By Kim Sharrah, Associate Editor
With high gasoline pricessqueezing fuel margins, theaddition of a car wash canturn a major profit for operatorslooking to make up some of therevenue lost at the pumps. It all comesdown to determining the right equipment,pricing for the local market andweather conditions.
A New Profit Center
Kwik Trip Inc., based in La Crosse, Wis.,operates 68 car wash sites in conjunctionwith its c-stores. The chain entered the carwash sector about 10 years ago to carveout a new niche in the market.
Most of the car washes are part of newconstruction and included in the originalblue prints. This eliminates the problem ofhaving to find existing sites with enoughland to add a wash.
Kwik Trip considers several factorssuch as traffic count, municipal restrictionsand market saturation to determineif a location is ideal for a car wash.
“The car wash is built in conjunctionwith the c-store construction,” said ErikPeterson, director of store engineeringfor Kwik Trip. “We see if the location willhave the ability to support the programfully, and then open the car wash simultaneouslywith the c-store.”
Kwik Trip originally began car washoperations with self-serve in-bay automaticsbecause of labor costs. Thereis typically one person on staff whosejob duties include cleaning and maintainingthe car wash, but the actualoperation is unattended.
With its unattended in-bay automaticcar wash, Kwik Trip can average61 washes per day. The advantages ofthis system are the small amount ofspace required for the building andthe ability to build multiple stationsnext to each other. The in-bay automaticscan also be a 24/7 profitcenter since it can be kept open withoutemployee supervision.
Weighing the Costs
Traditionally, c-stores operatorshave opted for the in-bay automaticsystems, according to Mark Thorsby,executive director for the InternationalCarwash Association. These systemsoffer easy operation, no labor costs andlittle maintenance. But as car washescontinue to become more popular forc-stores, operators are looking for newequipment options.
“As gas margins come down, retailershave to replace that money somewhereelse,” said Thorsby. “Some people areturning to conveyer systems because theycan generate more revenue.”
A conveyer tunnel traditionally takesup more land and requires multiple attendants.Putting in a conveyer tunnel isa bigger investment upfront, requiringmore expensive equipment and biggerbuildings, but it can handle about 50 carsper hour versus an in-bay automatic thatcan wash about eight to 10 cars per hour.
A new type of conveyer system, theexpress tunnel, is becoming very popular,especially in the Southeast. Accordingto Shirah Kellman, financing specialist forButler Capital, which provides car washequipment financing, express exteriorsallow very quick cleaning, usually clockingin around one minute as compared toa traditional four-minute wash.
Retailers also need to decide whetherto go with friction or touch-free technology.Traditionally, in-bay automaticsystems are touch-free and conveyer tunnelsuse friction technology. Both typesof equipment are equally popular and ahybrid technology of the two has startedgaining ground in the market.
With all these factors to consider, choosinga wash system is dependent on howmuch money and time a retailer wantsto invest in the equipment. A stationaryin-bay wash, including land, building and equipment costs, can run typicallybetween $200,000 and $400,000, accordingto Thorsby.
Retailers can turn to companies suchButler Capital to help guide them duringthe process. Another firm, GenesisModular Carwash Building Systems, actsas a development company and handlesall the components of setting up a new carwash location, from securing permits toconstructing the actual building. Servicessuch as these can be invaluable tooperators who are looking for guidancewhen making decisions for theircar wash operation.
One operator that opted to go witha conveyer wash was Grand Forks,N.D.-based Simonson Station Stores.Full-service car washes are available atseven of the chain’s 13 stores locatedthroughout North Dakota and Minnesota.
“We did research in our area beforedeciding to go with this type of wash,”said Julie Morse, store manager for theBemidji, Minn. location. “It depends onwhat the local market can bear and whatcustomers are willing to pay.”
The decision to add a car wash ontoan existing c-store site can be tricky. WadeBlumhagen, regional car wash managerfor Simonson, was in charge of the add-oncar washes for the chain’s seven locations.He had to consider positioning the washto ensure good visibility and user-friendliness.Sites need to offer enough room toenter and exit, and also to wait in line.
Morse agrees that one of the reasonsfor having a car wash onsite with itsc-store operation is to remain competitivewith other washes in the area.
“We can offer customers a top-qualitywash along with gas and a c-store in onelocation,” said Morse. “Having more tooffer gives us an edge.”
Plus, there are seasonal advantages.Customers at both Simonson’s and KwikTrip are affected by the brutal Midwestwinters. The salt on the roads drives a lotof traffic to the car wash.
“We can easily be four times as busyduring January and February,” said Morse.“The roads are sloppier and people can’twash their cars at home anymore.”
Simonson and Kwik Trip both offercustomers three different ways to pay fortheir car washat the pump, inside thestore or at a kiosk at the wash entrance.
“It’s important to market the car washat points of interruption so that customersstart to take notice of their options,” saidBlumhagen. “Well-positioned signage andbanners can really help drive businesstowards the wash.”
Special deals between gas and carwash purchases are becoming increasinglypopular with the rising gas prices.Simonson Station Stores offers customers a loyalty card thatgives one stamp forevery eight gallonsof gasoline or dieselfuel purchased. Afterthe card is filled, itcan be redeemed fora free car wash.
Wash prices typicallystart around$6 and increase bydollar increments.Customers are morewilling to upgradewash packages whenusing a credit card orprepaid card, saidRyan Carlson, salesand marketing manager for WashCard, a prepaid, rechargeablecard. The majority of retailers encourage the prepaid wash cardpurchases or the use of proprietary cards to cut down on creditcard fees.
Kwik Trip offers a proprietary wash card that can be purchasedand refilled over the Internet and in the store. The car wash ispromoted through pump toppers, counter mats, mailers and suggestiveselling by employees. The 335-store chain has calculatedthat about 90% of its washes are discounted.
Rojo Car Wash & Shell Station in Norwood, Mass., usesWashCard at its two car wash locations.
“The prepaid card really encourages customers to spendmore than they would with cash,” said Patrick Mosesso, generalmanager for Rojo. “It’s easier to get them to upgrade to a moreexpensive wash and then there’s a higher profit margin for us.”
Mosesso also runs fuel and wash promotions if customersuse a proprietary Shell card or the WashCards,offering them a 3% return on their fuel purchases in the form of carwash services.