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How Would Continued Minimum Wage Hikes Impact Carwashes?

HB 395, a Virginia bill aimed at gradually increasing the state’s minimum hourly wage to $15 an hour cleared a major hurdle earlier this month, passing through the Virginia House along a party-line vote of 55-45.

The most immediate impact would come on July 1 of this year, when the bill, first introduced by Del. Jeion Ward, would see the state’s minimum wage raised to $10 an hour.

The state’s current minimum hourly rate is the same as the federally mandated minimum wage, which sits at $7.25 an hour and hasn’t been altered since the jump to that level in 2009, more than a decade ago.

Though HB 395 is a step closer to the governor’s desk, SB 7, introduced by Senator Dick Saslaw, could be the bill to actually reach that desk for potential passage.

That bill would see minimum wage work its way up to $15 per hour, then be allowed to rise further depending on the consumer price index and other regional factors.

Recent conversation around the bolstering of minimum wage rates has been polarized, with proponents pointing to cost-of-living increases and the potential boost for consumer spending that would come along with more money being injected into workers’ pockets. In theory, proponents also argue that higher wages would lead to less turnover and boosted employee satisfaction.

However, opponents of a hike say there could be unintended consequences of a measure that seems straightforward on the surface, arguing that higher wages could lead to employers absorbing costs through layoffs, elimination of entry-level positions, and other measures.

The car wash industry is certainly not immune to a spike in minimum wage, particularly a nationwide one that could follow on the heels of decisions in states like Virginia. Prices could jump, requiring specific communication to customers as to why to keep them receptive. Other benefits, such as express lanes, loyalty programs, and more could help offset these rising costs.

It’s also critical to continue to research and stay abreast of ways to invest in innovations and technology that can propel your business forward without requiring a significant boost in expenses, and other ways of saving money, such as water conservation, will prove key.

To learn more about how operators have already adjusted to minimum wage hikes, check out the Foundation for Economic Education’s look at the impact of such a spike on carwashes in New York here.

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Podcasts

The Iron Fox Podcast: Cleaning Up Under the Radar

Generally speaking, the role of an investor is very different from that of an operator. On this episode of The Iron Fox Podcast, Bob Rust, the CEO of Iron Fox, sat down with host Sean Heath as they discussed how advances in technology are changing the nature of investors in the car wash industry.

With technological improvements being introduced constantly, not only have the services grown, but the makeup of the operators has evolved, as well, explained Rust.

“It’s an interesting industry because it’s been growing and consolidating and has been a fun time to be involved in it because of all of the change,” he said.

The carwash industry has traditionally been one of tremendous revenue swings, primarily due to weather. Subscription models are causing significant improvements to that issue, according to Rust.

“If you’ve had a really bad weather month, you might be really hurting for revenue and what the subscription model has done, is that’s really evened out some of that cash flow,” he said.

“It’s evened it out in a great way because it has probably stopped the floor from being so low,” he said.

Being involved in the industry has its own mystique, Rust offered.

“If you tell people at your cocktail parties that you’re in the carwash business, it’s surprising. It’s never, like the first choice for folks. And we like it that way. We like it to be under the radar, in that sense,” he said.

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Podcasts

Opening a Car Wash with Help from a Pro

Starting in a new business venture as a novice can be a daunting expedition, but expert consultation and advice can help navigate challenges and make for smoother sailing. On this week’s episode of the Building Management podcast, James Bridges, development analyst for Iron Fox, shares his expertise in getting new car washes up and running.

Bridges has helped entrepreneurs open car washes from Maryland to South Carolina. His talent is in real estate site selection, volume estimation to determine site viability, equipment selection, and maintenance training. He and the Iron Fox team will even consult with partners on best practices and policies to implement long after the grand opening.

“We try to be a complete partner,” Bridges said.

He revealed that there’s more to running a car wash than meets the eye. Different municipalities have different water chemistries. Sometimes the water is too hard and other times too soft, so getting it just right requires a bit of art and science. And since the red clay of the South differs from the dirt in the East, the part of the country will inform the best equipment for soil removal.

When it comes to the solvents used inside the car wash, Bridges explained that there have been tremendous improvements in car waxes, detergents, and cleaning solutions to produce a better-looking car. “Cleaner, Drier, Shinier,” is his refrain.

Asked about handwashing his own vehicles, Bridges said: “I always take my cars to the different car washes.” He trusts his automobiles to the same wash tunnels he’s helped kickstart since, in his words, you need to sample what you’re selling.

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Podcasts

Iron Fox: Investing in Car Washes for Fun and Profit


If you’ve got money to invest then you might consider parking it in the stock market or buying a piece of real estate. But increasingly, more and more investors are adding car washes to their portfolio. On this week’s episode of The Iron Fox Podcast, company president Dominic Lewinsohn shared what attracted him to the car wash industry and how it has become a hot investment play.

Lewinsohn revealed he got his start at Boston Market before creating his own restaurant group. From there he transitioned to a career on Wall Street to head up a consulting firm. Always on the hunt for new opportunities, the car wash industry caught his eye.

“I was able to look at the financials of car washes and that was very appealing to me,” Lewinsohn said.

Of the three industries he’s worked in, he said car washes are the most fun but also the hardest. The business requires a technical background to handle the logistics of the tunnel, exceptional customer service, and a keen understanding of how the financials work.

He went on to explain that there are three types of tunnel car washes. With the express version, the customer’s car goes through the tunnel and they vacuum it themselves. Full service includes detailing and hand-washing by attendants. And flex offers customers the option of either self-service vacuuming or service by attendants. Each has an important place in the car wash ecosystem.

“The reason express is doing so well at the moment is because the labor from an investor standpoint is very, very low,” Lewinsohn said.

Subscription plans where customers pay a monthly flat fee for unlimited washes have taken off over the last eight years. Operators like the model because it provides a steady stream of income that they can use to hire a stable labor force. Lewinsohn thinks people with a hospitality or foodservice background do well with car washes because they go from an industry with many costs to one with just two, labor and chemicals.

Lewinsohn said that the industry is becoming more and more competitive, but it remains a lot of fun.

“The returns on investment are superb if executed properly,” he said.

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Blog General

Chemical Customization Positively Impacts Carwashes

They say it’s all about good chemistry, and nowhere is this more true than in modern car washes. From soap, chemicals, and the right equipment, the interaction of these elements determines how clean a vehicle will look after it leaves the carwash. Knowing the science behind the chemistry allows carwash owners to make informed product and equipment decisions that can enhance wash results and garner impressive cost savings.

Soap On, Dirt Off

Today’s carwash soaps outperform older offerings in many ways. The advanced chemicals used deliver superior cleansing effectiveness with tailored ingredients that better penetrate and lift dirt, removing various soils, contaminants, and environmental oxidation from vehicle surfaces. Further, concentrated chemistries in smaller, recyclable packaging maximize the number of vehicles that can be washed per container while reducing transportation, storage, and carbon footprints. Moreover, their greater penetrating and unbinding capabilities allow carwash operators to use less water per vehicle.

Once the soap cycle is complete, the surface is ready for a protectant. These protectant formulations––such as self-curing polymers––provide maximum lubrication and protection, creating a sacrificial barrier that prevents subsequent environmental damage to the vehicle’s finish.

Customizing the Chemistry

Soap is no longer a one-size-fits-all solution. Deciding on the best presoak, tire & wheel cleaner, detergents & soaps, and waxes & protectants are vital to maintaining your carwash at peak performance.

Presoaks, along with other chemicals, come in low-pH and high-pH variations. A high-pH presoak is an alkaline product formulated to remove oily and greasy compounds, while a low-pH presoak is an acidic product formulated to remove dirt and dust. Understanding the common soil type in your geographic region will help you decide which pH will be more successful in your carwash.

Tire and wheel cleaner come in both alkaline and acidic variations and remove both organic and inorganic soils from brake pads, abraded rubber and more. Many drivers have custom wheels on their vehicles, so it’s important to use products that are safe for both OEM wheels and aftermarket wheels.

Available in either standard red, gold, and blue or custom colors, triple foam products come as conditioners or polishes. Conditioners help clean the car, but polishes also apply a layer of wax, with most carwashes typically running the conditioner first followed by the polishing wax. These neutral or acidic products condition and prepare the vehicle’s clear-coat to accept sealant and protectant products while also expediting the drying process.

Injector and tip sizes are integral in determining the chemical to water ratio. These components can be modified to achieve the proper titration and dispense of chemicals and water, as well as color vibrancy.

Cutting Costs

Chemicals are a significant reoccurring expense for operators, so effective utilization—using the appropriate ratios of cleaning and finishing products during the proper phases of the process—can provide greater output and increased savings. But beware—even small changes in chemical dosing can create issues, preventing a car wash from achieving clean, dry, and shiny vehicles. By maintaining the right chemistry balance, you can ensure cost-efficient, peak performance every time.

Water usage can also be costly. As nozzles wear, water flow increases, pressure decreases, and chemical concentrations degrade, resulting in an inferior clean and higher water use. Installing water reclamation systems that recycle and purify wastewater for reuse can reduce both water consumption and sewer costs. However, it’s essential to incorporate reclaim-friendly cleaning products—which can alleviate foul odors, bacteria growth, and clogging—to ensure the system’s performance is not affected.

Operators should also establish weekly checks of all chemical metering equipment to ensure injection equipment is properly functioning. Simply marking container levels on a weekly basis will alert the operator of unexpected changes in dosing, allowing for the resolution of any chemistry issues while ensuring inventory is on hand when needed.

Iron Fox focuses exclusively on helping investors, entrepreneurs, and existing operators in the conveyor carwash segment. Our Senior Consultants have extensive experience with retail real estate site selection, accurate proprietary volume estimating tools, project development, and all aspects of car wash operations. With an experienced equipment installation team and responsive service crew, Iron Fox not only gets you up and running, we keep you that way! To learn more about our services, click here.