04/05/2024
Carwashes - automation and more water consumption coming to a corner near you......
From the O'Reilly April 5th 2024 Newsletter:
A hose of easy money
Sometimes the ramifications of the unrelenting quest for profits aren’t as much damaging as they are just weird. Bloomberg’s Patrick Sisson recently investigated why it seems like there are “suddenly so many car washes” everywhere. The answer won’t shock you. In the US, the market of car owners is vast. Plus, modern car washes have fairly low overhead and are often automated, requiring few employees. And the shift to a subscription model has allowed car wash owners—including quite a few private equity firms—to really clean up. As investment firm CEO Ian Rickwood puts it to Sisson:
"What other industry can offer locations with up to 80% subscription-based revenue and an earnings before interest, taxes, depreciation and amortization margin of 50%? . . .And the growth potential is massive. About 15% of the current car wash market is membership-based. . .; when customers go from non-members to members, that results in 13 times more consumption and 10% more revenue. If just 10% of the total market shifted into the membership category, that would boost the total number of washes in the US from 2 billion to 3 billion a year."
As Sisson notes, cities are fighting back over nuisances like traffic and noise, and an overcrowded market may soon become an issue. But car wash chains are bullish about demand. Don’t be surprised to find one on every corner in the near future.
—Tim O’Reilly and Peyton Joyce
