60-Second Business Plan
The pitch: There are 75,000 car washes in America, most of which don't provide a Rolls-Royce-caliber experience. At the high end are 10,000 so-called full-service washes that scrub and buff, on average, 67,000 cars a year. They're pricey ($13 a pop for pretty basic service); inconvenient (you have to abandon your car to strangers wielding noisy vacuums); perilous (equipment that's outdated can ding your vehicle); and not known for gracious service (holders of these sweltering-in-summer, freezing-in-winter jobs turn over at an annual rate approaching 260%). At the other end of the market are drive-in, do-it-yourself shops, which tend to be run-down and ill-lit. They leave you fumbling for quarters, and then they soak your feet.
In between those two extremes of American water torture, Kingsley Management LLC sees a sweet spot. The Boston-based start-up's 15 car washes -- trademarked "Swash" -- are in three markets (Rochester, N.Y.; Greenville, N.C.; and Jacksonville, Fla.) and deliver a state-of-the-art, no-muss, no-fuss scrubbing for $4 to $8. You pull up to what looks like an ATM and pay with cash, a credit card, or at some locations, a prepaid card. The machine then rolls a video that explains what your car is in for: wash, wax, undercarriage wash, sealant, and a spot-free rinse and dry. All services are delivered by software-controlled equipment that never lays a brush on your car. At some Swashes, if you have any questions, you can just push the customer-service button, and a living, breathing person on the other end of the line instantly comes to your aid. The whole experience takes less than five minutes.
Driven: With technology replacing manpower, "we can just go where the opportunity is," says Matthew Lieb
Kingsley, founded in 1999 by Matthew Lieb and Chris Jones, is attacking the market on three fronts. First, it's setting up stand-alone single-bay car washes in high-traffic, upscale commercial locations. (Multiple-bay units, ? la Jiffy Lube, are in the offing.) Second, it's forming partnerships with gas stations, which, in an effort to offset tissue-thin margins on gasoline and service, have become more accustomed to selling Twinkies than tune-ups and consequently should find car washes an attractive profit center. Third, Kingsley hopes to join with hypermarkets, giving the one-stop shoppers one stop fewer they have to make.
"This is a cash business and pretty simple to communicate to investors," says CEO Lieb, 30. "We raised $6 million from angels and bank debt." With the second phase of financing complete, the company will begin its expansion to more than 100 locations across the country in the next two years. Lieb says he can hold his corporate staff steady at five people -- the management team has experience in everything from the gasoline, real estate, and convenience-store industries to corporate strategy and brand management. And with technology largely replacing manpower at the point-of-buff, Kingsley can enter markets without fretting over labor or the need to achieve critical mass in one area. "We can just go where the opportunity is," says Lieb.
The Technology Edge
CEO Matthew Lieb grew up in the car-wash business. But when it comes to actually washing cars, Kingsley's resident expert is a machine: the Laserwash G5, a product of PDQ Manufacturing, based in Green Bay, Wis. The G5, which registers the dimensions of customers' cars as they roll in and then adjusts itself to ensure optimum spray distance on all sides, can deliver four different types of washes without having a single brush touch a single vehicle. The machine operates the wash, diagnoses problems, performs safety checks, and provides management reports on demand. Last year Kingsley acquired nine G5s and six Laserwash 4000s (precursors of the G5s). Each of the machines costs several hun- dred thousand dollars and cleans up to 15 vehicles an hour. That gives Kingsley more of the units than any other privately held company, according to Lieb.
Clean Sweep or Washout?
Who: Kevin Hart
Title: Executive editor, Professional Car Washing & Detailing magazine
Where: Latham, N.Y.
"With full-service car washes you're paying labor an awful lot, and overhead is high. Margins on car washes are much better than on gas, so that will help offset those costs. Allowing customers to pay with credit cards is a brilliant idea. The customer doesn't have to look for change and is more apt to select more-expensive packages. Plus the difference between spending $20 and $6 on washing your car is a lot. By eliminating the labor issue and charging a more reasonable rate, Kingsley has a market opportunity, [given] the problems the industry is having generating frequent returns. But when you do things in a labor-free manner, you have to be sensitive to the customer. There is no shortage of gas stations mismanaging car washes these days. You need someone on the ground in case the equipment breaks down."
Who: Chris Traczek
Title: Associate editor, National Petroleum News
"Ten years ago who would have thought there would be a Jiffy Lube on every corner? So why not a car wash? The market is definitely there, but I'm not so sure about Kingsley's efforts to implement the idea at existing service stations. Many of those sites are just not big enough, especially in the high-traffic areas they want to get into. A lot of the good sites are owned and operated by the major oil companies, and most of those have car washes already. They have a better chance of getting into hypermarkets. All those places have huge parking lots, and they want to sell gas. Wal-Mart, Sam's Club, and Costco all have big plans to put gas stations on their sites. Selling gas can be a loss leader for the car wash. Or the car wash can be a loss leader for the store. Buy so much merchandise, and you get a coupon for a free car wash."
Who: Kent Sutherland
Title: CEO of Kent Sutherland Cos., which operates a car wash, among other businesses
Where: Sherwood, Ark.
"They seem to be on the right road, but they're going to run into more competition. The big retailers are already building their own car washes. It's harder and harder to find good locations. I'm shocked that they think they can charge only $6 for an expensive car wash like this laser wash. I don't see them staying at that price point. Maybe $10. In the prime real estate areas, where they want to put these things, that dirt's not going to be cheap. You could easily pay $500,000 to $1 million just for the site. That's a lot of quarters."
Who: Tom Hobby
Title: President, Autec Inc., a car-wash manufacturer
Where: Statesville, N.C.
"If you partner with a convenience store, and if it's a well-run operation, the numbers work. But you have to be careful. There are a lot of marginal sites out there, and if a convenience-store chain goes in with you on a good site, they'll want you to take some dogs as well. And besides, if the site is good, the owner would be smart to do it himself rather than do a joint venture. Kingsley's concept is more convenient; a full-service wash normally takes you 30 to 45 minutes. But their idea is capital-intensive. They're looking at at least $200,000 per site in capital expense. Kingsley has to be very choosy about where they put their car washes and who they partner with."
Enter the Dragon
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60-Second Business Plan
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