Fast Lube—Profit or Headache?

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Fast Lube—Profit or Headache?
Will a fast-lube center complement your carwash?

By Elaine Foxwell

Big-box retail stores such as Wal-mart have recognized that offering many services on one site attracts customers. A carwash can create similar brand loyalty by providing the convenience of profit centers such as an express oil change and lube. But there are some factors wash owners should consider before getting into the fastlube business.

Operators who’ve done it

Jim Hansen, the owner of The Great Car Care Center in Gig Harbor, Wash., says he combination of fast lube and carwash was one of the reasons he purchased his location.

“I saw the fast lube as a good synergy with the carwash,” Hansen says. In addition to express oil and lube, the facility offers a 24- hour self-serve wash, automatic wash, express detailing, wax, full detail services, paintless dent repair and rock chip repair. Mister Carwash was founded in 1969 in Houston with a single store and a handful of employees. Now, the company has 33 locations and 1,200 employees in Idaho, Iowa, Minnesota, Texas and Washington. The sites offer carwashes, lube centers, detail centers, automotive accessories and gas.

“Our lube centers were acquired along with our carwashes and are profitable,” says Bruce Schumacher, director of strategic initiatives for Mister Carwash.

Norm Porges, president of Prime Shine Express Car Wash in Modesto, Calif., incorporated the company’s first and only quick lube into the plans of Prime Shine’s sixth location, realizing the site dictated an additional use besides the company’s typical wash layout.

After more than 20 years in retail, Express Lube & Car Wash owner Jeff Jones decided to look for different business ideas. Research into the carwash industry made it quickly apparent that a combination carwash/express lube operation is after the same customer and that there is profitability in combining the two services. Jones opened his first Express Lube & Car Wash in Brunswick, Ga., in 1995 with a three-year growth projection. When this was realized at year one of his business plan, he opened another store in 1998.

Zoning issues

Carwashes deal with the disposal of water and chemicals, but a fast-lube operation has the added burden of handling petroleum products and dealing with their possible contamination. Hansen’s facility is located in a coastal area, and municipalities are strict about preventing ground-water contamination. The property is completely paved or concreted, making it self-contained. No contaminants can get into the surface water, and all storage tanks are above ground so if one should rupture, the spill will stay on the property, he says.

The site for Prime Shine’s fast lube and wash was an old gas station with “a horrendous contamination problem,” Porges says.

“Although we were only doing a land lease, we worked closely with the state and county officials, the former gasoline operator and the landlord to work out issues of well monitoring and ground water cleanup,” he says.

The facility only had space for a two-bay configuration. However, to make an adequate profit and for operational ease, Porges would only consider a minimum of three bays in the future. Because the site does not have the typical waiting room, customers stay in their cars and all space is used exclusively for work areas.

“We went through a three-year learning curve and now the unit has made a contribution to profits at a reasonable rate,” Porges says. But he doesn’t think the synergy between the two is as great as he expected.

Before taking the plunge

Some wash owners may wonder if adding a fast-lube operation to their facility is for them. Hansen says liability is one of his chief concerns.

“We’re dealing with $50,000 to $100,000 cars, and if the oil change isn’t done properly, we can be liable for an engine,” he says.

Liability for damage in a carwash is not as great. Hansen, who is also a CPA and attorney, suggests before buying a carwash and fast lube that owners have excellent knowledge of the fast-lube industry.

“Prospective owners must really have a passion for the industry, for training people and for keeping them certified and up to date,” he says.

Jones agrees that the combination of a carwash and fast lube is not an enterprise for every operator.

“There are many factors to be considered, including existing competition, cost/availability of semi-skilled labor, local zoning issues, location, etc. And bottom line, ask if the numbers work,” he says.

A wash owner considering adding a fast lube needs to ask himself if he really wants to dedicate the time and energy that will be necessary to make it a successful venture, Porges says. The owner’s research should determine if the profits generated by adding a fast-lube operation are what he usually expects from a wash.

Before entering the fast lube/wash combo enterprise, these four owners emphasize how important it is for operators to do their homework.

They suggest the following checklist:

  • Determine if the size and layout of your site will handle the extra traffic flow from the fast lube.
  • Have adequate capital to build and fund during the startup process.
  • Evaluate the competition in the area.
  • Develop or have good communication with vendors.
  • Determine if quality staffing is available in the area, including a good lube manager.
  • Understand all environmental issues and municipal requirements and understand all documentation requirements.
  • Decide if you want to be a franchisee.
  • Decide whether to be branded or independent and what brands to carry.

Site check

The size of the site for a carwash/fast lube combo is, of course, critical.

“The bare minimum would be around 3,000 square feet for the building and 40,000 square feet for the lot. A more average site would have a 7,000-square foot building and 60,000 square feet for the lot,” Schumacher says.

A half acre can be adequate if the layout is carefully planned, Jones says. Express Lube has two stores, one is a two-building setup with a three-bay lube building plus a 120- foot-conveyor full-service wash/building housing the lobby/retail store. The company’s second store is also a two-building setup, with a three-bay lube building and a glass house in-bay automatic wash, also on a half acre. The second facility did not have to provide on-site customer parking as per local code because it sits on an out parcel of a shopping center.

Hansen estimates an owner can build a wash and express lube on a half acre with the right configuration.

“A lot also depends on how much landscaping is required,” he says. “We are in a small, quaint fishing-village atmosphere, so municipalities want quite a bit of space devoted to landscaping.”

Porges says operators should ask themselves the following questions when evaluating a site:

  • Am I willing to sign long-term contracts?
  • How many bays do I need?
  • Do I want above-ground or in-ground tanks?
  • Who will prepare my spill prevention, control and counter-measure plan?
  • What other services besides the oil change will I offer?
  • What equipment will I need for these services?
  • How will I market and cross-market this business?
  • Do I have room to build a drive-through lube, or will it have to be a back-out?
  • What POS system do I want? Will it interface with my current carwash system?

Cross-marketing

Customers love a bonus or something free with anything they purchase. At The Great Car Care Center, the carwash is used as a selling tool for the quick lube. Customers receive a free carwash with lube and oil services.

“We have quite a few fast lubes in the area but none with a carwash, so the carwash differentiates us from the competition,” Hansen says.

The combination carwash/lube allows him to keep pricing at a higher level for services and have a better retention of customers. When gas prices went up last summer, many experienced a 15 percent to 20 percent drop in car counts. Customer counts through Hansen’s facility stayed steady, which he attributes to the carwash having an oil change. All of Hansen’s profit centers cross-sell. If someone comes into the oil store, the signage tells them about detail services, chip repairs or paintless car repair.

“We will have someone come in that needs oil change and end up getting a detail, or they may bring a car into one of the profit centers, leave it for certain work and they have it for a day or two,” he says.

“Essentially we’ve associated ourselves with a high-end oil company that gives us the ability to charge commensurate with that quality and image as long as we provide excellent service and offer outstanding convenience,” Porges says.

Prime Shine includes a carwash with any oil change, offering added value. The only other profit center is the wash.

“We are not so sure that the wash numbers generated with the lube would not have been generated without the lube,” he says.

Customers can easily find the Express Lube by its 20-inch blimp named “Lubie” and the words “Car Wash” on the side flying at an altitude of 200 feet. Express Lube also uses direct mail and radio. Jones says the company’s approach is not to market one profit center over another but to combine their marketing efforts to make customers see the value in the one-stop quality shop option.

Mister Car Wash offers a free wash with each oil change, sends out reminder cards and uses direct mail.

Knowledge is king

“Anyone considering a fast lube should contact current and past owners for feedback,” Schumacher says. He also recommends The Automotive Oil Change Association (AOCA) as a good source for contacts. Although a fastlube operation is not for every carwash owner, he says it can be good for many. Hansen, Jones, Porges and Schumacher also relied on sources such as the International Carwash Association, Western Carwash Association and the AOCA. The AOCA is especially helpful in the areas of employee certification and environmental concerns.

“The oil change business is much less prone to weather conditions, so it helps offset rain days,” Schumacher says.

And this added profit center can mean the carwash/lube combo is a worthy venture.

With the ever increasing pace of living, it makes sense to offer your customers more than one service on a site. Fast lube/carwash combos just may be the ticket for you. If you don’t consider it, your competitor just might.

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