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Comments (26)

Aug 15, 2020 - 2:08am

It seems like a highly fragmented business. There is a tremendous amount of employee turnover and it depends on very low labor cost. Very little opportunity for automation.

Even if you managed to professionalize the industry you are still dealing with small local competitors willing to be scrappier and skirt rules to outcompete, for a time. Low/no barriers to entry mean a revolving door of competitors mis-pricing their product, putting you out of business while they go out of business.

You may be able to roll up in a city or region, but I would be amazed if a single car wash threw off over $1MM/yr in revenue with anything over a 20% margin. A whole lot of not worth it. And if you don't own the land it's a slippery slope.

I would avoid.

Aug 16, 2020 - 10:18pm

Can you please respond to the other guy's post above? Seems like it completely contradicts what "textbook logic" about roll-up strategy would dictate.


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Aug 19, 2020 - 3:47pm

The key is the subscription part IMO.

1st guy was pointing out the issues with a low barrier to entry, highly fragmented space that's extremely competitive and has low opps for value add.

2nd guy is pointing out that with the rise of subscription services, all of a sudden, roll up strategies offer value in that you can get actual "scale" benefits from a roll up of a city or town, lock-in w/ customers that creates a moat against competitors, efficiency savings from marketing spend against a measurable CLTV, etc.

Sep 16, 2020 - 4:53am

Would need to be super geographically targeted as well. If you rolled up a county or region's carwashes, you'd be able to help eliminate pricing pressure from the undercutting smaller players by buying them out. Then establishing a brand which cements your leading position not only to random passerbys but more importantly to all residents in said targeted area will help with organic customer acquisition as well as increase recurring customer revenue. Opens up possibilities of offering rewards or promotions to those who visit x-branded carwash locations. Just a spewing of my thoughts here but I think you would really need to be selective about where you choose to employ such a strategy

Aug 18, 2020 - 3:36am

Would take a good look at online marketing. I would always search on google for a car wash. Get 5 star ratings of 10k people (or buy that..) and increasing # of people will find your business without additional media spend.

All carwash in NW Europe are fully automated by the way.

Sep 23, 2020 - 12:37am

Agreed. Check out my post below regarding digital versus brick-and-mortar real estate. I believe car washes like self storage are premeditated acts that are destination locations. Random acts do not occur with these two industries or a slim amount. It's like getting hair cut... simple and harmless but to work up the courage to go is always delayed by laziness. I don't believe people actively hunt for car washes and it's more borne of last resort (my car is so messy I can't get a date).... while some demographics (blue collar) worship their cars and treat it with a lot of respect. I believe those customers heavily rely on the top rated car washes and would go out of their way for a 5-star experience. 

Aug 18, 2020 - 6:21am

Depends on the region. Automation % is very different in various geographies. Would not believe in a strategy that does not focus on automation unless you are in Asia. If your strategy takes into account the machines and potentially even benefits from this trend, could be interesting. Best way for a quick supplementary DD is to look at some of the equipment manufacturers because there are only a handful meaningful players and they will have all the data on fragmentation etc. PM me, if you want

Aug 19, 2020 - 5:18pm

Sounds like Skyler from Breaking Bad

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Aug 19, 2020 - 6:15pm

A family member of mine has a car wash business. His grandkids can go to any college they want. He plays golf everyday and living life. He also has a 4th grade education too. Know your market.... Good luck!

Greed is Good!
  • 1
Aug 19, 2020 - 9:02pm

I see car washes as decent cash flowing businesses if you can find ones that check the right boxes which are newer equipment, mostly automated, good car traffic, etc. I've heard there are some peculiarities to car washes to watch out for such a land ownership rights but that goes for any asset.

Although there are PE firms out there rolling up car washes, the Mister Carwash is a good example, I see it being a tougher strategy for an individual to implement. You would need a heavy ops effort to acquire multiple car washes in a region, coordinate S&M efforts, make sure you have appropriate staffing, a subscription model, a mobile app (pretty sure some of these chains have apps now) not to mention at least a few million in capital.

If you're looking for a cash flowing side hustle, I'm sure you could buy an established car wash, make some minor tweaks to it, increase margins slightly and have it be a 20% CoC type of asset. I think it would be harder to do a Mister Carwash type of play, even on a smaller scale, I don't think the synergies become apparent unless you put a lot of effort into it. Just my opinion though.

Sep 13, 2020 - 8:18pm

Do you guys believe that car washes are solely reliant on drive-by traffic? I personally believe it's location and SEO driven now. People google where the closest decent car wash is and will go there (premeditated). Most "car wash" experts say that drive-by traffic for the random car wash is vital... I don't believe it. How many of you guys randomly decide to get a car wash when you see one? I can't imagine that happening...

Sep 16, 2020 - 8:56pm

You can use search volume results pulled from AdWords to answer that question (right down to geo)a SEO is meaningless now with most of the top of page real estate being swallowed by AdWords results. 

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