The last few years has seen a veritable explosion in the number of car washes opening around us.
It seems like every third building being erected in Cheyenne is a car wash. The other two being banks and drive-thru coffee shops.
There’s a reason for the sudden popularity in (usually franchise) automated car washes: subscriptions.
These new car washes all seem to be selling monthly subscriptions that allow those who buy them the ability to wash their car as often as they’d like.
It’s convenient, easy to justify, and can make sense for someone who drives past the same car wash every day.
Most automated car washes have a set price per wash. Usually about half of the cheapest subscription cost.
This entices customers to justify a subscription with the idea that it would more than cover the cost of two washes in a month.
Under the assumption that washing a car more than once a month is common. Which, it turns out, isn’t.
The car wash industry in the United States sees revenues of over $14 billion annually. Most experts recommend a bi-weekly car wash schedule.
For Wyoming, I personally recommend twice a month during the summer and every week during the winter. Assuming you have a paint job you’d like to keep intact. Whether or not you use a touch or touchless wash is your call.
The reality is that most people don’t wash that often. Including myself.
Our family vehicle gets washed about once a month, whatever the time of year. Because we’re busy.
And we don’t have a subscription for it anywhere. And I’m not the primary driver for that vehicle. My wife is. And her schedule makes my schedule look amateurish by comparison. That’s reality.
And that reality is one of the things car washes are counting on.
While most subscription buyers use their new access a lot during the first portion of ownership, they tend to flag off and use it hardly at all in the long term. While still paying.
Most subscription-based services like car washes and fitness centers bank on this phenomenon. Once the “new and shiny” wears off, the routine payments continue, but the use of the service doesn’t.
So how much profit is in this subscription plan? I contacted the managers of several car washes in the area of Cheyenne and could only get one to talk to me about this. And that was under the condition that I not name them or their company (which is part of a franchise).
I was told that the profit per wash depends on the wash chosen, but the cheapest on their menu has a net profit of about $2-3 per vehicle, depending on the vehicle’s size.
Larger vehicles require more soap, etc. and thus cost a few cents more to wash. Higher cost washes net higher profits as well.
On a subscription, the profits per month are much higher as the average subscription cost is usually more than the price of two of the lowest-cost washes.
If the customer uses the subscription once per month, the car wash stands to make more profit than had it merely sold two washes to the customer instead.
And customers who use the wash more often because of the subscription are more likely to opt for the higher-cost washes, which net higher margins.
The greatest benefit, however, is stability of income. If a car wash has 1,000 active subscriptions per month, for example, at $15 each, that’s $15,000 coming in every month. Guaranteed.
Which makes access to lower-interest business loans, payroll, and many other things much easier for the business’ owner or manager. Rather than be totally dependent on traffic alone, the car wash now has a base income to cover much of its operations.
That stability has meant a lot of change in the car wash industry. As automation has increased, the speed with which a single customer gets a wash also increased.
More speed equals more available washes per day. More washes equals more profit. Throw in the subscription idea with its base income promise and suddenly car washes start to look pretty sexy to investors.
And the industry is booming. Nationally, the average customer drives three miles or less to the car wash, but more people are using car washes than ever before.
The days of washing a car on the front lawn are mostly gone. Today, we drive through the car wash with the A/C on and watch the colorful soaps do their thing.
Is there car wash oversaturation? In some places, probably. Here in Cheyenne? Not likely.
The business case remains and this being America, people are going to jump on board if there’s money to be made.
Aaron Turpen can be reached at: TurpenAaron@gmail.com
