Join host JT Thomson as he introduces you to the brand new business podcast, Scaling Car Washes, that is all about how to Build, Scale, and ultimately Exit your car wash business. JT shares about his experiences in the car wash industry over the last twenty years leading up to the creation of the podcast. He talks about what he has learned and what he plans to cover with the industry experts who will be guests on the show. Join us again in two weeks for JT’s first discussion with a guest expert.
“But my goal with this podcast is to really help owner operators or people even investing coming into the carwash. How do you build out a scalable unit? The thesis is build, scale, exit. And some people look at the exit from the beginning. Some people just say, “I really want to build a business that I can own and operate,” and I certainly understand that and respect that. So, the goal here is to bring in some experts from all different functions of operating a business, and hopefully we’ll have some fun along the way and share a lot of great ideas and some insights.“
~JT Thomson, host of Scaling Car Washes
Interested but don’t have time to listen? Read what’s in the first Scaling Car Washes episode right here!
JT Thomson 0:00
Welcome to Scaling Car Washes. I’m your host, JT Thompson. I built my first car wash in 2002, and since then I’ve been involved at every level of the carwash ownership experience. I’ve built and sold my own car washes and as a Sonny’s distributor, I’ve helped other investors build and operate their car washes. Along the way, I’ve been a multi-unit restaurant owner with 23 units in five states. We’ll talk to experts in the carwash industry and related industries that can share insight information that will help you build, scale, and ultimately exit your multi-unit carwash platform.
JT Thomson 0:31
Hello, everyone, and welcome to the podcast show Scaling Car Washes. My name is JT Thompson, and I’m your host. This is the first episode of the podcast series that I’m putting together, and I’m really excited about this. This is a project that I’ve been thinking about for a while, and I’ve got a little time this summer to start this, and I’m really excited about blowing this thing out.
JT Thomson 0:51
So, just to give you a little bit of background on what the purpose of this podcast is, and really kind of what the thesis is of getting this started, I wanted to put something together that can help owners transition from a Mom and Pop type operation to more of a scalable multi-unit platform. My plan is to bring on guests who have a lot of expertise in areas such as finance and capitalization, HR, legal, operations, customer service, etc. And when you’re going from a Mom and Pop type operation to really a dispersed multi-unit platform that’s got locations in multiple cities, multiple states, how you manage that business is really dramatically different. And so what I hope to do is bring in experts that can bring in expertise in those areas. So I mean, just think about — take HR, right? Maybe you have two or three units right now, and you’ve got a dozen or a couple dozen employees, three dozen employees, and growing that business to where you have 200, 300, or 400 employees, and how you manage them is really dramatically different.
JT Thomson 1:59
And so what I want to do is have people that can come on and share ideas or certain expertise in those areas, that will be a benefit to owner operators, and really help them kind of move their operations to the next level. And when you look at a business, you maximize the value of that business when it is not reliant on one or two people, right? Because somebody’s going to come in, and if you’ve got an exit plan, the usual plan for the buyer is to take it over and to be able to run it without the owner operator. And the value of that business, if it’s a standalone business, it’s much easier to maximize that when it is a true standalone business that is not wholly reliant on that single owner operator to really make all the decisions. So you really want to kind of build out your infrastructure and your platform in a way that the business can scale and is not reliant on you as the owner operator.
JT Thomson 3:04
So that’s just a mindset, and there’s a lot I can tell you as an entrepreneur. And I’ve grown businesses. I had several car washes that I sold to Mr. Carwash. I had restaurants; I owned 23 restaurants in six different states. So just how you manage those restaurants, or really any retail operation when you’re that dispersed, really takes a much different mindset in terms of scaling the business. So the goal here is to just create an ongoing conversation with people that can bring in ideas and share really valuable insight on things that can help the owner operator. And I’ve learned a lot of lessons over the last 20 years. Hopefully I can share some of those from a personal standpoint. I’ve learned a lot of expensive lessons along the way, and hopefully I can help some people avoid some pitfalls as well.
JT Thomson 3:52
Just to give you a little bit of my background, I got into the car wash business in 2002, really, by accident. I never planned to go into this business. Out of graduate school, I finished my MBA and went to work for a consulting firm, left there and started a software company and brought in big investors. We raised a ton of capital; UPS Capital was an investor, Credit Suisse First Boston, and a bunch of others. And we went through the internet bubble in 2000 when the market crashed, and we went through 9/11, and our investors thought it was a good time for us to look for a strategic buyer. So we put that business up for sale in 2002. And at that point, I knew I needed to do something different.
JT Thomson 4:37
And I had a really good friend of mine who owns some car washes in the Atlanta area and he was spending all of his time in the panhandle of Florida fishing, and so I thought I’m really in the wrong business. I need to look and see what he’s doing. So, I built my first carwash in 2002 and opened it in 2003. And we sold the software business and I stayed on for that. So the carwash business was kind of a side gig for me, kind of a side hustle. It was it was really a great opportunity. I built a self-serve carwash with three seltzer bays and two in-bay automatics in a really high end area of Atlanta called Bidings. It was a good opportunity for me to learn a little bit about the business. And back then the business was much, much different. You had self serve, you had in-bay automatics, and you had full serve. That was really the extent of the business. And about the time I was selling a business, you had some pioneers of the Express wash ; Benny’s and Googoo Car Wash was coming out. And so they were really expanding into a whole different area of car washing.
JT Thomson 4:37
And so, in 2004, I sold that carwash, and people love buying self-serve car washes, at least they did back in the day because they felt like they were all cash businesses, and they could hide money from the IRS. But you know, the reality is it’s not so much like that. But anyway, I got out of that business in Atlanta. We moved to Salt Lake City; we had a little bit of flexibility and wanted to get back to the mountains, so I ended up opening an express wash in 2005 in the Salt Lake City Market. And it was really an eye-opening opportunity for me because at that point, the free vacuums were still a new concept. And so I built a big 200 foot tunnel, I built a lube on with it, which was a mistake. least in my mind. For me, it was not a good business decision. It was, it’s hard to run a lube as a one-off operator. So… A lot of people make a lot of money in the lube business, so I’m not knocking it. But for me, it was not something that I would ever get back into.
JT Thomson 6:42
When I did that wash, it was a car wash called Star Wash. We had the concept of an unlimited wash that we started in 2005. There was only a handful of people doing it at that time. And there was no technology to manage that business. And one of the things that I learned are that — it was really just a disaster — we had to put barcode stickers inside the door of a customer if they were a member, and then we had a barcode scanner. It is very much like the Hertz rental car agents where they had that hip pack with a printer and then a scanner; it was the same thing for us. So that technology was just not really meant for a seamless, unlimited wash program. In fact, the credit cards… When we sign somebody up, we would manually enter their credit card into a spreadsheet, and then we’d put the anniversary date of the date that they started. And I had my manager every morning get up and he would go and actually type in the credit cards to run them for that day, and then you obviously would hope that they would clear. And we all know even today you have, you know, 10 to 12% credit cards fail. We had that same issue. And so the problem with it then was we just didn’t have the technology to manage it, so it was just a very manual process back then.
JT Thomson 8:03
But I knew back then that car washing was a fixed cost business model. And it’s very different how you run a fixed cost model versus a variable cost model, and so I just wanted to get that revenue in the door early on. A lot of people back then just thought I was nuts. You know, you had a lot of people going into the $3 carwash. There was a lot of lower price car washing models, but nobody wanted to go into the unlimited, and the technology, again, was not there to support it. So it was a tough deal for us. We had 300 members, 400 members, I think, when I sold that business to Mr. Carwash and just managing those three or 400 members was just… we had the tiger by the tail.
JT Thomson 8:44
I ended up opening a second wash in 2011. It was a big double tunnel. We had 255 foot conveyors, we had five entry unit pay stations, we had 40 something vacuums. So it was a big Taj Mahal type carwash. And ultimately, I sold both of those to Mr. Carwash and during that period, I opened up a Sonny’s distributorship. Well, actually we did in-bay automatics and tunnels. And really the purpose there was to vertically integrate. I knew that there were huge margins on the chemical side of the business. And then with only a couple of washes, it was hard to support a real service team and be able to get an inventory of parts that was cost effective. So I went into the distributorship as a means of kind of augmenting my costs on the assets, the operating assets, of the two car washes that I had, and ultimately, I sold the car washes to Mr. Carwash and kept the distributorship for a couple extra years and then ultimately sold that I think in 2015/ 2016.
JT Thomson 9:45
And after that, I started working with Mr. Carwash back in 2016/2017. They were looking at stepping into the development side to start building washes because they were… Their strategy up to that point was 100% consolidation through acquisition. And I had a great relationship with Ron Peterson, one of the founders of Mr. Carwash and talked with him about, you know, helping them on the development side. And so I started working with Darrence Skarecky, who was their CFO and then Dave Hale who is just a legend in the car wash business. So, I got to work with those guys.
JT Thomson 10:21
Darren subsequently left Mr. as a CFO. And in 2018, he approached me about launching our own carwash platform, and I was excited to have the opportunity to work with him. So we launched Go Carwash backed by Imperial Capital out of Toronto, Canada. And that was a great experience. We launched that in January of 2019. I left there in September of 2020. And I think at that point, we had 30 something units that were open or a handful of those were in development. So we acquired a lot of car washes in a short amount of time and had a great time doing it. For some personal reasons, I left to go run a business called My Wash out of Chattanooga. My dad had recently been diagnosed with Parkinson’s, and he’s in Atlanta. So this was a chance for me to get back closer family and see him and then this was a chance to take over the CEO role for a development company… really not focusing on the acquisition side, but more on the development. And so, I did that from September of 2020, and then this summer, I’ve left there and in September, I’m gonna take a little bit time off this summer and kick off this podcast, and then in September, Darren and I are going to get together; we’ve got a few opportunities that we’re looking at. So I’m really excited to get back in the game.
JT Thomson 11:32
But my goal with this podcast is to really help, again, owner operators or people even investing coming into the carwash, you know. How do you build out a a scalable unit? So I mean, I think kind of the thesis is build, scale, exit. And some people look at the exit from the beginning. Some people just say, “I really want to build a business that I can own and operate,” and I certainly understand that and respect that. So, you know, the goal here, again, is to bring in some experts from all different functions of operating a business, and hopefully we’ll have some fun along the way and share a lot of great ideas and some insights.
JT Thomson 12:09
So thanks for listening. I hope you will enjoy this podcast and look forward to getting back to everybody on a really… I think the plan is on a bi-monthly basis. So we’re going to, I think on the first and the third Wednesday of every month, release a new episode. So I’m JT Thompson. I’m your host. This is scaling carwashes.
Thanks for listening to today’s episode of the scaling carwashes podcast. Please subscribe to stay current with all of our episodes coming up. Thanks, and I’m JT Thompson, your host.