WashCast Podcast Episdode 1: Bill Martin

The inaugural episode of WashCast, a podcast by Suds Creative, Jason Baumgartner and Chris Moriarity chat with industry legend Bill Martin of Metro Express Car Wash. Bill discusses how his business got through the first wave of the pandemic and shares secrets of building and managing a high volume site.

Transcript

Jason Baumgartner: All right, welcome to “The Wash.” This is our Suds Creative podcast. I’m Jason Baumgartner co-founder and president of Suds Creative. Chris Moriarty.

Chris Moriarity: Hello.

Jason: Vice President of Strategy for Suds Creative. And then we have our special inaugural guest for “The Wash” podcast, Mr. Bill Martin with Metro Express.

Chris: Oh, he’s amazing.

Jason: Today, we’re going to talk about, it’s really an extension of our “Data Bytes” program that you may have seen with DRB where we talked about data and what was happening with COVID-19. Today, we’re going to talk about some more things operationally. We’re going to get into a little bit of the data pre-COVID, post-COVID, what it looks like across the nation and regionally. And we’re going to spend a lot of time bouncing ideas off of Mr. Martin and talking to him about how we can affect things like team building, throughput management, and all kinds of good things that’ll help you out with your wash facility. We’re glad to have you here as a viewer.

Bill Martin: Well, Chris, I for one, really appreciated the podcast you did with DRB, because again, being isolated a little bit, then not being able to go to conventions or interact with other operators and getting that data feedback and your perspective. And I think it’s real valuable, especially since Suds has so many data points to be able to collect, and it’s not anecdotal. It’s based on fact and reality and the operation. So I thought that was very valuable. And hopefully this will continue that trend here.

Chris: Well, as Jason kind of sets up some of his findings, It reminded me of, oh gosh, I think it was a Mark Twain quote where he said, “It’s not what you don’t know that’ll hurt you. It’s what you know for certain that just ain’t so.” Where I think a lot of us, you know, we’re all emotional, so we all started jumping to conclusions about, you know, I think this is going to happen. I think that’s going to happen. Well, there’s a big difference between what you think and what just the reality is, good or bad, you know. People have… I think they deserve to know what’s actually happening so they can make those plans. But what Jason’s about to get into, I’ll be the first to admit that had it not been for the data, I probably would have been wrong on some of these predictions.

Bill: Well, just a little historical perspective, you know. Back in the 80’s when Dale Brott started telling people at conventions and car wash operators that your customers only are coming to you three or four times a year, everyone’s like, there’s no way. He doesn’t know what he’s talking about. It’s impossible. Dale had the benefit of the data from hundreds of operations and what the operators were looking at and thinking about is what they experienced on their site. And they’d see a customer. They thought, “Oh, my folks are in here every few weeks.” But the reality was it’s about a four times a year. And so that single piece of information was a huge, huge feedback for operators that embraced it and tried to figure out how to improve, increase that frequency.

Jason: That’s an interesting point. So do you feel like that single data point maybe gave rise to the express exterior unlimited model? Gave people the confidence to try something like that?

Bill: I can only speak for how it affected our team and our company, but we started to really think differently. We did not believe it. Nobody believed it. And I challenged Dale on that information and they just, you know, it turns out obviously it was correct. And so when we finally embraced the truth on that and started to think about how we could change that behavior, then we started looking at our business differently. And so we can talk more about that. But to me, that was… And again, the industry was in denial about that. Smart people in the business.

Chris: That’s just it. The term we use for that is a confirmation bias. And in fact, when they study this, not just in business, but when people have decided to take a stance on what they believe to be true, when challenged about that view and when they were surveyed, they doubled down on that opinion. Like they’re not wrong because I know because I’m an operator and I will tell you, I don’t even care what your numbers say. You’re wrong. And it’s a mental hiccup. It happens to… We’ve all experienced it, but that’s where we’ve got to remove ourselves from a lot of these equations and say, “Okay, I’m going to put myself over here and say if nothing had existed before this moment, what decision would I make based off of this data?” And then trust in it.

Bill: Trust the data. And that’s, I think, particularly perhaps my generation or whatever, it may be harder to do that because you depend more on what, you know, maybe the historical perspective, but, anyway, we’ll talk more about that.

Chris: We’ll get big into it ’cause it’s my biggest fear. A lot of the tools that were developed around data were made for other people doing the same type of research, and they’re not pretty, and they’re very crude, and they’re not just consumer friendly. And when you hear about stuff, just in all industries where, you know, big algorithms that Netflix or even Amazon are using, they call it the black box, meaning that the inputs are going in one end, answers are coming out the other, but nobody knows how they came to the conclusions. So a whole lot can go wrong in these black boxes. And they’re so opaque that there’s a lot of danger in that. So while we’ve experimented with a lot of the folks we’ve talked to of, what’s the right amount of transparency? Where I want people to understand that at Suds, like, we go through a lot to come up with these conclusions, but sometimes showing them inside that box, I almost think does more damage or confuses them even more as opposed to… So it’s a constant, it’s a back and forth and it’s an evolution, but you know where… I’d rather show them too much than too little.

Bill: And for operators, you know, the risk in making change can be pretty high. I mean, we don’t want to lose a single customer, so when you tell me, I need to go from five price points to three or four to three or something like that, and we I’ve been doing it this way for, well, I don’t think you’re right about that. I trust what’s been working. So the risk for that individual operator for that company, they see that as very high and consequently people are slow to change. It’s like adopting unlimited. People do not… A lot of folks in our industry just do not believe the reality of the numbers that, you know… They think… ‘Cause they… The first people to adopt the unlimited are the people that are gonna come in twice a week.

Chris: Or everyday.

Bill: Yeah, and they experience this. I want out of this deal. And so you… But you got to stay the course.

Jason: When we got into the business at Suds, we started in 2015, 2016, how many people have yet to adopt an unlimited model compared to today? I mean, I bet it was 50/50 at that point, even just four years ago. And now it’s probably 80%, 90% of express tunnels have some type of unlimited model out there, but it has changed and it’s become, now it’s just become gospel to most. Whereas back, you know, as you tell that story about, you know, Dale Brott and that one little piece of, that golden egg data point of yeah, people are actually only coming in three or four times a year. And then ICA came out with a study in 2016 that backed that up and actually said, what we found based on credit card information is that people do wash four times a year retail, unless they’re an unlimited customer, but at your facility alone using that same credit card, at least it’s more like 1.87 or 2x.

Chris: That’s an important thing to ask, an important thing to know, kind of, what we’re really looking at with those numbers.

Jason: Absolutely. Let’s dive into the agenda here. So the first topic we’re going to throw out is, you know, being able to prosper post-pandemic, and let’s talk for a moment about what we were seeing pre-pandemic and what we’re seeing now post-pandemic. We were very excited for, you know, for the month, basically the second half of March in through balance of May. We really didn’t have any new site openings and at Suds Creative, we were opening about 15 to 20 new sites every single month. And that was a big part of our business. And so once we started launching these sites at the beginning of June, we were excited to see at the end of May, beginning of June, we’re excited to see where things shook out. Any basis, you know, any gut reaction to, from you both to see, what do you expect consumers to do just judging off of past experience or, you know, what you think is the sentiment around the population base? What would you expect to see, I guess, in terms of those numbers?

Chris: Well, I can tell you when it comes to my life, I’m super positive. Everything’s going to work out. When it comes to business, I’m just shy of a nihilist where I tell people, “What’s your worst case scenario? Now make it worse, now make it worse. Let’s start from there.” So when we started thinking about these new sites opening, I wasn’t as worried about established sites because you’ve established behaviors from people who know and already trust you. When you are starting from zero, you have no relationship. You have no assurance of quality. So I thought the risk would be much, much higher. And as people were coming out of the quarantine, I knew they’d come back and I knew that car washes would be on the front end of the recovery, but I thought it’d be a trickle kind of coming up and then a slow acceleration to where we got into stability. So that was my assumption when we started looking at the site openings.

Bill: Well, I want to preface my remarks by saying that… And I’ve heard this my whole career, is in talking to business people or people in our industry, well, you have to understand that our customers are different here or in this market, it’s different than in your market. Or we, you know, the weather makes a whole different thing here. And I would submit to you customers are customers are customers, and I don’t care if you’re, you know, anywhere in Western Europe or in the United States or much of the world, customers are customers and if you treat them the same, the response is going to be the same. So given that, our experience was that we saw a pretty good runway ahead of us at the beginning of the year, and we came out of Data for Dollars pretty excited about some of the information that you all shared, and were making some plans around that. And then when COVID hit, I personally became very negative and very concerned. And so we… In fact, I think I might’ve even overreacted on the conservative side, but I’ll get into that further. We took some precautions, and then whenever we opened back up afterwards, it was way beyond our expectations. It was four times, three or four times what I thought we would be doing in terms of our daily volume, because I thought everyone, like me, maybe was hunkered down

Chris: A little stir crazy.

Bill: They’d be very cautious. But we also felt that people wanted to get out. And so we knew there was some pent up demand, so we thought we’d be okay, but way beyond. And I think the fact that the government has done the right thing by supporting the economy with lots of dollars and that’s helped to make, give people a positive attitude. And it’s also created real dollars to be spent. So we’ve come out of it, I think, beyond where we thought we’d be. And I think the runway ahead is much better than I would have even thought 60 days ago for our industry, particularly. I mean, I’m glad that we’re not in the restaurant business or the bar business or something like that.

Chris: Movie theaters.

Bill: Yeah. We’re in the business where people can come in and shop with us. They can trade our for our regular, unlimited customers, they don’t even have to roll the window down. So great model. And we’re just gonna double down on everything we’ve been doing.

Jason: So Bill, you mentioned that you are an avid watcher of the “Data Bytes” series. So as we went week by week, I think we did eight episodes, were you surprised at the angle of the bounce back?

Bill: Yes, absolutely. In fact, if someone hasn’t seen those, I assume they’re still available on YouTube.

Jason: We’ll put it up on the podcast.

Bill: Yeah, ’cause that is some good data, but it demonstrates what was happening in real time across the country. And I looked at that and thought, “Oh my gosh, is that really what’s going on?” And that in fact has been what we experienced as well.

Jason: And for those of you that weren’t aware, “Data Bytes” was comprised of about 1,000 different sites across the country, broken down by state. And so we took average weekly volume across all 50 states and we’re able to aggregate that into national and take a look at trends and was really interested in information. In fact, you can go to drbsystems.com and look for the Here To Help button and you can watch each one of those episodes and download those stacks as well.

Chris: You’re gonna love it. If you haven’t checked it out, I’m telling you, don’t let your kids watch it. They’ll be hooked. It’ll be all day long saying, “Dad, I want to get into statistics and, oh my gosh, these graphs! Let’s do graphs together, Dad. Let’s forget about camping.” That won’t happen.

Jason: So while we did see, you mentioned, you thought mature sites or existing sites would be a little bit of more-

Chris: I did. I did. I thought that opening a new site, which, that was the real kick in the gut ’cause we know that it’s… You don’t get to flip a switch and start a new site. I mean, this is a long, difficult, often frustrating road. So getting that thing running, those people who had to put it on pause for a little while, I mean, your heart went out to them. And my concern, I should say my gut feeling would have been that it was much riskier than it would have normally been, just again on a non-established… ‘Cause I with Bill in so many ways that, you know, your reputation and the way that you treat people means more than almost anything, but trust is earned. You know? So when you’re starting from scratch, I was nervous for them. I really was.

Jason: Well, let’s take a look at it. So the first two weeks post-COVID I’ll call it, we’ve had two openings that have gone at least two weeks, 16.23% capture rate on an opening on the West Coast. We define capture rate is the percentage at which we flip a retail customer to an unlimited customer. And in the Midwest, we had a site open 20.47 average capture rate for that two-week period. So for 1,000 retail customers coming through the wash, you’re selling 200 of those plans or 160 of those plans. Those are fantastic numbers. Those are equivalent to, or maybe even a little better, than where we were prior to COVID-19. And certainly there’s some regional sensitivity as well. You know, you do get into some seasonality things and on the East Coast with pollen and even in the winter with the upper Midwest States, but how does that strike you? 16%, 20% capture rate?

Chris: This is, and Jason’s famous for a lot of phrases, but one of which is, you know, ultimately the consumer decides. So when it comes to me and that gut feeling, it doesn’t really matter what I think is going to happen. It only matters what does happen and how we can influence that outcome. ‘Cause regardless of how I felt about that extra caution, we approached it with the same aggressive attitude we always do, but I’m one of those people that, you know, we were talking, Bill and I were talking earlier about the amount of trust it takes to make just recommendations to any business, because there’s a lot on the line. If I’m wrong, I get my hand slapped, but on your end, you lose money. Maybe somebody loses a job. It’s a big deal. So existing sites gives us the ability to forecast. And if you go back to some of those “Data Bytes” episodes, we took some states and, just to kind of show people how it works, we made some forecasts and we were between, on the low end, 84%, on the high end, 97% accurate in what we were able to forecast is coming next week. That’s, all day long, that’s the level of confidence I’m trying to extend with these recommendations, but with a brand new site coming out of a pandemic, there is no historical information. And when people coming out of the pandemic were asking for recommendations, and then they’d ask us, well, “Hey, how have these strategies worked in the past?” And we’d had to tell them, “This is our first pandemic. So there is no history. There is nothing. All we can do is take the best information we have and go forward.” And it turned out wonderful. And I’ve never been so happy to have been so overly cautious on their behalf and see everyone just do so, so well, ’cause they deserve it.

Jason: It was definitely a good start. And so those are new sign openings. Both of them were Greenfield sites. And so off to a fantastic start there. It gives us a lot of hope that some of the tools that we implemented prior to COVID-19 are still as effective as they were post-COVID-19. So let’s talk about price sensitivity. So what’s the unemployment right now? It’s in the 15%, 16%.

Chris: It depends on how you figure it.

Bill: I heard today 20 million people. I don’t know if that’s, you know, accurate.

Jason: It’s a lot. How is that going to affect? Are people going to spend less? Are they going to choose a lower tier package, perhaps, than going for the top package? Are they going to sign up for unlimiteds at a slower rate? Are they going to do more one-offs? I think your point about the government subsidies is a valid one. We still have this, you know, trillions of dollars that are in the economy that weren’t as a result of a job or employment. How do you guys think that that would shake out? Because we do have some statistics here. I’d love to get your feedback. And I know that, you know, it’s going to vary region to region, so what we did is we polled multiple locations in multiple regions across the United States and the results to me were surprising. And I think, Bill, you were less surprised.

Bill: Yeah. I mean, I think that… One of the things I was pretty worried about with all the unemployment, you know, those folks are… They’re coming in now. Are they going to cancel their plans? What’s going to happen with those? I do think what happened with the stimulus, that’s given us a bridge to get through this. It’s still uncertain, you know, what’s going to happen at the back half of the year, the first of next year, although I think our country being what it is and people wanting to be out and engage in enterprise and shop and go out to eat and whatever, I think we’re going to see is ramp up pretty quickly.

Jason: Capture rates across the board, again, the conversion of retail to unlimited, actually jumped up about 18.5% From 4.96% to 6.05% on average across the locations that we polled. Again, multi-region across the United States. That was pretty surprising. I thought it would be flat and I thought that some of the flatness would be due to people canceling with the uncertainty and then perhaps resigning up and being recaptured, but actually an increase may suggest that we are exactly where we were prior to COVID-19. What are your thoughts, Chris?

Chris: Yeah, and that’s where data’s wonderful, but the only reason we look to the data is to predict behavior. And as we’ve looked at explanations, you know, what we would call variables, and those are just things that, all the things that could be potentially impacting the outcome, what we know about this industry in general is that when people start anywhere, whether it’s a wash package or the day that they come on, or the time that they come in, it’s very rare that they change these behaviors. So I think the people that did maybe initially pull back, the closest thing they could, the fastest thing they could do for a return to normalcy was to go back to the one pattern they still had access to. Can’t go to the gym anymore. Can’t go play golf anymore. But I can still do that. So it was one of those little missing pieces that got slid back in first. And we also predicted, and it made sense because of just the built-in protective nature of the car and when they were going back, we knew that there was going to be a period of time, and I think that we’re still in it, where there’s going to be no better time than to hit the gas as hard as you can take to get people back or to get new people in because right now there’s a whole lot of marketing dollars that are waiting on the sidelines. Everything from restaurants to everywhere else in your town. And as they start to open up, they got to make up a lot of ground so they have no choice but to be aggressive. So we’ve held the voice in so many different communities. And I think some of what you found in these jumps is really a reflection of that. And that’s why we had so many people ask us, “When should we hit the gas?” And I said, “Now.”

Bill: Well Jason, to your question, looking back on this and what we came through, I think I was wrong on several levels. You know, I really thought, as I said earlier, that we’d start up when we opened up much slower. It was three or four times what I expected. And I really was concerned about our unlimited and our club members, which are, you know, a huge base for us. And what we found, what the reality is, is that the customers have come back and our unlimited sales, we set targets for each quarter, where we want to be at the end of the quarter. We’re right now where we thought we’d be at the end of this year. So I can’t explain it. I really cannot explain it except that, you know, I think again, maybe it’s called pent up demand, but I missed that call in both both levels and it’s pretty gratifying. I think it really does speak to the future for our industry and where we can go given that we execute well.

Chris: And we’ll talk maybe more about this when we are kind of more in the interview portion, but we have, we’ll have people that will say, you know, “I want this many cars that are going to come in,” and we want that too. But the first question I always ask is, well, “What would you even do if they showed up?” Like, can you handle 10,000 cars? You know, and the answer of course is no. Or even if it’s, you know, a fraction of that, can you give enough attention to enroll them? And I think one of the reasons that you’ve really, I mean… To say you’ve done well coming out of this is an understatement. You guys are just doing, you’re doing fantastic. But I think so much of that comes from the preparation and the groundwork that your sort of career has provided. You know, we’ll talk more about this, but that focus on we’re not going to sacrifice that quality or that relationship to try to jam people in here, through there faster. So you were going to do well if it was this many cars, but you could also handle it when a lot of people came and that’s that… I think… I don’t know if it’s just the benefit of experience, but I can tell you most people underestimate the reality of what it takes to take care of people in a high volume situation. It’s incredibly difficult. They lose sight of it so fast. What’s going to get people to come back? So ask yourself that questions, listeners and viewers. What if you did hit your goal? Like ’cause, believe me, if a thousand people showed up in one hour, are you going to have 998 unhappy people? Well, that’s even worse than if they didn’t come at all, right? Anyway, we’ll get more into that. But I think that is one of the big reasons why you’re able to capitalize on the situation as it presented.

Jason: Well also, you know, having a conservative outlook about what could happen puts you in a position to have to plan for that, right? So you’re creating these contingency plans. You’re getting more aggressive. There’s a little bit of anxiety. And, you know, you have a fight or flight type of response to a situation like COVID-19 where you can either double down and figure out a way to become more efficient operationally or you can say, “What happens is going to happen. I’m just going to let it happen to me.” I think there are more operators that lean on the former where they wanted to swim and we were really able to generate a lot of great conversations based on… We were encouraging people to swing hard and swing for the fences because you’re going to be pitted up against other competitors. And, you know, just in this city alone, Boise, there’s a lot of good operators. So, you know, you want to be the one that’s out there swinging and there’s going to be half of the crowd that is going to take the flight response, where they get really conservative and half the crowd that’s gonna, you know, plan for the worst, but, you know, prepare for the opportunity. And I think that that’s exactly what you’re seeing and not just in the car wash industry. I think, you know, our industry as well.

Chris: Oh, hands down. Hands down.

Jason: In the car wash industry, but in the B2B side as well, you know, you’re expecting these things to happen. You become more lean operationally, you have to become more efficient and then you can take advantage of it when you find out that the industry is a little isolated.

Bill: I want to go back to what you said about, you know, if a thousand people show up, what do you do? And I think where I see one of the shortfalls and missteps in a lot of industries, but certainly in ours is operators say, “Well, let’s promote, let’s advertise, let’s do billboards or radio or whatever it is. Let’s get some people in here. ‘Cause we’re we’re not doing enough business.” And they do that. And they sort of do a shotgun effect, but then the customers show up and they’re not able to manage the situation or the throughput. And that’s where they dropped the ball. So they get the wrong thing first. You know, they start marketing before they’ve really focused on execution. At least that’s what I see happening a lot. And so that’s where the opportunity… I think there’s an opportunity for operators to focus on that execution piece and then the rest of it, you know, if you feed the… As they come to Suds or whoever and you can feed the customers in. Now you can manage that process.

Chris: And it’s interesting because, you know, this is where, again, the data and the KPIs really play a key role. And whether you call it an enrollment rate, a conversion rate, a capture rate, whatever you call it, whenever somebody comes in and they say, “We want 20,000 members,” you know, whatever the number is, well, the quickest way to know how possible that is is just to look at what they’re doing now. So if they’ve got a hundred cars that come in and you convert nobody currently, well what good’s 10,000 cars going to do you? So we need to work on those skills and make sure that we’re doing our part to… It’s not to meant to sound pejorative. We don’t care where you start. We just care that you start. And that’s why we make sure we’ve got tools and resources for folks who don’t, they don’t know how to write a better script. They don’t know how to make it conversational and guide and make it easy. ‘Cause we’ve all had that thing where, “Okay, okay team member, this is what I want you to say. And it looks like a phone book and you’re going to do it right.” And they’re like, “Oh yeah, boss. Oh yeah, boss.” And the minute you walk away, we know it’s not happening. Right? And why would it? Like, it’s an impossible situation. So let’s work on those things and let’s get that capture rate up so when we do hit the gas on that, we’re taking care of people. It’s the only way to do it.

Jason: Internal, external, reach.

Chris: Exactly.

Jason: So last point on this, on the data side, price sensitivity. So a lot going on, a lot of uncertainty. We looked at two weeks prior to COVID-19, so March 1st through March 14th, and then we took the last two weeks, the 21st through 27th of May through the 10th of June, and we compared package breakdown. So top package versus middle packages versus the base package and looked at the percentage distribution to see if consumer behavior has changed. It turns out it didn’t change. In fact, well, it did change, but it changed in a way that we weren’t expecting, at least I wasn’t expecting, where the top package actually performed significantly better post-COVID-19 than it was prior to COVID-19. And this is comparing a two-week period. What are your thoughts on that?

Chris: Well, you know, this is interesting, and I’ll tell you a story that happened a couple of weeks ago. So our job here is really simple, you know. Optimize revenue. Find ways to make your business healthier and do well. So a lot of… Oftentimes I get a little bit lost in the numbers where it’s a puzzle and it’s a game and I’m trying to stretch the pieces to make them fit the best. And the unfortunate byproduct of this is it removes a little bit of the emotion out of it, right? So as I was looking at a site, whenever we see the top level being really saturated, very, very popular, well, that simply tells us that we haven’t tested what the market will bear. Like, if everyone’s at your top level, clearly some people within that pool would be certainly willing to go more. And so looking at that and talking about this price sensitivity issue with the gentleman who owned the site, I showed him how far he could stretch up that price and do very, very well. And the numbers were really, really attractive and he didn’t want to do it. And I was like, “Oh, well, tell me more about that.” He goes, “I don’t think it’s worth it. I don’t feel good about what I’m providing for that price.” Meaning there’s a lot of crappy ways to make money, you know, and he didn’t feel right about it. So what I told him, as I said, “Well, number one, it’s not really up to us to determine how valuable people think something is. As long as they’re happy, then it’s okay.” But if you, this will go up there, What would it look like? This is the question I asked, “What would a wash look like that at that price would be worth it? What could we add in to do that since we know there is a market for it?” But I absolutely loved the lens that he put that recommendation through. Just because I can hose people and they’ll pay it doesn’t mean it’s the right move. Because as a business owner, he has to be able to look those people in the eye and say, “What you’re getting for your hard-earned dollars is worth it.” And he wouldn’t let my math kind of stretch that. And it’s certainly not my goal to try to manipulate and try to do anything like that. My job is to find the threshold. So then we have to figure out how to make that work. But it was a wonderful moment. And it was a kind of a check for me to say, you know, just, you know, you gotta ask those questions. You gotta make sure that there’s that level of comfortability, ’cause as a business owner, again, so many ways to make money, but it should be followed by the ability to sleep soundly as well, right?

Bill: We say to our team that the price of the product is more in the mind of the seller than the buyer.

Chris: Always.

Bill: And the value is determined by the consumer, not by us.

Chris: Exactly.

Bill: And so we have to be… When we start trying to manipulate that and… Well, I don’t want… I don’t think I’m delivering the service, Let’s find out. And it also can’t be done based on the competition.

Chris: Amen to that.

Bill: Because you’re not the competition. Again, we say to our folks, “We’re the competition.” They should be, you know, looking at our price and base them off of that. So I think that… That’s in every industry. Pricing is always… There’s a sensitivity, but… And because we have a commodity that nobody needs, you don’t ever have to wash your car, and so it’s not a necessity. It is simply a commodity that people choose to buy or not buy. We don’t even know what our capture rate is on the road. We, you know, we talk about… I mean, it’s low, low single digits. 1%, 2%, 3% in a great location. So there’s huge upside, huge opportunity to grow that. But we fear that they’re not coming in because of price and I submit that may be the last reason they’re not coming in.

Jason: 100%. What we will see is, we’ll see in areas that are higher cash customers, or higher percentage that are paying with cash, we’ll see higher price sensitivity in those areas or at those sites because people are paying with cash and they understand exactly how much they’re handing over. With a credit card there’s just a lot less price sensitivity than most operators care to admit. So I loved your comment about, you know, pricing is, we’re looking at that from an operator standpoint-

Bill: More in the mind as a seller than a buyer.

Jason: Correct.

Chris: Absolutely.

Jason: More important to sell than to buy. I love that and I’m going to steal that from you. Every once in awhile, I’ll give you credit for it. We’ve been beating that drum forever. People just aren’t as price-sensitive as you’d think. And, you know, an increase of the base price is… You want your highest perceived value to be at the top end and not at the low end. And you don’t want it… We don’t want it to be a race to the bottom.

Chris: It’s so funny. As we’ve seen this, especially in major cities where, in the Chicago market, $3 washes are pretty popular, and one of our team members wanted to run a campaign that said “We fix $3 washes.” And I just fell absolutely in love with it because again, at the end of the day, I told someone else, I go, “Tell them that you’ve got a wash available for a dollar and his name is Jim and he’s got a hose over there. Go for it. It’s not good, but it’s a dollar,” you know, whatever. ‘Cause people will understand that when you just push it even more to the extreme. But I’ve said it a million times. I don’t care if your Nordstrom’s, I don’t care if you’re Walmart, I don’t care if your Kia, I don’t care if you’re BMW, they all make billions with a B just being who they are. Are they in the same industry? Yeah. Are they selling the same thing? No, no. You know, it’s totally different. And people forget that there’s so much value in there.

Jason: I have toured some of those $3 washes in Chicago and they’re actually pretty darn good. It’s a crazy world.

Bill: Some of them are.

Jason: Let’s talk about some other types of recessions or what Chris is calling extreme ups and downs. How many… You’ve been in the car wash industry for decades. How many of those have you been through, and how does this compare to some of those other recessions?

Bill: Well, I think the Civil War was the worst.

Chris: Were you sad when all those dinosaurs died? Was that a hard day?

Bill: So we’ve been through a number of these situations and some of them lasted longer than others, But so I think that what we’re seeing now, we’re really better positioned than we’ve ever been because, A, we have a larger customer base. B, I think the economy has been, you know, spiked you want to call it or, you know, incented to… And folks have got resources to be able to come back and return to our business, so we’re in a better spot than we’ve been in some of these other situations, I think. And so… But, as I said earlier, it’s historic. It’s like no other,

Jason: Talk about 2008 in particular. At what point did you start introducing unlimited membership?

Bill: So we began that in… We began the unlimited program about 2006. And we started out, like, I think a lot of people do, with a very high price and we just… We weren’t… We wanted to make sure those people were gonna… We just knew they were going to come in every other day and so we wanted to get a price and we didn’t… We really put our toe in the water in a very cautious way. And so-

Chris: Did you have any like colleagues that had tried it first or were you…

Bill: Well, actually DRB was pushing us to do it. And some… Mister Car Wash, who everybody knows about, they were, they had been doing it for some time, and I think they were really one of the early adopters. So it was starting to roll out, but I think people were pretty suspect of the whole concept. And of course it was harder to manage back then too.

Chris: ‘Cause of the Abacus? All the beads.

Bill: Yeah, right, exactly. There was just a lot of caution about jumping into that.

Jason: And prices were four or five X, what the retail prices were, right?

Bill: Right. We were probably, I think we were $6 on our base and $30 on the unlimited. Something like that. So yeah, about five times. And because you’re pretty sure they were going to come in at least seven or eight times a week. So anyway, so we went into that very slowly and really saw… Tell you a little story. We built a facility back in the 90’s that… And I went to DRB and we wanted to… At that time we felt that one of the constraints to customers coming to our car wash… Because the history of the industry was when you drove in you were approached by a salesman who wanted to sell you everything that was on the menu. And that was the cons. That was really the approach the industry took. They weren’t doing high volume. They were trying to gross up the dollar. So my feeling was that if we could provide an avenue for the consumer to come in and avoid that situation, because they really just wanted the car wash, they don’t want to go through all that drama. So I went to Ken Brott and said, “Can you sell me a device where a customer can come in and maybe throw a token into a basket? Gate opens and they come in.” This was the mid-90’s. And he said there’s nothing like that. Can’t do that. But my sense was that if we could remove that unpleasant experience for the consumer, where they get, you know, they get their arm twisted. They wanted to get the car wash, but they didn’t want to have… And some people, you know, they’d buy up, but a lot of folks just didn’t want that experience the way it was-

Chris: And I gotta tell ya, you know, one of the things we harp on ourselves and others is focus on the problem you’re solving, not the product you’re selling, right? And it’s so funny. We did a training with a group just last week and one of the suggested scripts was literally, it goes like this and you know, why probably most people sign up for the memberships? So they never have to have a conversation like this ever again.

Bill: Right, right.

Chris: And because we know that people just don’t like that. I love the way that you saw it right out of the gates. I think it’s so apropos.

Bill: And whenever the auto cashier came around in the early stages, I was one of the first to adopt that because I felt, again, if you remove that person, and you left the customer to make their own decision, my contention was they would spend more money, not less. And I think we’ve proved that to be the case. And I guess the last part of that was we never were very good at training that hard sell model ’cause I didn’t believe in it. So we-

Chris: If there’s somebody out there that likes it, write in if you like a hard sale.

Bill: I think a lot of folks, maybe less today, but that was… We used to go to the conventions and they’d have seminars about how to, you know, how to gross up the dollar.

Chris: How’d those work out?

Bill: So we’ve kind of come through, long answer to your question, Jason, but a lot of different stages and the last one, the ’08, and we actually opened a car wash in 2009, right in the teeth of that recession, and I have to say we had a very slow startup and I was pretty concerned. It obviously worked out fine, but it was very slow to start. And so in that situation, but again, we were not at that time… Our average site may have had 1,000 customers, 1,000, sorry, 1,000 members and today that would be a pretty anemic number by today’s standards.

Chris: And it’s so interesting where… People have heard us before talk about vanity metrics, where we hear people, you know, they say, “We want this many members, or a ticket average of this,” and we really have tried to shift the focus away from a number that is ultimately meaningless. Meaning that, yeah. I mean, it’s a helpful indicator how many members you have, but number one, how long they sticking around? And number two, how many, in fact, just to put it bluntly, the only number I really care about is the one on the bottom line. If you want 10,000 members paying you 50 cents a year, no problem, right? It’s not about that. It’s a blend of different situations and I think that’s one of the reasons we wanted to do this podcast was to bring some clarity to what some of these goals are, ’cause everyone wants to feel successful and they want to compare themselves against their peers, but they’re doing it in the wrong ways, right. That’s why we’re so excited to get you here, because one of our first conversations you and I ever had was about relationship. And if you keep maintain that focus on relationship and loyalty, that’s how you win this game. There’s no prizes for the person who washes the most cars, right? It’s all about loyalty and fostering that longterm vision. And I think for some of the primarily younger guys who they’re just, they’re so hungry, they’re hungry for success and they want to get there and they certainly will, but when they approach you, when someone, you can feel it in your bones, like, how do I make more money? How do I get people in here? Like, what do you tell them? How do you get them back to that core of what’s ultimately made you this successful?

Bill: Well, I think it’s pretty boring. I think you’ve got to focus on the basics. You got to, you know, get down in the trench literally and make sure that the product is consistently a good product. You know, so it starts with product. In our company we talk about product, process, people and place. Those four things. And people, number one in that. The whole product that you’re producing, a lot of folks I see, they build a car wash, great facility. Nowadays they’re building some beautiful mega facilities.

Chris: Unbelievable. Just in this area alone.

Bill: Yeah, Boise. It’s unimaginable. But that’s the easiest part. That really is. It’s expensive, but that is the easiest part of our business. It’s executing consistently day in and day out and focusing on your team, the product, the process that you manage throughout the day and the place that, the facility. So, if someone were coming to me… Quick story. We had a gentleman that wanted to get in the business, who had very little, no experience. And what should I do first? I said, well, “Why don’t you go to welding school and learn how to weld?” Well, that sounds kind of boring. You’re going to need to know how to weld. It would help you if you’re down or broken down. And maybe that’s, you know, maybe that’s some of the old school coming out of me, but… So I think the basics are pretty important. And then the real glamorous stuff that Suds does, to me, that sort of comes at, you know, after you’ve taken care of all these other things, and then you bring, you know, then you can create activity at the site. We call it throughput management in our company. But we can talk more about that, but being able to process the customers when they come to you. And because, as I said earlier, nobody needs a car wash. So if they come to your location, you better treat them well, you better give them a great experience because that’s what’s going to bring them back. And a lot of people can turn out a good car wash, a good product. I would never claim that ours is absolutely the best in the market. I think we strive for that, but so does everybody else. So where can you differentiate yourself? It’s not in the things that everybody else does. It’s the things that you can do differently.

Chris: If it’s for sale, they can get one too.

Bill: Exactly, exactly.

Jason: We talk a lot about, at Suds, you know, we get the question and I think a lot of operators are surprised when they ask, “How much am I going to have to spend on media spend and social media ads and things like that?” And we’ve said, whoa, whoa, whoa. You know, we may go to the first 90 to 120 days without spending a dollar on advertising because of that focus on just… You have to focus on the internal process. You got to get your pricing, right. You have to get the experience to be consistent. If you ever want to expect any type of consistency in the financial outcome, you’ve got to have consistency in the customer experience. And so a lot of operators get taken aback by that, but we do focus so much internally and it’s for that reason. You can’t get to the other stuff, unless you do this right. And if you don’t do this right, we can’t help you. It’s not your stuff.

Bill: You know, I probably, I mean, I have a real passion about this business. And so not everybody shares that same focus and that same passion about, you know, throughput management and product and people and place. And so everyone has a different perspective and there’s a lot of ways to be successful, but you’ve asked me what, you know, what’s important to me. And so that, and it really comes back to our team.

Chris: I was just going to ask you about that.

Bill: Yeah, really comes back to our team. We feel like that our folks on our team can… When it’s our at bat, we’re going to be able to get a better batting average than the other teams. How are we going to do that? Obviously, we’re going to do it with training. We’re going to do it by treating them with respect, by paying them and making it a real job. When we hire people and we tell them, they’re going to work 40 hours, they’re going to work 40 hours. We’re not going to, well it’s a little cloudy today. Why don’t you go home? That’s not a real job. So all those things we do, you know, people leave a job, oftentimes not for pay, but for the way they’re treated.

Chris: And the studies will reflect that. They don’t leave bad jobs. They leave bad managers. They say it all the time.

Bill: Right. And so we’re proud of our ability to retain talent and anybody can go out and borrow money and build car washes, but if you don’t have the talent to fill those spots, that is not destined to end well. So that is our constraint to growth is talent.

Chris: Well, and there’s been, in having a well-established process to not only recruit but ask the right questions and set the right tone out of the gates, one of the things that, it just haunts me when people, when owners are held hostage by employees who quite frankly don’t deserve to be there anymore, but they’re afraid to lose them. They don’t want to go through the hiring process again. They’ll put up with somebody. It’s not a true partnership. And there was a gentleman online just the other day who said they had this employee who needed to go find their happy place. How about that? And they’re like, well, “What do I do to cover the hours and to do whatnot?” And I go, “You do what’s right for the business and the consumers. And if it takes you jumping into the trenches, do whatever it takes to keep the right people on the bus, because, guess what, the team members around that energy vampire that you’re holding onto, you’re punishing them and it’s a mockery of the work that they do put in.” I just have very little patience for it, but I understand that fear.

Bill: It speaks to the leadership, though. I mean, if you’re going to allow that sort of thing to go on in your company, then that’s not leadership. You have to set the tone for the team and they have to know that it’s real. It’s not just lip service.

Jason: So follow up to that. So one of the things that we’ve noticed… We work with a lot of new investors that come into the industry. They’re opening up their first location. Typically they’re not from within the industry. they’re from, you know, maybe real estate development or, you know, the banking industry. They see an opportunity. They’re going to be an absentee owner or an investor that’s going to then rely on site management. They’re not going to be an owner/operator so to speak. One of the things that just… I mean, it’s not funny. It’s tough to see, but I’d say 50% of them within six months replaced their first site manager, general manager. Is that something that you think is pretty accurate? You would see that across the board as well?

Bill: Well, yeah. Again, they don’t know what they don’t know, so they get into it and they talk about, okay, if you go out here and sell unlimiteds or, you know, upsell the customer and the focus is really not… And then cars show up and they can’t process them. So the last thing anyone wants to do is wait in a line. That is the last thing they want to do.

Chris: Death sentence.

Bill: So it’s almost destined to failure. And, you know, we see… Our business looks easy, but it’s very difficult to manage, but it looks on the surface like this easy. Just buy it and build it and they’ll come.

Chris: Push that button and off they go.

Bill: I happened to be involved in another part of my life dealing with a private equity companies that are looking at the car wash industry and early on… And I was involved in the early stages of Mister, and they weren’t as focused on this at that point. They are now. But nowadays the smart money, when they look at this industry and they look at buying a platform, the first question they want to know is who’s going to run this? Because they found out the hard way by buying companies that if we don’t have the right team, it doesn’t matter what the value is of this platform. We’re not going to be successful, and we’re not going to be able to take it from X to Y. So I see that with private equity. Now, in terms of your question about investors that come in one off, you know, a doctor, an investor of some kind, real estate developer, I think they, unless they are willing to get into the details and really and commit to it and not just give it lip service, really commit to it, then they’re destined, I think, to get out in a short time because the business doesn’t just, you know, you just don’t build these things and they take off and go to the sky immediately. It takes time, and it consistently can grow over time and get very, very good. But you have to reinvest in the business and reinvest in your people. And I’m not sure that… I think our industry, for the people that are committed to our industry, we’re in a great period of time where there’s going to be lots of opportunity, both for Greenfields, but also to acquire where people may have gotten into business and they need to probably get out of the business.

Chris: And I’ll be quite honest. We were talking about just how the game’s changed in terms of just the physical capabilities and all the things that are bolted onto these buildings now. Where, you know, Jason being from southern Oregon, my wife’s from the same town and we were talking about, we always drive by the same, you know, self-serves, just cinder blocks, right. It’s bulletproof, storm proof, whatever it is, you throw your coins in and hands-off kind of a deal. I think that’s the notion a lot of people kind of came up with where now, you talked about Boise and some of the sites they have around here, I don’t live in Boise full-time, so I’ll pass a couple of these things and I think they’re nightclubs. I think that there’s… Is this an amusement park? What’s going on? And all of a sudden you see these, I mean, they’re beautiful, beautiful locations, but at the same time, I wonder, well, where does that end? You know, where the long term? Same thing, like, with the Chicago areas, with the $3 washes. Well, depending on your tunnel length, I do the math. I’m like, you need 185 cars an hour around the clock to be able to out pay… I just, I worry about the thinking, and are you solving a problem with your amusement park? Is that what people want? I don’t know what the answers are.

Bill: That’ll bring them once. That’ll get them there one time.

Chris: Yeah. It’s like-

Bill: But that’s, beyond that it goes back to execution.

Chris: It has to. And I think the point that you made earlier about welding and how you thought that might be, you know, a dated skillset to have, I tell everybody, like I have some talents in life, but you do not want to live in a house that I built or drive a car that I fixed ’cause you’re going to die. And I think that the idea of being a true owner like that should be there doing that job. You need to have a bit of that skill set because if anything went wrong, and it does all the time. We see the pictures online. “Anybody know how to fix this? I need this little part,” all of that. I would be dead in the water and 100% reliant to somebody to come and bail me out. That puts me in a bad position and nobody around me deserves that. So I think that that was a wise thing to point out.

Bill: Well, there’s a lot of technology in our industry, not just high tech, but other types of technology, chemistry, and mechanical, And so I’m not saying that you have to be a mechanical genius or that, but you certainly have to understand it because that’s part of your investment. That’s part of what you need a return on. So you have to depend on your own skills to know or people you trust. And so you have to just be thoughtful about that.

Jason: You’ve been in the industry a long time. We’ve established that. If you could go back, what’s something that you would do different?

Bill: Well-

Chris: Let me rephrase that, too. All right, you’ve got a magic telephone. You’re going to place a phone call back to yourself on your first day on the job and you’ve got one minute to tell yourself something that you would need to know back then. What would you tell yourself?

Bill: Customer retention, team building, and throughput management. I wish I had worked on those a little bit harder and been more focused on them as opposed to zeroing in on trying to make sure every customer loved me. Now, I think that’s a good thing.

Chris: Oh yeah.

Bill: But it didn’t scale. It did not scale.

Jason: Give us a couple of examples of maybe some tips for our viewers on throughput management.

Bill: Well, it really starts… People talk about the constraint of the point-of-sale. That’s not the constraint. The constraint’s the conveyor. That’s always the bottleneck, and until people learn how to process those customers and yet make the customer feel like they’re not just in the cattle car being pushed through, they’re not going to achieve maximum throughput management at a site. It’s the process at the point-of-sale that is streamlined and efficient. We call it in our company, a rhythm. You get into a rhythm with the cars. They don’t flow in, you know, in any set standard. They’ll come in in lumps as everyone knows. But we have to process them with a rhythm, both at the point-of-sale and as they go through the tunnel and at the exit. One of the reasons we developed NoPileups was because that was one part of the process that allowed us to make sure that we could move from point A to point B without a lot of-

Chris: And for folks who don’t know what that is, like, give them the brief, in terms of the NoPileups technology, if someone’s not familiar with it. It’s a very cool piece of technology that solves a lot of problems. Give them the 30 seconds on what that is.

Bill: Of course, it solves the problem of a customer jumping a roller and getting a chain reaction in the conveyor where cars, you know, come together. And usually those damages are, if there is damage, they’re very, very minor, but it’s bad experience for the customer. It’s a bad experience for the team. And it slows things down. So that’s one part of it. But the other part of it is just, it goes back to throughput management, once you take away the fear of that happening, and you know that you can rely on the technology, then you’re comfortable. ‘Cause I’ve been to places where they said, “Well, we want our cars 20 feet apart because if it jumps, we won’t have a problem.” We don’t worry about that. We’ll put one roller, at the most two rollers, behind a pusher and, and then the jobs flow through nicely. And it’s like any technology, it can fail from time to time, but generally very, very, very, very reliable and consistent. So that is another piece that allowed us to process the customers. And when they come to our place of business, they meet our people. So it goes back to, again, the people, place, process and product. They look at our facility, they look at our people, they experience the process that we move them through, and then they check the product at the end. And those all, they are able to check all the marks. Do we do that 100% of the time? Absolutely not.

Chris: What!

Bill: But I think we win at it more than we fail. So that’s, Jason, what I wanted to talk about.

Jason: I appreciate it. That’s perfect.

Chris: We appreciate you sharing all this wisdom with us.

Jason: Absolutely. Bill, thank you so much

Bill: Yeah. Pleasure.

Jason: For coming into the Suds office and being a part of the inaugural “The Wash” podcast. We really appreciate your time today.

Bill: Well, I think what Suds is doing with this is going to be a huge hit, so good job guys.

Chris: Well, if nothing else we’ve got one fan. So, all right. Well, thanks again. I look forward to it. And again, one of the things we encourage is just send in notes. You know, shoot us an email, put it in the comment box, whatever it is. Just because it’s interesting doesn’t mean that it’s useful. That’s what I’m told constantly. So make sure that the things that we’re getting into, things you want us to explore are really helping you out. So we appreciate it.

Jason: Thank you, guys.

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