Transcript

Todd Davy, DRB^® Senior Vice President of Sales: Thanks, everybody, for joining us today. I'd like to welcome you to our webinar. It's one that we presented at the National Association of Convenience Stores a few weeks ago in Las Vegas. We wanted to kind of bring this more to the masses. So we're doing a webinar today with a panel, and we're going to talk about how to leverage your car wash to increase your C-store revenue. It's going to be kind of a free form, lots of question and answers between our panel. And then we'll have some time at the end to take your questions. Just talking about how we're going to do that, you're logged in via Zoom, and at the bottom of the screen, there's a Q&A button. If you click on that Q&A button, you'll be able to type your questions in there. And when you do that, when you have those questions on screen for us, I'll be able to take a look at 'em, and we'll answer 'em as we go. Or if we have time, we'll get to 'em at the end. If you're having any technical difficulties, again, you can't hear me, you can't hear one of our panelists, that's great. Just go ahead and throw something into that question-and-answer box, and we'll be monitoring that, and we'll keep an eye on it as we go. So with that, thanks for joining us, and let's get started. We're going to start by introducing our panel. For those of you who don't know me, my name's Todd Davy. I'm the senior vice president of sales with DRB, joined the company almost 26 years ago. I think we were laughing earlier this week. It was 26 years ago that I answered an ad in a newspaper that said, "Do you like computers, and do you like to travel?" And I was like a 12-year-old kid then. So I thought, "Heck, yeah, I like to do either." So joined the company then, have worked in implementation, operations, support, and now head our sales team amongst our tunnel and in-bay businesses. So that's me, and I next introduce you to Dan Flatley. Dan?

Dan Flatley, SUDS President: Yeah, thanks, Todd. Dan Flatley, I'm the president of Suds Creative. Suds Creative is, think of it as the marketing and analytics arm of DRB. Prior to that, I did some additional strategy work in express car wash space, really around pricing, branding, membership management. So I'm excited to be here. Thanks.

Todd: Thanks, Dan. We're going to next hand it over to Alan.

Dan: I guess I'll pass it off to Alan.

Todd: Yeah, Alan.

Alan Nawoj, Founder of Beacon Mobile: Thank you, guys. Alan Nawoj, the founder of Beacon Mobile and proud member of the DRB team. We build branded native iOS and Android apps for car washes as well as a lot of C-stores, too. So we'll be talking more in this presentation about how you can leverage marketing capabilities of mobile apps.

Todd: Awesome, thanks, Alan. And last, we'll go to Dante. Dante, tell us a little about yourself.

Dante Pierangeli, Car Wash Supervisor for Casey's General Stores: Hey guys, I'm Dante Pierangeli with Casey's General Stores. We're a large convenience store operator in the Midwest. I handle all the car washes for Casey's. I started in the car wash business in 1990. This is my 32nd year dealing with these. I handle all the car wash new construction, acquisitions, remodels, and maintenance. I have eight service techs and one dispatcher.

Todd: Ah, thanks, Dante. I really appreciate you taking the time out to join us today. We're kind of of scattered all over the country. Dan's in Georgia. Dante, you're in middle of the country, right?

Dante: Yeah, Ankeny, Iowa just outside of Des Moines.

Todd: Alan is the lucky one. He's in beautiful San Diego, California or very close to San Diego. So again, thanks everyone for joining us. Let's talk about what we want to talk about today. First we want to just kind of talk about why the car wash industry is growing so rapidly, and then we'll talk a little bit about car wash pricing strategies and key performance indicators. And then we'll finish up with some discussion around cross-selling and how to really highlight the car wash at your space. So most of the stuff you see on the slides that we cover today is just going to be guiding points for us to talk about some different things. So we're going to kick this off by talking about why the car wash industry is booming. And really I'm going to start this by asking Dan, let's talk about the rush of investment dollars that is entering the industry and why.

Dan: Yeah, I think that when I think about like why institutional money, so, private equity or large-scale investors are entering the car wash space, there's a couple of reasons for that. One is just simply the unit-level economics, just the high margin flow-through of the car wash business. It provides a return on investment that's really difficult to get in the retail space outside of car wash. I think adjacent to that is the high percentage of the revenue that's recurring. So as memberships became big, and Todd can speak to the history of this, but over the last 10, 15 years, a lot of the revenue of these car washes has moved from being very seasonal and very cyclical and very determined by whether to being much flatter and more reliable, which is really, really powerful for an institutional investor. And then I think the other reason, it's kind of subsequent to that, is that there is this power of a network effect that as you get density of sites, the sum of your sites is greater than the, sum is greater than the parts. You have three sites, and it adds up to 3.3 sites' worth of revenue. And so I really think that across the margins, really the expansion of recurring revenue and then that network effect, that density that's occurring is really driving a lot of focus and effort into the car wash.

Todd: Good. Let's build a little bit on that, Dan, and talk about the do-it-for-me market.

Dan: Hope that helps, Todd. Yeah, so I think what you're seeing here, Todd, is really a cultural shift that's occurring over the last 30 years or so. And so the slide that's depicted is the do-it-for-me market. Somebody that had professional costs in the last year, so that could be a self-serve car wash an in-bay auto car. And you can see that blue line is continuing to climb until about 80% now. We don't necessarily know if that's going to keep growing. There's probably an upper limit to that. Think it reflects two things. One is that, as I mentioned, that cultural shift. People are starting to understand car washes are different than those kind of self-serve bays that might be kind of dirty, and you don't really want to take your car there, or there's something that might break your car. They're starting to see these gleaming new in-bay automatics and these gleaming new express tunnel sites that are opening up that are millions of dollars of investment that are pumping 800 to 1,000 cars through. And so I think you're seeing that cultural shift in the car wash space, and it's really manifesting in this do it for me as a percentage of people that are willing to go to professional washes.

Todd: Awesome, thanks, Dan. Dante, I'm going to kind of spin this over to you. Let's talk about how convenience stores with car washes have an opportunity for growth with that car wash. What makes a good fit for a C-store operator to add a car wash at this time?

Dante: Something that's worked for us real well, we look at it on acquisitions and new construction as well, but obviously we sell from our pumps all the time. So we have marketing and signage at our pumps. We have it inside the store. We have signs around the property to raise car wash awareness. And then our biggest, obviously it's a struggle, is just try to keep our store staff involved to keep the wash open, report any issues. But those are the main things that we look at.

Todd: Awesome. Well, I want to talk, and Dan mentioned this a little bit ago with the do-it-for-me market and the investment dollars, but I want to talk real quick about unlimited memberships and recurring revenue. One of our other operators that joined us for the panel at NACS is unable to be here today, John Shelby, up in the Massachusetts area. We asked him this question, how do you use the unlimited memberships to bring people into the property, and what does that mean for how often they visit and when they visit? His response was, "These unlimited memberships really cause customers to be sticky and come back." When you have a membership tied to your car, they only come to you to get that car washed. And at his sites with gas and convenience stores, not only do they have the membership for the car wash, but when they're there, they're buying gas. They're buying products in the convenience store. And then the more members, the growth of membership that they have actually shows not just growth on the car wash side, but it's growth on what they're selling in the convenience store. It's driving more people to their property. Instead of just being an impulse driving in and getting gas, they're going to the car wash. They have that membership. They know they're going there. So having that membership makes your site more of a destination versus an impulse buy, which allows people that are washing their car four or five times a month, they're going to visit your C-store four or five times or visit your gas pumps or whatever the case may be. So we're going to talk a lot about unlimited during the course of this presentation, but just kind of put that into your bank for now, and we'll talk about it more as we go through. I'm going to pivot next to what the C-store operators should consider when deciding to invest in a car wash. And we're really going to talk about two different types of car wash. At the NACS show, there were a lot of folks that didn't have a car wash, were kind of learning. I think most of our attendees today are in the car wash business. We know that there's a conveyorized tunnel, where you drive in, and the car is pulled through the conveyor. You can wash multiple cars at a time throughout that tunnel, getting volumes as high as 100, 150, 200 cars per hour. In an in-bay automatic, it's one car at a time and maybe 12 cars per hour. So we'll spend a lot of time talking between tunnel and in-bay. Dante, tell me what you think about when you're deciding whether or not you want to build a tunnel or an in-bay automatic at your site.

Dante: Yep, so currently we have 201 locations. 54 are tunnels, and 147 are in-bays. Some of those are touch-free tunnels. Some are 120-foot friction tunnels, single touch-free end bays, dual bays. We've built pretty much all, single-bays, dual-bays, tunnels. Our main focus right now is 100-foot tunnels. We have a couple of those starting under construction, but we really look at obviously competition. Is it a touch-free market, friction market? But anymore it's kind of tough to really look at what's there because with the big growth and the tunnels coming in, we don't really consider that an issue for us. Obviously we have the C-stores, and we have other draw, but, really, with our unlimited app that we have now, that's really seemed to help us. But our main focus at this time is tunnels.

Todd: Okay, thanks. Let's talk a little more about this, Dan. Let's talk about location. What's the best way to pick a right location for a car wash? Maybe convenience stores would be great spots to add a car wash. Would you look differently at building a C-store with a tunnel or just a tunnel or an in-bay? Tell us a little bit about that process.

Dan: Yeah, I think when we start to talk about location for car wash, and I understand that when you're talking about real estate to convenience store owners or community store operators, this is a very successful group of people when it comes to understanding location analysis and where they should put a C-store. There is a corollary to car wash, but it's not exactly perfect, and I'll talk about some of the distinctions. And really I think it probably boils down to most simply, if there's a guiding light here, it's not everything is black and white. And the example of that is when a potential customer will come to me and say, "Where should I put my car wash? I want to put it here." And they'll have these limitations, and they'll say, "I want it to be 25,000 cars per day on that road, vehicles per day, bar none." And then I explain that may not necessarily be the driving factor in what is actually going to make that car wash successful. Or they'll say, "Hey, I want to be really close to the Chick-fil-A 'cause I want to be like a Chick-fil-A." Once again, that may or may not be really successful. What we see is that really the reality is it's a combination of those factors. So proximity to high-frequency retail, being on the way home from something, being closer to the corners, being closer to a corner that's 35 miles per hour and has high visibility. Those things tend to work together in a network effect to create the best place for a convenience, excuse me, for a car wash. On the particular C-store, IBA versus tunnel, generally there's a higher correlation with the larger the car wash you build, the better off it's going to do. And I think you see that reflected in the convenience store. The more pumps you have, generally the more cars you have that flow through that. And I think, Todd, this might be, if you'll permit me just to keep running my mouth a little bit,

Todd: Yeah.

Dan: Talk a little bit about saturation because I think that that kind of goes hand in hand with location. And when I say saturation, I'm talking about, I'm really worried about putting another car wash into this marketplace because it's just saturated.

Todd: Yeah.

Dan: And the reality is I think we all collectively on this call, certainly, thought that that was the big boogeyman that was coming to get all of us. And through some pretty detailed analysis over the last several months, we just don't think that's the case. And I know that's very easy for me to say as a car wash guy, but the reality is there is an elasticity to car washing volume that I don't think we've hit the point. And so if I go back to, circle back to the black and white, don't be limiting yourself based on some radius to another car wash where you say, "I'm not going to put an IBA here because there's another IBA a mile and a half." It's more nuanced than that. It's traffic patterns. It's understanding where people are going at any given time. And there is probably an opportunity to continue to add incremental volume to that market. So I'd say just don't think of it in black-and-white terms. That was a lot, Todd. Does that help?

Todd: No, I think just to kind of sum this up, it's no matter what, you may think it's a saturated market, but you need to take a look at what are the driving patterns of the people in the area. It's kind of like when you build a gas station. Gas stations on every corner doesn't mean we're oversaturated in the gas station market. Same can happen with car washes. Again, one plus one might not equal 1.8. It might equal 2.3, 2.5. And having multiple locations within a metro area really helps because you're offering convenience to your customers. So, fantastic.

Dan: Well said.

Todd: I love it. We hear about saturation all the time. We've done some deep dive analysis on it where we don't think the market's saturated. We don't see it hitting that point for many, many years. So it's a big country, and there's lots of areas to continue to add car washes, which is great. All right, I'm going to go on to our next topic, which is helping the operator get the most out of a car wash investment. I'm going to start here with Dante, and then we're going to switch to Alan after that. So Dante, talk a little bit about your unlimited program and what you see happening at your sites. How often is your in-bay getting used, and how do you feel about that opportunity for the future?

Dante: Yep, so we rolled ours out in June. It's a mobile app that's on our caseys.com or Casey's app. We just have a car wash tab on there. So ours isn't really a truly unlimited. Ours you can use, you can do two washes per day, and that's whether it's at a tunnel location or an in-bay. And you have to use it one hour apart. So there's a few stipulations there, but the nice thing is you can do it at a tunnel or an in-bay, touch-free or soft touch, either one. So that's been a big hit for us. Again, we just launched that in June, so we're really monitoring it on how it's doing each month. but so far, we're still on the up. So it's been really good for us. It was a lot of work to get it where it was at today, but we're really happy with it.

Todd: What's really going to be fun, Dante, is you're heading into the busy season too. We were talking earlier before the call started about leaves falling, and, well, it's almost salt season, and you're going to see, how does that pick up? Do the memberships pick up to go along with it? So as a Midwesterner, I'm really excited 'cause I know we're coming into our really busy season of the year with salt and dirty cars. And I drive a white car, and I get teased because I wash it five times a week. Well, that's my unlimited program, and that's what I do. I'm the exception and not the norm when it comes to wash volume and membership volume. But yeah, I think I was called weird yesterday when we were talking about it. So it's fun when we kind of go through this. So Alan, let's talk a little bit more about the app and how we drive traffic to the unlimited memberships and bring customers into your C-store. So tell us a little bit about the app side of the business.

Alan: Yeah, so we've seen operators be pretty clever in terms of using the technology that the app provides to get more customers on site. One of the nice things is when you have a digital asset like that, you can start running online campaigns, too. So whether that's Facebook ads or putting ads on your website or pushing out text messages if you have people's cell phone numbers with links of coupons that you would redeem in the app, that could add up quite a bit once you start really canvassing that area and driving traffic to the site. Another thing obviously too is just good signage. So we all know the importance of having good signage. It doesn't have to just be at the car wash. You can put it on the fuel pumps. You can put it inside the C-store. So when you're going inside the store to get your cup of coffee for the day, say, "Hey, would you like to save $2 off your next car wash? Download our app." So now you're getting a customer into your ecosystem, and then you can leverage that going forward to promote other services that you offer too. And I know we'll talk a little bit more about that further on in the presentation. But those are some of the techniques that we've seen operators be really successful with.

Todd: Fantastic, and Dante, let's talk a little more about that cross promotion. Beyond just selling it at the pump, what other ways have you seen promoting it in the car wash, in both the convenience store or at the car wash itself, ways that you promote your wash?

Dante: Yeah, so definitely inside the C-store on the counter, a little bit on the cooler doors. We haven't really dove into the cooler door part yet. We're kind of testing that in some markets. Signs on the property, like Alan said, clean signs, real easy-to-read signs, signs close to the car wash, at the exit of the car wash. We've had good luck with all of those. And then obviously buy-ups at the auto cashier has been big for us too. That's another one that we like to touch on quite a bit.

Todd: Awesome, yeah, I've seen a lot of that. We've also had customers that have been really successful with discounting the car, the gas price if you buy a car wash. So putting up on your sign out front maybe instead of cash credit price, it's fuel price, and then price with a car wash. So you can discount 10, 20, 30 cents a gallon and kind of drive car wash traffic that way. The car wash is a highly profitable part of the business, right? Maybe that $10 wash costs you $1.50 in chemical water or whatever else. That's a really nice way to drive profits at the site. I'm actually going to, we have a question that I want to kind of take while we're still talking about location and promotion real quick. Someone has asked, "When deciding to add a car wash to an existing C-store, other than some of the stuff we've already mentioned, is there a rule of thumb around population or maybe gallons of gasoline pumped?" And I'll let Dante and Dan kind of take this one real quick.

Dan: Yeah, why don't you start Dante, and then I'll cover on when, You have more real-world experience doing this. Mine's more theoretical.

Dante: Yeah, I'll kind of go on the gallon of gas thing, and it seems like that changes almost daily anymore. But for the longest time, it was about 80 gallons per car wash. And then I think some of the numbers we were seeing was it got up to about 130, 140 gallons per car wash. And now the latest, that was a couple weeks ago, we were seeing it back in the 90s to 100. But that's definitely a, it's a really good question, but it's a tough one to measure too because it is ever changing. But I'll let Dan talk on the second half of that.

Dan: Yeah, if I look at population, this simple answer is it depends, right? It depends on a lot of other factors, but I've seen sites, this is express tunnel sites, I've seen express tunnel sites be very successful in towns that are as few as 15 or 20,000 people, sometimes a little bit less than that, because once again, you're not just looking at population within three miles. I think that's that black-and-white attitude, where it's like, oh, there's only 16,000 people within three miles, and ignore it. Yeah, but that has the only Walmart within 30 minutes of any direction, and so you're going to get a tremendous amount of high-frequency retail traffic. And so I've seen sites do you 1.3, 1.5, $1.7 million in a very, very small town where lots of operators would've avoided it. So it depends is kind of a cheap answer, but it kind of goes back to that black and white where you want to use that population as a guidepost. But you want to make sure you understand the traffic patterns and the other things that are occurring 'cause there may be a diamond in that rough.

Todd: And we've got some interesting tools just to be a little bit promotional here that can help you kind of, If you have an address, we have some tools that we can run things through and say, really geared more around tunnel car washing right now, but we're working on tools for other markets to say, would a car wash fit here? And for those of you that have got interest in should I build a wash on this property, our partners and our team at Suds Creative can kind of help out with that. So, lots of different factors and variables that come in, but if you've got some sites that you're curious about, and I've got an address, I'm not sure if it's a really good fit, we can help out with that. And there's some products that we can do that can help you through that journey. So okay, let's get back to our presentation, and we're going to kind of switch gears a little bit here. We're going to talk about metrics and KPIs that are important for a car wash to track. And I'm going to actually kick this off by talking about some recurring metrics. What you really want to track is people that are coming to your car wash and converting to that unlimited membership. And something we might not have covered on the unlimited membership side, when we started in the business, maybe when Dante and I started in the business, there was a lot of worry about car washes being very seasonable, ups and downs based on weather. And if it was raining for a whole week, I wasn't going to wash any cars. What the unlimited membership allows you to do is really level your revenue, consistent revenue. It's a higher lifetime value of a customer. So one of the important things that you want to track is how many of your customers that are coming in and buying a wash are you converting to an unlimited membership. Everybody always asks me, how often do people really wash their car? We've done a lot of studies on this. A non-member, a pay-as-you-go customer, maybe washes three times a year. You have three opportunities to sell 'em a product if you don't have unlimited memberships, and if you sell 'em three best washes at $20 a pop, you maybe made $60 in total revenue off that customer. But if you can convert that customer that comes in and buys the best wash to be a monthly plan member customer, we've seen that the average is around nine or 10 months in a good unlimited program that they stay in that program. So you've taken what might have been a $60-a-year customer, and you've turned them into a $270 a year customer. It's recurring steady revenue. So it's really important to track your conversion metric, how many pay-as-you-go customers are you converting over. Another thing that you want to keep an eye on well is converting customers from the pump. One of the operators that did this panel with us at NACS mentioned that 23% of their washes were sold at the pump. But then what they also do is how many of those customers that bought a wash at the pump could you convert to unlimited when they came to the pay station before they entered your in-bay or your tunnel. And that's a really important metric because, okay, your signage may have sold 'em that wash, or they looked at their car when they were pumping gas. But when they came around to the pay station, or they talked to someone else on your site, they're able to upsell them and get them to a membership. So again, it's a better deal for the customer to be an unlimited member. Have signage and things that kind of push you towards that unlimited side of the business. Dante, the next question I have for you is the KPIs you track at your car wash business. And I think we've covered a little bit of this with your last answer on gallons for car, but are there other KPIs that you're tracking at the C-store for car washing?

Dante: Mainly our members. We really look at our members, how many we're selling per day, and then obviously I think think we get into a little bit later in the program, but the churn rate. Are we keeping everybody? If we lose 'em, what'd we lose 'em for? Hopefully there's feedback there, but I think we go over that later. But main thing is members, obviously, is how many we're gaining per day.

Todd: Right. Well, Dante, that was a great setup for Dan because I was going to ask Dan about churn rates. So, Dan, talk about churn and how do we keep our members in the program.

Dan: Yeah, so I think that the big thing we need to think about churn, so when I define churn, it's the number of your active members that are departing you either voluntarily, so they've chosen, "Eh, not interested," or involuntarily, which might be kind of they moved, or their credit card expired, or their credit card declined. How many of those occur on any given month? And I think there's probably two big things to point out here. One is it really switches from a sales game, which is the converting them, to a customer service game, which is I need to keep providing them value every single month so they re-up their membership. And so it's a mindset shift. I've seen operators be exceptionally good at converting and terrible at churn 'cause they're not providing that continuous value to the customer as they continue to wash. And the second point is really related to that first. There's a balance there where if your churn starts to tick up, up, up, up, up, it is much, much harder to maintain that membership base just by converting people. So there's a point at which you can't outrun the treadmill where you need to make sure that the holistic structure of your business, the foundation of your business, is such that you're providing really good customer service so those people won't leave. It's a heck of a lot cheaper to keep them than it is to go seek out new customers.

Todd: Absolutely. Alan, let's build on that a little bit more. When you're watching the app, and from an app-tracking standpoint, what kind of KPIs and metrics do you use with your app through the program?

Alan: Yeah, there are a bunch. I mean, level of engagement is big. We want to see customers coming back into the app, not just necessarily to buy a car wash, but also to stay engaged with some of the gamification features, for example, that the brand might have built into the app. So, hey, play this game, and whoever gets the top score for the month earns a free car wash. Or maybe it's since you have a C-store, maybe it's a free slice of pizza or a free pizza, for instance. And that kind of engagement leads to obviously longer lifetime value or greater lifetime value, I should say, for that customer. And so we spend a lot of time looking at that engagement, how frequently do those customers come back into the app. Some of the other metrics you talked about too, Todd, around just conversions from single wash purchasers up to monthly members is another metric we certainly watch pretty closely because what a lot of folks will do is they'll run an online campaign. Let's say it's a Facebook ad. They'll canvas their entire area within a couple zip codes of their car wash, drive a ton of downloads through some sort of an offer. For instance, download our app, and your first wash is free, or download our app and you're going to get some sort of a discount on that first wash. Great, you just got a ton of new users, but now how many of those can we convert to monthly members? So that metric for sure, that KPI, is something we watch pretty closely. Another thing too is that with a mobile app, you have these interfaces with different revenue streams on the property. So it's not necessarily just the car wash. You talked about gas earlier. With the mobile app, we can actually activate the fuel pump directly from the app as well. So when we see people downloading an app for taking an offer, let's say on fuel, how many of those people then go off to buy a car wash? What's that percentage look like? Also getting them to come inside the store to buy products in the C-store. There's high margin on many of those products too, and we want to get that foot traffic in the store. So, we can track all this, and the data becomes super valuable 'cause you can then see, okay, the customer came into the ecosystem through the car wash, but now they spend most of their time buying products in the C-store, and we're driving more revenue inside the C-store, or vice versa. So it's a bunch of different metrics, quite honestly, but the engagement, I would say, is probably number one that we look at 'cause the more engaged the customer is, the more likely they are to spend money, quite honestly-

Todd: Right.

Alan: And come back.

Todd: Yeah, great anecdotal story. When we all remember COVID hit a couple years ago, I had never used my Chick-fil-A app. I downloaded the app because I got a free cookie, hadn't used it since then. When I learned I could start ordering food through the app, it would get, and Dante's laughing. Yeah, I eat a lot of Chick-fil-A. You can tell when you're looking at, kind of big guy. But the engagement through that app, and now I don't go to Chick-fil-A without using my app. So it was a trigger to kind of make, To make that app sticky for me was the order and the ability to kind of drive business. In the car wash, managing that membership through the app makes it a more sticky experience, and it kind of builds the business of the location. So there's a nice tie and a nice play there. And then, Alan, again, what you said about being able to control a fuel pump and pay from that phone, I'm really excited about those developments and really looking forward to the next few years as we see the forecourt of the C-store change a little bit with that dependency on the mobile services. So it's pretty fun stuff. That was a little off our metrics and KPI track, but it's an interesting development, and I'm really excited about it, as you can see. So next, let's kind of shift gears and talk about pricing and how operators should price their washes and their packages for maximum ROI. And we're not going to cover specifics on pricing. We're not going to tell you you should do a five, eight, and $10 wash, but you should never do a five, eight, and $10 wash. Just pretend like those words never entered my vernacular as far as that goes. But Dan, let's talk about pricing strategy principles and maybe your top three.

Dan: Sure, so when I think about pricing, I'd like the group to understand kind of two things. So one is that it's more inelastic than you think, and I think that this is really critical, and it brings up a lot of the stuff we we talked about today. But it's really critical for C-store operators, especially fuel operators, to understand there is not a giant banner where I can constantly see the price of your retail wash and compare it with the banner across the street. That doesn't exist in car wash. Todd mentioned it, and it's really important to key on, the retail customers on average will come in three times a year. They're not going to remember what they paid four months ago for a retail wash. So it's more inelastic than you think. Should you go completely hog wild? Probably not, but don't be as afraid of price changes as maybe you necessarily need to. The other point I want to make is actually tying back to something that Dante said where he mentioned really clean, easy-to-understand signs. This cannot be more important than in pricing. So oftentimes, operators will use signs to talk to other operators, and they will tell you how many things you're getting on each wash, and it's 15 different attributes, and it's a lot of really cool things that have a lot of strong chemical sounds. Nobody knows what you're talking about. And so being very succinct, very clear, and very clean with how you demonstrate what your prices are going to be is going to reduce the strain on the customer and make them much more likely to upsell into a package that you're kind of looking for. So those are probably the two big things, inelasticity and then just really the ease of the customer's thinking.

Todd: What about brand image and how that should impact your pricing, Dan? Talk a little bit about that.

Dan: Yeah, I think brand image, it sort of relates to kind of what to what Dante was saying in terms of the clean signs. But your price should reflect your brand promise. And so if you are intending to be a value play, your prices should be a value play, and your branding should reflect as such. The conversation I often hear, and I kind of joke about it, is that everybody wants to be the Ferrari of car washes. Yeah, but your Ferrari car wash is in the middle of a Walmart parking lot. And so understand your target audience and price yourself accordingly. Not everybody needs to be the Ferrari of car washes. Ford does pretty well as the Ford of car washes.

Todd: Right.

Dan: And so just making sure that that messaging is consistent from brand to sign to price, that's the key message there, I would say.

Todd: Yeah, let's talk a little bit, Dante, let's talk a little about not racing to the bottom. You're in a Midwestern market with some interesting different pricing levers depending on which state you're in. But the tendency, especially with gasoline pricing, is, hey, brand XYZ down the street just lowered their price by 5 cents. I need to lower mine so we're all selling wash prices at the same time. What do you do from a wash standpoint as far as, is it a race to the bottom, and where do you kind of see yourself fitting in that?

Dante: Yeah, great topic. I think the race to the bottom, my opinion, I think is gone. And I don't think any operators, anybody you know on the panel here today on the call, I don't think we want to race to the bottom. I think that's done. Customers, I believe, will pay a premium price for a clean, dry, and shiny car. If you're confident that's what you're putting out, I would say price accordingly. I would not say price to the highest point, obviously, but you want to be middle of the road somewhere. And if you're confident you're putting out that product, stick to that price. We discount our fuel a dollar pretty much in the Midwest, or we discount the car wash a dollar with five gallons in the Midwest market. And then in the Chicago market, we do 10 and 20 cents off per gallon in that market. So we kind of mix it up a little bit, but again, I would not try to race to the bottom. If you're confident, stick to that and price accordingly.

Todd: And you hit on a really key factor there. Outside of price, it's that clean, shiny, dry car that's done fast. The customer is going to pay what the customer pays, but when they drive out of the in-bay automatic or the tunnel, is my car dry? Is it shiny? Do my tires look good? Those are great things to focus on, which is a really good, We could talk about pricing all day, but at the end of the day, when the car comes out of the production plant, how does it look? And that's really important for you all. I really appreciate that philosophy. I also want to talk about unlimited price packaging. We get a lot of customers that come in, and they think, "Look, if I'm selling my base wash for $10, my unlimited needs to be, if I don't charge 60 or $70 for that, they're going to rob me blind, and they're going to wash all the time." That's not the mindset you should have. Really, you want to take your wash pricing and price your unlimited at 1 1/2 to two times the price of that wash because, remember, most consumers are only washing three times a year. We're looking to bring them into the property. We want them washing their car more often. And what you really want is them washing their car four or five times the first month that they have that membership because then it becomes a habit, right? They're going to continue to come back, and maybe they wash four times the first month and five times the second month and then two times the third month, and it kind of studies out after that. They think, "At a two-X multiple, I only have to wash my car twice, and I'm getting one over on this operator." It's a really good pricing method to choose. So don't immediately go to, if I sell a $10 car wash, I should have a four-year, $50 plan. Keep that multiple tighter and build on that long-term value of a customer. So that's the last thing I really want to talk about from a pricing standpoint. We're actually going to shift here and talk a little bit more about in-store experience, and we're going to talk about integrating the car wash with the in-store experience. Alan, let's talk about what you're seeing in the convenience store industry that's more than just car wash subscriptions.

Alan: Yeah, definitely, Todd. So getting people inside the C-store is definitely an important benefit of the app, too, because you can drive traffic by putting out offers. We were talking earlier about cross promotions. With a download of an app for a car wash initially, you can then push that customer offers to come inside the C-store for discounts. And one of the interesting things that we're seeing now actually are some C-store operators starting to do subscription programs for products inside the C-store, like a drink club, for example. We all know that the margins can be really high on drinks. Coffee club, come in and get a coffee a day. You're paying maybe 15 bucks a month for that privilege, and you're using your app to basically redeem that cup of coffee every day. But while you're on site, great opportunity to get a car wash, fill up your car, you name it. Other services that might be offered there on the property sort of come into the fold. So that's one big piece. I'd say the subscription programs around products inside the C-stores, but also now order ahead, too. If anybody on this call has used apps like the Starbucks app where you can order your coffee ahead of time, why do people do that? It's the convenience factor and plus the loyalty benefits too because when you make the purchase on your mobile app, you can set up your own reward chart that says after X number of purchases, you get the fifth one for free. Or after X number of purchases, you accrue this number of points. And you can now redeem those for something else inside the C-store. So maybe you're somebody who likes to get that latte every day on your way to work at the C-store. Well, after a certain amount of time, you earn up enough points in your app, and now you can cash that in for maybe a free lunch. So it's just building that value with the customer and using this tool to facilitate it, essentially.

Todd: Yeah, it's interesting. Been in this industry a long time, and it's always, we're competing against all these other car washes. And really you're not just competing against the car wash. With the economy today, you're competing for wallet share. I have, I counted 'em up last night, I have eight television subscriptions that we belong to at our house. It's ridiculous. I have college-age kids. One still lives at home, so you get some of it, but there's the Disney and the Netflix and the this and the that. It's just so easy to sign up for that subscription that we could steal more wallet share by offering other subscription models, whether it's car wash, coffee, pizza, donuts, whatever the case may be. And that, it's recurring wallet share. It's consistent business. It's always a good thing to add on. Yeah, I know, Dan, I have way too many television things at home. And I wish I had time to watch all eight of those streaming services.

Dan: I'm actually running through my head. I'm like, "Oh crap, I think I might be close to eight."

Todd: Yeah.

Dan: As I'm going through my head.

Todd: They add up, but they're so easy to sign up, so easy to maintain. And here's another thing, it's easy to cancel, right? If I want to cancel my Netflix subscription, I can just go ahead and click a button. And I hear a lot of back and forth in our industry about this, but I think the harder you make it to get out of a subscription, the less likely that customer is to come back. So you want it to be easy for the consumer themselves to manage. Don't rely on your team member to have to do the cancellation. Let 'em cancel through the app because if you make it a seamless experience, they're more likely to come back. And one thing to remember again on canceling memberships, these people were members. You likely have collected cell phone and email information. They're a constant advertising opportunity for you, whether it's advertising the car wash, advertising specials in the C-store. They've opted in at some point to your marketing. Use that. Make it a good experience for them whether they're signing up, using membership, or canceling the membership is really, really important.

Dan: Todd, do you mind if I put a fine point on that?

Todd: Yeah, sure.

Dan: Real quick. I think the point of the ease of cancellation is really critical because if that person was a retail customer, and then they became a member, and they want to cancel their membership, it's a high likelihood they're going to go back to their retail behavior. But if you make it so painful for them to cancel, there is a very low likelihood that they're going to come back as a retail member. So it's just one piece of advice.

Todd: I think everybody remembers how hard it was to cancel your first AOL account. I'm dating myself a little bit here. But I think you had to jump through 15 hoops and be able to do double-dutch jump rope and all this other stuff to be able to cancel. And it was a really, really bad experience, and AOL is dead now, so kind of fun to think about all that. And yes, I did date myself as we talked about that. All right, let's move on and talk about trends and innovations. And I'm going to start by kicking this off and talk about mini tunnels. We've talked about in-bay automatics and full-size conveyorized tunnels, but a mini tunnel's a smaller building, maybe 50 to 60 feet, where an in-bay automatic is, sorry, a 30 to 50-foot building, and you can only do about 12 cars an hour. We've seen a lot of customers shifting to a mini-tunnel concept, which takes that existing neglected in-bay automatic building on the back of the property and turns it into a tunnel where you can kind of wash 25 to 30 cars an hour and increase the space of what you want to do there and then again help build that membership side of things. Dante, do you have any mini tunnels or different things you've done with that experience? Tell us a little bit about it.

Dante: Yep, so we had a site. It's kind of a unique to the industry, but it was a small C-store that we just kind of outgrew, not enough room. The site was always packed. So we took the property, and we purchased the property next door, built a real big site there. But then we had this small-C store, but it just kind of sat there. Didn't have no idea what we were going to do with it. And after about three years of it sitting there boarded up and just looked ugly, we decided to put, see what we could do to put a car wash in it. So it's a 66-foot convenience store. We tore the floor out, put a 56 foot of belt in it. So it's a belted location, so 56 foot of belt. You come off the belt, 10 foot of tire shine. We cut doors in it, and we started with one lane, and then as the business grew, we added a second lane. So it's a mini express C-store car wash conversion. It's been a really good site for us. We have some other properties like that that we're looking at to possibly do that, where we built a big store next door, and we have the small one next to it. Not sure what to do. But yes, the mini tunnel has been good. This conversion, it was kind of unique to us. We were pretty proud of it when it's done. And then obviously the two sites that we have under construction now, I guess considered mini tunnels. They have like 90 foot of belt, 10 foot of tire shine, so just under the 100-foot model as well.

Todd: Yep. Tell me about your experience with the belt. I always hear it's a consumer delight because it's easier to load the car and get on. Anything you want to say, difference between a belt and a traditional conveyor?

Dante: Yep, when we first looked at it, we built our first 120-foot belt probably five years ago, and there was a lot of horror stories out there about the belt and the maintenance. And the belt breaks, and nobody knows how to work on 'em. Nobody has parts. The three that we've built ground up, we did two 120s and then the 166-footer with the 56 foot of belt. Honestly, guys, we have not had those horror stories. We've had had some issues. Yes, we did have to upgrade from like the 12-tooth sprockets to the 16 as that changed. But we have two more of them going in here probably in the next three months. They're under construction now. But we have not had some of the belt issues, the horror stories that are out there.

Todd: I can speak anecdotally. I'm pretty good at loading my car under the conveyor. I've been in enough car washes to get there, but my sons and my wife love the sites with a belt because it's just so easy. It just takes that little bit of nervousness that I don't want to drive and load that car on the conveyor. So it's been a kind of a fun thing to watch as we go through that. Dan, let's talk a little bit more about profiling and segmentation and what you've seen from a market standpoint with memberships and marketing to your customers.

Dan: Yeah, I think the innovation that's in this space when we talk about segmented customers is the traditional. Because the recurring revenue is so powerful and because people got really focused on memberships, there is this clean break that kind of developed between retail customers and members. And unfortunately, that's really not the optimal way to think about things. So if I think about the innovation when you come to segmentation, it's really meeting your customer where they are on that continuum of, I'm going to come in two times a year, I'm going to wash five times a year. There are opportunities to segment and target with individual products, and I know that this links into Alan's world where there's pay-as-you-go opportunities. There are pre-paids that are seasonal. There are opportunities for an annual pass. Maybe that's a Black Friday deal. There's a lot of different products that can be applied to customer segments that aren't these very clear kind of traditional. Once again back to my black-and-white theme of member and retail, and we ignore the retail, and we try and convert 'em to a member. The innovation is in understanding that kind of gray space that exists between them.

Todd: Fantastic. I'm going to ask Alan one more question, but before I do, folks, we're going to have about 10 to 15 minutes here for question and answers. So if you have questions, please put those into the Q&A spot. I'll keep an eye on those. We'll ask them once we wrap up this last question. Alan, let's talk a little bit more about the app. Are there things you can do from the app that maybe kind of lead to have fun while you're in the car wash and change that consumer experience?

Alan: Yeah, definitely, Todd. Some of the innovations we're seeing in the IBA space with C-stores and even tunnels are pretty exciting as far as personalizing the customer journey. So when you have an app that's downloaded onto somebody's phone, you obviously know a fair amount about that customer, and you can now personalize their customer journey with your brand. So some of the things that we're now seeing folks do, and we've done integrations with some lighting companies, where you can actually go to the car wash and run your own personal light show. So when you're going through the tunnel or going through the IBA, choose that light show that really resonates with you. And we're seeing actually the operators use this, interestingly enough from a marketing standpoint, using the local sports team colors, for example, as a light show opportunity. So you can get really creative with it, and it just makes it fun, especially families with kids. I know my own, whenever we go to the car wash, they always like the lights. Unfortunately, we don't have one in the area where we can do this with. But it's just one of those angles that makes it different, and you want to be different. You want to think of ways to be different from the others that are in your area, and this is just a way of helping to stand out from the crowd.

Todd: Yeah.

Alan: We're also seeing a lot of electric vehicles on the road nowadays. Some C-stores talking about putting in EV charging stations 'cause what a great opportunity. You're sitting there, and you're vacuuming your vehicle, or you go inside the C-store for five, 10 minutes. You could be getting a charge. And if you have a membership, let's say through your app, you can also activate the EV charging station directly from the app as well, and so it all kind of ties together. So those are some of the innovations that we're seeing, and I think we're going to see more certainly as time goes on here.

Todd: Yeah, the EV charging thing is really interesting because if the customer's going to be there for 20 or 30 minutes, it's another opportunity for you to sell car-cleaning products. Maybe they want to Armor All their dash while they're waiting on their car to charge. And they didn't think about it, but if you put a vending machine out there or something really close by, it's just another way to drive more revenue at the site. And the customer's going to be there, so you have a chance to sell them some food, maybe a cup of coffee, maybe something to clean up their tires a little bit, just add-on purchases. It just keeps stacking that value. EV's going to be really interesting. There's a lot of fear about losing the gas pump, but really you're going to need a place to stop. You're going to need a place to charge, and why not clean up the car while you're there? Okay, folks, that wraps up all of our pre-planned questions. If anybody has any questions, we'll hang out here for another minute or two. Right now, I don't have any on the list, but do really appreciate everybody joining us today. I'll give it a minute here to see if we have any questions come up as we kind of wrap up our day, and go ahead. Yeah, I think we are running short of questions. So again, thanks everyone for joining us today. To my panel, Dante, Alan, and Dan, really appreciate all your help and your effort in putting this together. And if you guys, folks, have any questions, please, I want to remind you of our takeaways. We think there's a huge opportunity for car wash with a C-store. Use those unlimited memberships, whether it's car wash or your other things to help maximize your ROI. And then pricing, tracking your metrics, and then bundling services are really key to your success. So if you have any questions after this, feel free to shoot us, give us a call, or you can shoot me an email. My email address is twdavy@drb.com. Or you can hit us up at info@drb.com. That helps as well. And again, you can reach us at 800-336-6338. Thanks to the panel and thanks everyone for joining us today. Have a great day.

Dante: Thank you.

Alan: Thanks, everyone.

Dan: Thanks, all.