Inside the 'gold rush' to build car washes | Business Local | buffalonews.com

2022-08-13 10:49:02 By : Ms. Tracy Gu

Calvin Caruso has run a successful car wash and detail business in what he considers a desirable area of East Amherst for more than 15 years.

That doesn’t mean he wasn’t still a bit shocked when he received two phone calls recently from larger out-of-state car wash operators inquiring whether he’d be interested in selling his Bubble Boy Car Wash on Transit Road.

On top of that, growing national retailer GO Car Wash is planning to open a new car wash just a few doors down from Caruso’s shop, on the border with Clarence.

It's all part of the changing – and booming – nature of the car wash business. Once the bastion of mom-and-pop operators and local chains, it's now a fast-growing $30 billion industry that includes national chains with the backing of deep-pocketed investment firms.

That expansion includes the Buffalo Niagara region, where vehicles getting dirty during the winter months due to road salt and slush increases the appeal of being part of the industry in the area.

Calvin Caruso Jr. of East Amherst, 57, owner at Bubble Boy Car Wash on Aug. 3, 2022. 

“Car washes are becoming like a Tim Hortons and Starbucks around here,” said Caruso, also the owner of Calvin’s Furniture in Williamsville, who noted he's not ready to sell his car wash yet.

“It’s a crazy world to be in right now,” he said.

Denver, Colo.-headquartered GO Car Wash burst into the Buffalo Niagara market after its acquisition last fall of Royal Car Wash, a Rochester-based company that had four sites in the local market. Royal had plans to add even more sites locally, and those remain in place under GO, which will open new shops in Hamburg and West Seneca in September.

Local chain Delta Sonic is expanding, opening its 12th Buffalo Niagara site on Niagara Falls Boulevard this spring.

Splash Car Wash, headquartered in Milford, Conn., also is coming to Western New York, as it seeks town approvals to open in Lancaster, after acquiring 17 Classy Chassy Carwash locations, including three in Western New York.

And there are still mom-and-pop car washes that have either recently opened, plan to or have been in business for decades.

Unlike the bare-bones car washes of old, operators of today's modernized car washes view them as recession-proof and relatively Covid-proof. Another plus in today's tight job market is that the new facilities need fewer employees because of improvements in industry technology and a move toward more automation.

A car runs through the wash track at Bubble Boy Car Wash in East Amherst, Aug. 3, 2022.

“It’s just good business and maybe less risky than, say, a tech startup or restaurant or something like that,” said Brett Meinberg, chief operating officer of GO Car Wash, which entered the Northeast market with the 2021 acquisition of 14 Royal sites from Daniele Management and Development.

“It’s a fun business and creates great cash flow," he said. "As a few people did it, others saw it and at that point, it creates a little bit of a race.”

The industry now has the attention of private-equity firms, which are backing new developments and pushing its car wash businesses to acquire even more.

“Private equity has sort of caught up with the car wash industry and I think the pandemic brought our industry to the forefront because it was an industry that survived during the outbreak,” said Walter Hartl, president of New York State Car Wash Association. “I think the level of quality that car wash operators offer is way better than it was 20 to 30 years ago.”

Customers at many of these “touchless” car washes can now use a touch-screen kiosk to customize their wash, pay at the machine and then move quickly through the tunnel.

“Car washes are just trying to do a better job now,” said Tyler Schmitz of Eden, who owns Apex Car Wash, which opened about eight months ago on Camp Road in Hamburg. “Competition breeds the best of an industry, so we’re trying to raise the bar.”

The industry is going through a “gold rush” right now, Meinberg said, as big business has pumped money into a once underserved market.

What once made car washes seem like staid, highly local businesses now is seen as having sought-after traits.

It's a business that's hard to outsource, since its customers are mostly local.

It's an in-demand service, with many busy drivers increasingly preferring to pay to have their vehicles washed, rather than do it themselves. Subscription-based pricing also breeds customer loyalty and more predictable cash flows.

It’s also become a real estate play.

The percentage of U.S. drivers frequently washing their vehicle at a professional car wash has increased from approximately 48% in 1994 to about 66% in 2021, according to the International Car Wash Association.

There are now more than 60,000 retail car wash locations in the U.S. and studies estimate this number will continue increasing at an annual growth rate of 3.8% through 2028. In 2021, Mister Car Wash became the first company in the industry to be traded publicly on the stock market.

Once a cottage industry, private equity firms realized these businesses are resistant to challenges during the 2008 recession.

It also has independent operators like Schmitz abuzz. He studied the car wash industry throughout college while earning an engineering degree and found the ideal location in Hamburg – one of the few areas still not being served by a major chain, Schmitz said.

“We found one of the last spots that I thought could have used one,” he said. “Car washes are starting to build on top of each other.”

Like any other industry, there are still challenges for car wash businesses. A nationwide labor shortage and minimum wage increases in New York have forced operators into more automation.

There’s also a lot more competition.

However, Hartl believes there’s room in the industry for larger and smaller operators, saying competition will drive innovation and “makes you a better operator.”

Experts think there’s still room for growth in the market as well – if more people stop washing their own cars.

“The biggest competitor to the professional car washing world is people washing their cars in their driveways,” said Bryan Hage, vice president for sales and distribution for Sonny’s Direct, a former car wash operator that now makes conveyorized car wash equipment and supplies. “That leaves a lot of folks that we can still draw out of their driveway.”

A Royal Car Wash in Lancaster.

Many car washes have gone from providing extensive manual services by employees, such as vacuuming vehicles and cleaning windows by hand, to using new technology where employees do very little.

License plate recognition systems allow car washes to track vehicles who come in and out of the business and offer opportunities to sell other products and services to its customers, whose habits they now know a lot more about.

Sonar is used to direct the higher-pressure water sprays and brushes tuned to oscillate at certain speeds to clean each vehicle in the tunnel. Camera systems provide security and document previous damages to cars. More sophisticated touch screen pay station systems make the process of ordering a wash relatively seamless.

“We want to do everything as quickly and efficiently as possible so the advancements in equipment technology have just been remarkable,” Hartl said.

Many operators have also been working with equipment and solution manufacturers to promote cleaner and safer products that use less water. Some are recapturing their water with infiltration systems and reusing it.

One of the other major innovations in the marketplace over the past decade has been the proliferation of car washes offering monthly membership programs.

Subscription-based providers use the “unlimited washing” concept to create a continuing revenue stream, said Hartl, who compared it to Netflix. Radio frequency identification tags stuck to the windshield of vehicles allow customers to be identified as members and wash their cars whenever they like for a monthly fee.

A car goes through the wash at the Delta Sonic on Niagara Falls Boulevard in Amherst.

Delta Sonic, for instance, offers a monthly unlimited wash subscription for just under $20.

Operators are adding other perks, too.

GO Car Wash, which now operates in six U.S. markets and will soon rebrand the Royal Car Washes they purchased locally, offers express-style services and free self-serve vacuums with memberships that can be used at any of their 109 locations.

The average member comes in about once a week, Meinberg said, and there are about four to six employees working at a time to help process the vehicles.

But Caruso, the Amherst independent operator, doesn’t believe in the subscription-based model. At his business, employees prep the vehicle before the wash and then towel dry it afterward – services that he said have become too costly for most car wash models that rely on less labor.

“I like getting involved and that’s a big advantage for me over corporate,” he said. “I’m not really too concerned about competition, but I have to keep an eye on what’s going around me.”

Schmitz is also a believer in the importance of a personal touch. He’s at the shop often, as the business’ only full-time employee, to help and answer questions.

“That way people know that you’re around and you care,” Schmitz said.

A car is buffeted by rollers, buffing off soap, water, and any remaining dirt, at Bubble Boy Car Wash in East Amherst, August 3, 2022. Libby March / Buffalo News

Must-read local business coverage that exposes the trends, connects the dots and contextualizes the impact to Buffalo's economy.

Michael J. Petro is a business reporter for The Buffalo News. The Buffalo State College graduate is a former sports writer who previously served as the editor of both The Sun and Buffalo Law Journal.

Email notifications are only sent once a day, and only if there are new matching items.

See who is buying and selling properties in Erie County.

Plans for a new $200 million marijuana growing and production facility in South Buffalo are back on track.

It's a changed world for housing across the Buffalo Niagara region – and even bigger changes could be coming.

Wine and hospitality have been a part of Katie McKenna-Heveron’s life for as long as she can remember.

"It’s a very, very unique, very nice piece of property, and it happens to be very well-run. I felt it fit into the overall hospitality venue that we have created in Buffalo," the developer said.

The e-commerce giant is facing scrutiny in Hamburg over a warehouse that was completed in March but remains empty – despite the company getting nearly $7 million in tax breaks.

The fine against Safire Rehabilitation of Northtowns is tied to an inspection completed two days after 78-year-old Judith Schrecengost was found dead in the courtyard at the Sheridan Drive facility.

The Erie Canal Harbor Development Corp. wants to enhance the pedestrian trails, bicycle paths and adjacent land at the Bell Slip.

Buffalo's ACV Auctions plans to cut costs as the used car market is facing pressure from a weakening economy and ongoing supply chain constraints impacting the automotive industry. 

A car is buffeted by rollers, buffing off soap, water, and any remaining dirt, at Bubble Boy Car Wash in East Amherst, August 3, 2022. Libby March / Buffalo News

A car runs through the wash track at Bubble Boy Car Wash in East Amherst, Aug. 3, 2022.

Calvin Caruso Jr. of East Amherst, 57, owner at Bubble Boy Car Wash on Aug. 3, 2022. 

A car goes through the wash at the Delta Sonic on Niagara Falls Boulevard in Amherst.

A Royal Car Wash in Lancaster.

Get up-to-the-minute news sent straight to your device.