This is interesting because I've noticed several new constructions projects in the area that turned out to be car washes, and I was a little dumbfounded. However, I drive an 18-year-old car with...
This is interesting because I've noticed several new constructions projects in the area that turned out to be car washes, and I was a little dumbfounded. However, I drive an 18-year-old car with over 140k miles on it and am firmly in the "wash it once a year whether it needs it or not" category. So maybe I am not the target audience.
“I don’t want to be too bullish and say there’s no way this could fail,” said Jeffrey Cicurel, director of capital markets at real estate brokerage JLL. “But Americans are moving to the suburbs, and Americans want quality retail, and car washes come with that.”
Statements like this make me think this is a kind of pump and dump scheme for developers. Build up the hype around it. "Sure we can't tell you it's a sure thing [wink, wink] but we don't want you to miss out on this golden opportunity." Meanwhile, banks hear about this new trend and offer financing, the operators take out loans, splash out for new construction and the equipment, and probably have to buy into maintenance and supply contracts. The developers and manufacturers get paid, and when the bottom falls out, the operators and the banks are left holding the bag. The community has these derelict car wash lots eyesores that are completely useless as anything else. So they sit there until real estate gets so tight that the cost of razing it so it can be made into productive space again is worth it.
I've been feeling super cynical about things like this, so I'd love someone to tell me I'm wrong and why car washes are the best thing since sliced bread.
“[S]aturation bans” have emerged in nearby northeast Ohio cities such as Stow and Parma, Cleveland Scene reports. In Buffalo, New York, a surge of suburban car wash openings in 2023 triggered opposition from nearby residents and community members — including the owners of an existing car wash nearby. New Jersey, Louisiana and Alaska are also seeing their own car wash booms as national chains like Mister Car Wash and Zips Car Wash expand.
Last fall, the planning commission in Lebanon, Tennessee, rejected a permit to build a new Mister Car Wash location, arguing that the largely automated facility wasn’t the best use for a prominent Main Street site. In response, the company is suing.
In a country with roughly 280 million private cars and trucks, can there be such a thing as too many car washes? A growing number of city leaders seem to think so. Unlike stores, restaurants or other businesses, most self-service car washes don’t pay sales taxes to their host communities. And they don’t bring much else to the table in terms of local benefits, critics argue; like drive-through-only fast-food outlets (which have also been the target of local bans), the latest generation of automated facilities provide few jobs even as they pump out noise, traffic congestion and vehicle emissions.
But where neighbors might see a too-crowded market, investors see the beginning of a boom. From the Snow Belt to the Sunbelt, companies are scrambling to add locations and grab a piece of a $14 billion-plus industry. With 60,000 locations across the US, the sector has been expanding at roughly 5% annually, with some forecasts predicting the market to double by 2030. More car washes were built in the last decade than all the preceding years combined.
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The car wash boom reflects a broader shift away from do-it-yourself car care habits. Like changing your own oil, soaping up the family auto in the driveway has increasingly become an artifact of decades past: The number of washes done at professional facilities jumped from 50% in 1996 to 79% in 2021, according to the International Car Wash Association.
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In recent years, car wash evolution has mirrored trends in technology and business practices, namely the replacement of human workers with machines. A chain called Benny’s in Baton Rouge, Louisiana, is credited with pioneering the “express exterior” model, with automated payment kiosks. These mostly unmanned tunnels now make up a bulk of the industry’s revenues, said Wulf, since they allow owners to slash labor and maintenance costs and obtain bulk savings on chemicals and other supplies. Even the industry that manufactures the technology and machines used at these locations has consolidated and vertically integrated, with Dover and National Car Wash Solutions dominating the market.
Water use has also declined as technology has improved: According to Rickwood, current technology uses about 50 gallons a wash, 80% of which is recycled. Going DIY with a hose and a bucket typically requires 150 gallons.
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But the industry’s biggest recent innovation involves its business model, which has increasingly focused on membership and recurring revenue.
Mister Car Wash, a chain picked up by private equity firm Leonard Green & Partners that has gone public and now has more than 400 US locations, was an early developer of subscription offerings. Users pay a monthly fee for unlimited washes, with plans starting around $20 a month before adding services like waxes and wheel polishes. (A basic a-la-carte wash runs for about $10 each.)
In analyzing usage patterns, the industry soon found that the convenience of wash memberships translated to higher profits. A typical non-member may come in three or four times a year, while a typical member gets that many washes each month. But at $20 a month, that’s a huge jump in annual spending — more than enough to cover the costs of accommodating heavy users who may scrub their SUVs dozens of times a month.
Yeah. Sales taxes are common, but you're not paying for the water, and income taxes are common, but there's no employees making any income. Aside from the direct service being provided, all the...
Yeah. Sales taxes are common, but you're not paying for the water, and income taxes are common, but there's no employees making any income. Aside from the direct service being provided, all the value is extracted from the host community
According to local lore, an automated car wash is a great way to launder money from other illicit sources, something the article doesn't consider. Of course, the owners aren't going to admit to...
According to local lore, an automated car wash is a great way to launder money from other illicit sources, something the article doesn't consider. Of course, the owners aren't going to admit to that, but it seems like a logical way to do it - who's going to audit if there is 1 car washed a day or 100 cars so verifying the throughput of cash is a guessing game.
Could just be lore, could be true. I can't tell. And that's the point.
With the decline of cash, that's probably less true than it once was. If everyone else is showing 90% card payments, and you're claiming 90% cash, that's a little suspicious.
With the decline of cash, that's probably less true than it once was. If everyone else is showing 90% card payments, and you're claiming 90% cash, that's a little suspicious.
Actually, car washes seem like the easiest possible business to audit if someone wanted to, since each individual customer can be observed from the street (as a car) and their is a purchase price...
Actually, car washes seem like the easiest possible business to audit if someone wanted to, since each individual customer can be observed from the street (as a car) and their is a purchase price "ceiling" for each car.
This is interesting because I've noticed several new constructions projects in the area that turned out to be car washes, and I was a little dumbfounded. However, I drive an 18-year-old car with over 140k miles on it and am firmly in the "wash it once a year whether it needs it or not" category. So maybe I am not the target audience.
Statements like this make me think this is a kind of pump and dump scheme for developers. Build up the hype around it. "Sure we can't tell you it's a sure thing [wink, wink] but we don't want you to miss out on this golden opportunity." Meanwhile, banks hear about this new trend and offer financing, the operators take out loans, splash out for new construction and the equipment, and probably have to buy into maintenance and supply contracts. The developers and manufacturers get paid, and when the bottom falls out, the operators and the banks are left holding the bag. The community has these derelict car wash lots eyesores that are completely useless as anything else. So they sit there until real estate gets so tight that the cost of razing it so it can be made into productive space again is worth it.
I've been feeling super cynical about things like this, so I'd love someone to tell me I'm wrong and why car washes are the best thing since sliced bread.
It seems like any business. There are risks and whoever is doing it will need to understand what they're getting into.
From the article:
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How does that work? Is this because it's a "service," and not all jurisdictions tax services?
Yeah. Sales taxes are common, but you're not paying for the water, and income taxes are common, but there's no employees making any income. Aside from the direct service being provided, all the value is extracted from the host community
According to local lore, an automated car wash is a great way to launder money from other illicit sources, something the article doesn't consider. Of course, the owners aren't going to admit to that, but it seems like a logical way to do it - who's going to audit if there is 1 car washed a day or 100 cars so verifying the throughput of cash is a guessing game.
Could just be lore, could be true. I can't tell. And that's the point.
With the decline of cash, that's probably less true than it once was. If everyone else is showing 90% card payments, and you're claiming 90% cash, that's a little suspicious.
Many of these standalone washes are subscription-based too. You pay monthly fee and their gate just scans your license plate whenever you roll up.
Actually, car washes seem like the easiest possible business to audit if someone wanted to, since each individual customer can be observed from the street (as a car) and their is a purchase price "ceiling" for each car.