Car Wash - does anyone own?

[Ben Leybovich]

Guys,

Got a call from a banker. A set of several automated car washes is selling. If anyone owns some car washes, please chime in. Underwriting EBITDA and CF, and I'm starting to develop a basis for understanding, but any useful advice will be appreciated!

@Brian Adams, @Brian Burke, @Jon Holdman, @J Scott?

[Jimmy Klein]

Not as great of a business as you would think. The repairs can cost an arm and a leg. If the repairs are large, the car wash will be down for maintenance, and you will lose cash flow for that period. The business is not recession proof. The business is seasonal as well depending on where it is located. Car washes in the north rarely get used during the Winter months. In addition, car companies like Toyota, Honda, Ford, etc. have promotions where if you buy a new car you get unlimited car washes for the life of that car. I personally have this on one of my cars so don't need to take it to the wash. 

In addition, car washes don't hold their land value that well because of the long term environmental impacts of the chemicals used on site. A phase 2 environmental report may show a ton of problems.

I know these things because I was about to buy a portfolio of 3 car washes. During our 60 day due diligence we found so many issues. Things that are not just specific to the ones we were buying, but to the industry as well. Also, I am good friends with someone that owns two car washes as well. He is trying to sell both. Even though they are self automated, he has to constantly keep running there when something doesn't work, which he tells me is multiple times a week.