/1/2009 thru
    5/31/2010
    Difference
    Cars 55,810 61,512 +10.2%
    $/Car

    $11.97

    $11.99 +0.2%
    Extra/Car $3.18 $2.71 -14.8%
    Sales $658,953 $728,283 +10.5%
    Labor $/Car $2.81 $2.40 -14.6%
    Labor % 23.5% 20.0% -14.9%

Site #3

  1. Site Demographics
    1. 6 miles from site #1
    2. Traditional full service car wash with a small volume of exterior only
    3. In business for more than 40 years
    4. Average income per household in the car wash zip code as measured in 2009 was $41,493
  2. Big Changes?
    1. None recorded
  3. Results

      9/1/2008 thru
    5/31/2009
    9/1/2009 thru
    5/31/2010
    Difference
    Cars 38,351 40,943 +6.8%
    $/Car

    $15.94

    $16.14 +1.3%
    Extra/Car $4.78 $4.90 +2.5%
    Sales $631,117 $678,769 +7.6%
    Labor $/Car $7.15 $7.33 +2.5%
    Labor % 44.9% 45.4% +1.1%

Site #4

  1. Site Demographics
    1. 21 miles from Site #1
    2. Exterior only car wash that offers a few detail services
    3. In business for more than 40 years
    4. Average income per household in the car wash zip code as measured in 2009 was $60,281
  2. Big Changes in the Past Two Years?
    1. Tore down and completely rebuilt street sign
    2. Added tire shine machine to tunnel package
  3. Results

      9/1/2008 thru
    5/31/2009
    9/1/2009 thru
    5/31/2010
    Difference
    Cars 38,010 42,350 +11.4%
    $/Car

    $9.84

    $9.20 -6.5%
    Extra/Car $2.09 $2.15 +2.9%
    Sales $374,183 $389,271 +4.0%
    Labor $/Car $1.03 $0.85 -17.5%
    Labor % 10.4% 9.2% -11.5%

     

Final Thoughts

These numbers surprised us. We have heard and continue to hear stories from our customers that have moved from traditional greeters to pay stations and see substantial growth in volume and revenue, which led us to this experiment. Yet clearly, this is one experiment in one place and at one time. It is very difficult to control for variables and we admittedly did not spend the extra time to exhaustively review each site for other factors that could have affected the results.

On the other hand, looking at the numbers at face value, it matches experiences that we’ve heard elsewhere. DRB Systems, Inc. has heard many references to the idea that adding pay stations increases volume and revenue, and this test seems to bear that out. In the case of site #1, the operator in question reported to us that he had gotten his investment back in six months; and, given the size of the initial investment, the payback is going to remain substantial for the upcoming years.

Many operators may now be asking themselves, “Okay, but why would pay stations create such a volume and revenue increase?” When this question was put to the operator, his answers were relatively straightforward.

First, the speed and convenience of the FastPass and ARM systems are very attractive offerings to the time-pressed consumer. Driving up to the gate, waiting a few seconds, and then pulling to the tunnel is the sort of thing that, once the consumer has had their first experience, they no longer want to stop and place their order each visit. As the saying goes, “once you’ve had a taste of the good life, it’s hard to go back.”

Second, the modern consumer wants to control their own transaction at their speed and in the direction they want to go. Perhaps this is because of the rise of the internet and more tech-savvy consumers. But, once the consumer gets comfortable with buying their services at their own pace and on their own path, they are uninterested in going back to the old ways. How often have you missed the days of the travel agent or the bank teller?

Perhaps not every site can justify the substantial investment of going with pay stations. In the case of the operator of site #1, he feels that he couldn’t afford to NOT do so – especially with the fear of a competitor down the street possibly beating him to the punch.

Have comments or questions about how this experiment was conducted? Want more information? Contact us via our contact form, by phone at 1-800-336-6338 or via email at info@drbsystems.com.