Value Added: Getting The Car Washed
Here's Tom Heath's latest column on Washington's entrepreneurial set:
David DuGoff loves rainy Tuesdays. He relishes big trees that drop nasty yellow pollen all over cars. He prays for a couple of feet of snow every January and February. Not all at the same time, but enough to throw lots of salt and sand slushing around the roads.
Why the passion for weather? DuGoff is the owner of College Park Car Wash, down the street from the University of Maryland on Route 1 in Prince George's County. He thrives on drivers' pain and hope. The pain is what drivers feel from watching their sleek BMWs or Mercedes - or whatever - get dirty. The hope lies in those drivers' yearn for sunny weather, which makes them come to the car wash.
I have always been curious about the car wash business. A neighbor owned a couple of car washes when I was a kid in Syracuse, N.Y. and I thought he was rich.
DuGoff takes his business seriously. He is on the premises almost every day at the 24-hour car wash. He preaches a work-ethic that would make any small-business owner proud: do the fundamentals right and profits will follow.
"If we keep the lot clean and everything running, if we do the fundamentals, the blocking, tackling, running and catching, we will have a good business and make a nice living," said DuGoff, who has kept it simple by concentrating on only one car wash and making it the best one he can. "That was my goal in coming into this."
He can reel off the names and alkalinity levels of soap. He can riff on clearcoat, brake dust and car paint. When I tell him that the pre-wash, tire wash and dropless rinse are gimmicks to make customers spend more, he instantly responds with a litany of facts about soap levels and water pressure per square inch.
"I built this," said DuGoff, whose family ran a string of nine local service stations - called the Homes Oil Co. - for decades. The DuGoffs sold out around 1990. Before they sold, David noticed something. Self-serve car washes at a couple of the family stations made more money than gasoline sales. So when the family sold, David kept the College Park site.
"We looked at College Park, and thought maybe it's not a good gas station site," he said. "But maybe we just build as big a car wash as possible and just go with that."
He has five self-serve bays where people spray the car themselves and three automatic bays where you just drive up and the machinery does the rest. It appears the automatic, which costs more up front because of the machinery that tows your car through the tunnel, is the real cash generator. You can wash 10 or more cars an hour in an automatic compared three to four in the self-serve. A car wash in each is about the same, around $10. That equates to around $100 an hour in the automatic compared with a little over half that in the self-serve.
The industry average is 1,800 to 2,000 cars cleaned per month, per bay on a self serve.
"We do substantially better than that," he said, adding that all his metrics are above the national average because of location, the wealth and the population of the Washington region.
The costs are higher too, though.
The cost to build the automatics is about $120,000 each for the equipment alone. The building adds several hundred thousand dollars more. The automatic washes are priced at $6, $8, $10 and $11 per wash. The $11 is most popular.
"We can do over 300 cars in automatics a day," he said, adding "that's a nice day. But the average is closer to 150."
Both self-serve and automatics require hot water to make the soap more effective, so gas and electricity costs are two big expense items. The water bill arrives quarterly, and it's only a couple thousand dollars each time. The automatic recycles its water, which is required by the local water utility, the Washington Suburban Sanitary Commission. Two full-time employees and one part-time are the biggest expense. The fixed costs of electricity, gas to make hot water are next. Chemicals and water softeners to remove calcium are also in the mix. He rolls back a bunch of money into the business every year to buy the latest equipment and repair what he has. I thought insurance would be a big expense, but it's not.
He keeps costs low. He has only two full-time employees, who keep the grounds clean, tend to the machinery, manage the vending machines and make sure everything operates smoothly. There also is one part-time employee and, of course, there is DuGoff.
As I said in a previous Value Added, a key to success in a small business is the owner consistently being on the premises.
"I am pretty much there every day. I like interacting with the customers. I spend time adjusting this or that, attending to stuff. There are a lot of mechanics that go into the back room, such as measuring the strength of the soap."
Here is one big advantage DuGoff enjoys over others. Zero debt. Because his family owned the land, he didn't have that huge cost - which today easily runs to $1 million for an acre that's commercially zoned.
He leaves no revenue source unmined. For example, DuGoff makes sure his vending machines are always full and operating, so customers can buy microfiber cloth, wax, soap or air freshener. And DuGoff adds his own little touch: he slips an occasional envelope with a couple of tickets and a parking pass to either the Washington Nationals, or to the University of Maryland basketball or football games. It keeps customers coming back and is cheaper than advertising.
The key is weather. And January and February are to the College Park Car Wash what the Christmas Season is to retailers.
"What we like is a very simple request from Mother Nature," said DuGoff. "We want a little bit of snow or rain on Tuesday. Tuesday is a slow day for retail generally, and we follow the same pattern. We can give up the business on Tuesday and not lose anything. So if there is snow on Tuesday and a little salt goes down and a little sand goes down, so by Friday, you are thinking, 'I should wash my car.' So on Friday or Saturday, we want sunny weather in the winter. It doesn't have to be warm. It doesn't matter how cold. Just sunny."
Bad weather kills about a third of the days, leaving 265 good business days a year. Saturdays are packed.
DuGoff said June is not a good month and September tends to be too rainy. Spring is usually good because of the messy pollen. "I live for the yellow stuff," he says.
The rest of the year rocks along at average or below average. DuGoff said the sight that makes him most happy is every bay full and running, with one or two cars waiting. I figure he grosses more than $500,000 and clears nearly half of that after expenses. He didn't yell at me when I ran that by him. He built a nice, Frank Lloyd Wright-style home in Chevy Chase. He also owns a Mercedes convertible and Ford Hybrid Escape.
He tried to buy stocks, but now leaves that up to his broker at Wachovia. He also owns mutual funds and other securities.
"We make a good living. We are not becoming millionaires. I know if I work hard and if I maintain the operations, people will come. It's very satisfying to me in that way. I see the results of my effort."
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