The car wash industry is the place to be. Growing at a rate of almost 5 percent per year, the industry’s total value is expected to reach over $20 billion by 2028, according to a report from Grand View Research.
In particular, the express tunnel format appears to be reigning supreme. From independent and multi-unit operators, to regional and national operators backed by private equity investors, everyone is jumping in to take advantage of this growing segment.
But even the biggest players in the space only have 3 percent of all the washes in the country. This leaves a lot of opportunity for others to enter the playing field. As a result, a massive land grab is happening across the country as people snap up properties as quickly as they can.
However, to have the best shot at reaping the benefits of this high profit industry, it’s crucial to know where to open.
And to know where to open, you need data.
“Retailers have been using data and analytics for site selection for 20 plus years now,” said Tim White, Buxton's senior vice president of sales. “The car wash industry is just now getting a taste of what data is even available, and using proven methodologies will help mitigate risk and support more successful site selection decisions.”
Before you spend millions of dollars building an express tunnel car wash in the wrong location, here are five types of data and insights you should consider when choosing your next plot of land.
Number 1: Customers
A car wash, like any business, relies on its customers. By understanding who your customers are at a granular, household level, you have a better shot at opening in the right location.
But what does this mean?
It means you need to go beyond demographic data (like income, age, and other census data), and look at behavioral data to understand your customers as consumers. Often called psychographics, this type of data explores customers’ attitudes, beliefs, and values and can help you understand why they buy what they do, how they buy it, how they prefer to be communicated with, how often they’re likely to get their car washed, and more. When you combine these insights with those from mobile GPS data, not only will you understand who your customers are, but also where they are.
From there, it’s easier to find markets and trade areas with a lot of them. Those markets and trade areas are where you should look for properties. Applications like Mobilytics, which is part of the Buxton Platform, can ensure this process runs more smoothly.
Number 2: Vehicles
Along with your customers, you need vehicles for a car wash to be successful. Specifically, you need to understand which types of vehicles are most likely to use an express wash. Even if the car’s driver fits your customer profile, it might still be the wrong type of vehicle.
Number 3: Cotenants
People often visit car washes out of convenience. Rarely do consumers wake up and leave the house with the intention of getting their car washed.
More often, consumers are already out running errands—picking up groceries or dry cleaning, grabbing lunch, or filling a prescription—when they see a conveniently placed car wash, remember their vehicle is dirty, and go through.
Because of this, being near the right cotenants that will draw customers into the shopping center is pivotal to have a successful express tunnel car wash location.
Number 4: Traffic and Visibility
Similar to being near the right cotenants, it’s also important to be near the right roads. Areas with high vehicle traffic help generate visibility when people drive by and see your site.
With this, there are a few other real estate-focused factors that can help increase your visibility from the road. For example, building your car wash parallel to the street, as opposed to perpendicular, will help more of the actual building is seen by people driving past.
Additionally, look at the road itself. Does it have an intersection or a traffic signal? Is it a divided highway? What might make it difficult for drivers to reach you once they’ve seen you? Ingress and egress are just as important as visibility!
Number 5: Competitive Landscape
Finally, be sure to evaluate the competitive landscape of your trade area. Because the express tunnel car wash industry is booming, you’re sure to have competitor washes nearby. Always evaluate the market saturation before committing to a location.
The Bottom Line
While the adage has always been location, location, location, what makes a location a good one is the customers. By using data to understand them better, you can ensure your piece of dirt is the right one, as opposed to simply a cheap one. Doing this helps mitigate the risk of such a high-capital investment and will help propel you ahead of the competition.
“For the wash owners who build their locations in the right spots,” White said, “operators can get a return on their investment capital in a much shorter period of time.”
To learn more about the types of data car wash owners and operators should consider when expanding, check out our recent webinar, “Where’s Your Next Wash? Leveraging Predictive Analytics for the Car Wash Industry.”