If you’ve considered purchasing a car wash in Kentucky you may have noticed…there’s blood on the streets. To put it in less graphic terms, these types of properties haven’t fared well under recession conditions. Reliable statistics for car wash facilities are frustratingly difficult to locate but here’s one from an appraisal I’m just wrapping up that will give you a snapshot of what’s going on in the industry; over the last three years, revenues have decreased by 18% while net operating income has decreased by nearly a whopping 40%. That’s not a typo. I wish it was.
Foreclosed Car Washes
Of three recent sales I was able to identify in the Louisville area, two were bank foreclosures. Not. Good.
The car wash industry appears to have several factors working against it. First and foremost is the recession. Lower employment equals less discretionary income equals fewer car washes. Secondly, is the trend away from self-service bays towards the touchless systems. According to the owner of the facility I’m appraising, his single touchless bay does roughly 50% of the volume of his four self-service bays. As a sidenote, if you haven’t yet enjoyed the wonderment of a laser-guided automaton salivating aromatic blue suds across your windshield from the comfort of your vehicle, you should. It’s worth the $8 or $10 bucks. But I digress.
The third, and final factor working against the car wash industry is the cost of the equipment. The afore-mentioned experience doesn’t come cheap. The cost to equip the facility I’m appraising with a touchless system was 130 grand. And that was just the equipment – five years ago. That’s a lot of $8 or $10 car washes, especially in rural parts of Kentucky.
If you think that this is an isolated case, think again. I have the good fortune of having a dearly beloved brother in Mississippi who is also a commercial appraiser. And guess what he just finished appraising? That’s right. A car wash. Revenues – down sharply over the last three years. Net operating income – approaching the red.
In summary, as my father used to say, “A word to the wise is sufficient.”