Historically, the conveyor carwash industry has been extremely fragmented, with a majority of operators owning and actively managing a single carwash. From the beginning in the 1950s through the 1990s, few operators had as many as 5 locations. Beginning at the turn of the century, this changed. There is an accelerating trend toward acquisition and consolidation. Since 2000, IMO and Mr. Wash have aggressively acquired existing carwashes. This trend is reflected in smaller operators as well with a number of smaller roll-up operators operating 30 to 40 locations. In 2013, there were only 43 operators with more than 10 carwashes. By 2016, there were 61. Private equity is actively seeking carwashes as sound investments, which creates exit opportunities for operators, entrepreneurs and investors.
As these shifts occur, the more entrepreneurs are looking to start ventures in the carwash industry. These new owners will focus on multiple exterior-only and flex-service sites. This will place a premium on distributor partners who can provide more operational, site selection and equipment expertise to entrepreneurs looking to expand quickly.
This shift is due in part to the explosion of the exterior-only operating model for conveyor carwashes. The exterior only model consists of a 90’ to 120’ carwash tunnel with an area for customers to vacuum their cars. The model requires very little labor compared to a full-service model, which has as many as 25 employees at busy locations on peak days. Exterior only operations are slightly less profitable than the full or flex-service models; however, the model is not as management intensive and is more scalable, allowing an investor to build multiple units. Equipment manufacturers and distributors have encouraged the exterior-only model. New investors are increasingly looking to create chains of 3 to 10 carwashes. Since 2010, more than 80% of new conveyor carwashes are exterior only models. Operators of exterior only models, with limited management and labor, will increasingly rely upon distributor partners, such as Iron Fox, who have the management expertise and staffing to address development, equipment and operational issues. Learn more about Iron Fox and its services.