Owning car wash business is a great way to make a living and start your entrepreneurial career. According to StatisticBrain.com, the US Census Bureau reports that consumers spend an estimated $5.8 billion at car wash businesses annually and that on average nearly 20,000 cars get washed at any given car wash annually. Auto Laundry News reports that conveyor car washes will see an average gross revenue of $9.56 per car which sounds like a high profit margin. However, there are costs to figure out in order to earn or exceed the average revenue per car in car wash business profit. Keep in mind the following costs when calculating the car wash business profit you should expect.
Variable costs are the expenses a business pay that can vary from month to month. The typical variable costs for a car wash business includes, but is not limited to, electricity, natural gas, water, chemicals/car wash soap and repairs/general maintenance. Below are some average price breakdowns for variable costs. It is important to remember these costs are the national average and will vary by location, utility companies, chemical suppliers, and equipment you are using.
- Electricity. Running a car wash business takes a lot of energy consumption to keep the building working to maximum efficiency. It is estimated that the blowers to dry off cars use the most electricity and it actually costs less long-term to keep them on than to start and stop them. The average cost of electricity use per car is $0.50.
- Natural Gas. Hot water is required to clean the vehicles and warm air for the heated blowers to dry the vehicles that come through their car wash business. The average cost of natural gas usage per car is $0.12.
- Water. The cost of water is necessary to the business, whereas some costs you may be able to find an alternative to, such as using electricity compared to using natural gas, or using eco-friendly soaps than chemicals that are potentially hazardous to a vehicle’s exterior. Typically, it takes about 45-65 gallons of water to wash a car in a one-bay automatic car wash. Most car washes have reclaim systems, which reclaims the water used in previous washes to wash more cars. The average cost per car for water is $0.16.
- Detergents/Chemicals . Depending on which type of car wash the customer chooses will determine how much is spent on each car for car wash chemicals. For example, if a car wash allows a customer to choose between purchasing either a standard car wash at $7 or purchasing the deluxe wash at $10 which, then the cost per chemical will increase if they choose the slightly more expensive chemical with the deluxe wash. Car Wash Magazine estimates that a basic car wash costs $0.45 per car and the most upgraded car wash costs $1.20 per car. The average cost per car for chemicals is $0.64.
- Repairs/Maintenance. Once you have built your new car wash business from the ground up, time will eventually wear on your equipment. As more customers go through your car wash business, your building will eventually need repairs and routine maintenance that keep it running efficiently. The average cost per car for repairs and maintenance is $0.47.
These are costs that will always be there, such as site labor, administrative expenses, rent/mortgage and annual property taxes.
- Site Labor. This cost is determined by how many people are needed to be on staff each day at the car wash business. It is highly recommended to have the same amount of staff there each day, no matter if only 10 cars come by or if it is 1,500 cars that come through. The average cost per car for site labor is $1.24.
- Administrative Expenses. Such expenses include business insurance, management staff, marketing and advertising fees, landscaping, office supplies, etc. The average cost per car for administrative expenses is $1.00.
- Rent/Mortgage & Property Taxes. These costs are dependent on the location of the business.
The National Average Car Wash Business Profit
If you take all these variable and fixed costs and add them up the total cost per car is $4.13. If you take this number and multiply by the average number of 20,000 cars that get washed at any given car wash annually, then the total number of costs you will incur is $82,600. Suppose that the 20,000 cars that come through your car wash each buy a basic car wash at $7 per car wash, then the total revenue made is $140,000 (if your business has just the one-bay automatic car wash). To calculate the average car wash business profit you can make, take the total estimated revenue and subtract by the total average costs and the number you get is $57,400. Since this is just an average car wash business profit, there is potential to make much more profit by either opening up more automatic car wash bays, adding additional car wash services and having customer loyalty programs.