September 8, 2023 • 42 mins
Chris Michael, CEO of Express Carwash in Kansas City joins the podcast this week, providing valuable insights into maximizing profitability of your car wash, leveraging data for success, and the future of the car wash industry. Learn how Express went from operating locations to building car washes, and how they're now helping other operators thrive.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Chris Michael (00:00):
Hey,
Kevin Zalaznik (00:11):
everyone.
Welcome back to the modern pod,modern car wash podcast.
I'm yours.
Kevin's elastic.
Normally I'm joined with ShaneGroff, but Shane is, we'll say
he's on assignment today.
Um, but we are excited that wehave Chris Michael from express
car wash on the show.
Chris.
Chris Michael (00:27):
Well, thanks for having me, Kevin.
Appreciate it.
Yeah.
Kevin Zalaznik (00:30):
I gotta, I gotta assume that you guys are, uh,
some of the busiest people inthe carwash industry, especially
given what express carwash does,uh, the last couple of years
with the growth of the industry.
Um, so yeah, how was your day
Chris Michael (00:44):
to day?
Well, our, uh, our day's goingpretty good.
Um, we're, we've got a lot ofteams throughout the country
moving and shaking.
And we're actually, uh, in thenext two weeks moving into a new
facility.
And so there's a bunch of hypearound the office and, uh,
things getting boxed up.
So it's an interesting time forus as we, as we expand to a new
(01:06):
facility.
Um, about 5X the square footageinto 100, 000 square feet new
offices to really help us on ournext leg in this, uh, Industry
growth cycle and also whereExpress Car Wash is going.
Awesome.
So,
Kevin Zalaznik (01:21):
uh, for those who don't know, uh, You hear
Express Car Wash.
Maybe you're maybe our audienceis thinking you're an operator,
but you're not an operator Whatis Express Car Wash exactly?
Well,
Chris Michael (01:33):
we were operators.
That's where our story began Uh,but when we say Express Car Wash
or EC, we're really talkingabout ExpressCarWash.
com um, and so we we started inthe operations owning and
operating Um, I came into theindustry a little over a decade
ago in the recession.
I bought my first car wash.
(01:53):
My family was in the carbusiness.
Uh, my grandfather's store backthere is an old Studebaker's
store.
Uh, we had car dealerships for along time and then my family
exited.
So I started washing cars at thedealerships and then I ended up
buying my first car wash in therecession.
Um, Scott Besch, my partner,helped me build my first tunnel.
We became like heart and mind,started expresscarwash.
(02:14):
com, express car wash equipment.
Because, um, uh, guys keptasking us to kind of help build
car washes, service car washes.
We thought if we could do one ortwo a year and have a couple of
service techs, that'd be great.
Um, that's grown into a, uh,large organization as of itself.
Uh, we've had, uh, multiplereli, uh, retail locations and
(02:36):
multiple brands.
But, uh, uh, today we haveexpress car wash, which is a,
uh, nationwide headed it tomultinational service
distribution.
Um, and so really a, uh, turnkeysolution and, and a flexible,
uh, solution for people where wework on all types of equipment,
(02:57):
um, and all types of washes,right?
So my first car wash was a selfserve, um, Hand bay, hand bay
automatics, build my firsttunnel.
We've owned, uh, operated andserviced just about any type of
machine that washes a car.
Kevin Zalaznik (03:13):
So like I said, uh, yeah, you're a pretty busy
guy.
As the company is.
Yeah.
Yeah.
It's funny when, uh, hearing yougo.
Through a new office.
So our office, Hoffman Car Wash,Hoffman Development, uh, pre
pandemic, we were like a can ofsardines, uh, above one of our
(03:35):
locations.
I mean, two, three to an office.
There were people in theclosets, essentially, like
Charity had worked on.
So, uh, Uh, it's, uh, and ourpresident always say it's good
to, it's good for, to work for acompany that's growing.
So, what's, uh, just walk it,the scope of Express Commerce.
So you're moving into a new, uh,a new office building.
(03:58):
Um, I'm assuming warehousing andall that fun stuff as well.
How many, so how many peoplewould you say kind of day to day
are in the same facility as you?
Chris Michael (04:09):
Yeah, so.
In office, there's only probably10 to 15 people in office every
day.
Monday through Saturday in thatfacility.
Um, the service techs installcrews come in and out, um,
deploy from there.
Most of our foreman live in theMidwest and deployed to the
(04:29):
coast.
Um, truck trailer, uh, just togive you a scope of, um, that
I've got, uh, I wrote it downearlier today.
I'm in, I had one in Minnesota.
I've got a team at Boise, I havea team in Louisiana right now.
And in Washington, D.
C.
So, almost to the extreme fourcorners.
(04:51):
Um, in some way right now that,that are out and about, um,
those will all deploy from, uh,Kansas City.
We're here in the Midwest.
That's, that's where we hub outof, but we service and install,
um, throughout the country and,and into Canada now, um, as
well.
Kevin Zalaznik (05:08):
So is it, uh, these guys are, they're deployed
or they're out there?
How much is it?
Uh, you know, I'm assumingthey're very good at their jobs,
but.
How often do you guys get throwna little wrench in the, uh, in
the operation?
You got to move fast or is itpretty smooth sailing at this
point?
Chris Michael (05:25):
No, I don't want to say it's smooth sailing.
Car wash is a complex machine.
It's done a little bitdifferent, uh, there's not two
car washes anywhere in thecountry that are exactly the
same for whatever reason, eveninside the same brand, same
equipment, um, you know, so you,in the same way that we help
people build a car wash fromground up or remodel, we're
always trying to match themachine to the market and the
(05:46):
profitability back to the P& L,and so each one of those have,
um, a little different, Um, uh,zest about the, and the way you
wash a car in Minnesota toTexas, to DC to, um, Boise,
Florida.
All those have a little bitdifferent nuances to'em that
you're, they're trying toaddress.
So, um, it's uh, it's always nota repeatable process.
(06:09):
We always consider ourselveskind of the hot rod, um, people
in the industry, right?
You can go buy a Ford, Chevy, orDodge off the lot.
They're all kind of the same,but if you want a Ford engine
and a, a Dodge transmission anda Chevy Interior, we're kind of
those guys.
We're also the guys to work onthat as well.
We understand the fundamentals,um, behind the equipment and,
(06:32):
and the goals that you're tryingto make.
So a guy that's, uh, trying toonly do 80,000 cars in, uh, a
year versus somebody that'strying to do 400,000, the
machine's gotta be different.
People have different capital,uh, that they want to deploy and
different, uh, expectations onthat and you, you got to make
the machine deliver on it.
So, at the end of the day.
Kevin Zalaznik (06:52):
You talked, you talked about, um, kind of going
into a market or, uh, workingwith a client.
You're trying to actually, likemost businesses, right?
You just want to maximizeprofits.
It's from maybe the last year ortwo, what do you feel are maybe
like the lowest hanging fruitfor people to, you know, or
maybe they're just missing theboat profitability wise?
Chris Michael (07:14):
Well, uh, one is remodeling current facilities
and in the landscape that we'regoing to, which is competitive,
not saturated, in my opinion,you want to be able to look at
what your current offering is.
Um, if you projected, you know,if your payments or your
projections are over 20 to 30years, there is going to have to
be capex at some time.
(07:34):
And you have a permanent pieceof property that has a customer
base right now.
You want to make sure thatyou're investing in that and and
those investments can be A fewhundred thousand dollars to a
few million of dollars in And aretrofit of the exterior, a
facelift there, and animprovement to the, uh, tunnel
(07:54):
as well.
If you look back, some of thesetunnels were built pre
membership and weren'tnecessarily designed to run the
volumes that we see today in theindustry wide, and so, um, that
is a good investment dollar.
We see a high return.
I have clients that have had twoand three X EBITDA movements
after they've invested in acurrent facility.
(08:17):
I know that the, the cool thingis to say we're building a new
car wash.
We're expanding.
We have two coming online nextyear.
Uh, I always say, well, what isyour current estate producing?
The best real estate may be whatyou already own and that you
maximize.
And so I think too many peopletoday don't look at what they
(08:37):
already own.
And it, because it's sexy tobuild new, right?
But uh, uh, there, there's awhole different aspect to where
Express Car Wash can come inand, and we really want to
understand what your goals are,what you have today.
And uh, baby, maybe the best 2million you can spend is not
buying a new piece of dirt.
It's investing in the 15, 10year old car wash that you got,
(09:01):
um, that, hey, let's put anotherpay station in, a cashier, hide
a little.
Um, exterior remodel, you know,prep, non prep.
We can look at that through yourthroughput, how your design is,
vacuum, vacuum amenities.
I feel like the number onebattleground in the industry
right now is in the vacuums.
And the amenities that we give,towels, air, canopies, all those
(09:25):
things that, you know, kind ofdifferentiate the tangible
customer experience there.
So, um, you ask what the, thebest dollars are to spend or
where that return is.
I think it's current ownerslooking at their current estate
and saying, um, what can I get?
Because you can spend 2 million.
You may be able to bump even as,you know, a few hundred thousand
(09:47):
dollars.
That's a great percentagereturn.
Um, some of these guys are, areseveral hundred thousand
dollars, right?
That's the best ROI you can getcurrently.
And it's less risky.
It's a known asset.
It's, it's not greenfield.
The other thing is permits areharder and harder every day,
right?
So let's maximize the permit youalready got.
Kevin Zalaznik (10:09):
Yeah, it's, it's kind of refreshing to hear you
say that because Hoffman CarWash over the last couple years,
uh, has done a lot ofremodeling, even though from the
outsider standpoint, probablydoesn't look that way.
Um, but our equipment is prettymuch online at all of our
locations.
It's the same experience, uh,from one location to the next.
(10:32):
And I think you were, youtouched to it on the vacuum.
So that was a big step for ustoo, is moving to a free vacuum
model.
We're not completely free vacseverywhere.
There are some issues we havewith sites and everything, but
kind of, yeah, looking at thoseareas to improve on 15, 20, 25
year old buildings, um, and thestores that we've, we have
(10:54):
taken.
Um, steps to remodel like wecertainly see growth in those
stores and some of these storeswere, you know, they're, they
were B C list stores for us andnow they're, they have moved up
a category for sure.
Uh, with that being said, we dohave a lot of shovels in the
ground and we're building andwe're expanding and.
(11:16):
Uh, I, I think one of the thingsthat we look at is, you know,
how to build a site cheaper, andI'm sure a lot of people, um,
you want to, uh, maybe not makesuch a, such a big investment,
but making sure that you're notlosing quality there.
Um, any insights there on, youknow, maybe.
How not to overspend on a newbuild.
Chris Michael (11:38):
Yeah, I think it's matching the machine to the
market.
I'll say that a lot because it'score philosophy of ours.
It depends upon your traffic,your demographics, your
competitive landscape thatyou're looking there.
Uh, the less is not always morein this scenario.
And so, um efficiency of thedollar spend is there.
Um to that, you know, if youwanted the word cheap Um, mostly
(12:05):
represents also the end outcomeis going to feel and look cheap
as well.
So uh, we just really want to goback to say, Oh, what's the
capital you want to deploy?
What's the return that you wantto get on that and, and make a
machine that will do that on thelocation.
I'll do that.
You're going to get your, uh,the best potential is going to
be in the ground day one.
(12:26):
And what we put on top of itjust needs to maximize that,
right?
If we go pick a corn seal.
We probably just need to do aself serve, uh, you know, and
spend 50, 000 on it, and it mayreturn great, right?
The farmers may stop there andwash their trucks, and that's a
pretty good return.
If we're downtown on 60, 000cars, and the permits are hard,
and we get one, Man, let's lookat putting a double title in
(12:49):
interior of action interiorexpress detailing those things,
right?
We were very blessed to be apart of you know, the flagship
Big indoor car wash we did allthat work to our knowledge.
It was the largest mostexpensive wash that was done In
the US up to date and but thedirt told you to do that the
demographics told you to do thatThis is it.
(13:10):
You can't build
Kevin Zalaznik (13:11):
that everywhere you have Almost like a formula
or starting point.
You're like, okay We're going tobuild it in this, this is the
location, or this is the, um,community that this person wants
to build in.
Right here, the demographics,here's the, the traffic count,
et cetera.
And you're like, okay, this getsa point.
(13:33):
This gets a point.
All right.
This equals, uh, you know, 160foot tunnel and these amenities,
or is it more, it's kind oflike.
Almost like you're using yourexperience and your gut.
Um, how do you approach that?
Chris Michael (13:46):
We have a lot of data, data to back things up,
but at the first, at thebeginning, and I think we're,
we're a little bit differenthere at expresses.
I'm going to get to, let's sayKevin, you're the person that
calls in and says I want to geta car wash or I want to build my
30th car wash.
Okay, what is your, yourpersonal or your organizational
goals with that and what's thewhy behind it?
(14:07):
And do you want to do more ofthe same or do you want to think
ahead and be a little bitdifferent to what that is?
Um, to, to state where thatcomes in and some real
practices, you know, we've gotclients that are infilling
current buildings because they,uh, maybe bought a hundred
thousand feet of an old grocerystore.
They subdivided it, put in somedifferent things.
(14:27):
The guy really wanted a moreconsistent return than him to
grow, you know, and do 20 carwashes.
That's different than the guythat's adding this 30th that
says we want to do pretty muchthe exact same that what we want
to do financially.
We want to be in a little bitcheaper.
Um, or, or more realistic, uh,to, to what we can do.
(14:49):
So, you know, that, that's adifferent story and because
they're different people at theend of the day.
And, you know, we're trying tofill people's, um, buckets up
with emotionally and the timethat they want to spend.
Some people want to be over onour operators.
You know, we do give theopportunity, you know, we'll
come in as an operator, um, evenif other people own the real
estate and the building andthose things there too.
(15:11):
So, uh, I can't give a directanswer because we're flexible.
We are the.
Flexible, um, people to it.
I'm, I'm never going to putanybody in a box to, to what to
be.
Kevin Zalaznik (15:24):
You talk about the data and just like the
conversations you probably haveon a day to day basis.
I mean, you're probably so intune to the industry and where
it's heading.
And, um, I'm, I'm curious, uh,when you look at maybe the last
10 years and look forward to thenext 10 years.
Uh, what has excited you themost about the industry, or
(15:45):
what's there to come that, um,you know, you're really looking
forward to?
Chris Michael (15:49):
Yeah, I'm gonna answer that in two different
ways.
What, what excites me and whatam I looking forward to are a
little bit different.
Um, what excites me is that theconsumer appetite, I still
think, is growing.
In the us um, some bit theconsumer appetite outside of the
US for express car washing inthat model and a membership
(16:11):
based, um, I think is massive.
It's extremely untappedglobally.
And so that, that does exciteme.
I think that's gonna be apotential there.
Um, inside the US I think it'sreally interesting if you look
at Driven and MR.
And the stock and, and how thepublic markets, which have
really driven the last.
Five years of PE getting in andREITs and how that's done and
(16:35):
now coming to an actual publicviewing of that.
And I think, I think those guysare top, top class.
I think, unfortunately, thepublic markets probably, um, are
just being a little tough onthem for, for where they're at
in the moment.
But I think that sets theprecedence in the future, right?
I think the days of selling 10times are gone.
(16:57):
Um, it was, it was a momentarydeal.
Uh, now, interest rates comeback down, that could change,
but obviously, uh, that wasreally full, fueled by
refinancing on the underlyingthat they were going to get the
depreciation under the currentprogram and money was cheap.
So that was fueling, uh, a bunchof the growth, that was the
(17:18):
financing that was doing thegrowth, it was the financing
that was getting the M& A done.
There, so both of those arechanging and I think changed
quicker than anybodyanticipated.
If we rolled the dial back ayear, there were still deals
getting done at a big, at a bigmultiple, right?
And Reach were, day of closing,picking up that stuff at, um,
(17:40):
really good cap rates.
That's not there today.
And so, I think where we'reheaded is a new world where I
see many mom and pops.
I will call Hoffman a mom andpop, I think they're best of
breed, you know, you guys are 40location, but you are privately
held on a, on a family, on alegacy there, right?
These people are re energized,right?
(18:01):
We all kind of feared, uh, someof the bigger, bigger people
coming in.
Um, I think there's great, bigoperators in there now too, but
they are having to change wherethey entered the market at, and
we're going to expand andfinance that expansion and
continue to hit metrics.
That day is over and it will bedifferent.
(18:27):
Uh, it won't be as good as wehope.
But it will be different.
With that being said, I thinkwhat you're going to see is a
reinvestment in currentfootprints.
to maximize return.
There's going to be many moreremodels of assets that are 10
plus years in age.
I mean, it is 2023, 24.
So somebody built a car washand, and there was a big, big
(18:47):
surge right before the recessionin 2000 to 10, bigger surge,
probably, you know, 15 to 20.
But you know, that entire partof the estate is going to have
to be retouched.
It's already permitted.
It's either financial on theground or paid off.
And I think you're going to seea A bunch put back into that
stuff there.
(19:08):
Uh, the novos are going to gettough.
Um, I, honestly, I think that'sgoing to be a pretty tough road
to hoe for the entire industry.
You know, talk a lot ofdifferent projections.
Is it going to fall off a cliff?
No, but the hockey stick momentof growth for everybody, I
believe, is over.
We'll build new stores as anindustry, express will, innovate
(19:31):
will, off my will.
We just won't do it at the samepace.
Um, but I do think consumerdemand kind of keeps going up
and we just, you know, focus onwhat we already got and doing a
little bit more out of what wecurrently have.
Kevin Zalaznik (19:45):
From like a consumer, consumer demand
standpoint, um, you know, youlook at all indications are like
we're heading towards some sortof recession, maybe early part
of next year, you know, in yourexperience going through one,
Um, you know, put 15 years ago,I guess, how, how best do you
(20:07):
think people can, our operatorscan prepare for some sort of
recession or is the industryrecession
Chris Michael (20:14):
proof?
It's not, nothing is recessionproof.
Um, it's not going to go off acliff.
It will expose those, right nowthose that are barely making it,
won't make it, which is 10 20percent of the industry, right?
But that's in, that's in everyother type of retail business.
You are gonna see, now, I'vealways believed, and I saw in
(20:36):
any other blips, We are anaffordable luxury, right?
We're talking about a 20 ticketto make, and at the end of the
day, you know, I really believe,you know, we're bringing self
esteem at the end of the day.
You feel better about your carwhen you leave, so it is a 20.
I call it a high.
We all feel good, right?
You put on fresh clothes orwhatever that is, beds made, the
same thing about cleaning yourcar, and we can do that in three
(20:58):
minutes for 20 or whatever.
So, um, you know, there may,there is going to be, we already
see it.
You can see it in the publicmarkets.
There's some menu trading.
Down, there's some changehappening there, um, retail
traffic will slough off a littlebit, 10, 20 percent, um,
membership conversions, probablyrates will go down a hair, but
(21:23):
at the end of the day, peoplewill still want their car
washed.
The units may go down, our grossaverage ticket may go up because
you will have some bit oftransfer from membership to, uh,
back to retail, which is ahigher gross per unit, but
obviously a less gross dollar onthe year.
Um, so we'll change again, youknow, as an industry, we'll,
(21:44):
we'll, we'll change, but it'snot detrimental.
It will call out some of the badactors in the industry, which it
needs to do.
And it will reset some people'sgrowth paths, um, to more
health, healthier.
So the good guys will still dogood and bad guys will board it
(22:06):
up and it'll be torn down or ifit, or if it's a good lot.
Permitted it'll still sell thedirt is still working a four
wall if it can be resurrectedwill be um, and we've had we've
had a couple really good successstories of of Uh guys buying
(22:26):
people that were going brokeDoing a little bit of work, a
little bit of CapEx to it, canbe a really good success story.
Kevin Zalaznik (22:32):
Yeah, I'm curious, uh, so for our
listeners, and they're like, ah,am I a good guy or am I a bad
guy?
How would you define, I mean, Iguess you'd probably know it
already, but I'm curious how
Chris Michael (22:42):
you'd define it.
If you got to ask yourself thatquestion.
Ha ha ha ha ha, you're a badguy?
I doubt Tom Oppmann askedhimself that question today.
Ha ha ha ha ha.
Uh, that's good.
Um, you know, it, it, Butthere's a lot of great guys
there and they're gonna changetheir business too, you know
stress will make you change ormake you break Yeah.
(23:04):
No.
Yeah.
Um.
Kevin Zalaznik (23:06):
I'm curious, I mean, uh, so we've been on for
just over 20 some minutes andthis whole time we've been
sitting here looking at, uh, uh,a giant ticket behind your head.
Oh yeah.
Yeah.
I'm
Chris Michael (23:17):
curious what the story is.
Yeah.
So, uh, the story is we all gotone life to live.
We got an expiration every dayis precious to us.
You know, um, you know, I'vebeen very blessed to be raised
in a family that, that brought agreat faith, Christian faith to
me and, um, you know, I don'thave any fear.
I believe in Lord, my savior,and so I'm going to heaven.
(23:37):
So, I always want to use my onelife to kind of bring, um,
positivity, joy to everybodyelse in life, and I want to walk
in my office every day andremember, I don't get a reset,
this day is precious.
Um, you know, I personally haveexperienced loss in my life, um,
at a, at a momentary notice and,um, you know, I just need to
(23:57):
bring that positive attitude toeverybody in our organization
and everybody that would goaround.
And then also, I'll tell you thetruth and it sounds a little
corny, but I know that ourorganization is bringing today,
um, boy, I should do the number,but we talked about it in the
past, you know, we're going tomake a million people happy this
year out of car washes we builtor more, you know, that's a,
(24:19):
that's a roundup.
You'll so many.
You know, and and we arebuilding a machine that brings
good self esteem to people andso, you know Know how hard the
day is and you know, I got guysin a hundred and degree heat
blowing out a conveyor today andI mean that's hard work and And
I got it.
I got to make sure that onetheir families are taken care of
(24:41):
They're putting in the time tomake sure that that later on
they can give it back to theirloved ones too.
But yeah, just it's a reminderevery day that I come in.
Um, we've got one life, noresets on it, no reset on the
day.
And um, how do I put people in agreat position to be successful,
whether that's inside of ourcompany or they want to be in
the car wash industry.
(25:02):
Um, that's what it's about, man.
Yeah.
Thanks for that.
It's a
Kevin Zalaznik (25:07):
great reminder, right?
Like see that every day.
And I think what's remarkablethe way you said was You know,
uh, and I, I'm hoping ouraudience is more geared towards
the operator and, you know,they're running their
businesses, but I think there'scrossover in the fact of, you
know, your team is out there,you're building these car
(25:27):
washes, you're building, uh,something that, like you said,
it builds self esteem and makespeople feel good.
And how do you, how do youconvey that to your employees?
That all right?
Yeah.
It's, you know, I'm on aninstall in Dallas and it's 110
and the humidity's through theroof.
And, um, but at the end of theday, like long term like this,
(25:47):
what I'm working on is gonnahave, as, like you said, as
corny as it sounds like, isgonna have an impact on cel
Chris Michael (25:53):
day.
Well, we, we say it, we try tobelieve it.
Uh, some of the mottos that wehave, Around here and you know
everybody that comes to work forus We have initial one that
nathan kind of brought up and isuh, we do hard things on purpose
So don't show up here todaythinking that today is going to
be easy no matter what that is.
Um, Car washing is a complex youknow mechanical device that we
(26:17):
put retail customers thatThrough there.
You got a kid in the car seat.
You got a an an elderly personThere's there's a lot of
different things that are goingto go through your machine So
this is going to be hard It's acaustic environment with 180
volts and hydraulic pressure andair and systems and like complex
electronics So and point ofsales that want to integrate,
(26:41):
you know to different things socome to work prepare to be
challenged but at the end of theday You're, you're making
somebody feel good about theirnumber one publicly viewed
asset.
So whether they rent it, leaseit, whether it's 20 years old or
right, that's your car that youtake through there and you need
to feel good about it, uh, it,and when it's clean, no matter
(27:04):
what it looks like, an oldjalopy or whatever, a brand new.
You know, um, beautiful car it,you got to feel good about it
and you will if it comes outclean, shiny and, and, and dry
at the end.
So that's a machine that you'rebuilding today.
Kevin Zalaznik (27:18):
And you've said a few times about, you know, you
guys do hard things like onpurpose, you're, you're out
there doing hard things.
Yeah.
Has that been, um, kind of theway you guys have steered the
ship or is it just something,you know, from day one?
Uh, we found ourselves in thesedifficult situations and we're
not going
Chris Michael (27:36):
to shy away from it.
I think Scott and I have been invery entrepreneurial, um, and
thought that there wasn't aproblem that we couldn't come up
with a solution with.
And early on, there was someenvironments like in, um, North
Dakota that, you know, negative40, how do you wash a car there?
Um, even some of the things thatwe did with, um, Flagship
(27:59):
internal belts, bringing them inand the biggest, you know, car
wash in the U.
S.
square footage and I know thatwas at that time and We knew
that we've always had goodpeople around us I'm very proud
to say that the first employeeScott and I hired he's still
with us today He's probably onthe road right now somewhere in
(28:20):
Minnesota Fixing hard problems,and we try to make sure it's a
good work life balance,people's, um, cups are filled
with that.
Then we can go tackle the hardmechanical problems and know
that, you know, you are going tobattle with somebody to do that.
And, um, at the end of the day,we'll, we don't try to have an
(28:43):
ego when we go into it and tellyou that, um, you have to do it
this way.
There are many ways to wash acar, many ways.
And what I've told everybodythis whole time is, and when
we've been in retail and we soldand bought and what have you,
nobody has got a higher multipleor a lower multiple because the
equipment that is in there, thattunnel, and they got to keep
(29:06):
that in mind, right?
So we can be emotional to, tomaybe this works better than
that.
But at the end of the day, it isa tool to make money for you and
your family and your company.
and bring a clean car to theclient.
And it needs, you know, that,that's what it
Kevin Zalaznik (29:21):
is.
Are there any other industriesthat maybe you draw inspiration
from or you're
Chris Michael (29:26):
intrigued by?
You know what, I think I gotblinders on every day.
Uh, my wife would tell me, well,I don't, I don't, I'm not very
good.
I'm not good on, uh, socialmedia or anything.
But, but that's a greatquestion.
Um, I don't, I can't come upwith one right now that I'm
really intrigued with, exceptfor maybe commercial space
(29:48):
travel.
And then maybe.
Um, I am a little bit intriguedthere.
On my other wall, not aspaceship, because I am
intrigued that the fact of, um,us commercializing that, that it
makes sense.
Kevin Zalaznik (30:00):
All right.
All right.
Yeah, I think, um, well, I thinkit's really anything where, uh,
when you're in it every day,it's, it's like you said, you
have blinders on, you're sofocused in on it, but I think
there are times where, like,I'll find myself anyways, where
it's like, okay, I know how thisoperation works or.
You know, I, I know how, um, Iknow a little bit of the recipe.
(30:24):
So like, I don't know, I'm goingto target or something and you
see like nuances, you know,like, Oh, I see how they
incorporated that actually, likewe're doing that too, but a
little bit differently.
Chris Michael (30:33):
So I'll tell you this one, you're right now that
I got a second, the airlineindustry in aviation in general
and how safe that is.
Uh, we had the company read abook called the checklist
manifesto last year.
Um, and the fact that theaviation over, uh, you know,
these last decades have beenable to become the safest form
of transportation throughchecklist improvements and
(30:54):
maintenance.
And I tell our guys all the timethis, when we talk about...
On a retail, we tell ourmanagers you have to learn how
to land the plane and be able todo that on the mechanics of it.
The pilot does not know how tofix the jet engine, but whatever
goes wrong with that jet engine,he does know how to land the
plane.
On the other side, the mechanicdoes know how to do that, and he
can understand the machine.
(31:15):
There's predictability in it.
And the failure and they knowthat, hey, we, if we do all
these things right, I think it'sthe same as a chain roller
bearing all the things in a carwash, right?
If you put that into yourfinancial model and you feel
good about it and know you won'trun the same exact, even, but
we're really talking about twoto three points different PM.
(31:35):
Here, you can have a car washthat's open 365.
That's consistent there.
And so that is an industry welook at, um, as a bellwether
flying a plate.
And as many planes are outthere, and none of them falling
out of the sky, knock on wood,you know, it's very safe.
They can do it.
It's harder than us.
(31:56):
We can do it.
It's more predictable.
We're on the ground.
This thing is there.
Now you have to have thefinancial discipline to invest
in it.
Airlines have a better financialdiscipline because your life's
on the line, versus in the carwash.
But with that same mentality,practice, procedure, checklist,
um, and a desire to, you know,take good after action.
(32:16):
And we're a big after action.
The reason they put a black boxon a plane is so that they can
have an after action.
They don't record anything thatgoes well, they record it when
it goes bad.
So we're very big on afteraction and trying to be
procedural on what, if somethinggoes wrong, why did it go wrong?
And if we have premature failurein anybody's equipment, um, how
(32:39):
do, how do we get better atthat?
You know.
It's all right.
So
Kevin Zalaznik (32:43):
I work in marketing and just, uh, yeah.
As much as I think thatmarketing has, you know, is, is
a, it is an important part, butit's not the important part,
right?
Uh, I feel like, uh, car washoperators or car washes are so
operation driven, right?
It's like flying that plane,right?
You could have the bestmarketing, but, you know, if
(33:05):
you're on time, you don't delayflights.
You land safely like that.
Those are the things that aregoing to make the biggest
difference.
So I like that analogy of like,yeah, like we are, these car
washes are like an airline,right?
And downtime is, is notsomething that you want at all.
Um, and like you said, like thepilots, like they're not the
ones fixing the plane.
(33:26):
But they know how to safelysteer it, and they know how to
identify the problem and thencommunicate that to, uh, who
does fix it.
So, uh, very cool.
So, uh, I assume, you know,you're looking at, you've
brought up space and, andairplanes.
You're, I take it you're kind oflike, you're, are you an
aviation guy?
Chris Michael (33:46):
Um, I am, my, my whole entire family was, um, I
am not, we've been blessed to beable to have aviation, private
aviation in our business, um,and so that is, um, I'm a little
bit enthralled with it, but mydad was a pilot, both of my
uncles were pilots, uh, justprivate pilots, and so, yeah,
we're up in that level ofdiscipline.
(34:08):
Yeah, so,
Kevin Zalaznik (34:09):
um, we touched on a little bit, uh, about like
the future in the industry.
Where do you see technology, um,uh, and its role?
I know it's a big part of ourtunnels already, but like every
day, it just gets more and moreimportant.
Where, where do you, what do yousee, um, Trending technology
(34:29):
wise in our
Chris Michael (34:30):
tunnels?
I think it's your point is inthe tunnel.
Uh, I think it's AI on machinelearning and vibrations and
stuff, knowing when motorbearings and other things are,
are coming out.
Right.
Um, those.
Little widgets are becomingcheaper and cheaper for us to
put in place and be a little bitbetter on the predictive there
(34:50):
Uh, outside of the tunnel, Ithink, you know, you're starting
to see some pretty good leapsand bounds in the point of sale,
um, and really the, the datathat we're gathering off the
customer, uh, customerretention, you see third parties
that have been able to piggybackon, um, that I, I think you're
going to see a pretty bigrevolution there.
(35:11):
Um, on that, uh, truthfully, Ithink AI is going to come into,
um, play here.
Um, I think there's a, a, adecent chance that AI starts to,
uh, change prep and pre soak andsoap usage, um, sooner than
later.
(35:31):
That's not that hard to do.
Um, you know, you...
Cameras can look at cars andtell...
Tell a bunch, you know, if youwant it to, um, but don't think
again, the ROI on that, um,that'll be the driver of the
pace there.
(35:52):
Um, I think you're gonna, again,the battleground for the
customer right now is inside oroutside in the vacuum area.
Certain people are bringing thevacuums inside into a semi
conditioned environment.
Um, the, whether you're makingthat exclusive to a member or
not, I think is going to be adifferentiation of the brand.
(36:15):
To use an airline analogy,Southwest and Delta do it
different.
And, uh, that's their brandidentity, and I think you're
going to see a few brands startto identify.
There's, uh, um, some smallerregionals that do that as well,
with a, with a pretty goodsuccess there.
So, um, but I do think you'llstart to see some custom
abilities in AI and cameralearning to start to cut down.
(36:39):
So water usage, the way that wedo that and timing, um, and even
the prep because labor and theexpense there, there's some
things that I think, you know,that, that we're involved with.
Even that here in the new nearfuture sub five years more than
(37:00):
two, you're gonna start to seein the industry, um, be able to
really make a, a labor move.
For the industry and, and alittle bit more on soap cost
too, possibly.
Kevin Zalaznik (37:10):
So it's, uh, looking at your website, you
know, you go to the, um, AboutUs page and it's, you know, you
have your president, picture ofyour president, you have your
picture of your CEO, and rightnext to you is, um, Chief
Innovative Officer, right?
So, uh, I think that probablysays a lot about your company,
(37:32):
and I don't know the fullbackground, but You know, a lot
of times you might see a, A, C EO, C O O there, or c f O, but
innovation seems to be kind ofon the forefront of, of what
Chris Michael (37:43):
you guys are doing.
Yeah.
It kind of goes back to machineto market.
Um, you know, what do we need tochange to make sure that it,
that it's working in theenvironment?
Is it a current technology inthe space or do we need to help
develop it or where that is, Imean, that's where our two
companies.
You know, ended up partnering onthe RO and reclaim, um, you
(38:05):
know, we, we saw some needsthere on use of square footage
and buildings efficiencies, um,moving forward there that, that
we weren't satisfied and, andall the metrics that, that we
saw on the market and, um, Youknow, we still sell all the
reclaims and ROs as well becausewe just thought it was a part of
the segment of the market thatwas missing.
(38:27):
It wasn't that the currentthings weren't, um, supplying
it, uh, a good product.
It was just, there was part ofthe market that needed a
different product as well.
What's, uh, so
Kevin Zalaznik (38:37):
are you in your research development side of
things?
Are you guys...
Putting AI at the top of thatlist or near the top of that
list?
Chris Michael (38:45):
Um, there are some things with camera learning
and, and you, there's somecompanies out there and that are
doing it and there's just eveneasy reporting on where the
person is, right?
If the, are the employees beingefficient with their time?
It's not our technology, it'sout there, everybody can go buy
it and what have you.
(39:06):
But, add on to that, there areways that we know, um, that can
probably be, start to be alteredon a car.
And, um, selective prepping.
I think customers would be okaywith that, right?
We really, we started preppingcars before we had Unlimiteds.
That trend's continued for a lotof different reasons we don't
(39:27):
need to get into, but...
That trend could reverse, uh, tohelp throughput and labor into
the, to the model.
Um, I think the consumers would,are and would be receptive to an
AI.
Even if it's mainly marketing insome ways, but you know, we can
scan a car and say, hey, thisone needs prepped in the wheel
(39:48):
wells and other things likethat.
It's pretty easy for us to turnon a few other functions in
there and uh, make selectiveprepping, um, an easy
opportunity there, right?
Kevin Zalaznik (39:59):
I don't want to keep you too much longer, uh,
but I do ask all of our guests,uh, this question is, and this
is unrelated to the car washindustry, but we want to know
what you're streaming or you'rebinge watching.
And by we me.
Chris Michael (40:13):
Yeah, so that would be me and my wife, uh,
after the kids go down.
Uh, well, I'm here in Kansascity.
So we just did quarterback, uh,obviously with my homes, um,
being in there.
So we just got done with that.
Um, we are hard knocks.
Um, we, we do hard knocksquarterback and, um, my wife
(40:38):
likes like, I'm, I'm gonna screwthis up.
Uh, murder's in the building.
So I'm, I'm coached into thatonce a week.
I, I'm, I, it fine.
Sure.
You know, so whatever makes themhappy.
And watching
Kevin Zalaznik (40:52):
quarterbacks and I, the last episode I saw they
had, um, Mahomes was watchinggame film.
And he was making reads, like,as they were happening.
He was like, okay, this guy,like, cause he's doing this,
it's gonna open up all this,blah, blah, blah.
And it's just like, man, theseguys are so talented.
Especially him, I mean, he's,he's the best quarterback in the
(41:14):
league.
Just to see that work and theprep that goes into it.
It's, it's, it's phenomenal.
Uh, so congratulations to youguys.
You have a great football teamin the last couple of years for
sure.
Chris Michael (41:26):
Yeah, we've been blessed.
He's definitely been able tolead that through and Yeah.
One thing I took away from thatis the fact that his training is
metrics driven, so, and the waythat they're trying to do that
in time, you know, and just get,uh, some metrics on everything
that they're doing there and,and make training a
competitiveness againstyourself.
Kevin Zalaznik (41:45):
Yeah.
Awesome.
Chris, thank you so much foryour time.
I really appreciate it.
I know our, our audience willget a lot out of this
conversation and, uh, uh,hopefully, uh, maybe we'll have
you on, uh, down the roadsometime.
Chris Michael (41:58):
That'd be great.
Thanks.
All right.
Kevin Zalaznik (41:59):
Thanks so much.
Hey,
Kevin Zalaznik (00:11):
everyone.
Welcome back to the modern pod,modern car wash podcast.
I'm yours.
Kevin's elastic.
Normally I'm joined with ShaneGroff, but Shane is, we'll say
he's on assignment today.
Um, but we are excited that wehave Chris Michael from express
car wash on the show.
Chris.
Chris Michael (00:27):
Well, thanks for having me, Kevin.
Appreciate it.
Yeah.
Kevin Zalaznik (00:30):
I gotta, I gotta assume that you guys are, uh,
some of the busiest people inthe carwash industry, especially
given what express carwash does,uh, the last couple of years
with the growth of the industry.
Um, so yeah, how was your day
Chris Michael (00:44):
to day?
Well, our, uh, our day's goingpretty good.
Um, we're, we've got a lot ofteams throughout the country
moving and shaking.
And we're actually, uh, in thenext two weeks moving into a new
facility.
And so there's a bunch of hypearound the office and, uh,
things getting boxed up.
So it's an interesting time forus as we, as we expand to a new
(01:06):
facility.
Um, about 5X the square footageinto 100, 000 square feet new
offices to really help us on ournext leg in this, uh, Industry
growth cycle and also whereExpress Car Wash is going.
Awesome.
So,
Kevin Zalaznik (01:21):
uh, for those who don't know, uh, You hear
Express Car Wash.
Maybe you're maybe our audienceis thinking you're an operator,
but you're not an operator Whatis Express Car Wash exactly?
Well,
Chris Michael (01:33):
we were operators.
That's where our story began Uh,but when we say Express Car Wash
or EC, we're really talkingabout ExpressCarWash.
com um, and so we we started inthe operations owning and
operating Um, I came into theindustry a little over a decade
ago in the recession.
I bought my first car wash.
(01:53):
My family was in the carbusiness.
Uh, my grandfather's store backthere is an old Studebaker's
store.
Uh, we had car dealerships for along time and then my family
exited.
So I started washing cars at thedealerships and then I ended up
buying my first car wash in therecession.
Um, Scott Besch, my partner,helped me build my first tunnel.
We became like heart and mind,started expresscarwash.
(02:14):
com, express car wash equipment.
Because, um, uh, guys keptasking us to kind of help build
car washes, service car washes.
We thought if we could do one ortwo a year and have a couple of
service techs, that'd be great.
Um, that's grown into a, uh,large organization as of itself.
Uh, we've had, uh, multiplereli, uh, retail locations and
(02:36):
multiple brands.
But, uh, uh, today we haveexpress car wash, which is a,
uh, nationwide headed it tomultinational service
distribution.
Um, and so really a, uh, turnkeysolution and, and a flexible,
uh, solution for people where wework on all types of equipment,
(02:57):
um, and all types of washes,right?
So my first car wash was a selfserve, um, Hand bay, hand bay
automatics, build my firsttunnel.
We've owned, uh, operated andserviced just about any type of
machine that washes a car.
Kevin Zalaznik (03:13):
So like I said, uh, yeah, you're a pretty busy
guy.
As the company is.
Yeah.
Yeah.
It's funny when, uh, hearing yougo.
Through a new office.
So our office, Hoffman Car Wash,Hoffman Development, uh, pre
pandemic, we were like a can ofsardines, uh, above one of our
(03:35):
locations.
I mean, two, three to an office.
There were people in theclosets, essentially, like
Charity had worked on.
So, uh, Uh, it's, uh, and ourpresident always say it's good
to, it's good for, to work for acompany that's growing.
So, what's, uh, just walk it,the scope of Express Commerce.
So you're moving into a new, uh,a new office building.
(03:58):
Um, I'm assuming warehousing andall that fun stuff as well.
How many, so how many peoplewould you say kind of day to day
are in the same facility as you?
Chris Michael (04:09):
Yeah, so.
In office, there's only probably10 to 15 people in office every
day.
Monday through Saturday in thatfacility.
Um, the service techs installcrews come in and out, um,
deploy from there.
Most of our foreman live in theMidwest and deployed to the
(04:29):
coast.
Um, truck trailer, uh, just togive you a scope of, um, that
I've got, uh, I wrote it downearlier today.
I'm in, I had one in Minnesota.
I've got a team at Boise, I havea team in Louisiana right now.
And in Washington, D.
C.
So, almost to the extreme fourcorners.
(04:51):
Um, in some way right now that,that are out and about, um,
those will all deploy from, uh,Kansas City.
We're here in the Midwest.
That's, that's where we hub outof, but we service and install,
um, throughout the country and,and into Canada now, um, as
well.
Kevin Zalaznik (05:08):
So is it, uh, these guys are, they're deployed
or they're out there?
How much is it?
Uh, you know, I'm assumingthey're very good at their jobs,
but.
How often do you guys get throwna little wrench in the, uh, in
the operation?
You got to move fast or is itpretty smooth sailing at this
point?
Chris Michael (05:25):
No, I don't want to say it's smooth sailing.
Car wash is a complex machine.
It's done a little bitdifferent, uh, there's not two
car washes anywhere in thecountry that are exactly the
same for whatever reason, eveninside the same brand, same
equipment, um, you know, so you,in the same way that we help
people build a car wash fromground up or remodel, we're
always trying to match themachine to the market and the
(05:46):
profitability back to the P& L,and so each one of those have,
um, a little different, Um, uh,zest about the, and the way you
wash a car in Minnesota toTexas, to DC to, um, Boise,
Florida.
All those have a little bitdifferent nuances to'em that
you're, they're trying toaddress.
So, um, it's uh, it's always nota repeatable process.
(06:09):
We always consider ourselveskind of the hot rod, um, people
in the industry, right?
You can go buy a Ford, Chevy, orDodge off the lot.
They're all kind of the same,but if you want a Ford engine
and a, a Dodge transmission anda Chevy Interior, we're kind of
those guys.
We're also the guys to work onthat as well.
We understand the fundamentals,um, behind the equipment and,
(06:32):
and the goals that you're tryingto make.
So a guy that's, uh, trying toonly do 80,000 cars in, uh, a
year versus somebody that'strying to do 400,000, the
machine's gotta be different.
People have different capital,uh, that they want to deploy and
different, uh, expectations onthat and you, you got to make
the machine deliver on it.
So, at the end of the day.
Kevin Zalaznik (06:52):
You talked, you talked about, um, kind of going
into a market or, uh, workingwith a client.
You're trying to actually, likemost businesses, right?
You just want to maximizeprofits.
It's from maybe the last year ortwo, what do you feel are maybe
like the lowest hanging fruitfor people to, you know, or
maybe they're just missing theboat profitability wise?
Chris Michael (07:14):
Well, uh, one is remodeling current facilities
and in the landscape that we'regoing to, which is competitive,
not saturated, in my opinion,you want to be able to look at
what your current offering is.
Um, if you projected, you know,if your payments or your
projections are over 20 to 30years, there is going to have to
be capex at some time.
(07:34):
And you have a permanent pieceof property that has a customer
base right now.
You want to make sure thatyou're investing in that and and
those investments can be A fewhundred thousand dollars to a
few million of dollars in And aretrofit of the exterior, a
facelift there, and animprovement to the, uh, tunnel
(07:54):
as well.
If you look back, some of thesetunnels were built pre
membership and weren'tnecessarily designed to run the
volumes that we see today in theindustry wide, and so, um, that
is a good investment dollar.
We see a high return.
I have clients that have had twoand three X EBITDA movements
after they've invested in acurrent facility.
(08:17):
I know that the, the cool thingis to say we're building a new
car wash.
We're expanding.
We have two coming online nextyear.
Uh, I always say, well, what isyour current estate producing?
The best real estate may be whatyou already own and that you
maximize.
And so I think too many peopletoday don't look at what they
(08:37):
already own.
And it, because it's sexy tobuild new, right?
But uh, uh, there, there's awhole different aspect to where
Express Car Wash can come inand, and we really want to
understand what your goals are,what you have today.
And uh, baby, maybe the best 2million you can spend is not
buying a new piece of dirt.
It's investing in the 15, 10year old car wash that you got,
(09:01):
um, that, hey, let's put anotherpay station in, a cashier, hide
a little.
Um, exterior remodel, you know,prep, non prep.
We can look at that through yourthroughput, how your design is,
vacuum, vacuum amenities.
I feel like the number onebattleground in the industry
right now is in the vacuums.
And the amenities that we give,towels, air, canopies, all those
(09:25):
things that, you know, kind ofdifferentiate the tangible
customer experience there.
So, um, you ask what the, thebest dollars are to spend or
where that return is.
I think it's current ownerslooking at their current estate
and saying, um, what can I get?
Because you can spend 2 million.
You may be able to bump even as,you know, a few hundred thousand
(09:47):
dollars.
That's a great percentagereturn.
Um, some of these guys are, areseveral hundred thousand
dollars, right?
That's the best ROI you can getcurrently.
And it's less risky.
It's a known asset.
It's, it's not greenfield.
The other thing is permits areharder and harder every day,
right?
So let's maximize the permit youalready got.
Kevin Zalaznik (10:09):
Yeah, it's, it's kind of refreshing to hear you
say that because Hoffman CarWash over the last couple years,
uh, has done a lot ofremodeling, even though from the
outsider standpoint, probablydoesn't look that way.
Um, but our equipment is prettymuch online at all of our
locations.
It's the same experience, uh,from one location to the next.
(10:32):
And I think you were, youtouched to it on the vacuum.
So that was a big step for ustoo, is moving to a free vacuum
model.
We're not completely free vacseverywhere.
There are some issues we havewith sites and everything, but
kind of, yeah, looking at thoseareas to improve on 15, 20, 25
year old buildings, um, and thestores that we've, we have
(10:54):
taken.
Um, steps to remodel like wecertainly see growth in those
stores and some of these storeswere, you know, they're, they
were B C list stores for us andnow they're, they have moved up
a category for sure.
Uh, with that being said, we dohave a lot of shovels in the
ground and we're building andwe're expanding and.
(11:16):
Uh, I, I think one of the thingsthat we look at is, you know,
how to build a site cheaper, andI'm sure a lot of people, um,
you want to, uh, maybe not makesuch a, such a big investment,
but making sure that you're notlosing quality there.
Um, any insights there on, youknow, maybe.
How not to overspend on a newbuild.
Chris Michael (11:38):
Yeah, I think it's matching the machine to the
market.
I'll say that a lot because it'score philosophy of ours.
It depends upon your traffic,your demographics, your
competitive landscape thatyou're looking there.
Uh, the less is not always morein this scenario.
And so, um efficiency of thedollar spend is there.
Um to that, you know, if youwanted the word cheap Um, mostly
(12:05):
represents also the end outcomeis going to feel and look cheap
as well.
So uh, we just really want to goback to say, Oh, what's the
capital you want to deploy?
What's the return that you wantto get on that and, and make a
machine that will do that on thelocation.
I'll do that.
You're going to get your, uh,the best potential is going to
be in the ground day one.
(12:26):
And what we put on top of itjust needs to maximize that,
right?
If we go pick a corn seal.
We probably just need to do aself serve, uh, you know, and
spend 50, 000 on it, and it mayreturn great, right?
The farmers may stop there andwash their trucks, and that's a
pretty good return.
If we're downtown on 60, 000cars, and the permits are hard,
and we get one, Man, let's lookat putting a double title in
(12:49):
interior of action interiorexpress detailing those things,
right?
We were very blessed to be apart of you know, the flagship
Big indoor car wash we did allthat work to our knowledge.
It was the largest mostexpensive wash that was done In
the US up to date and but thedirt told you to do that the
demographics told you to do thatThis is it.
(13:10):
You can't build
Kevin Zalaznik (13:11):
that everywhere you have Almost like a formula
or starting point.
You're like, okay We're going tobuild it in this, this is the
location, or this is the, um,community that this person wants
to build in.
Right here, the demographics,here's the, the traffic count,
et cetera.
And you're like, okay, this getsa point.
(13:33):
This gets a point.
All right.
This equals, uh, you know, 160foot tunnel and these amenities,
or is it more, it's kind oflike.
Almost like you're using yourexperience and your gut.
Um, how do you approach that?
Chris Michael (13:46):
We have a lot of data, data to back things up,
but at the first, at thebeginning, and I think we're,
we're a little bit differenthere at expresses.
I'm going to get to, let's sayKevin, you're the person that
calls in and says I want to geta car wash or I want to build my
30th car wash.
Okay, what is your, yourpersonal or your organizational
goals with that and what's thewhy behind it?
(14:07):
And do you want to do more ofthe same or do you want to think
ahead and be a little bitdifferent to what that is?
Um, to, to state where thatcomes in and some real
practices, you know, we've gotclients that are infilling
current buildings because they,uh, maybe bought a hundred
thousand feet of an old grocerystore.
They subdivided it, put in somedifferent things.
(14:27):
The guy really wanted a moreconsistent return than him to
grow, you know, and do 20 carwashes.
That's different than the guythat's adding this 30th that
says we want to do pretty muchthe exact same that what we want
to do financially.
We want to be in a little bitcheaper.
Um, or, or more realistic, uh,to, to what we can do.
(14:49):
So, you know, that, that's adifferent story and because
they're different people at theend of the day.
And, you know, we're trying tofill people's, um, buckets up
with emotionally and the timethat they want to spend.
Some people want to be over onour operators.
You know, we do give theopportunity, you know, we'll
come in as an operator, um, evenif other people own the real
estate and the building andthose things there too.
(15:11):
So, uh, I can't give a directanswer because we're flexible.
We are the.
Flexible, um, people to it.
I'm, I'm never going to putanybody in a box to, to what to
be.
Kevin Zalaznik (15:24):
You talk about the data and just like the
conversations you probably haveon a day to day basis.
I mean, you're probably so intune to the industry and where
it's heading.
And, um, I'm, I'm curious, uh,when you look at maybe the last
10 years and look forward to thenext 10 years.
Uh, what has excited you themost about the industry, or
(15:45):
what's there to come that, um,you know, you're really looking
forward to?
Chris Michael (15:49):
Yeah, I'm gonna answer that in two different
ways.
What, what excites me and whatam I looking forward to are a
little bit different.
Um, what excites me is that theconsumer appetite, I still
think, is growing.
In the us um, some bit theconsumer appetite outside of the
US for express car washing inthat model and a membership
(16:11):
based, um, I think is massive.
It's extremely untappedglobally.
And so that, that does exciteme.
I think that's gonna be apotential there.
Um, inside the US I think it'sreally interesting if you look
at Driven and MR.
And the stock and, and how thepublic markets, which have
really driven the last.
Five years of PE getting in andREITs and how that's done and
(16:35):
now coming to an actual publicviewing of that.
And I think, I think those guysare top, top class.
I think, unfortunately, thepublic markets probably, um, are
just being a little tough onthem for, for where they're at
in the moment.
But I think that sets theprecedence in the future, right?
I think the days of selling 10times are gone.
(16:57):
Um, it was, it was a momentarydeal.
Uh, now, interest rates comeback down, that could change,
but obviously, uh, that wasreally full, fueled by
refinancing on the underlyingthat they were going to get the
depreciation under the currentprogram and money was cheap.
So that was fueling, uh, a bunchof the growth, that was the
(17:18):
financing that was doing thegrowth, it was the financing
that was getting the M& A done.
There, so both of those arechanging and I think changed
quicker than anybodyanticipated.
If we rolled the dial back ayear, there were still deals
getting done at a big, at a bigmultiple, right?
And Reach were, day of closing,picking up that stuff at, um,
(17:40):
really good cap rates.
That's not there today.
And so, I think where we'reheaded is a new world where I
see many mom and pops.
I will call Hoffman a mom andpop, I think they're best of
breed, you know, you guys are 40location, but you are privately
held on a, on a family, on alegacy there, right?
These people are re energized,right?
(18:01):
We all kind of feared, uh, someof the bigger, bigger people
coming in.
Um, I think there's great, bigoperators in there now too, but
they are having to change wherethey entered the market at, and
we're going to expand andfinance that expansion and
continue to hit metrics.
That day is over and it will bedifferent.
(18:27):
Uh, it won't be as good as wehope.
But it will be different.
With that being said, I thinkwhat you're going to see is a
reinvestment in currentfootprints.
to maximize return.
There's going to be many moreremodels of assets that are 10
plus years in age.
I mean, it is 2023, 24.
So somebody built a car washand, and there was a big, big
(18:47):
surge right before the recessionin 2000 to 10, bigger surge,
probably, you know, 15 to 20.
But you know, that entire partof the estate is going to have
to be retouched.
It's already permitted.
It's either financial on theground or paid off.
And I think you're going to seea A bunch put back into that
stuff there.
(19:08):
Uh, the novos are going to gettough.
Um, I, honestly, I think that'sgoing to be a pretty tough road
to hoe for the entire industry.
You know, talk a lot ofdifferent projections.
Is it going to fall off a cliff?
No, but the hockey stick momentof growth for everybody, I
believe, is over.
We'll build new stores as anindustry, express will, innovate
(19:31):
will, off my will.
We just won't do it at the samepace.
Um, but I do think consumerdemand kind of keeps going up
and we just, you know, focus onwhat we already got and doing a
little bit more out of what wecurrently have.
Kevin Zalaznik (19:45):
From like a consumer, consumer demand
standpoint, um, you know, youlook at all indications are like
we're heading towards some sortof recession, maybe early part
of next year, you know, in yourexperience going through one,
Um, you know, put 15 years ago,I guess, how, how best do you
(20:07):
think people can, our operatorscan prepare for some sort of
recession or is the industryrecession
Chris Michael (20:14):
proof?
It's not, nothing is recessionproof.
Um, it's not going to go off acliff.
It will expose those, right nowthose that are barely making it,
won't make it, which is 10 20percent of the industry, right?
But that's in, that's in everyother type of retail business.
You are gonna see, now, I'vealways believed, and I saw in
(20:36):
any other blips, We are anaffordable luxury, right?
We're talking about a 20 ticketto make, and at the end of the
day, you know, I really believe,you know, we're bringing self
esteem at the end of the day.
You feel better about your carwhen you leave, so it is a 20.
I call it a high.
We all feel good, right?
You put on fresh clothes orwhatever that is, beds made, the
same thing about cleaning yourcar, and we can do that in three
(20:58):
minutes for 20 or whatever.
So, um, you know, there may,there is going to be, we already
see it.
You can see it in the publicmarkets.
There's some menu trading.
Down, there's some changehappening there, um, retail
traffic will slough off a littlebit, 10, 20 percent, um,
membership conversions, probablyrates will go down a hair, but
(21:23):
at the end of the day, peoplewill still want their car
washed.
The units may go down, our grossaverage ticket may go up because
you will have some bit oftransfer from membership to, uh,
back to retail, which is ahigher gross per unit, but
obviously a less gross dollar onthe year.
Um, so we'll change again, youknow, as an industry, we'll,
(21:44):
we'll, we'll change, but it'snot detrimental.
It will call out some of the badactors in the industry, which it
needs to do.
And it will reset some people'sgrowth paths, um, to more
health, healthier.
So the good guys will still dogood and bad guys will board it
(22:06):
up and it'll be torn down or ifit, or if it's a good lot.
Permitted it'll still sell thedirt is still working a four
wall if it can be resurrectedwill be um, and we've had we've
had a couple really good successstories of of Uh guys buying
(22:26):
people that were going brokeDoing a little bit of work, a
little bit of CapEx to it, canbe a really good success story.
Kevin Zalaznik (22:32):
Yeah, I'm curious, uh, so for our
listeners, and they're like, ah,am I a good guy or am I a bad
guy?
How would you define, I mean, Iguess you'd probably know it
already, but I'm curious how
Chris Michael (22:42):
you'd define it.
If you got to ask yourself thatquestion.
Ha ha ha ha ha, you're a badguy?
I doubt Tom Oppmann askedhimself that question today.
Ha ha ha ha ha.
Uh, that's good.
Um, you know, it, it, Butthere's a lot of great guys
there and they're gonna changetheir business too, you know
stress will make you change ormake you break Yeah.
(23:04):
No.
Yeah.
Um.
Kevin Zalaznik (23:06):
I'm curious, I mean, uh, so we've been on for
just over 20 some minutes andthis whole time we've been
sitting here looking at, uh, uh,a giant ticket behind your head.
Oh yeah.
Yeah.
I'm
Chris Michael (23:17):
curious what the story is.
Yeah.
So, uh, the story is we all gotone life to live.
We got an expiration every dayis precious to us.
You know, um, you know, I'vebeen very blessed to be raised
in a family that, that brought agreat faith, Christian faith to
me and, um, you know, I don'thave any fear.
I believe in Lord, my savior,and so I'm going to heaven.
(23:37):
So, I always want to use my onelife to kind of bring, um,
positivity, joy to everybodyelse in life, and I want to walk
in my office every day andremember, I don't get a reset,
this day is precious.
Um, you know, I personally haveexperienced loss in my life, um,
at a, at a momentary notice and,um, you know, I just need to
(23:57):
bring that positive attitude toeverybody in our organization
and everybody that would goaround.
And then also, I'll tell you thetruth and it sounds a little
corny, but I know that ourorganization is bringing today,
um, boy, I should do the number,but we talked about it in the
past, you know, we're going tomake a million people happy this
year out of car washes we builtor more, you know, that's a,
(24:19):
that's a roundup.
You'll so many.
You know, and and we arebuilding a machine that brings
good self esteem to people andso, you know Know how hard the
day is and you know, I got guysin a hundred and degree heat
blowing out a conveyor today andI mean that's hard work and And
I got it.
I got to make sure that onetheir families are taken care of
(24:41):
They're putting in the time tomake sure that that later on
they can give it back to theirloved ones too.
But yeah, just it's a reminderevery day that I come in.
Um, we've got one life, noresets on it, no reset on the
day.
And um, how do I put people in agreat position to be successful,
whether that's inside of ourcompany or they want to be in
the car wash industry.
(25:02):
Um, that's what it's about, man.
Yeah.
Thanks for that.
It's a
Kevin Zalaznik (25:07):
great reminder, right?
Like see that every day.
And I think what's remarkablethe way you said was You know,
uh, and I, I'm hoping ouraudience is more geared towards
the operator and, you know,they're running their
businesses, but I think there'scrossover in the fact of, you
know, your team is out there,you're building these car
(25:27):
washes, you're building, uh,something that, like you said,
it builds self esteem and makespeople feel good.
And how do you, how do youconvey that to your employees?
That all right?
Yeah.
It's, you know, I'm on aninstall in Dallas and it's 110
and the humidity's through theroof.
And, um, but at the end of theday, like long term like this,
(25:47):
what I'm working on is gonnahave, as, like you said, as
corny as it sounds like, isgonna have an impact on cel
Chris Michael (25:53):
day.
Well, we, we say it, we try tobelieve it.
Uh, some of the mottos that wehave, Around here and you know
everybody that comes to work forus We have initial one that
nathan kind of brought up and isuh, we do hard things on purpose
So don't show up here todaythinking that today is going to
be easy no matter what that is.
Um, Car washing is a complex youknow mechanical device that we
(26:17):
put retail customers thatThrough there.
You got a kid in the car seat.
You got a an an elderly personThere's there's a lot of
different things that are goingto go through your machine So
this is going to be hard It's acaustic environment with 180
volts and hydraulic pressure andair and systems and like complex
electronics So and point ofsales that want to integrate,
(26:41):
you know to different things socome to work prepare to be
challenged but at the end of theday You're, you're making
somebody feel good about theirnumber one publicly viewed
asset.
So whether they rent it, leaseit, whether it's 20 years old or
right, that's your car that youtake through there and you need
to feel good about it, uh, it,and when it's clean, no matter
(27:04):
what it looks like, an oldjalopy or whatever, a brand new.
You know, um, beautiful car it,you got to feel good about it
and you will if it comes outclean, shiny and, and, and dry
at the end.
So that's a machine that you'rebuilding today.
Kevin Zalaznik (27:18):
And you've said a few times about, you know, you
guys do hard things like onpurpose, you're, you're out
there doing hard things.
Yeah.
Has that been, um, kind of theway you guys have steered the
ship or is it just something,you know, from day one?
Uh, we found ourselves in thesedifficult situations and we're
not going
Chris Michael (27:36):
to shy away from it.
I think Scott and I have been invery entrepreneurial, um, and
thought that there wasn't aproblem that we couldn't come up
with a solution with.
And early on, there was someenvironments like in, um, North
Dakota that, you know, negative40, how do you wash a car there?
Um, even some of the things thatwe did with, um, Flagship
(27:59):
internal belts, bringing them inand the biggest, you know, car
wash in the U.
S.
square footage and I know thatwas at that time and We knew
that we've always had goodpeople around us I'm very proud
to say that the first employeeScott and I hired he's still
with us today He's probably onthe road right now somewhere in
(28:20):
Minnesota Fixing hard problems,and we try to make sure it's a
good work life balance,people's, um, cups are filled
with that.
Then we can go tackle the hardmechanical problems and know
that, you know, you are going tobattle with somebody to do that.
And, um, at the end of the day,we'll, we don't try to have an
(28:43):
ego when we go into it and tellyou that, um, you have to do it
this way.
There are many ways to wash acar, many ways.
And what I've told everybodythis whole time is, and when
we've been in retail and we soldand bought and what have you,
nobody has got a higher multipleor a lower multiple because the
equipment that is in there, thattunnel, and they got to keep
(29:06):
that in mind, right?
So we can be emotional to, tomaybe this works better than
that.
But at the end of the day, it isa tool to make money for you and
your family and your company.
and bring a clean car to theclient.
And it needs, you know, that,that's what it
Kevin Zalaznik (29:21):
is.
Are there any other industriesthat maybe you draw inspiration
from or you're
Chris Michael (29:26):
intrigued by?
You know what, I think I gotblinders on every day.
Uh, my wife would tell me, well,I don't, I don't, I'm not very
good.
I'm not good on, uh, socialmedia or anything.
But, but that's a greatquestion.
Um, I don't, I can't come upwith one right now that I'm
really intrigued with, exceptfor maybe commercial space
(29:48):
travel.
And then maybe.
Um, I am a little bit intriguedthere.
On my other wall, not aspaceship, because I am
intrigued that the fact of, um,us commercializing that, that it
makes sense.
Kevin Zalaznik (30:00):
All right.
All right.
Yeah, I think, um, well, I thinkit's really anything where, uh,
when you're in it every day,it's, it's like you said, you
have blinders on, you're sofocused in on it, but I think
there are times where, like,I'll find myself anyways, where
it's like, okay, I know how thisoperation works or.
You know, I, I know how, um, Iknow a little bit of the recipe.
(30:24):
So like, I don't know, I'm goingto target or something and you
see like nuances, you know,like, Oh, I see how they
incorporated that actually, likewe're doing that too, but a
little bit differently.
Chris Michael (30:33):
So I'll tell you this one, you're right now that
I got a second, the airlineindustry in aviation in general
and how safe that is.
Uh, we had the company read abook called the checklist
manifesto last year.
Um, and the fact that theaviation over, uh, you know,
these last decades have beenable to become the safest form
of transportation throughchecklist improvements and
(30:54):
maintenance.
And I tell our guys all the timethis, when we talk about...
On a retail, we tell ourmanagers you have to learn how
to land the plane and be able todo that on the mechanics of it.
The pilot does not know how tofix the jet engine, but whatever
goes wrong with that jet engine,he does know how to land the
plane.
On the other side, the mechanicdoes know how to do that, and he
can understand the machine.
(31:15):
There's predictability in it.
And the failure and they knowthat, hey, we, if we do all
these things right, I think it'sthe same as a chain roller
bearing all the things in a carwash, right?
If you put that into yourfinancial model and you feel
good about it and know you won'trun the same exact, even, but
we're really talking about twoto three points different PM.
(31:35):
Here, you can have a car washthat's open 365.
That's consistent there.
And so that is an industry welook at, um, as a bellwether
flying a plate.
And as many planes are outthere, and none of them falling
out of the sky, knock on wood,you know, it's very safe.
They can do it.
It's harder than us.
(31:56):
We can do it.
It's more predictable.
We're on the ground.
This thing is there.
Now you have to have thefinancial discipline to invest
in it.
Airlines have a better financialdiscipline because your life's
on the line, versus in the carwash.
But with that same mentality,practice, procedure, checklist,
um, and a desire to, you know,take good after action.
(32:16):
And we're a big after action.
The reason they put a black boxon a plane is so that they can
have an after action.
They don't record anything thatgoes well, they record it when
it goes bad.
So we're very big on afteraction and trying to be
procedural on what, if somethinggoes wrong, why did it go wrong?
And if we have premature failurein anybody's equipment, um, how
(32:39):
do, how do we get better atthat?
You know.
It's all right.
So
Kevin Zalaznik (32:43):
I work in marketing and just, uh, yeah.
As much as I think thatmarketing has, you know, is, is
a, it is an important part, butit's not the important part,
right?
Uh, I feel like, uh, car washoperators or car washes are so
operation driven, right?
It's like flying that plane,right?
You could have the bestmarketing, but, you know, if
(33:05):
you're on time, you don't delayflights.
You land safely like that.
Those are the things that aregoing to make the biggest
difference.
So I like that analogy of like,yeah, like we are, these car
washes are like an airline,right?
And downtime is, is notsomething that you want at all.
Um, and like you said, like thepilots, like they're not the
ones fixing the plane.
(33:26):
But they know how to safelysteer it, and they know how to
identify the problem and thencommunicate that to, uh, who
does fix it.
So, uh, very cool.
So, uh, I assume, you know,you're looking at, you've
brought up space and, andairplanes.
You're, I take it you're kind oflike, you're, are you an
aviation guy?
Chris Michael (33:46):
Um, I am, my, my whole entire family was, um, I
am not, we've been blessed to beable to have aviation, private
aviation in our business, um,and so that is, um, I'm a little
bit enthralled with it, but mydad was a pilot, both of my
uncles were pilots, uh, justprivate pilots, and so, yeah,
we're up in that level ofdiscipline.
(34:08):
Yeah, so,
Kevin Zalaznik (34:09):
um, we touched on a little bit, uh, about like
the future in the industry.
Where do you see technology, um,uh, and its role?
I know it's a big part of ourtunnels already, but like every
day, it just gets more and moreimportant.
Where, where do you, what do yousee, um, Trending technology
(34:29):
wise in our
Chris Michael (34:30):
tunnels?
I think it's your point is inthe tunnel.
Uh, I think it's AI on machinelearning and vibrations and
stuff, knowing when motorbearings and other things are,
are coming out.
Right.
Um, those.
Little widgets are becomingcheaper and cheaper for us to
put in place and be a little bitbetter on the predictive there
(34:50):
Uh, outside of the tunnel, Ithink, you know, you're starting
to see some pretty good leapsand bounds in the point of sale,
um, and really the, the datathat we're gathering off the
customer, uh, customerretention, you see third parties
that have been able to piggybackon, um, that I, I think you're
going to see a pretty bigrevolution there.
(35:11):
Um, on that, uh, truthfully, Ithink AI is going to come into,
um, play here.
Um, I think there's a, a, adecent chance that AI starts to,
uh, change prep and pre soak andsoap usage, um, sooner than
later.
(35:31):
That's not that hard to do.
Um, you know, you...
Cameras can look at cars andtell...
Tell a bunch, you know, if youwant it to, um, but don't think
again, the ROI on that, um,that'll be the driver of the
pace there.
(35:52):
Um, I think you're gonna, again,the battleground for the
customer right now is inside oroutside in the vacuum area.
Certain people are bringing thevacuums inside into a semi
conditioned environment.
Um, the, whether you're makingthat exclusive to a member or
not, I think is going to be adifferentiation of the brand.
(36:15):
To use an airline analogy,Southwest and Delta do it
different.
And, uh, that's their brandidentity, and I think you're
going to see a few brands startto identify.
There's, uh, um, some smallerregionals that do that as well,
with a, with a pretty goodsuccess there.
So, um, but I do think you'llstart to see some custom
abilities in AI and cameralearning to start to cut down.
(36:39):
So water usage, the way that wedo that and timing, um, and even
the prep because labor and theexpense there, there's some
things that I think, you know,that, that we're involved with.
Even that here in the new nearfuture sub five years more than
(37:00):
two, you're gonna start to seein the industry, um, be able to
really make a, a labor move.
For the industry and, and alittle bit more on soap cost
too, possibly.
Kevin Zalaznik (37:10):
So it's, uh, looking at your website, you
know, you go to the, um, AboutUs page and it's, you know, you
have your president, picture ofyour president, you have your
picture of your CEO, and rightnext to you is, um, Chief
Innovative Officer, right?
So, uh, I think that probablysays a lot about your company,
(37:32):
and I don't know the fullbackground, but You know, a lot
of times you might see a, A, C EO, C O O there, or c f O, but
innovation seems to be kind ofon the forefront of, of what
Chris Michael (37:43):
you guys are doing.
Yeah.
It kind of goes back to machineto market.
Um, you know, what do we need tochange to make sure that it,
that it's working in theenvironment?
Is it a current technology inthe space or do we need to help
develop it or where that is, Imean, that's where our two
companies.
You know, ended up partnering onthe RO and reclaim, um, you
(38:05):
know, we, we saw some needsthere on use of square footage
and buildings efficiencies, um,moving forward there that, that
we weren't satisfied and, andall the metrics that, that we
saw on the market and, um, Youknow, we still sell all the
reclaims and ROs as well becausewe just thought it was a part of
the segment of the market thatwas missing.
(38:27):
It wasn't that the currentthings weren't, um, supplying
it, uh, a good product.
It was just, there was part ofthe market that needed a
different product as well.
What's, uh, so
Kevin Zalaznik (38:37):
are you in your research development side of
things?
Are you guys...
Putting AI at the top of thatlist or near the top of that
list?
Chris Michael (38:45):
Um, there are some things with camera learning
and, and you, there's somecompanies out there and that are
doing it and there's just eveneasy reporting on where the
person is, right?
If the, are the employees beingefficient with their time?
It's not our technology, it'sout there, everybody can go buy
it and what have you.
(39:06):
But, add on to that, there areways that we know, um, that can
probably be, start to be alteredon a car.
And, um, selective prepping.
I think customers would be okaywith that, right?
We really, we started preppingcars before we had Unlimiteds.
That trend's continued for a lotof different reasons we don't
(39:27):
need to get into, but...
That trend could reverse, uh, tohelp throughput and labor into
the, to the model.
Um, I think the consumers would,are and would be receptive to an
AI.
Even if it's mainly marketing insome ways, but you know, we can
scan a car and say, hey, thisone needs prepped in the wheel
(39:48):
wells and other things likethat.
It's pretty easy for us to turnon a few other functions in
there and uh, make selectiveprepping, um, an easy
opportunity there, right?
Kevin Zalaznik (39:59):
I don't want to keep you too much longer, uh,
but I do ask all of our guests,uh, this question is, and this
is unrelated to the car washindustry, but we want to know
what you're streaming or you'rebinge watching.
And by we me.
Chris Michael (40:13):
Yeah, so that would be me and my wife, uh,
after the kids go down.
Uh, well, I'm here in Kansascity.
So we just did quarterback, uh,obviously with my homes, um,
being in there.
So we just got done with that.
Um, we are hard knocks.
Um, we, we do hard knocksquarterback and, um, my wife
(40:38):
likes like, I'm, I'm gonna screwthis up.
Uh, murder's in the building.
So I'm, I'm coached into thatonce a week.
I, I'm, I, it fine.
Sure.
You know, so whatever makes themhappy.
And watching
Kevin Zalaznik (40:52):
quarterbacks and I, the last episode I saw they
had, um, Mahomes was watchinggame film.
And he was making reads, like,as they were happening.
He was like, okay, this guy,like, cause he's doing this,
it's gonna open up all this,blah, blah, blah.
And it's just like, man, theseguys are so talented.
Especially him, I mean, he's,he's the best quarterback in the
(41:14):
league.
Just to see that work and theprep that goes into it.
It's, it's, it's phenomenal.
Uh, so congratulations to youguys.
You have a great football teamin the last couple of years for
sure.
Chris Michael (41:26):
Yeah, we've been blessed.
He's definitely been able tolead that through and Yeah.
One thing I took away from thatis the fact that his training is
metrics driven, so, and the waythat they're trying to do that
in time, you know, and just get,uh, some metrics on everything
that they're doing there and,and make training a
competitiveness againstyourself.
Kevin Zalaznik (41:45):
Yeah.
Awesome.
Chris, thank you so much foryour time.
I really appreciate it.
I know our, our audience willget a lot out of this
conversation and, uh, uh,hopefully, uh, maybe we'll have
you on, uh, down the roadsometime.
Chris Michael (41:58):
That'd be great.
Thanks.
All right.
Kevin Zalaznik (41:59):
Thanks so much.
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