Finding commercial real estate on which a successful conveyor car wash can be built is extremely challenging. Actually finding a site is not that hard. Finding one that has a good chance of being successful is. And, in some areas, finding a site where a car wash can be permitted to build at all is also very difficult. After you finish reading this article, the task will be even more challenging, because you will have all of the major variables to consider, and the factors are more numerous than might have been previously thought for a car wash.
The most frequent difficulty potential car wash owners have is that they fall in love with a piece of property before all the tough questions are asked. "Marry in haste, repent at leisure," Ben Franklin is reported as saying. When spending $.5M to $1.5M on a piece of property, and $2M to $2.5M for the entire project, looking under every rock to see if there are any potential problems would seem to make a lot of sense. The good news is that the downside of building a car wash where there is no realistic chance of success can be avoided. The further good news is that the task of finding a good site can proceed with greater success in the future when you know what to look for.
Here are the major variables to be considered:
- Zoning
There are three general categories that your site for a car wash can fall under. The first, obviously, is that the site is zoned for a car wash. In this case, the permitting process can usually proceed without much difficulty.
The second situation is where the site is not zoned for a car wash. In almost every case this situation will result in a long and expensive process to try to re-zone it, and there is no guarantee of success. Most new operators entering the business should try to avoid this situation.
The third situation is where a variance or a special use permit is required. This is the most frequent situation that a person attempting to build a car wash finds himself in. In this case it is strongly advised that you find a local attorney who appears before the local planning board with some frequency to help steer you through this process.
- Site Itself
There are 3 major considerations when assessing a site: first is the square footage, second is the exact shape of the site, and third is the access to the site.
In terms of square footage, simply put, the site has to be big enough to build the type of car wash that you want to build.
In terms of shape, the dimensions of the site have to conform to the car wash concept that you plan to build. Most conveyor sites need to be in a rectangular form, with the length of the site approximately 1/3 more than the width.
Another consideration when evaluating the site is to look at the access to the site itself. Is it on a corner, mid-block, or in a shopping center? Is there a median to be negotiated, and if so, is there a median cut? What is the overall distance to the site from the point at which a vehicle, coming from the opposite direction, can turn into the site, etc.
- Site Requirements
There are a large number of questions that need to be answered regarding site requirements. They are:
• What are the building setback requirements?
• What are the green space requirements?
• What are the parking space requirements?
• What are the detention area requirements?
• What are the restrictions on curb-cut placement?
• What are the curb-cut allowances?
• Is this a plan development use?
To assist you in navigating through all of the local codes and regulations, it is recommended that you engage a local engineering firm. Again, one of the chief requirements for hiring this firm should be the frequency with which they deal with local officials that govern the site approval process.
It must be determined how much the setback requirements take away from the dimensions of the site before someone really knows how much property they have that is usable for building.
- Signage
All of the variables that affect signage can be found in a careful analysis of the local sign code. It is important to note that these codes are being revised continuously; therefore, when you visit with the officials that control this area, it is important to ask whether there are any intended revisions being discussed. Sign codes can also be slightly different, depending upon how the real estate is zoned. So, there are general requirements, as well as specific requirements.
Of all the variables to be considered when looking at the total signage on the site, the setback requirements and the maximum size for the street signage are far and away the most important. If a street sign cannot be seen from the traffic approaching from either direction until a vehicle is almost on top of the property, it doesn’t matter how big the sign is or how well-designed it is. The objective is for the sign to be close enough to the street and large enough to be seen from at least 300’ in either direction.
Since the street sign is only one part of the total site signage program, there are many other variables that need to be considered as well. The major variables include the following:
• Total Signage Square Footage Allowed
• Maximum Size for Street Signage
• Sign Height
• Type of Sign (pole or monument)
• Signs on the Building
• Directional Signage
• Car Wash Menu Signage
• Individual Product Promotional Signage
• Instructional Signage
• Any Other Signage on the Property
The signage on a car wash property is so critical to a car wash's success and so much more complex than most other retail establishments, that there are professionals who specialize in consulting on this one topic alone. It is recommended that you either engage such a person or make sure to work closely with your sign company before finalizing the purchase of the location in order to be sure what the sign code requirements are going to be for the property.
- Traffic
This item is one of the variables viewed by most operators to be the most important variable to consider. It is extremely important, because the higher the traffic count, the greater the potential for the property. It's important to note that the type of car wash that is being built dictates minimum traffic counts needed, as well as what an individual operator believes that they need to be successful.
Determining the trend of traffic counts is equally important to knowing what the current traffic count is. Basically, the question that has to be answered, "Is the traffic going up or going down?" Also, what is the rate of movement and, most important of all, what factors are driving the rate of change? Additionally, if there is no change over an extended period of time, what is the reason for that? And, the projected growth rate for the traffic is an important consideration as well.
The speed of the traffic as it passes the site is extremely important to consider when evaluating a location. If the traffic is going too fast, a driver cannot react very well to the impulse created by signage to turn off and enter the site. The general rule of thumb that most industry observers would agree on is that 45 MPH or less is the ideal to strive for.
- Visibility
When considering site visibility, the ideal situation is when the street signage, the building, and the activity on the site can all be seen from at least 300’ in either direction. In my experience, it rarely occurs that all of these areas are visible. If you have to choose, the No. 1 consideration is visibility of the street signage.
- Population
After traffic count the amount of the population within a 1-mile, 2-mile, and 3-mile radius is considered by many to be the second most important criteria in selecting a site. No matter how high you rank this factor, it is critical, and the evaluation begins with the obvious: the denser the population, the better the opportunity for higher volume.
A better criterion for evaluation than 1-, 2-, or 3-mile radii, is to determine the polygon for the retail trade area in which the prospective property sits. A polygon is generally considered to be defined as the natural trade area in which people will drive to a site within 7 minutes, or approximately 2.3 miles, on average. Although it takes a little longer to construct these polygons, they are a more exact indication of potential customers.
The amount of population within these defined radii that is required to have enough of a customer base for the car wash is determined by (a) the type of car wash, (b) the percentage of customers that are local vs. drive-by for that type of car wash, and (c) the amount of competition that both already exists in a market and the amount of potential competition that can be anticipated to develop in that market.
Another factor to consider is the growth rate of the population. Oftentimes a car wash can be built today with the population less than what is required, because it can be determined with some certainty what is going to be built in the very near future.
The percentage of daytime population and the number of households that are renting are two additional factors that can be very important, depending upon the type of car wash and the particular concept.
- Competition
This factor is, in this writer’s opinion, one of the most important considerations to be looked at when deciding if a car wash should be built on a site, what type of car wash should be built, and what pricing should be on the menu. Interestingly enough, this is the area that is certainly looked at by new people entering the industry, but is most often quickly dismissed. Why? Everybody believes that they will do a much better job, and, thereby, vanquish all of the competition. What is recommended instead is that every car wash within the trade market be considered competition and that a share of market be determined that is realistic for a new car wash entering the market. Even if this share of market is overly optimistic, it still works with the idea that competition exists, and more often than not, will fight back to stay in business. There are only so many people in a market, and they will wash their car only so many times. So, looking at total potential washes to be delivered in a market and analyzing your potential share is a more solid approach than feeling sad for all the competitors that are going to go out of business once you open up.
- Nearby Businesses
The more reasons that a car wash customer has to come to the area surrounding your property, the greater the chance for increased frequency of visits. Keeping this in mind, the daily needs of local consumers are the first area to look at. This means that businesses like grocery stores, convenience stores, service stations, and local restaurants are first in importance. Right after that are the magnets for weekly shopping, such as big box retailers, malls, and chain specialty stores. As always, national names trump regional brand names, which in turn are generally more valuable than one-of-a-kind local entities.
- Utilities
The costs of sewer, water, gas, and electricity are critical for determining the viability of a car wash location. Tap fees and hook-up fees are becoming increasingly onerous, and, in some cases will knock out the viability of a project. There are some areas where these fees are running into the hundreds of thousands of dollars and making the building of a car wash impractical.
Ongoing costs, although growing, are usually more reasonable and can be absorbed as a normal cost of operation. Also, many municipalities have a history with car washes and will use this historical information to begin the process of charging a car wash for their resources.
When it comes to the cost of water, it is strongly recommended that a good reclaim system be installed and utilized for reclaiming a large portion of the freshwater usage.
- Cost of the Land
Surprisingly enough, the cost of the land is usually not the most critical factor in decision-making. For tunnel car washes successful operators have built on 1-acre parcels that range anywhere from $500K to $1.3M. The type of car wash and the expected revenues determine the decision to purchase a piece of land that will conform to the bottom-line requirements of a proforma. In some areas the cost of land is so prohibitive that no level of operational success can realistically make the numbers work. For the most part, however, operators are willing to pay a premium to obtain a site that meets all of the criteria.
- Impact of Marketing
When deciding whether or not to purchase a site, one of the criteria that should be considered, but often is not, is what the impact of a well-developed, successfully implemented marketing plan will be on site revenue. In most retail businesses the expectation is that this is the 'chicken' that comes before the 'egg', and large amounts are usually budgeted for first-year expenditures. Unfortunately, most car washes do not achieve their proforma, often simply because they have not expended the funds necessary to achieve their targets, but rather, have operated on the basis of 'build it and they will come'.
- Impact of Successful Operation of the Car Wash
The successful operation of a car wash can affect volume in a positive manner. In my experience, new operators overestimate how much better the performance of their car wash is going to be in relation to the competition. That is why competition is often neglected in deciding whether or not to build a new car wash.
An experienced operator usually has a much more realistic approach. Poor operators or even moderately successful operators will shy away from getting into an overly competitive situation. Superior operators (which all new operators believe they will be) will be aggressive, because they have a history of their better performance eventually overcoming competition they have faced.
As you can see, the above is not a cookie cutter formula. However, simply knowing all of the variables to be considered before making such a large investment will guide you in the right direction in terms of decision-making.
The following point may be the most important one that I can make in this article: Every evaluation has to be site-specific in nature.
For example, a site could have 12 of the 13 variables just perfect, and one variable could cause you to pass on a site. On the other hand, you may be looking at a site that has only 5 of the key variables that are favorable, but they outweigh the problems represented in the other factors.
When evaluating a location, it is recommended that you utilize the resources of someone who has evaluated many car wash sites in the past. Given the size of the investment required today to enter the car wash industry as an operator, it makes good financial sense to obtain the best analysis possible.
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