DataBytes 11 - November 2020

November 12, 2020

Suds is back with another DataBytes episode! This time Jason and Chris show impressive trends from the back half of 2020 and discuss consumer sentiment shifts.


Jason Baumgartner: Welcome back to DataBytes. I'm Jason Baumgartner, president and co-founder of Suds Creative, and with me as usual, Chris Moriarity, our VP of consumer strategy. How are you doing, Chris?

Chris Moriarity: Hello, I'm doing okay! We're here in the Boise area, where I've discovered that your rain is apparently broken, and it's coming down in these white, kind of hard crystals and accumulating on the ground. We don't have that in the Seattle area. So I'm trying not to be alarmed. I'm sure it's normal.

Jason: It is normal. It's called snow. And it's a really good thing for a lot of car wash operators across the country.

Chris: Oh!

Jason: The more that gets packed on, so. All right, well let's jump in-

Chris: Well, we don't have to shovel rain.

Jason: Yeah, you can't shovel rain, that's right.

Chris: Yeah.

Jason: Let's jump into the agenda. First, we're going to take a look at a national look like we typically do. We're going to go into some trends. Then we'll jump into some state discussion, and we're going to go a little bit more in depth in a few of the states, and look at a split of the year from week 22 on, and from week 0 to week 22 and show you the differences and what we're expecting to happen in November and December of this year. Then we're going to hand it over to Chris, and he's going to run through our consumer sentiment filter, and a really interesting time to look at that type of information based on all the current events that are happening, the election, COVID-19, just to name a few big ones. And then we're going to give you our contact information. If you have questions, or there are things that you want us to go over in the next DataBytes, please feel free to send those over. So let's jump right into it! All right, looking at the national numbers, a really great week for weather across the most parts of the country, with the exception of the Intermountain West and parts of the West Coast, but a tremendous uptick the last two weeks, really strong Northeast, really strong Midwest, really strong Southeast. Chris, what do you see when you look at the last couple weeks?

Chris: Well, what was interesting is, ages ago, we actually tried to see if there was a correlation or relationship between the stock market and wash trends, like did they kind of follow each other? And the answer was not really, and as we were approaching the election, you always kind of watch the stock market and it kind of holds its breath for a while to see what's going to happen, and it kind of takes off from there. My assumption would be that people's general consumer behavior would kind of do the same thing, that they'd hold back a little bit to see kind of what was going to happen, and that wasn't what happened! You know, people kind of kept on living their lives regardless of what was going on, and we saw some excellent activity.

Jason: Absolutely, and I'm sure weather played a part of it, as well, because regionally, like we mentioned, with the exception of parts of the West Coast and Intermountain West, it was just tremendous weather. Diving in a little bit deeper, now this is really interesting. So this is week 22, was kind of the peak, actually, for 2019 and 2020, for whatever reason, week 22 is the peak. It's right around the 18th or so of May. After week 22, we're actually up half a percent in terms of volume year over year from 2020 to 2019. And, you know, looking at it, just the last 45 days, just really strong performance in a lot of regions of the country. But is that interesting to you? I mean, would you have thought that we'd be all the way back and then that would be as constant, given some of the surges of COVID-19, and across the country, I mean, almost every part of the country right now is in a little bit of a hotspot relative to new cases.

Chris: Well, I think this is, again, this is why it was kind of important that we brought up some of the sentiment filters that we're going to get into a little bit later. I think that as COVID has kind of become ever-present, you kind of know how it's going to affect your personal reality, whether you get it, whether you're not, whether your neighbors have it, whether they don't, and people are just slowly saying, "Well, you know what, it's not going anywhere, so let's just keep on keeping on, regardless of what the news says," where I think the volume question of why have we been able to sustain if not a full return to normalcy versus other industries, I still feel a lot of it boils down to, it's one of the few places you can go. I mean, I can't read the news without a restaurant that's been around for 40 years or a movie theater, whatever it is, that are all kind of shuttering. I honestly believe that as people do go out to run their errands, they're trying to stay out longer. So I think that all of a sudden, washing your car, and doing those things with a little more regularity just keeps them out of the house a little while longer. Now, again, that's that's speculation, but it'd certainly make sense! I mean, 'cause we're lucky that we're seeing this, but it's one of those things that, given where we are today, the real question is how do we go further? Like if that is indeed what people are doing, how do you hit the gas harder?

Jason: Well, that's a great question. Here's another look, now these are trend lines, polynomial trend lines that show, the orange there is 2019 and the blue is 2020. Again, pacing, this is almost following an identical trend. So when you're looking at seasonality and weather impacts, it's almost like we're just looking at a mirror of the back half of 2019. So in your opinion, does that continue, even as COVID potentially surges through the winter, does that continue in November and December through the holidays and what might we expect or what are some things that we can talk to operators about around the holiday season that could potentially step on the gas, like you mentioned, and take us even further?

Chris: Well, there's two things that they really need to think about, is, are you leveraging what you have? If you have a membership base now, what are you doing to use them as an extension to meet more people? As we're heading into the holidays, this is a great time, as we might investigate some more specific strategies here a little bit later, but how do you reach out to those people to reach out to their friends? We want to make sure that if something does happen, as it relates to COVID, probably the biggest risk right now would be that if we get into the new year and with an administration change, if there are new limitations, if there is a new lockdown-style event, that's going to pull back from some of the organic traffic we're trying to leverage now. So you want to say, "Okay, well, if that volume does take a hit, what can I do to overcome that deficit?" And the easiest way to do that is to reach through the folks that already know you, they like you, and you're in a relationship with. 'Cause barring anything like that, the trend lines are so lockstep right now that we should be nothing but optimistic heading into the holidays, but as good as what... If we're just as good as last year, we'll be happy, but there's really no reason that that shouldn't be even better.

Jason: I agree, I also think that, you know, you mentioned leveraging the tools that you have. If you have e-commerce as a tool, you know, things like Black Friday, Cyber Monday, pushing that contactless type of signup and contactless purchase arrangement, that can be really beneficial as well, and we're definitely going to leverage that with our clients. Here's another look. So you see here, week 22 to week 45, let's look at week 1 through 21 and just look at this fluctuation. So overall for 2020, we're about 9% down from where we were, overall volume. 18% of it, we're a half a percent up in the back half, 18% down on the front half, so again, this is pretty explanatory. You can see the COVID dip, but as we get into state by state, it's really interesting that there's definitely, depending on politics, depending on the severity of the lockdowns, the timing of the lockdowns, some states got hit a lot harder and some states really didn't get hit much at all.

Chris: It really was just a matter of right place at the right time, and control what you can control. I mean, that's one of the most frustrating things about this is, you've got so many people, they're just loaded for bear, they're just sitting in the gates, just chomping to get some more action, and some of them have held back a little longer than anyone would've liked.

Jason: Yeah, particularly if you look at this shape of the Northeast. Now, the Northeast has really rebounded. The last couple of weeks in Northeast, the last week was amazing. You can look at these. These are definitely regional weather patterns. You look in New York, Ohio, New Jersey, Pennsylvania, just a really sharp uptick. So some fantastic weather over there, but look at the shape of the dips. Now, New Jersey, Pennsylvania, New York, they were part of that group of states that really locked down for a little bit longer, but they've rebounded, for the most part, pretty nicely. Ohio, the same thing, one of the first states to come out with lockdowns. But then, again, for the back half, really following some of that same pattern on the national side and then, God, it's really good to see this nice little uptick, and which we have to assume is weather-related.

Chris: Absolutely, and you know, we try to tell folks that sometimes the simplest tactics tend to be the most effective, where if it's all of a sudden, you catch a break in the weather, get a sign-spinner. Somebody stand out on the street and wave your arms, like reintroduce yourself to the community. Don't think that growing your business needs to come on the back half of fancy graphs and algorithms. I mean, just something as simple as increasing your visibility by this much can make a huge, huge difference! So don't just sit back, be an active participant, and say, "Hey, today's the day. People are coming. Let's let's jam this place full!"

Jason: Absolutely. Take a look at the Midwest, again, really strong activity the last couple of weeks. You can see some of these dips, you know, Indiana, Illinois, Michigan, again, politically... And Nebraska is just relatively unscathed, one of those states that just really didn't see that much of a hiccup. You look at the blue down here during the COVID period, and it really kind of mimics just a bad weather pattern, and then they bounce back up, and look how strong the last part of the third quarter, and so far in the fourth quarter has been far for Nebraska, but definitely encouraging to see these types of volume numbers in the Midwest, as well.

Chris: Well, and I did some research, and I did confirm that corn cannot get COVID. So explains why Nebraska just, they're doing fine, they're doing fine. Corn's good.

Jason: Corn is good. That makes a lot of sense.

Chris: I got to tell you my one Nebraska joke. You know the N on the helmets of the Nebraska football team, do you know what that N stands for?

Jason: I don't.

Chris: Knowledge. Knowledge. Oh, that's my only joke. I'm from Iowa. It's like the one state we get to pick on. Everybody picked on us. I'm just kidding, Nebraska folks. I love ya. Midwest for life.

Jason: Midwest for life, I love it. All right, looking at the Southeast, the Southeast is one of those regions that really, if you looked at a region that was super insulated from all of this, a majority of the states just really didn't have the type of drop-off, and certainly the weather in the Southeast, in the last three weeks has been phenomenal. So we are seeing a really nice uptick in volume, as you can see, we're showing Kentucky, Arkansas, Georgia, Alabama. But compared to the weather that apparently was going on this time last year, if you look in the orange, they all took a pretty big hit. Again, just underscores the importance of good weather.

Chris: I mean, everybody knows what that drives, and we've seen a lot of people, especially multi-site operators in these groups that are getting bigger and bigger and bigger, they're really looking at their sites as you would a stock portfolio, where looking to kind of offset volatility in one area by using weather specifically. So if you live in an area where there's high volatility, you can offset that in another place that might have lower volume but lower volatility, and it's very interesting to see how people are applying some of this information.

Jason: Absolutely. Quiz for you. Let's see how good you are here. What would you say, now, we've been looking at all this kind of in aggregate, but what would be the top three states in your opinion, in terms of car wash volume? And the answers might surprise you. Weekly volume on average for all of 2020.

Chris: Yeah, there's... And again, we've got to take into consideration sample size and a lot of other things that are in there. But if you look at the year, I mean, I would... Rhode Island, Indiana, Hawaii would be the top three that'd come to mind, where your brain would naturally think Texas, Florida, California, and it's not so, especially when you factor in volatility.

Jason: Man, so Hawaii, I'd excluded Hawaii from this because they have had some fits and starts, but you're absolutely right. Indiana, Rhode Island, and Idaho. I thought I'd be able to stump you with the Rhode Island piece of it, but surprisingly high volume numbers in those states.

Chris: Yeah!

Jason: And they're all in different regions. So yeah, really interesting numbers. Like I would have imagined Florida would be right there, Texas, but geographically much larger states, and, you know, areas like Indiana and Idaho, may be more concentrated in terms of population basis, but interesting, nonetheless.

Chris: Oh yeah, I mean, it's one of those things that we always tell ourselves, that's why you got to trust the numbers, because anecdotally, you know, you'll leap to a conclusion or make an assumption that just ain't so!

Jason: That's right, you know what happens when we assume.

Chris: Assume-

Jason: All right, so let's take a look at a few states that really haven't rebounded all the way yet. And we've got California up here, Colorado, Nevada. Again, taking the last couple weeks, or the last week, I guess, into account, weather definitely affecting this region of the country. But if you look, we'll go a little bit further and look at California trends. So this is from the beginning of the year till now. Start, almost got back to the point where we were catching up on the trend side. Overall, down about 15% or 20% in California, in terms of overall volume year over year. Anything that jumps out at you here?

Chris: You know, and this is again where we knew when the wildfires were happening on a micro level, we were seeing certain things being impacted. Then we also expected a rebound on the back half of that, whether it's ash or smoke-related or whatever it might be. So as we looked at this specific incident, this is a great sort of example of what we do in terms of refinement, 'cause just like Texas, where West Texas and East Texas might as well be different planets, let alone the same state, same thing with Northern California and Southern California!

Jason: Sure.

Chris: So as we look at this, we want to say, okay, are we getting pulled down by regional activity? Or is there a geopolitical force that may be at play here? 'Cause even though we've known we've seen certain weather events, that doesn't really explain that drop-off. And so this is again where we would break that down and basically put it into two buckets, something we can control and overcome, through your marketing and messaging, or is it something that we got to wait out? And if we are going to wait out, how long do we anticipate, what's going to get pulled off the table, and how are we going to make that back up when it does rebound?

Jason: Do you think it's a matter of consumer behavior changing, or is it a matter of policy?

Chris: Oh, the one thing that causes volatility more than anything as it relates to consumer sentiment is the unknown. When people don't know what's going to happen, their behavior jumps all over the place and it gets really, really crazy. And of course, we've known what's going on at a national level as it relates to change. I'm less familiar with what's been going on on a California-specific level in terms of their elections, and their changes and where their focus is. We know that there's been a significant amount of just unrest in a lot of different areas, but if we were to plot that, there's always going to be a reason, but what we always want to try to predict is what's the strength of those reasons, what is the strength of the relationship between what's happening and those wash volumes, and based on that, then usually we can predict when we know it's going to be over.

Jason: Interesting. Let's take a look at another one here. Colorado, again, you can see a gap, and you know, this may have been weather-related here. We get back up, actually pacing really strong, and then it drops off in COVID, and then we've just kind of echoed, albeit 15% down from prior years, actually, Colorado ended up being around 25% on average per week, down from 2019. And, you know, they're one state that came out with... They went back a stage and are limiting gatherings again to 10. And so, increase in lockdowns certainly could have affected the last week. I think that came into place about a week and a half ago. So, interesting to watch how from state to state, policy to policy, things like remote work, you know, less people out on the roads, we're still traveling, but patterns have changed, and some of these places that have larger Metro areas, or regionally could skew, you know, it could be that the Bay Area certainly has had tighter lockdowns than other parts of California, and more remote work, is that changing people's driving habits? And what does that look like going into November, December, January? You know, an announcement was made that the Pfizer vaccine is 90% efficacy. Certainly that's a shot in the arm or a boost for overall sentiment, and we'll get into that in a second, but what does that do, you know, at what point does that affect policy? And I think that's the question. And some of these states that have fallen behind and stayed behind, and just been consistently 15 or 20% below, and you can see just echoing some of the seasonality from the years before, but from a policy standpoint, do you think that the announcement of the vaccine and the ability to distribute the vaccine is going to change, materially, volumes that we would see maybe in the first quarter of this year? At what point do you think states like Colorado and California will get back to bar?

Chris: Well, this is again, why the sentiment filters are going to be so apropos for today. Anybody who grew up with grandparents who lived during the Great Depression know that they never got over it. You know, you finish everything on your plate, they still count their pennies, they're very reluctant to spend, they're good savers, hard workers, all that. So right now, we're going through what basically equates to conditioning. And you know that you're being affected by this conditioning when you watch movies and you see people hugging and shaking hands, and you're like, oh!

Jason: Yeah.

Chris: And you see, now you've been conditioned-

Jason: 100%.

Chris: That that's not okay anymore and you catch yourself being like, "Oh, man!" So when it comes to how long will it take for us to just go back to the way we were in terms of social interactions, it's going to be awhile, but the good news is, is in fact, I would've been wrong in predicting how the lack of commuter traffic specifically was going to affect enrollment. Because as all the research we'd done, so many people would wash to and from work, which makes sense. But even in large metropolitan areas and rural areas, the folks who are actively campaigning, people who are opening new sites, it's not been an issue. Everybody's still hitting their numbers, people are still coming out, they've just changed their behaviors, and it's been interesting. But in terms of some of the other industries out there, it's going to be awhile. Even if COVID vanished tomorrow, we still... It takes a while to earn that trust back, because again, classic conditioning.

Jason: Well, and I know you're a big proponent of the impact that ticket average can have directly to the bottom line, so it's absolutely possible to see a 20% reduction in volume and still hit the same numbers that you hit in 2019 from an EBITDA standpoint, and so it just underscores the importance of being as profitable as possible. And the pricing strategy piece of it can absolutely do that. Enrollment reduces some of that volatility. So like you said, there are moves that you can make, even if you're in one of these states where volume is down.

Chris: Oh, absolutely. And we're not just talking about hyper-efficiencies. In fact, where people are, you know, they're scrimping and saving and they're trying to cut their costs all over, that's literally the slowest way to push dollars to the bottom line. There's so many other ways that are a lot more fun, a lot more engaging, that can certainly accomplish that. So whatever situation you're in, as long as, of course, your wash site's not behind a dumpster somewhere like six miles out of town, I mean, you know, obviously, location's still a big contributing factor of this, but most folks, there's still plenty of levers to pull.

Jason: Let's take a look at Florida. Florida is one of those states that you get a little jealous of, because even through COVID, I mean, they had one, two, three weeks where they took a dip, but again, that could be affected, that could simulate a bad weather event at that time a year, and then boom, just bounce right back. So down about 3% overall volume from 2019, but still, some really predictable patterns relative to the seasonality in states like Florida, and a lot of states, actually, in the Southeast kind of mimic this, and Florida is performing perhaps the best of those, but really, you know, a really predictive pattern, going back two years to account for seasonality and the dips in the Southeast, for whatever reason, just weren't as bad, and so the uptick, getting to normal was a little bit easier in that region.

Chris: And of course, being so heavily travel-dependent and all the tourism dollars that they need kind of pouring into that state, we knew there were going to be pockets of significant unemployment. So as we started running, again, just some regressions, testing the relationship between those two things, we didn't find any evidence early on. And the numbers reflected that going forward, that we know that that state's taken a massive hit, but whatever that hit is, is not manifesting it at car washes. People are still enrolling, people are still coming, and they're right on track.

Jason: It's crazy, right?

Chris: But it was a natural question to ask, and it would be, you know, your general assumption would be, you would see some sort of effect from that, but the early-on models that we ran said, "Not so," and that turned out to be true.

Jason: Right, well, let's talk about consumer sentiment. Why don't you explain what we're looking' at here?

Chris: Yes! So there's this thing called social media and it's on this internet that I think is going to be a big hit, I think people are going to want it.

Jason: I've heard of it.

Chris: Yeah, it's going to be a winner. But what a sentiment filter does is, this one's really looking at Twitter, primarily, but you can look at everything from Facebook to Reddit to anywhere that people are having conversations. And what it does is it scrapes through all those conversations and it's looking for words. Then the words that it's looking for are categorized. Are these positive words, are these negative words? Like what sort of emotion do they really reflect? And this is something that we started tracking early on, because what we know is how people feel about a situation is more important than the reality of the situation. Meaning that as many of us personally have not potentially been affected by COVID, how we feel about it, our anxiety about it, our belief about the future, as it surrounds that topic, is going to change the way that we behave. So as we look at this, and we ran a few different ones, one of which, we all knew, was the election. And your business doesn't care what your politics are, in large part, right? The tax man's a different story. So when we look at this, we want to know, how are people generally feeling about this outcome? And it's not because I am going to shift tribes or do anything like that. It's that I want to make sure that the messaging and the tonality that I'm putting out there matches the way that people feel. So when people are generally optimistic, be optimistic. When people are more frustrated, it doesn't mean stop marketing. You just need to take a frustrated tone and that's okay. You can still keep telling your story. But the further this shifts into the green, this does tend to be a reflection or a leading indicator of positive economic output. Do people feel good about what's happening? Do they feel relief? That will loosen the purse strings, that will get people out more, and again, how they feel is the only thing, ultimately, that's going to be predictive of their behavior. So if we kind of go through this, we looked at the election, we looked at car washes, we looked at COVID-19 specifically. And COVID's really interesting. Show them what we did with this one, Jason.

Jason: So this is the current state, sentiment state, and this was back in April of 2020. So look at all the blue here. And again, blue is bad, green is good, to put it simply. So when we allowed more-

Chris: And we watched that whole thing drift.

Jason: Positivity-

Chris: Remember that?

Jason: Yeah.

Chris: Like early, early on in the quarantine, everyone was super positive. We were like, "Hey, this is crazy, but we're going to do what we have to do." And then as it wasn't two weeks, as it went on and on, you just watched that whole thing drift left. And then you started watching, again, the news, and everything was, you know, as predicted. And now, watching people swing back to the other side, picture perfect.

Jason: That's what you want to see. All right, let's take a look at car- Yeah, exactly, let's take a look at car wash. So this is for the keyword car wash. A lot of green!

Chris: Well, and what's weird was, we run this many, many times over the year. I don't know that I've ever seen this much frequency. And of course, leading up to the holidays, we know a lot of people are promoting, a lot of people are getting stuff out there, a lot of clients and now a lot of just sites are just getting better about being engaged on social media. And you can see that everyone's... Their sentiment is reflecting what we're seeing in the graphs, that, hey, you know, are we crushing over 2019? No, but everyone's still doing well, at least has the opportunity to do well.

Jason: And then there's this guy over here. So every site has one of these guys that's upset or stressed and posts about it on social media. All right-

Chris: If you don't have at least one, you're not doing it right.

Jason: That's right. Well, we would love to talk about what you want us to talk about. So feel free to reach out to me and Chris. Here's our email addresses. Jason@sudscreative, Please be sure to include DataBytes in the subject line, so we can sort that way. And if you haven't gotten a chance to register to receive your state's data, you can go to, fill out a quick little form, tell us which state you'd like information on. And those of you watching right now would've already just received, a couple days ago, your state's information, so you can kind of keep track with what's going on and plot yourself your own car wash volume averages against your state's and see how you're doing. But we really encourage you guys to do that. Please reach out to us. We'd love to talk about what you'd like us to talk about. Thanks again for watching DataBytes. I'm Jason Baumgartner.

Chris: And I'm Chris Moriarity, signing off.

Jason: And there it is. Thanks, guys.

Chris: All right.

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