With more and more people signing up for monthly deals, washing a car is a big money-making operation.
The Wall Street Journal reports that private equity wants to wash your car
The car wash industry has become a hotbed for private equity activity. Investors are now paying a hefty price for regional chains — 18 to 20 times earnings before interest, taxes, depreciation and amortization, according to bankers involved in the deals.
Car washes have had little appeal for private equity until recently. These were mainly cash register transactions, the turnover of which fluctuated seasonally and required many employees on site. When car wash owners introduced prepaid wash subscriptions, revenue became more consistent and fewer on-site employees were needed. This caught the attention of private equity investors.
The subscription also means that much of the actual car washing process is automated, which helps increase profits. Subscribers receive a radio frequency identification tag for their windshield that allows the machine to read what packaging they have, triggering cleaning and the correct chemical mix. A typical express laundry requires only two employees working at the same time, resulting in a tremendous operating margin of around 65% excluding rental costs.
When Mammoth enters a market, it buys a large, multi-location brand and then creates smaller players in the same markets, which it rebrands to align with the larger chain. Car wash brands include Swifty, Mark-1, Finish Line, Viggy Wash, Pitstop, Busy Bee, PureMagic and Silverstar. It is also building new sites, which typically cost $4.5 to $5 million per resident, including land.
Mammoth saves money by buying cleaning chemicals and other consumables in bulk. It has centralized customer service, recruiting, training, human resources, and back office functions like payroll and accounting.
Car washes have become a hugely popular real estate gamble for retail investors, with car wash deals now accounting for a significant portion of revenue, said Jeff Lefko of Hanley Investment Group, a real estate advisory firm.
“There’s no other operation on a two-acre site that can make $1 million to $2.5 million in sales and half of that out of their own pocket,” he said.
car wash | “Work at the car wash, yes!” Theme song
Here is a musical tribute.
I had no idea how a car wash business had turned into a cash cow. And I’m excited to share a look back at a hilarious 1976 film.
Q: Does the car wash film car wash still run?
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A: The ‘De Luxe Car Wash’, an existing facility equipped with all the modern gimmicks, is located in downtown LA, near Lafayette Park, on the southeast corner of South Rampart Boulevard Sixth Street. It has since been demolished and replaced by a shopping mall.
Above film location.
I think demolishing the mall and putting it back in the car wash would be a good move.
This post is from MishTalk.Com
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