What’s hot: car wash

In this article,  Kalibrate’s Grant Irving, VP Sales, and Pete Baciagalupo, Director of Client Services, talk about their work with car wash brands which includes helping car wash companies with both real estate and marketing decision-making.
What’s hot: car wash

One of the hottest private equity investments in 2021-2022 is the car wash. Many consumers are choosing to drive their cars longer, so maintaining their investment has created a demand for car washes not previously seen. Consumer demand coupled with car washes evolving into a subscription-based model, the industry has become lucrative and private equity has noticed.

In this article,  Kalibrate’s Grant Irving, VP Sales, and Pete Baciagalupo, Director of Client Services, talk about their work with car wash brands which includes helping car wash companies with both real estate and marketing decision-making.

 

What is a common challenge you see for car wash owners and executives?

Grant Irving: Understanding a changing trade area and the competitive landscape are two big challenges. In some markets there are car washes being built quickly, so staying on top of a trade area is important. With that rapid change, it’s hard to utilize a predictive model that doesn’t change with the landscape of competition. We overcome that challenge by building a model that is nimble and can change easily. It’s built at a point of view in time, the market is changing so rapidly that the model has to change with the market.

Peter Baciagalupo: With the influx of private equity investment, now when a car wash banner is purchased a lot of time there is institutional knowledge the PE firm is bringing to the table to change or enhance strategy. Our real estate models are built so that if strategy just change, we can easily pivot as well.

GI: Our team builds models that identify good co-tenants and gaps in the market, utilizing mobility data to lay out a trade area. It’s sophisticated in the way that we determine the trade area – we actually evaluate the way people move through the area based on mobility data.

 

What are sample questions Kalibrate answers for car wash companies?

GI: Two of the most commonly asked questions are “How big can we be?” and “What are the next markets for growth?”

To answer these questions, we’ll do a deep dive on competitors and the characteristics of competitors, and take an extensive look at mom and pop car washes. We’re also profiling the consumers in the trade area to understand their spending and commute patterns.

There is also so much acquisition in this space, that we also answer, “Who should we acquire next in this market?”.

A lot of larger companies want to know who to acquire next. If there are 50 trades areas in DFW, we stack those opportunities and how it effects existing locations.

 

Why is there so much interest from private equity?

GI: The subscription model has become the norm for car washes now. It’s like the Netflix effect, it’s easier for people to get into carwashes.

PB: It’s an industry that has proven to have consistent demand even as the economy ebbs and flows. Companies have become smarter with subscription models being able to capitalize on consistent demand. It’s an industry that’s been around forever, but with the PE influx there are brighter minds in the industry. So many areas that have unmet demand in given markets by growing with analytics.

GI: We see people not only opening a car wash, but buying the real estate and developing the land around it. Car wash owners don’t have to compete with a Chick Fil A for the real estate, they can be flexible where they open in some markets. They can have a viable car wash, on a piece of B or C real estate.

PB: Another thing we’re doing is collecting point of sale or loyalty data, building live looks to see how consumers are changing. Is each location pulling in the same type of consumer? Is the customer profile changing? Its not only fluidity of the trade area, but also the consumer and the price elasticity of subscriptions. These companies need a live, continuous feed of what is changing and the ability to use it across the organization.

 

What are key indicators for a good location for a new car wash?

GI: The space is so complex now – it used to be traffic counts and competitive locations – now it’s brand recognition and so many other things. It’s not a simple as it once was.

PB: The same thing that retail went through 15-20 years ago, it’s been happening the last five years in car washes. Real estate decisions were made off of traffic counts, competition, and maybe one or two other data points. It’s so crowded now you have to be much more calculated with real estate and marketing and where to position yourself so you know there is demand there to be successful.

 

How does a predictive model help a car wash company’s marketing team?

GI: There is a profile of their consumer and what’s important from a demographic standpoint, and we can look at where a company is underpenetrating the trade area and target those areas with digital ads. You can also profile a competitor’s consumers to target market to their customers to pull market share.

PB: It’s very new for car wash marketers to learn who that “true” best customer is. When we start talking about real estate and site selection, that’s the initial conversation and then it translates very easily to the marketing team with digital targeting.

 

If you want to learn more about our work with car wash companies, contact us to learn more.

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