ِ A Brilliant Biz Plan

 

I just heard about a company making close to $100M/yr washing cars.
I was fascinated so I spent the last 3 hours digging into the business.

Here’s what I learned:
The company is called Mammoth Holdings. They own nearly 100 car washes in the USA in places like Knoxville, Miami, and Utah Valley. And growing fast.
Mammoth is one of many firms that are rolling up car washes, with PE backing.
And it makes a lot of sense. Car washes can make $1M - $2.5M per year at a hefty profit. Especially if you know how to run them.

Here's the Mammoth playbook:

1/ Buy the biggest car wash in a small market
Mammoth doesn’t actually build car washes. To enter a region, they acquire a popular brand with a few locations. This acts as their car wash platform for the market. They keep the name and continue picking off smaller players in that same market, rebranding them to match the platform. Before long, they are a dominant player.

2/ Implement a subscription model
This is the best part. Most of us pay for a car wash each time we go. But that can lead to a crummy business with spotty revenues. What happens when it rains and no one needs a wash? So Mammoth introduced a membership model. They charge $18 - $35 / month for unlimited washes. Each tier comes with its own perks like waxing and tire shining.
Get this – 60% of the company’s revenue is recurring! This makes a lumpy revenue stream much more smooth and consistent.

3/ Put lots of automation in place
Once you get a car wash subscription, members get a radio-frequency identification tag to put in your windshield. The RFI tag tells the wash which package you have, chemicals are mixed automatically, and you drive right in. With this automation, a typical car wash can operate with just 2 employees. Huge boost to the bottom line.

4/ Acquire smart and finance well
Mammoth buys a mix of dominant car washes and smaller ones, paying higher and lower multiples for each, respectively. Then they will sell the real estate and rent it back from the new owner. This lets them pull out a chunk of capital asap. There’s actually huge demand from real estate investors for the land that sits under car washes.

5/ Keep people and train them up
After an acquisition, Mammoth tries to retain existing employees. The company trains them on its playbook and promotes them from within. This streamlines talent acquisition and keeps employees on board for much longer. You can go from working in a single car wash to managing an entire territory.

6/ Optimize back office functions
As you would expect, the company centralizes tasks like hiring, training, customer service, payroll and accounting. This lets them run an efficient operation and cuts down on redundant costs big time.