Building a Moat - Strategies to Protect Business in Uncertain Times
January 12, 20248 minute Read
Just as a diversified portfolio is the recommendation for successful investors, car wash owners find that the best way to prepare for revenue fluctuations caused by weather or the economy is to diversify sources of revenue. Monthly membership programs provide a stable moat to protect businesses from the ebbs and flow of revenue, but some car wash companies are looking at other ways to generate new revenue that provides even more protection.
Offer a Fleet Program
Before 2022, some Take 5 locations offered fleet programs that were in place before the company acquired them and others did not. Pricing, services and features of the programs differed from location to location. In mid-2022, the company surveyed all of the offerings and developed a national fleet program for all locations to offer. Since the launch of Take 5’s national fleet program in late 2022, more than 3,000 cars have been enrolled in the program.
“We wanted a consistent price and product at all 400-plus locations to support a marketing program that would create the potential for more volume at all locations,” said Diana Trinh, senior manager of sales programs for Driven Brands, owner of the Take 5 brand. “If there were already fleet programs in place, we transitioned them to the new program.
“This program has enabled us to drive incremental revenue that we were not previously targeting,” she said. “While police departments are a frequent user of fleet services, I have been surprised at the level of interest from school districts, universities and funeral homes.” This is also a revenue source that is more predictable during economic fluctuations because businesses rely on clean cars to maintain brand image and are not likely to wash their cars in the driveway, she added.
Waves Express Car Wash’s fleet program began four years ago after some customers approached owners for fleet discounts, said Jimmy Williams, owner. “We were interested in offering a fleet program but did not want to negotiate different agreements with each customer, so we created a program that met a fleet customer’s needs but did not require re-invention of the wheel each time we signed someone up.”
Waves relies on license plate reading technology to manage club memberships, so the same technology was used to manage the fleet program. Each month, the fleet customer receives a report that details the specific vehicles that were washed. “Taking a little time upfront to provide the license plate information and the make, year and color of the vehicle ensures that the organization is not paying for an employee’s personal car,” Williams said. “It is also a more efficient way to manage payments – rather than 20 to 30 different credit card transactions for each wash, the organization just makes one payment each month.”
Network with Others
When Alimentation Couche-Tard acquired True Blue Car Wash in December 2022, an opportunity to cross-market Circle K car wash, gas and convenience store services with the Clean Freak and Rainstorm washes operated by True Blue was created. “The only barrier to reciprocating memberships now is technology — Circle K is an app-based membership and Clean Freak and Rainstorm rely on RFID tags in the car,” said Stuart Crum, CEO of Clean Freak powered by Circle K. “We are evaluating options to address the technology to give customers more options with their car wash memberships.”
In the meantime, members of Clean Freak operated by Circle K and Rainstorm operated by Circle K do get discounts on gas from Circle K, said Crum. “On National Circle K Fuel Day, customers who purchased gasoline during the promotion period received free car wash coupons to Clean Freak or Rainstorm, and we’ve also had promotions where Clean Freak and Rainstorm customers got coupons for 20 cents off a gallon of gas and a free coffee at Circle K,” he said. “These cross-promotions work because we are seeing customers we’ve never seen before and have already increased our car wash membership by 10%.”
Partnerships can exist between car washes, even if they do not have the same owner. It is an idea companies such as EverWash and WashMe are exploring and offering.
EverWash is a car wash network with 900 participating locations, all of which have access to the EverWash membership sales and subscription management platform. When opened, the EverWash app locates the closest wash to the customer and, from there, they can purchase a membership at that specific location.
While EverWash memberships are wash-specific, if an operator owns multiple washes on the network, those locations can be networked together so that members can use their membership at multiple locations without paying extra, said Max Pulcini, director of marketing and communications. “We’ve even seen operators who are friendly with one another network their washes together as a value add to their members.”
“The car wash industry is so fragmented — with so many mom-and-pop shops and small ownership groups, there’s no real national player. That’s been a benefit to us, since we’ve been able to create this huge network that we can leverage as a consumer brand,” said Scott Caplan, founder and CEO of EverWash.
WashMe is an app-based car wash membership network that currently includes 70 independent locations representing over 30 different brands in 13 states. There is no cost for a car wash operator to join but every partner must meet quality, image and service standards to protect the integrity of the network, said Denny Axman, co-founder of the company. “WashMe members can visit any of the car washes in the network, which increases traffic at all of the washes and allows staff to upsell products and services,” he said. “Our vision is to offer a car wash membership alternative to people who don't buy traditional car wash memberships, adding a new revenue stream to our Partner Wash locations all over the country.”
“Because WashMe is based on a profit-sharing model, network partners will have a stable, predictable revenue base that can help them deal with seasonal, weather or economic fluctuations in their areas,” said Patrick Osredker, co-founder and CEO. “This is a strategy that works well for businesses of all sizes – we’ve signed up car washes with one location and a business with 20-plus locations.”
Be More Than a Car Wash
Tom Morris, the owner of Chesapeake Car Wash & Detail Center, has transformed his business into a destination rather than a conventional car wash. Drawing inspiration from an experience at an oil change center where he sat in a small, uncomfortable waiting area, Morris built his car wash eight years ago with a focus on providing a welcoming, enjoyable experience for customers. In addition to making sure his building and grounds are always clean and well-maintained, he incorporated features that enhanced the experience of going to the car wash.
“You can see the whole tunnel through the 10-by-8-foot window in the waiting area, so it is fun to see the cars and the lights of the tunnel,” he said. To enhance comfort, there are 20 regular seating chairs, tables, background music and the company’s friendly Goldendoodle greeter, Suds. Morris goes the extra mile by accommodating his detail customers, taking them to the nearby mall so they can shop and dine during the two to four hours of detailing.
Differentiation was a top priority for Miles Morin when he was doing his initial research into the car wash market, too. He found that the express tunnel segment in his area was oversaturated, but there was a way to differentiate the business and offer services not available in the market. MegaWash in Ashland, Va., opened two years ago and offers an in-bay touchless wash for cars, self-service car wash bays, an RV and tractor-trailer truck wash and an RV and truck storage site.
The location would not work for a traditional car wash business that relies on high-traffic areas for business but the combination of services at MegaWash requires space and convenience to I-95, Morin said. “Our tunnel for RVs and trucks is 25-feet tall and 100-feet long, and it looks like an airplane hangar,” he said. “We provide a combination of hand and automatic washes for each vehicle.” MegaWash also provides prep work for cars as well and the business handles 100 washes, on average, each day.
Marketing to an audience that spends a lot of time on the road looks different than traditional car wash businesses. “We use social media influencers, are members of different RV social networks and encourage word-of-mouth recommendations,” he said. “We see a lot of Canadian travelers because we are halfway between Canada and Florida on I-95, and we have built a loyal customer base by providing good service and having great employees.”
Making New Friends
Capitalizing on an idea that is working well in other industries, Tommy’s Express Car Wash started a customer referral program. These personal recommendations from loyal customers are the foundation of the program. “We have learned that word-of-mouth is the best way to gain new customers, so we created a program that shows our appreciation for members who encourage friends and family to join our membership club,” said Kristy Sherlund, vice president of retail marketing.
Using the Tommy’s Express user-friendly app, a member can share a referral link with a friend, family member or their social media feed. That person can download the Tommy’s Express app for a free month of unlimited washes, then when they pay for their first month, the members who referred Tommy’s get a $5 credit to their account. “There is no limit to how many credits a member can earn, and we have seen some members with 20 or more referrals that earn credits,” she said. “This has been a very effective marketing program that increases engagement with our members and generates new revenue because it is easy. We have made it simple to access the referral link, which is the key to engaging our members.”
Take 5 is trying a new business-to-business-to-customer program, which would expand their potential customer base. “We are piloting a program focusing on car dealerships and their service departments,” Trinh said.
While service departments often wash a customer’s car after service, partnering with a car wash to get discounted rates on car wash vouchers for their customers saves the dealership the time and expense of washing the car onsite, she said. “We’re combining this with a program that also includes the cars on their sales lots as well.” The goal is to reach new customers and convert the free washes to loyal, wash plan members, she said.
Rock-N-Wash in Canada is adding a lot of names to its friends list, too, but in a different way. Using a Canadian equity crowdfunding platform called Equivesto, they are attracting people who want to own shares of a car wash and, in turn, fund the expansion of services at Rock-N-Wash and fund the 2023 construction of a new flagship site in Sherwood Park, Alberta. Rock-N-Wash has a patented design that incorporates a high-end automatic wash, self-wash bays, RV and truck bays and a detailing center along with a ’50s-style diner, a retail store and community event space. “Crowdfunding is a way to offer retail investors an opportunity to invest in a company for as little as $250 CAD,” said Sylvain Blouin, CEO and president. “Investors own a piece of the business, but we are also creating a loyal customer base at the same time.”