car wash

[Terrel L. Shields]

Without a market study, it is hard to project a value via income methods for new construction. And even then a DCF might be better than a simple multiplier. New suggests the Cost App but again, you are not going to have any support for the obsolescences which are difficult to differentiate F x from Ob x in older sales. I recently did a storage building complex and the vacancy in 2005 was zip, every unit was full. This winter, the vacancy was 30%....a value killer.

 

[Howard Klahr]

... Although I can only speak to my regional market, your examples find no parrallel in the full service car wash market here. This thread is about car washes, which are dominated, based on my research, by smaller operators.

Maybe you should consider expanding your research. The market may be dominated by local operators but while not yet having obtained national reach, here is a list of large regional operators.

Express Car Wash
National Car Wash
National Pride Car Wash Systems
Stanton Corp.
Buffs-N-Puffs Ltd.
Hollingshead Industries Inc.
Wash on Wheels Inc.
Tankar Stations
McKinley Car Wash
Car Salon Inc.
White Glove Automatic Care Inc.
Gateway Waterworks Inc.

and here is a list of franchisers

Cactus Car Wash
Car Wash Guys
Rapido Rabbit, LLC
Spot-Not Car Washes
Super Wash, Inc.
Wash My Car

Clearly, with multiple locations they have established the some business advantages which are attributable to business value.

Until McWash comes to dominate the national car wash industry, and we get engaged to appraise McWash's 500th franchise, I don't think I'll see sufficient data to attribute a BEV to a car wash start up at day one-at least not in my market.

Maybe it's just me.

While no one has attempted to tell you how to perform your analysis, my reply to your question was illustrative as to how it is possible for there to be business value attributable to a new business. If you choose to take a holier than thou approach feel free. No skin off here. Best of luck on your assignment and becoming competent in performing these type of assignments. Clearly you already know all there is regarding the topic, despite having come here requesting information.

 

[CANative]

dac...

Listen to Klahr.

20 years ago and now for the last three months or so my conversations with my "boss" about one of the business I'm running for him are always interrupted by cell phone calls from his other irons in the fire... chiefly the political intrigue invovled in branding, re-branding, trading, swapping, and deal making that goes on with C-stores, gas stations and car washes.

 

[dacsavannah]

While no one has attempted to tell you how to perform your analysis, my reply to your question was illustrative as to how it is possible for there to be business value attributable to a new business. If you choose to take a holier than thou approach feel free. No skin off here. Best of luck on your assignment and becoming competent in performing these type of assignments. Clearly you already know all there is regarding the topic, despite having come here requesting information.

I sincerely apologize if my post carried a holier-than-thou tone, or if I implied that I knew all there is to know on this, or any other topic. No one hates the terse and sarcastic approach to posts on these forums more than I do. I think you got me all wrong. I just thought we had a spirited discussion going. Lord knows I will need some help on this forum, and soon, on some thing or another.

To recap: in my market, which I qualified was all that I could speak to, small operators prevail. I would not be comfortable attributing a BEV component of value to an independent operator start up such as we see here, unless there were some substantial extenuating circumstances. This perspective seems to find agreement, at least in spirit, with some others here.

However, I recognize, as I stated, that this may not hold true for every business or every industry. And apparently, for some full service car wash markets.

As for the last two sentences of your post, I wonder if you confused me with the original poster. I simply chimed in thinking it might be prudent, in the midst of the OP's discussions on BEV, to remind everyone that he was talking about a start up, and that consideration of BEV might be a little less relevant; also, to see if anyone else agreed.

I appreciate the insight of all of the experienced appraisers who post on here, including you, Mr. Klahr.

 

[Howard Klahr]

I appreciate the issues regarding your specific market and that business value may not be applicable in your specific situation. My original post was more toward the point you raised about how could business value exist for a new operation that did not have any operational history.

Furthermore, I can understand that there may not be any regional or large franchise car wash businesses currently in your local market area. However, may I recommend that you look beyond the immediate boundaries of your market area to gain an understanding of industry trends and direction. Just as some examples, Wal-Mart was at one point just a discount store focused in small rural areas, Home Depot was just another local Atlanta building supply store, Sears was once the largest retailer in the country - now its owned by Kmart and they are both questionable in maintaining a future existence.

Economic and industry trends may (likely) have influence on local markets even if it is not readily apparent.

Please feel free to keep posting questions as we all benefit from open discussion. My only piece of advice is that we often understand your (not you specifically but in a general sense) situation even if it doesn't seem like it at the time.

 

[CANative]

I just got a million dollar tax reduction on a car wash. Too late though and we probably won't be paid. They're in foreclosure and the taxes haven't been paid in a while.

Looking at car wash sales throughout California I have found many that are distressed. On the other hand, car washes that are part of a larger branded c-store/gas operation are very profitable (according to my inside source.)

 

[dacsavannah]

Had some recent experience that warranted a revisit to this thread. We were engaged to appraise two express car wash facilities which were approximately 18 months old. We had access to the original appraisal reports from 2 years ago. These were chain-owned stores whose owners operated multiple locations elsewhere in the state. The original reports valued the operations based on a feasibility study and sales projections provided by a large car wash equipment vendor utilizing their proprietary traffic capture rate formula.

To say the projections were optimistic is an understatement. They utilized an incorrect traffic count, and on one facility, they were projecting over 600 washes a day. Typical operating hours: 8a.m.-8p.m.=10hrs=600 minutes. Assuming 1 min/wash (which is unrealistic) that would mean bumper-to-bumper usage from bell to bell. The original appraiser utilized this projection (as did the lender). Unfortunately, the site's access, traffic speed and proximity to interections do not appear to allow for anywhere near that kind of capture, despite its impressive location and high actual traffic count. Not sure if the facility could even handle it. Of course, we have the benefit of 18 months of operating statements as hindsight.

In the end, one facility is making a little money, and one is losing money. Both appear to be achieving stabilized sales levels far below their projections, with neither having sufficient income to service sufficent returns to the hard assets, much less a business enterprise value.

The moral of the story? I guess it's . . . . be careful attributing value to projections unless you're willing to underwrite the projections yourself.