There was no dissuading him because, as he put it, "Nobody else knows how to value these things, either." It was our first exposure to the study of carwash operations and the influence of passing traffic on wash volume. That was nine years ago and now, over 100 carwash appraisals later, we continue to think of ourselves as students of the industry; we would be skeptical of anyone claiming graduate status.

We have learned to appreciate the results of the annual survey performed by Professional Carwash & Detailing. Of particular significance is the percent of traffic count washed, or "capture rate."

In the 1995 survey, there was an average capture rate of 0.76 percent reported by the respondents. This means that, on average, 76 of every 10,000 cars passing the site will turn in for a carwash.

Understanding Capture Rates

Taken at face value, this implies that high wash volumes depend only on high traffic counts. Such is not always the case, and a simplistic analysis can lead to trouble.

A good case in point is a carwash we appraised that has 300 feet of frontage toward a major freeway that carries over 150,000 vehicles per day. Now that's traffic count! It is located about one-quarter mile from the off-ramp and averages about 130 to 160 cars of daily wash volume; it has a capture rate of only 0.1 percent.

Conversely, another carwash we appraised is at an intersection where the traffic is only about 5,000 vehicles per day, both streets included. Yet it regularly averages 300 to 400 washes daily, or a 7 percent capture rate. So what makes the difference between these two extremes?

Obviously, there are numerous factors that enter the equation, including competition, pricing and quality of service. The task becomes one of studying these variables and how they relate to one another, especially capture rate.

However, all other things being equal, a thorough understanding of passing traffic is critical to optimizing the performance of an existing carwash or making the site selection for a proposed facility.

Local Traffic or Commuters?

One way to gain a better understanding of the relationship between traffic and capture rate is by asking the questions: Why are people driving by in their cars anyway? Do they have places to go (elsewhere) or do they have things to do (around here)?

As carwash feasibility analysts, we try to categorize this passing population into those two camps. People with "places to go" represent commuter traffic. People with "things to do" represent local traffic.

It is evident that local traffic will yield a much higher capture rate than commuters. So it is critical to the feasibility of a carwash (or a carwash marketing strategy) to know the percentage of the traffic falling into these two components. There are a couple of ways to go about it.

In many cities, there are fairly sophisticated traffic engineers who can provide not only average daily traffic counts, but, to the really inquisitive, they can give hour-by-hour, day-by-day counts. If you can get it from them, by all means do so.

If you can't, hire someone who'll do it or make the observation yourself. You can spend one weekday and a Saturday with a good click counter to obtain an average estimate. This is especially important in the feasibility stage.

Characteristics of local traffic arteries include a relatively stable traffic volume throughout the day with some peak activity during the morning and evening hours as the work force joins the crowd. Weekends will also have strong counts.

On the other hand, commuter traffic arteries will have a very high volume in the early morning and late afternoon hours, with considerably lower volumes on the weekends.

Other Traffic Characteristics

Another assessment that should be made is the average speed of the passing traffic. Cars traveling on streets with speed limits over 40 miles per hour tend to fall into the places to go (commuter) category, and the capture rate expectations should be adjusted downward.

Proximity to freeway or highway on/off ramps does not necessarily improve the situation because a high percentage of the traffic will be on the way to other places -- that is, commuters. A 20,000 or 30,000 daily traffic count by a site that is one or two miles from a highway is often better than one with similar counts but located only a half-block from a highway, because the traffic artery serves more as a commuter conduit.

The presence of other nearby retail activity strongly affects capture rate because it acts as a magnet for local traffic. When Mom or Dad can stop to get groceries, pick up the laundry, and have the car washed while getting a haircut, more items on the "things to do" list can be efficiently accomplished during the same trip.

The highest volume carwash we have ever appraised (regularly exceeding 600 washes per day and sometimes 1,200 on a Saturday) is located across the street from a shopping mall miles away from the nearest freeway but in a reasonably dense residential area.

What's a Good Site?

In the site selection process for a proposed carwash, care should be taken to assess its visibility to passing traffic. Obviously, a deep-lot configuration is inferior to a lot that has greater frontage along the main traffic artery.

A corner is even more important because it provides access and exposure to two traffic arteries, which increases accessibility. When a signalized intersection is at hand, motorists can literally sit at a stoplight and observe the activity, thereby developing an impulse to take advantage of the service.

We have discouraged carwash developers from relying too much on traffic from a major commercial artery when their site is located on a side street, even though it might be just one property removed from the intersection. This distance is a real disadvantage, and a capture rate projection in this scenario should be made very conservatively.

If the traffic along that artery is primarily in the local traffic category, there is some cause for greater expectations with strong marketing, But if commuter traffic predominates, having only a "peek-a-boo" window of visibility from a side street almost entirely eliminates that artery from consideration in the capture rate/traffic volume equation.

Curb Appeal

Another much more subjective variable can play a part in influencing capture rate upward or downward. It is one we call "curb appeal." Retail shopping center developers are very familiar with this terminology, and they have come to highly regard this visual aspect playing a major role in attracting consumers.

For example, once a shopping center is 15 or 20 years old, the addition of a new facade with canopies, neon lights, new signage and attractive planters can virtually turn a failing center into one that is quite successful. Consumers are heavily attracted to modern facilities in any retail category, and carwashes are no exception.

A facility with a dated appearance can stir memories of past negative experiences. With so many new carwashes making their appearance in cities across America, carwash consumers have ample opportunity to be selective, often opting for those which appear to be on the cutting edge of technology. The more an existing facility can modernize its appearance, the greater a magnet it will be to passing motorists.

One of the most innovative concepts we've witnessed in this regard was a carwash in which the dry-off area was located right at the curb. All the carwash attendants dressed in tuxedo-type uniforms, connoting class, sophistication and elegance. Combined with immaculate landscaping, stainless-steel surfaces and crisp, clean paint everywhere, it's no wonder the facility scored so high in its capture rate.

Tuning Your Marketing Strategy

The operator of an existing carwash won't be able to change any of the traffic characteristics at his location. But by categorizing the traffic into the two components, local or commuter, a more effective marketing strategy, specifically targeted toward the appropriate market segment, can be designed to increase capture rate.

For example, in locations where local traffic prevails and there is other good retail support, cross-couponing with other merchants is one potential. Asking patrons for their ZIP code and then targeting those neighborhoods with direct mail or flyers should be considered. There are good computer hardware and software systems available for this.

The marketing task, however, is more challenging where most of the passing cars represent commuter traffic. Some effective promotional techniques we have observed include large signs offering free commuter mugs for a week or two.

Free coffee and doughnuts or a free newspaper or Wall Street Journal can be good temporary advertising campaigns. An espresso bar and shoeshine stand are helpful to the working crowd. When daylight hours permit, opening at 7 a.m. and closing at 7 or 8 p.m. will allow working commuters to avail themselves of a wash on the way to or from the job.

One carwash has been very successful giving out punch cards promoting every fifth or sixth wash as a freebie instead of the more normal 10th wash.

No matter where the location, the passing traffic should become a matter of careful study. The visibility, visual impression, width/depth, width/depth ratio of the site and the important sub-components of commuter versus local traffic are all items that merit serious consideration. To those who understand these variables will come the fruits of higher capture rates when choosing a site or marketing an existing facility.

Steven Schmidt Herron is president and Jeffrey M. Key is vice president of S.S. Herron & Associates, Inc., Anaheim, CA, an independent appraisal firm specializing in carwash valuation.