BENCHMARK SURVEY 2013

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Harriet Ross
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AUSTRALIAN CAR WASH INDUSTRY BENCHMARK SURVEY 2013 This survey was undertaken in response to many requests for information about the car wash industry in Australia both the current position and the

1 AUSTRALIAN CAR WASH INDUSTRY BENCHMARK SURVEY 2013 This survey was undertaken in response to many requests for information about the car wash industry in Australia both the current position and the trends over time. The survey was completed by members of the Australian Car Wash Association and their participation was voluntary and anonymous. This is the second in the current series of car wash industry benchmark surveys and the intention is to continue the research indefinitely. Through this widespread data collection, ACWA has been able to start building a profile of the car wash industry in Australia, which will both better represent the industry to regulatory authorities and provide valuable data to car wash businesses and the associated suppliers. The success of this research work being undertaken by ACWA on behalf of the industry will depend on the interest and involvement of sufficient members of the industry. It is the respondents who provide the basic data for all kinds of washes from which meaningful analyses can be extracted and comparisons made. Caring for your car and the environment AUSTRALIAN CAR WASH ASSOCIATION ABN P O Box 4390, Langwarrin, VICTORIA 3910 T: F: M: E: contact@acwa.net.au W:

2 Page Site information location, ownership, facilities 3 Site facilities 4 Water efficiencies 4 Facilities pricing and range of services 5 Wash counts 6 Annual turnover and expenditure 7 Staff and owner management 9 Comparative annual turnover 10 Competition and marketing 12 Bad weather days 13 Maintenance and breakdown days 13 General questions 13 2

3 SITE INFORMATION Over 8 of the sites surveyed are in Victoria or New South Wales / ACT. The numbers for the other states are too low to be considered representative of the industry in that state. Thus, their results will be combined for the rest of this analysis. Location of Sites by State/Territory VIC NSW/ACT QLD SA WA TAS 32% of sites surveyed offer petrol sales and a convenience store as well as car wash services. The proportion of sites in major capital centres is much higher for the petroleum businesses than for the car wash only service businesses Location of sites by capital city, major regional or small urban / country area National no petroleum National all sites VIC all sites NSW/ACT all sites OTHER STATES Small Urban / Country Major Regional Capital City Similarly, land and building ownership is much higher among the petroleum sites than for the smaller independents, where 39% rent the land and 21% rent the land and buildings. 10 Percentage of Capital Assets of Business Owned or Rented Rent - Single Site Own - Single Site Rent - all Own - all Land Buildings Equipment Land single site Buildings single site Equipment single site 3

4 SITE FACILITIES More than 87% of all sites surveyed have automatic bays, vacuums and vending machines. 72% of sites have self-serve bays, most of which also included at least one automatic bay. It should be noted that there was not a sufficient data sample in the surveyed sites to draw any conclusions about hand wash sites. 10 Types of facilities/equipment that are available at car wash sites, as a percentage of all sites surveyed Self Serve Bays In Bay Automatic Conveyor Tunnel Hand Wash Dog/Pet Wash Vacuums Vending Average number of each type of facility or equipment per site Self Serve Bays In Bay Automatic Conveyor Tunnel Hand Wash Dog/Pet Wash Vacuums Vending WATER EFFICIENCIES Rising water prices and the ever present threat of future drought imposed water restrictions have resulted in most car wash sites which include an automatic bay or tunnel, providing for recycling or alternative sources of water. 7 of all sites surveyed have a working recycling system, and a further 14% have recycling but are not currently using it. 3 of the sites have accessed bore water. 51% of all sites surveyed are currently accredited under the Water Saver Rating Scheme (WRS), half of these in Victoria and half in New South Wales. 85% of the petrol station sites are accredited under the WRS. 4

FACILITIES PRICING AND RANGE OF SERVICE A wide range of pricing is available throughout all facilities with 65% of those surveyed reviewing their pricing every year.

5 FACILITIES PRICING AND RANGE OF SERVICE A wide range of pricing is available throughout all facilities with 65% of those surveyed reviewing their pricing every year. However, only 4 had actually increased their prices within the last twelve months and only 54% within the last two years. Self-serve bays Pricing in the self-serve bays is based on the number of seconds given for washing per $1. 21% of sites give less than 75 seconds per $1 (down from 35% in last year s survey) while 2 give 2 minutes or more per $1 (same as last year). Automatic bays and tunnels A range of services is offered in the automatic bays, with extra cycles such as wax, conditioners and underbody washes being added to the more expensive wash programs. Basic wash prices vary from $8-16, Middle wash from $11-18 and Top wash from $ $20 $18 For Automatic - average price for each service offered $16 $14 $12 last year this year $10 $8 Basic wash Middle wash 1 Top wash The Top wash is the most popular or best-selling wash for 8 of sites surveyed, the Middle wash for 12% of the sites and only 8% nominated the Bottom wash as being most popular. This is a much higher percentage favouring the Top Wash than in the previous survey. With only 2 tunnel wash sites responding to the survey, comparative pricing analysis is not feasible. 5

6 Full service hand wash A wide range of services is offered in these facilities with an equally wide range of pricing depending on whether it is a basic operation such as in a shopping centre car park or a major independent development with its own café and additional features. Pricing starts at $15-30 for a basic exterior wash and ranges up to $190 for full detailing and a hand wax finish. Due to the small number of hand wash survey responses, we are unable to ascertain a reliable picture for this sector of the industry in this survey. WASH COUNTS Wash count analysis has been restricted to those States and sectors where the number of responses enabled a reliable analysis of data. 1,200 1,000 WASH COUNTS - average monthly counts for each activity per bay or per unit 1,023 1, Automatic, per bay Self-serve, per bay Vacuums, per unit Dog wash, per unit 69 WASH COUNTS -average monthly counts, by State for each activity per bay or per unit 1,800 1,600 1,400 1,200 1, National NSW VIC Automatic Self serve Vacuums Dog wash 6

7 ANNUAL TURNOVER AND EXPENDITURE Turnover Gross annual turnover is affected by a variety of factors and fluctuates enormously from site to site for these reasons. The range does however give a good indication to car wash owners of where their own business fits when compared to the overall picture. In this survey, the retail petroleum sites surveyed were not the larger chains and the differences in turnover compared with focussed car wash sites were not as marked as in the previous survey. There was a significant increase in the proportion of businesses reporting an annual turnover of more than $200,000 than in the previous year 6 in 2013 compared to 32.5% in Annual Car Wash Turnover per site - comparison for year ended June 2013 with year ended June less than $100,000 $100,000 to $199,999 $200,000 to $399,999 $400,000 to $799,999 $800,000 to $1,199,999 Comparisons were only viable for Victoria and NSW/ACT with the national average. Victoria s results were better than the national average, but NSW/ACT were slightly lower. Annual Car Wash Turnover per site by State for year ended June NATIONAL VIC NSW/ACT less than $100,000 $100,000 to $199,999 $200,000 to $399,999 $400,000 to $799,999 The major wash facilities account for most of the income of all sites. Additional facilities may only provide a small amount of additional revenue but can also help attract customers to that particular car wash ahead of its competitors. The percentage contribution to total income is shown separately for self-serve bays where there is no automatic on site, compared to sites which have both self-serve and automatic. 7

8 Average income breakdown for each service, expressed as a percentage of Total Turnover for the year ended June 2013 Expenditure Petroleum sites were not included in the questions on expenditure because of the difficulties in allocating expenses between the different services being offered at the site. 8 out of 10 car wash only sites showed a net profit of at least 2 (compared with 5 out of 10 the previous year) and 2 out of 10 kept expenses at less than 6 of gross income (same as previous year). No respondents indicated a position where expenditure exceeded income. The analysis of expenditure showed that staff and management wages combined are the major expense (24%). Rent and Rates was the largest single expense (22.7% compared with 14% in the previous year). A positive indicator for the growth and resilience of the industry was the increase in Capital Purchases from 2.2% in the previous survey to 13.6% this year. Other Expenses included Travel, Training, Security and Office Expenses. 25% Expenditure for the Financial Year ended 30 June 2013, as a percentage of Total Annual Income. 2 15% 1 5% 8

9 25% Expenditure as a percentage of Total Annual Income comparing significant items for year to June 2012 with year to June % % STAFF AND OWNER MANAGEMENT It is generally accepted that having staff on site during normal business hours not only keeps the site well maintained but also helps bring in and retain more customers (see Graph on Page 12 of this report). This year, however, the percentage of sites employing full time managers decreased from 86% to 42%, with a corresponding increase in part time attendants from 23% to 73% cutting costs but retaining a presence Type of staff employed on site, as a percentage of sites surveyed Business owners are putting in un-charged time at their sites without recognising its value either as an expense to their business or as a reduction in their own earning capacity. This is particularly significant if that time is given instead of employing paid staff as attendants. Percentage of Owner/Operators who regularly give uncharged time to the business - comparing year to June 2012 with year to June General Management 8 Hours 6 Working as Attendant Hours 4 Marketing Promotional Hours

10 COMPARATIVE ANNUAL TURNOVERS There has been a significant turnaround in turnover across all car wash sites from the results given in the previous year. 58.1% of businesses reported an increase in turnover of more than 1 for the year ended June 2013, compared with 31.6% last year. Only 13.1% of businesses reported a decrease in turnover this year compared with 31.5% for the year ended June In the graph above, business owners reported a significant increase of time spent marketing and promoting the business (from 42% of owners for the year ended June 2012 to 56% this year). While other factors must also be taken into account, it can be concluded that the increased promotional efforts contributed to the increased turnovers. 4 35% 3 25% 2 15% 1 5% Comparing TOTAL turnover from the financial year ended June 2013 with that for the year ended June 2012 Comparing TOTAL turnover by State and National Financial year ended June 2013 with that for the year ended June National VIC NSW/ACT Other States Decr more than 1 Same or +/ 1 Incr more than 1 The change in turnover was not reflected equally across the various facilities offered on site, with some increasing while other services decreased at the same site. Automatic bays reported that most consistent increases compared to self-serve bays and dog washes. 10

11 Comparing TOTAL turnover from the financial year ended June 2013 with that for the year ended June 2012 for the different activity sectors of the business Self Serve Bays In Bay Automatic Dog Wash All activities Decr more than 1 Same or +/ 1 Incr more than 1 Turnover comparisons to two years ago The improved performances reported for the year ended 30 June 2013 compared with June 2012 have brought more car washes into a growth position compared to the results of two years ago. Only 15% reported a lower turnover than for , 4% stayed the same and 81% reported an increase; 23% achieved an increase of more than 2 over their results of two years ago Comparing TOTAL turnover from the financial year ended June 2013 with the total turnover for 2 years ago (year ended June 2011). While NSW/ACT seems to have recovered even more quickly than the national trend, Victoria still has 29% of the businesses showing lower turnovers than two years ago. But note from the graph on page 8, that average turnovers are higher overall in Victoria than in NSW/ACT Comparing TOTAL turnover by State and National Financial year ended June 2013 with that for 2 years ago (year ended June 2011) Decr more than 1 Same or +/ 1 Incr more than 1 National VIC NSW/ACT Other States 11

COMPETITION AND MARKETING When asked if they faced more competition from other car wash businesses than a year ago, 4 said yes, almost the same response as last year.

12 COMPETITION AND MARKETING When asked if they faced more competition from other car wash businesses than a year ago, 4 said yes, almost the same response as last year. Respondents were asked to identify, on a scale of 1 to 10, what they felt was most important in attracting customers to their site and retaining the custom. The most effective ways of promoting a car wash business Comparing 2013 and 2012 on a scale of 1 to 10 Keeping your site well maintained A good range of services on offer Attractive signage Staff on hand several hours every day Credit card and/or pre pay facilities Loyalty specials and regular promotions Cross marketing with other local businesses Linking ups with schools, sports clubs, community Website, facebook and other electronic communications Occasional advertising in local papers or with letter box drops Regular advertising in local papers and other media

Very few of the single site operators spent time on marketing, whereas 5 of the multi-site operators spent more than 20 hours a month promoting their businesses.

13 Very few of the single site operators spent time on marketing, whereas 5 of the multi-site operators spent more than 20 hours a month promoting their businesses. 10 How much time is spent each month promoting and marketing this car wash site? Specifically on this car wash site As part of a multi-site promotion less than 5 hours 5-10 hours hours more than 20 hours 57% of respondents have a website linked to their car wash site, up from 13% in the previous survey. Of those who do not have a website, 25% are in the process of developing a site while the remainder either do not think a website will help promote the business or do not know enough about websites to try. BAD WEATHER DAYS 68% of respondents said that income was less than half of normal for more than 50 days of the year due to bad weather. 4 said that income was less than half of normal for more than 100 days of the year. NSW/ACT had the highest response for rain affected income, whereas in the previous year it was Victoria which was most affected. 13

14 MAINTENANCE AND BREAKDOWN DAYS 52% of respondents said that they had planned automatic or tunnel bay closures for maintenance for less than 10 days per year, up from 38% the previous year. The remaining 48% of respondents had closures for days, and no closures of more than 20 days were reported. Overall, unplanned closures accounted for just as much, or a little more, down time as planned closures. 6 Downtime closure days for breakdowns and unplanned maintenance with one or more automatic or tunnel bays less than 10 days days days more than 30 days GENERAL QUESTIONS 6 of respondents took less than 20 minutes to complete the survey. 37% took minutes, and 3% said more than 60 minutes. Comments showed that some respondents did not have the detailed financial information or that privacy concerns restrained them from answering those questions. Comments on content of survey were generally that it covered the ground very well. A couple asked for more social media information what was used and its effectiveness. 14

Self-Serve Survey BENCHMARKING. SURVEY REPORT Tokens Offered 37% 63% Additional services offered

THE 2014 Self-Serve Self-Serve Survey BENCHMARKING Own/operate or manage Number of locations Locations include self-serve bays 1-5 93.5% 95.7% 6-10 5.4% 4.3% 11-15 1.1% 0.0% 16-20 0.0% 0.0% 20+ 0.0% 0.0%