How much money can I make from adding a fast lube to my wash? What does labor cost at a lube? What are the construction costs for a lube?
Wash operators often ask these and a host of other questions when considering whether or not to add a lube to their existing car wash.
We are going to cover as many answers to as many of those questions as possible in the next few paragraphs.
First lets quickly cover what benefits exist that might persuade wash owners to add a lube to their wash.
If you are looking to expand and add a lube you have no doubt already thought about the cross marketing possibilities. Wash and lube customers are very similar in their buying habits/preferences where their cars are involved. And in theory you will see this customer more often by offering additional services for their cars. Consumers universally have said they want one stop shopping; this includes a pharmacy at their neighborhood grocery store and a lube center at their car neighborhood car wash.
When you “build on” to an existing wash as opposed to building a whole new site you will take on less risk and lower your total cost to build the lube since you already own the land you are building it on. This lowers your break even point and therefore makes the upside better than a new build. And since you are zoned for car wash, the existing zoning will very likely allow for a fast lube with out special zoning permits.
Costs for the actual shell of a building will vary greatly depending on the part of the country you are and the type building you have planned. There are several places around the country that can be particularly expensive to build. Whether it is local building code requirements or covenants, local building inspectors seeing things a particular way, required union workers, limited building season etc, etc. there are lots of reasons but one reality, it simply costs more to build in some places than others. The construction cost of the building will run between $175,000 and $200,000 per bay. That is the cost of a typical lube including typical site work, paving and landscape. This does not however include the land purchase price. Keep in mind that if you want to build a Taj Mahal, that will be extra.
The building is of course not the only cost involved. As I mentioned you need to budget your land costs plus lube equipment, computer system, inventory and pre opening training costs.
The equipment will run roughly $20,000 per bay installed depending on the equipment package you choose. It is important not to cut corners in the equipment. Just as in the car wash the better the equipment the more you can save in man hours/labor costs and throughput of cars. The difference in transmission service machines might be $500 when buying the equipment new but the right machine will decrease average service time by 75%. The right transmission machine will also reduce training time, cost less to maintain and can eliminate damage claims. The same goes for coolant service machines. One might cost a bit more but it will help you in ways other machines simply cannot. The right machines do not COST you more money they MAKE you more money. So do your home work and look at several machines as objectively as possible and try your best to tune out the sales pitch you get from the person selling you the machine. In addition to service machines the rest of the equipment is comprised of cat walks, tanks, pumps, guns, consoles, pit covers, lifts for tire rotation, compressor, filter crusher, hand tools, tool boards, specialty hand tools, computer, etc, etc.
I consider a good lube computer as important as any hand tool at a fast lube and as necessary as a filter wrench. Computers range in price and believe me when I say, “you get what you pay for.” Software packages start at under $4000 but you provide hardware. Complete packages, that is hardware and software both start at around $8000 and go up from there. Everyone benefits from a good lube computer. The lube manager and technicians enjoy an easier/faster service procedure because of computer and the reports a good lube computer produce are absolutely vital to the lube owner. A note for car wash owners, it is generally best to stick to computer companies that specialize in lube software instead of simply adding onto the car wash software. Some car wash software companies have good lube software but that is the exception rather than the rule. And yes, you can service cars with out a computer just as you can run a tunnel car wash without a computer, but do you really want to deal with that!? The cost of the computer is quickly paid for in speed of service, inventory management and tighter financial controls it encourages. A good computer will provide you with solid inventory control.
Besides being a necessary tool for your lube techs, your customers expect computerized records and detailed information on their cars. The computer even affords you an air of professionalism as well. Not many legitimate businesses exist these days that do not use computers in some way. Adding a computer will also assist you in establishing a healthy ticket average. The computer you choose will have automotive manuals and you current/needed inventory built right in to the database. Because you have all this information at your fingertips, you are better prepared to present necessary and profitable services to your customer.
Probably the biggest distinction between wash and lube at an operational level that car wash operators mention that is different when they add a lube is the inventory. Inventory at a car wash is relatively simple in most cases. Car wash chemicals deplete at moderately slow and predictable rates. Running out of a specific greeting card in the wash lobby is typically trouble-free but running out of a certain oil filter can cause utter chaos in a fast lube. There are a myriad of automatic transmission fluids and gear oils to keep on hand not to mention the many viscosities available in many different brands of oil. Dozens and dozens of oil filters to keep in stock. Hundreds of air filter part numbers you can choose from to keep in stock. Which ones should you carry and how many of each? When should you reorder and from whom should you be ordering? Once you decide the answers to those questions the computer will help you keep track and produce reorder reports for you at the appropriate times.
The inventory itself will run you in neighborhood of $15,000 to $20,000 including oil. Of course if you have larger oil tanks and you have them filled up, inventory can be higher. The computer is the ownerʼs best connection to the financial health of the fast lube. Just be sure not to rely on computer reports alone. Nothing beats a first hand, in-person look at the operation on a daily basis.
Below is an example P&L I will use to illustrate the appropriate/expected costs at your new lube. Please note that you costs may be on the higher end or lower end depending on several things. For example, the “heat, light and power” or “snow removal” categories will be higher in the winter months especially if you live in the Great White North. Of course if you are able to surf after work then the snow removal will probably not be of concern to you at your location. I think you get the idea.
The figures used in the above P&L are from actual operating fast lubes. Use the numbers as a benchmark when doing your pro-forma. Royalties are put in strictly for your information and removed on the bottom. If you can include the lube into your current insurance then your cost will be reduced. If your CPA and payroll costs are less then you will obviously fare better in that category.
I believe we have answered the lionʼs share of the normal questions most future lube owners ask. If you have any further questions let us know and we will do our best to answer them.