About the Episode:

In this episode of Car Wash M&A, host Lanese Barnett chats candidly with Matt DeWolf, chief marketing officer of the International Carwash Association and host of CAR WASH, the podcast, before a re-broadcast of an interview Matt had recently with Amplify Founding Partner Jeff Pavone. Jeff, who now proudly bears the honor of ‘most featured guest’ on Matt’s show, reviewed notable highlights and trends that emerged in the car wash industry during 2023 and shared predictions for the year ahead.

Tune into episode 19 for behind-the-scenes commentary with Lanese and Matt where these long-time friends talk shop, nerd out about car wash marketing, and dive further into themes from the episode.

For more from Matt DeWolf and CAR WASH The Podcast, you can subscribe wherever you like to listen, or you can download the CAR WASH Magazine app to keep up with industry news.

Sign up for Car Wash M&A, The Newsletter. | Follow us on social media @AmplifyCarWashAdvisors on LinkedIn or Facebook. | Connect with Lanese on LinkedIn.

More about Matt DeWolf:

Matt is the Chief Marketing Officer for the International Carwash Association and Editor-in-Chief of CAR WASH Magazine. With a passion for helping people tell better stories, he’s spent the last 15 years visiting car washes across the globe and telling the stories of the professional car wash industry. When he’s not visiting a wash or asking people more questions than they want to answer, he’s spending time with his three children and his wife Kacie. He also loves to play baseball, drink wine, and consume as much content as humanly possible. He currently serves as the Alumni Association Board President for Simpson College.

More about Jeff Pavone:

Jeff Pavone is a leading advisor to the car wash industry, successfully completing more than $5 billion in car wash-related transactions. A lifelong entrepreneur, Jeff is the owner of Commercial Plus, a real estate and business brokerage firm, and a partner at Amplify Car Wash Advisors, a mergers and acquisitions and capital advisory firm specializing exclusively in the car wash industry. Leveraging his longstanding relationships in both the car wash and investment banking industries, Jeff partnered with car wash veteran Bill Martin in early 2020 and launched Amplify Car Wash Advisors to address the evolving needs of car wash owners. Together, Jeff and Bill recognized the need for providing guidance tailored specifically to car wash owners when it comes to selling or scaling their business. Today, Amplify has completed complex transactions for some of the most well-known and widely respected car wash chains in the country and is the only group that bridges the gap between investment banking and car wash operations.

Check out the full transcript below:

Lanese

Hello, and welcome to episode 19 of Car Wash M&A, The Podcast. Today I have Matt DeWolf, who is also the host of CAR WASH, the podcast by the ICA, the International Car Wash Association. First of all, welcome, Matt, thank you for joining me today.

Matt

Hey, Lanese, it’s always good to see you.

Lanese

Yeah, you too. So you and Jeff Pavone, our partner at Amplify Car Wash Advisors, recently recorded for your show an episode, and we’re going to re-broadcast that show in its entirety after this, but I just wanted to take a few minutes to chat with you about what big themes stuck out with you from your conversation with Jeff, and then just dive deeper into a couple of those that I found really interesting as well. First, what was the most surprising thing that Jeff shared in that recent episode about what he sees going through the end of 2023, or coming into 2024?

Matt

First of all, it’s always fun to have Jeff on because I always learn something, whether that’s what his favorite hooded sweatshirt is, or something cool about the industry. But I think one of the things that kind of bubbled up for me was just the reality of this pause state that we’re in. We kind of felt it, and you could see it in the news that was coming out, but to be able to sit down and talk and say, “Okay, what are you actually seeing? You’re on this side of the business, where you’re doing the deals and talking to many more people than I ever am…What’s happening?” And to have that kind of validated that, hey, it’s not bad. We’re just paused. We’re going to settle down for a minute. We’re going to work on our business; we’re going to really focus on being super efficient and super profitable. And we’re going to just keep going. And I thought that that was super, super helpful for me just to ground me and kind of what I look at every single day.

Lanese

Right, and I totally agree with you. We have this really fevered pace of just interest in general in the car wash industry. And you know, when the party is going, it seems like it’s going forever, but also when there is a pause in the music, it doesn’t mean that it’s completely stopped or that everything that was good about the traction, and the momentum is gone. But it does have to have a more stabilized or normalized pace at some point. You can’t go at the highest gear all the time. And so it seems like this is just helping that reset and recalibrate as an industry for continued interest and success overall.

Matt

Yeah, I mean, the follow up to that, honestly, was this whole conversation around getting back to our roots really. Jeff was talking, and I think he made some comment about the great car washers was built car wash companies; they don’t just do a great job of washing cars, and I thought that was so resonant, especially because in my mind, I was thinking about how quickly everything was going. And then as you talk to people that started to slow down, they were always talking about, well, we’re going to take this time to focus on our infrastructure. And it’s like, man, I get the idea that, you know, people talk about how we’re trying to build the plane as it’s going down the runway and taking off. And that’s an approach, but you can’t really do that if you don’t have the parts in place.

Lanese

Right.

Matt

And so that was missing. That’s what’s always been missing, I think.

Lanese

Or the mechanics to build anything! You have to have some of these things there. Otherwise, that’s just a hope and a dream. I loved that, too, and the idea that the successful car wash companies are successful companies. Period. They are successful entrepreneurs; they are focusing their time and resources on their team, their leadership, their ability to build a culture within their organization to then take that culture and outwardly showcase that to their customers to be able to provide that great experience. But they need to feel like they’re empowered and they know what’s going on and feel part of the team, feel validated so that they can share that. And this is a feel good service where we want people to come and enjoy the experience of getting their car washed. A lot of times, this is 5, 10, 12 years ago, but we would talk about people putting washing their car in with going to the bank, getting their dry cleaning, and that it was this chore or commodity that was very interchangeable that was like on this checklist of like womp, womp, womp, womp, womp. And then now, it’s a totally different experience. And I really value the car wash industry for embracing that experiential nature and really pushing the boundaries on how we can, you know, lean into that and do more and be creative. And I think that’s a really cool part of it,

Matt

Well, and I think it’s only going to get better. I mean, now that we are so much more visible, and there’s so much more interest, both just in general terms, and from a financial perspective. All this money came into the industry, and we can do so much more, and it’s pushing so much innovation, and it’s pushing all of these really great entrepreneurs in this industry to think differently, and to like stretch those muscles, right? People were kind of building up their businesses and maybe were getting pretty comfortable doing that. And now, there’s all this new challenge and all this new pressure. And it’s a really kind of perfect place, I think, for those folks who do a great job to really expand and disrupt in new and exciting ways. I’m super excited to see what comes out of that.

Lanese

Yeah. And it’s mirroring that strength in the core infrastructure of just the sound business practices, but also the ones that are more apt to lean into innovation and embracing new technologies or trying different things that just because XYZ has been done a certain way doesn’t mean that there’s not another way to do it. And I know you guys touched on some new technology and different things that are coming out with kiosks or with how companies are adding locations or maybe having acquisitions, and then how do they fold those into their system? And there are new and creative ways that companies, that the solutions providers, are providing that answer or that option to look at it differently than just the same one way that’s being done, like rip everything out, you know, put the same system in or however.

Matt

Yeah, I mean, that’s the area where it seems like we’re most ripe for kind of disruption. And at some point, when money is expensive, and there isn’t enough of it, you’ve got to make some decisions. And so I think the technology that’s coming out of that is going to be super fascinating. And it’s something that we’ve been talking about for a long time, right? When are we going to get to be at a point where we have stuff like the McDonald’s pay stations where you are just tapping in your order? Or how are we going to leverage some of this data that we’re able to start collecting now and use smartly to create better customer experiences? I think we are so early on and all of this, it’s going to be super exciting.

Lanese

I do, too. And I always love sharing in that enthusiasm with you on like the kind of nerdy marketing and experience side and just watching the industry over time. And I mean really coming from: Are you going to laminate your piece of paper on your clipboard when you put it in the customer’s window? Are you going to make them memorize the script? There are so many things that have advanced that we have been, as an industry, we have the opportunity to keep pushing this further. And with money being more expensive, necessity breeds innovation, so it does make that ripe time, and all the kind of right ingredients, to explore new ways of doing things that can be really exciting.

Matt

Yeah, I think you’re absolutely right, Lanese. We didn’t have to, for a long time. Nothing was pushing us to, so if somebody got a really great idea, and they wanted to try it, they could, and they could go do that. But they didn’t need to. And now, now you do need to. You need to be differentiated. And I think the thing that you made me think about as you’re talking about kind of data and experiences that we shouldn’t leave out is the employee experience, right? I mean, the way that we can enable employees, and make them feel good about their experience every day, is being totally enabled because of data, because we can see how they’re performing. We can optimize for that. We can get our own operational numbers much faster than we ever could before. And we can start seeing that in a dashboard that helps us make decisions. And then our employees feel good about that. And they feel the whole success of the organization, instead of waiting for a quarterly report to come out and wondering, oh, well I tried this change in my sales tactics. And I don’t know if it worked until three months later. That doesn’t feel good.

Lanese

Right, right. And even with that, having the employee have that onus to where they have to make the change in their sales tactic to see if it works, when really we need better training or to think through how can we empower them to have these tools and resources to be successful? I was on a car wash tour with one of the associations. And I saw at one of the places inside the office area — it was an express exterior, but they had an office with the employee lounge and things like that — they had a table, and it had headphones with it. And it was a dedicated training area. And I just loved it, because this is a new employee’s desk that has their training computer or tablet setup that they’re going to go to, that they’re going to complete these modules, but the idea of the dedicated space for a new employee to have a temporary home while they’re getting things figured out. And watching so many, especially young kids, come in, and maybe it’s their first job, and they just are so… They don’t know what to do, and they don’t have a place yet. And so that intentionality of like this is your training area, just watching things like that. I love seeing that and seeing the thoughtfulness and how we can keep taking those ideas, and there’s endless possibilities to just keep going. And so you and Jeff talked about where are we in kind of the inning cycle, or the life cycle, but I’m with you, I see that there’s endless possibilities to keep advancing. And every time I think I have even something figured out, there’s this whole other, you know, universe behind there that is, well, that’s the tip of the iceberg.

Lanese

That’s so true. Yeah. I mean, it’s not any different from, you know, when we discovered the express exterior model, right? It’s like, “Oh, look at this amazing thing!” And here we are. Look at what that has bred!

Lanese

Doesn’t that sounds so funny? Guess what? We’re going to have them stay in their car.

Matt

Free vaccuums.

Lanese

They’re not going to do it! They won’t do it.

Matt

Oh, my gosh, that’s crazy. So now I will say — I maybe have shared this story with you before — but I was on the customer end of being super uncomfortable in a car wash when I got a chance to visit Repsol over in Spain. And they were showing me some of their washes. And, you know, in that area, it’s a lot of in-bays. And they have a really amazing…

Lanese

I totally know that because I totally have been there, too.

Matt

Yeah, it’s like they have this awesome mobile app. And so they’re showing me how that all worked and how the kiosk was going to work. And we pull up, and you scan the thing. And then like, you pull the car up, you park in the normal spot where you would in a rollover or an in-bay, and you get out. And I was like, “Whoa!!! What are you guys doing?!?” And they’re like, “Oh, we’re going to go get a coffee while it washes our car. And I’m like, “That would not work in the United States.” That just… We would be so confused, and people would be so mad that someone left their car.

Lanese

They’d never come back! Yeah, it’s like when you see somebody going inside while getting gas, like they’re pumping gas for their car. It’s like, woah!

Matt

Yeah, get your gas, then park, and then go get your thing. Yeah. It’s funny.

Lanese

Oh, yeah, so the disruption of that. Well, and even in your conversation with Jeff, he was talking about indoor vacuums, and things like that, which, you know, we think, “Wow, indoor vacuums!” But this is just very… We have our own kind of places that we have advanced and brought the industry forward in certain areas. But then there are other parts of the world that have… they’ve been doing things in a different way for a long time. So it’s sharing that information and sharing that experience to kind of, you know, keep iterating what this looks like. And I love the travel that you guys do with the International Car Wash Association, and seeing those different ways, either that you can mix that, or take that, and learn from each other. And it’s still, I think, very communal, and people are happy to share information because they’re so jazzed about it. I mean, you just get these really passionate people that are really excited car washers.

Matt

Well, I mean, it kind of goes back to what we were talking about earlier with kind of driving innovation. And the only way you can do that is if you get out of your little box, and look bigger. And we’re starting to see this all over the place, right? You’ve got cool mobile stuff happening in the Spanish market. You’ve got some really awesome point of sale stuff happening in Australia. You’ve got great operations happening in Germany, and in the Netherlands, like we always know happens. But even in the US now, you’re starting to see some of this disruption as it comes down to mobile apps and the whole customer payment experience. We were talking earlier, about how we got the video of the new kind of kiosk from AMP. And it’s like, you know, I never thought I’d spend nine minutes of my life watching a video about a payment terminal, but I sure did.

Lanese

I know! I mean, I was like, Ooooh, white! Oh my gosh. Yay.

Matt

Ooooh, and then you do what? Oh, great!

Lanese

Yeah, I loved it. I thought it was very, very cool, very well done. And I love the sophistication that we’re seeing in the industry and this, not just the professionalization, but taking those ideas and making them sharp, and look cool, and be user-friendly and sleek. And that’s really, really so fun to watch. And especially when you see the benefit on the customer side, and the operator side. They’re getting a better user interface, but also the customer is getting a better user interface as well. It’s simultaneous.

Matt

Well, the reality is, customers expect more. I mean, especially now with the membership model and the introduction of that, they really do expect more. I mean, that is their car wash, right? I’m a member of that car wash. That is my car wash, and it better be great.

Lanese

Right. Yeah, they’re paying you, whether it’s used or not. And yeah, they expect definitely a certain level of service. And there’s kind of a little bit of a, for better or for worse, the entitlement of yeah, this is mine, because I have paid into this.

Matt

Yeah, I paid for it.

Lanese

Yeah, exactly, so better give me my free towel.

Matt

Yeah, and I’m probably going to steal it. Just for the record.

Lanese

Yeah, some of them are good. I’ve got a couple of car wash towels. I’m not gonna lie.

Matt

Yeah, I mean, I have a box of them. Sorry. It happens. It happens.

Lanese

Yeah, and I mean, there are cameras everywhere, so yeah.

Matt

Yeah. What are they gonna do?

Lanese

I don’t know. I’ve seen signs that say: Be prepared. There are RFID tags in these towels.

Matt

Oh, that’s funny. Maybe that’s the new innovation. That’s going to drive profitability. And I feel bad for the person that has to sew those RFID tags into all of those towels.

Lanese

Yeah. That’s why you’ve just got to put some marketing on them. And then, you know, good. They have it in their car floating around with your name on it.

Matt

It’s a cost center. It’s totally a cost center.

Lanese

I agree. I agree. So Matt, we could talk forever. You are one of my favorite people to talk all things car wash with. And I appreciate your time coming on today. And I loved hearing the conversation with Jeff, but also just the chance that you and I get to just chit chat about all of these great things as well. And so thanks for your advocacy for our industry and just being such a great voice for us. And a good friend, and a good human being, as you have on your show.

Matt

Oh, thanks, Lanese. I appreciate everything you guys are doing. I love that I’m not the only person podcasting in this space. It’s nice to talk shop a little bit. But I’ve always appreciated your approach to when you were on the operator side, to how you market, and how you get information out, so I’m just grateful for your friendship.

Lanese

Oh, that got me a little teary. Thank you, Matt. I really appreciate that. Thank you, everyone, for joining us today. So stay tuned here: you’ll hear the full episode of The Great Market Pause with Jeff Pavone and Matt DeWolf.

Transcribed by https://otter.ai

Intro to CAR WASH The Podcast

Welcome to CAR WASH The Podcast your source for real stories and real business insights from the experts both in and out of the car wash industry. So put it in neutral, feet off the brakes, and take your hands off the steering wheel. Here is your guide on this journey, CAR WASH magazine editor in chief, Matt DeWolf.

Matt

Hey, everybody. Welcome to this episode of CAR WASH the podcast. This is the podcast, of course, that makes you a better car washer, and a slightly better human being. Now for a long time, we’ve been talking about this booming industry, this crazy carwash industry and how fast everything’s been growing and changing. And we’re going to talk about how it continues to change today. And to do that I’m gonna bring in Jeff Pavone, from Amplify Car Wash Advisors. He’s going to talk to us a little bit about how maybe this thing is slowing down a little bit, and, and how we might need to rethink what we thought was happening last year. Because things are changing, as they say. Jeff, welcome to the show.

Jeff

Hey, Matt, thank you. Again, as always, just pleasure to be on the show, and I look forward to a good interview here.

Matt

Well, I was just saying before we got started that I think you hold the record for most appearances on the podcast, and I don’t know if I should congratulate you or say sorry.

Jeff

Well, we appreciate it. And at the end of the day, this space is definitely volatile. And it’s changing in real time. I do think keeping the information fresh and in real time is important.

Matt

Yeah, so the last time we had you on would have been the end of the year last year, and we were talking a lot then about… I think we called that one The Great Market Reset because the year leading up to that was pretty crazy. Then we started talking about the market resetting. What are you seeing? And maybe what have you seen over the last kind of 12 months? 10 to 12 months in the market now?

Jeff

Yeah, you know, I really would say we had… I’ll call this the great pause for 2023. Right. And I think there’s a variety of reasons. When you look at all the headwinds, which we were sitting here with interest rates that continue to grow, we had no control over inflation at the time, labor reports weren’t very good, and then credit came to a screeching halt for most platforms. And so, you know, the pause really had to be… It had to see, first off and foremost, most platforms had a look at their own debt structure, and say: how do we fix this going forward? And it wasn’t easy. I mean, because, you know, not only was it expensive, it was really hard to come by. So that was, I would say, a priority. The second thing I think most platforms started to do is they really, you know, for the first time, they had a platform, they had data. they have a lot more information, and they’re smarter. They’re more educated. And they had to take a step back and look at, you know, how are their platforms performing? How are their platforms performing to projections? You know, really getting a much better feel for what they own was important. I think they had to get a better grip around the investment community and where multiples were going to settle in at. We had a lot of factors here that just said, You know what? It’s time to pause and just see how this all shakes out before we can move forward.

Matt

Yeah, you know, we have this period where… I think I said before that the whole industry was sort of like the surface of the sun. It was so hot, and it was growing so fast. And a lot of that initially was through acquisition, which is what we’re kind of talking about with the platforms. They were going out and buying up a lot of locations. And then we got into this phase where it was like, “Okay, let’s build our own,” because everything’s getting a little too expensive to go acquire, so let’s build our own. Let’s do some greenfield development because we can do that more cost effectively. Now, it seems like we’re sitting in this space where we’ve got to be really great operators. This is what kind of what you’re talking about with now we have KPIs. Now we have some metrics. Now we can look at our overall kind of wash portfolio and say, ‘Okay, where do we need to move and change and adjust and really get efficient with what we’re doing. What are you seeing people… Especially I know that you talk a lot with some of the platforms. What are you seeing people do? I mean, there’s a little bit of… In the social media space, you know, people are starting to identify some store closings, right? Is that something that you think we should be worried about?

Jeff

Well, you know, I don’t know about worried, but, you know, at the end of the day, all businesses have cycles. And we were certainly in an environment of get big fast. I don’t know if you remember the internet days, but that was sort of the mantra: get big fast. And then, all of a sudden, we saw the internet space implode, right? Because it went from get big fast to get profitable fast. Did it mean the internet was a lousy business? No, not really. It meant that the quality companies were going to go long term; this is a marathon. And so in the car washing space, I really think it went from get big fast, and was all about unit growth. And then it became obvious that you’ve got an operating business here. And I think today, going forward, we’re seeing the operators really reassessing everything they’ve bought, and it really is getting profitable. The bottom line is they’ve got to service some very expensive debt, and they’ve got investors that are expecting return. And so, you know, now it’s no longer a matter of just deploying capital for for the sake of growth. It’s got to be deploying capital, and then they want to return on growth. So I think you will see some units, if it makes sense to close. I think you’ll see, on the Greenfield front, you’ll see much more selective discipline Greenfield. I think on the M&A side, you’ll see M&A being done, but it’ll be done, I would say, a lot smarter. At the end of the day, they have a lot more knowledge, the buyers. So, you know, the way to characterize this is they brought professionalism into the space today. Before they had nothing to base it on. They were just buying without having a lot of experience. Today, it’s becoming very professionalized, and the business is trying to stabilize. So I think you’ll see an emphasis on quality versus quantity. And so if there’s some stores closing, you know, it’s probably for the right reasons. And you’ll see, again, a real focus on driving more value from each of the assets that they currently own.

Matt

Yeah, and I mean, that’s just good business, right? I mean, you need to run a profitable business. You can’t live in this space, where, you think, “We’re going to have some loser locations, and we’re just going to hang on to those!” That makes no sense. And I think that’s what we’re seeing with these groups now being able to be smarter about how they’re running business. They’re just making the hard decisions, and they’re doing what’s best for them.

Jeff

I think you’re right. I think this is a… The good that’s come out of this is we actually do know what’s a good business. We’ve got very high acceptance rates of memberships. Memberships have stayed stabilized, if not growing. The consumer loves the product, and we’ve got a really high margin business. And so this is a really good business to be in. I think you’ll see stabilized growth going forward. I think you’ll see some of the platforms are going to come out of the gates very soon, with fresh capital on their balance sheet, and look to really start expanding, but they’ll do it with with a lot more knowledge behind them, and it’ll be a very controlled smart growth, which is, long term, good for everybody.

Matt

Yeah, and steals a little bit from, you know, some of the great operators in this industry, right? Those groups that we’ve watched over the years since kind of the inception of this industry grow at really, really strong conservative paces, where they had everything set up, they had great infrastructure, they had their processes down, and they could then scale that very smartly. That’s starting to move over into into this platform space as well. So that’s going to be fun to watch.

Jeff

And Matt, you know, when you look at this, the great operators have one thing in common. They build the carwash company; they don’t just build car washes. And it’s consistent. If you look at all the top brands out there, they have a tremendous infrastructure and team, not only on their car wash locations, but at their corporate level, that’s driving volume. And now you’re seeing some of that professionalism flow through to a lot of the platforms. They’re getting it, and they’re going to be using that to their advantage.

Matt

So when you think about… we’re talking about platforms having more data now, and having a little bit more experience under their belts, as they’re kind of coming in to this thing. Now, is that something that you think the smaller operator needs to be concerned about? How does this play out for, you know, the people that have 2, 5, 10 and 20 locations as this dynamic shifts?

Jeff

Great question. I look at it, and I go, you know, first off, take the platforms. The data they’re going to be looking for could be, you know, competition. They’re going to look and dive deeper and say, “Okay, is it really… is it cannibalizing?” At the end of the day, you know, if you’ve got two or three car washes that are in the market that are both all convenient, there is going to be some impact on your numbers, right? And so when you look at, you know, how a smaller operarator would be looking at this thing is, they’ve got to be looking at it and saying, you know, some of the some operators, even great operators, I’ve seen, have just incredible numbers, but they’re not immune from having competition that’s just come in their their market. And at some point, even if they lose some share of their market, it’s just real. You’re not going to get your carwash two or three times a day, like a cup of coffee. It doesn’t work the same way, I think, you know, you’ve got to be very sensitive to what’s going on around you, and who’s building, because, you know, most of these new ones coming in, you know, even if it just takes a fraction of your business, it’s going to slow down some of your growth. And I look at, you know, a lot of the trends right now, you’re gonna see… There’s going to be… You’re gonna see the customer experience. I think for a long time, you know, it was all about adding units and growth through units. I think today it’s going to be: how do we differentiate? How do we improve our customer experience? We’re seeing a lot of innovation in technology, that’s going to start having a way better educated operator that’s going to know just how many times you’ve been to the site, how frequently you are coming, and more importantly, how to keep you coming back and building more stickiness. So I think the smaller operators have got to also start playing in that same game of looking at, you know, what technology is out there, to really make sure that they’re staying in the forefront of knowing everything they can about the customer on their lot and how to keep them.

Matt

Yeah, I love the sophistication that is starting to come with all of this, right? All of this ability to really think about that customer experience, end to end, and even from before they get to your actual wash. That’s only possible because some of these groups came in and started thinking that way. And it’s like, “Oh, yeah, that makes a lot of sense.” And to your point, Jeff, about differentiation, you have to be different today. Because let’s be honest, an express car wash, you can only build them so many different ways. And to the average consumer, unless you’re really doing something crazy on your location, you’re not going to look that different from the one that’s maybe down the road. So this experiential focus, I think, is going to be super important as we go forward.

Jeff

Right. And the good news is, we’re seeing a lot of a lot of technology, a lot of solution that’s coming into the tunnel, that’s going to be… And it’s here now. And so, you know, I do think you’ll see some really exciting, cool things happening on a site level, where, you know, people will get… They’re going to figure out what to do with all this data they’re getting, and how to maximize that into a return for them.

Matt

Yeah, it’s like you were talking about right? First you’ve got to get the data. And as you’re collecting it, now you’ve got a baseline. Now you know that you’ve got something, and you can start dissecting it, and analyzing it, and diving in, and doing all the super fun stuff that will really set you apart. I want to talk a little bit about that technology space and that innovation space. What do you think… where do you think we are ripe for some disruption? Kind of going in the next couple of years?

Jeff

There’s certainly a lot of talk about, first off, cost. This cost has gotten expensive to build these car washes. At the end of the day, we’re finding a lot of concern about how do we drive this cost down? And I do think you’ll start looking at parts of the business, whether it’s a POS, or whatever else seems to be the hot topic today, where that market is going to go. But I can tell you, there’s only so much tolerance for costs going up, and I think every part of your build is going to start looking at it. And so from an advancement in technologies, I do think you’re going to see that there are some young, nimble companies that are going to be able to give you the tools to interact with your customers better. They’re going to give you ways to get them on the lot, and to keep them. And with some of these younger innovative companies, they’re going to have a real advantage on cost, but I do think you’re going to find tremendous pressure from the big players to start driving costs down. You know, cost of chemistry, they’re going to look at every line item now to make sure that they can get these things profitable.

Matt

Yeah, it’s interesting. I mean, good operators do this already. They’re looking at stuff pretty closely. But when you get to the point where you’re having to ask yourself, what level of profitability am I comfortable with now that competition has taken some of that away from me? That question changes a little bit, and you look a little harder for those little pieces. It’s a real thing.

Jeff

That’s right. I mean, and any advantage you can use to your… you have to be getting it. And I do think the advantages will come down to… First off, let’s assume you all build a great facility. It’s going to come down to how well do your customers? How do you interact with them? How do you reach them? And there are really powerful new apps and tools out there that, you know, if you come into my wash, let’s say once or twice, I can go: “Hi, Matt! How’re you doing? How are you enjoying the experience?” And you’ll start seeing some more personalization going on. But the other kind of tools you’ll see out there are, you know, take memberships… We all experience churn in this business. The question is: are you learning from the churn? And there are tools out there and companies out there and now that, you know, we know of that will take that data, and you can… It could be one rogue agent. It could be all of a sudden getting more churn at one of your locations because that demographic is a little weaker, and it just got more… maybe it’s the economy affecting a location. But I can tell you, that kind of data is going to be the stuff that’s really going to be in the forefront, I think, of car wash operators going forward.

Matt

Yeah, it’s fascinating stuff. And it’s an exciting time to be kind of hanging around this space. That’s for sure. What does all of this mean, as you think about… I mean, obviously, part of your business is to help people do deals, right? Are deals still happening, Jeff? Is everything okay?

Jeff

Sure, certainly, you know, I’d say Christmas has slowed down, right? We had Christmas every day last year, and in the last few years. You know, I’d say deal flow, you know, plus or minus, came down 75%. You know, I think the market just had to take this pause. We as a firm, you know, again, maybe it’s just the advantage of being older, right? I’d been through cycles before. And I knew when things are going up and were that good, I knew the market couldn’t, long term, continue to go at that pace. And so, you know, we invested heavily into converting our firm to a full service advisory firm, you know, so really sitting in there and saying, the question that we’ve always got to ask is how do we… we want to be value creators, and how are we going to drive value? And again, at the end of the day, if you’re an emerging firm and building out, you’re not ready to sell. And selling in a market that you have very few buyers is probably not a smart thing, either. Today, the good news is we are finding buyers coming back, by the way. We have a very, very strong… The good news is that the buyers came back, and we’ve got a strong fourth quarter of closing deals. So we’re excited about that part of it. But we’re still… we’ve evolved to a point where we do want to help operators. The advisory side is looking at… let’s say you’ve got a chain, and you’re paying $1 a car for chemistry. And we can get your cost down to 60 cents. There are a million line items that having more data, and having more expertise… because again, we’ve got guys on our team that have been around for, you know, 40 plus years, on the highest level on operations. We’re going to dig deep into knowing these costs, help benchmarking some of it. We’re also going to sit there and help operators understand: what are buyers looking for today in real time? You know, there’s a lot of talk about multiples and valuations. I can tell you the only ones that matter are what things are trading today. And so, you know, I do think there’s going to have to be a lot more education, to the smaller operators. A lot of them, you know, are working really hard on their own company, and they don’t have the exposure to all of the advancements that are happening in the space, or even some of the KPIs. And so, you know, for us, it gives us an opportunity to step in, and really provide that kind of value to an operator. And eventually, at some point, if you create value for them, hopefully, at some point, when they transact, they’re going to use you.

Matt

So talk about that evolution a little bit for you all. So you started down this path of kind of making sure you had all the elements of an advisory firm in place. What were you kind of watching when that started to happen? Like what did you see?

Jeff

Well, I mean, at some point, the pain points became… That get big fast kind of process went on, and we sort of realized that there’s going to be real integration problems and stresses, right? We also looked at it, you know, coming out of a technology background… We also looked at how fast technology could impact the growth of this business, and we felt that there was real, real opportunity. So you know, sometimes we’re, where we see some of these things going on, we’ve got to look and say, it’s not all bad. We’ve got to just look at where are the opportunities here? And so, you know, we’re fortunate to have… we’ve got a wall street level investment bankers on our team to understand where the capital markets are going. We also have some of the best operators in the country to understand, you know, how these operators should be performing. And so, you know, I just think today, for us, it’s all about trying to put that knowledge out in the hands, so we are giving you the advantages that some of the other folks have. But, you know, we just started seeing, again, like I said, 18 months ago, when people kept buying at a furious pace. And again, the buying was more done on a matter of fear of losing a deal than anything else. And we knew that that’s not sustainable, right? And so, at some point, we had to look at this thing and say, what role do we want to play? And we were happy to do those deals. There’s nothing wrong with it, but we knew at some point, we needed to get down to how do we help stabilize this business long term, and add value? But I think the platforms have gotten really smart, really fast. And I would say, they brought professionalism into the space. You know, if you look at some of the leaders now running these companies… look at some of the other companies out there that have brought in just absolutely very, very smart guys that understand how to scale retail. I think that professionalism is going to go a long way. And for us, as we started looking at that, we had to help prepare the operators to fit within that box, too, right? How do they get more professional in the running of their business?

Matt

As you were talking about, kind of where Amplify is going and kind of the changes that you’ll have made, it made me appreciate what you all do, because you guys have always been all about being that trusted advisor, right? You want to be there alongside the operator and help them get the best possible situation for themselves, and that comes out in lots of the deals and stuff that you all do, but I think honestly, while that’s core to who you are, it’s also just really darn smart, Jeff, because you’re able to position Amplify in a way that’s like, “Who else would we use?” We worked with this group to help us become a super profitable organization. We built this car wash company, and now it’s time for us to do something else. Of course I’m going to use the person that helped me turn my business into something amazing. I think it’s smart, but not to be missed, it is core to what you guys have always been, which is in it to help operators maximize their experience in this business, so I love that part of it.

Jeff

Appreciate that.

Matt

It’s also smart. Talk to me a little bit about what the next two year looks like, right? What are you kind of watching as we go forward into ’24?

Jeff

So here’s the really good news. You know, I couldn’t say this a month ago. I could tell you today, we’re seeing inflation come under control. I mean, I don’t know… I think what I’ve read as early as this morning was, you know, under three, you know? We’re seeing the Feds pause. You know, I wouldn’t… The one thing I won’t expect: I think we’ve seen the valuations, now, really reset. And I don’t see that changing. The operators that are looking to say that, at some point, interest rates are going to drop, and there’s going to be this major reset. It’s just not going to happen. I think interest rates can go down a little, but we’re going to see a very disciplined buyer that has a lot of data now, and they know what they’re looking at. But on a go forward basis, the good news is, you’ve got inflation that’s under control; I think you’ve got a consumer that’s proved to be resilient and looking good. Are we out of this recession fear? Maybe. But it certainly feels like, from an economy standpoint, we’re doing quite well. The consumer is still quite stretched, if you’re looking at that side of it, so we’ve got to be a little concerned about that. And really important is that the majority of the platforms that are going to be around for a long time, are getting fresh capital, and you’re going some announcements any day now coming out, and you’re going to see some really… I think you’ll see a push by some of these stronger platforms that were disciplined, look to expand and grow, because this is going to be a tale of two sides. You’ve got some some platforms and chains that probably just didn’t grow as smart as they should have. And you’re finding others that that really took a a very good controlled strategy now come with fresh, really, really fresh capital. And I think we’ll see some… I think we’ll definitely see more deals closing in the coming year than we did this year. But I think they’re going to be structured. I think that the operator and the seller, there’s going to be some creativity and a structure to how deals get done. But I think you’re going to find that buyers now, they’ve recapped their balance sheets. They’re ready to go. They know where they want to grow. And so I think that’s going to be positive. You know, from the public markets, you’re seeing a lot of bad news that happened over the recent times. You know, and I think going for it, we’re already seeing Mister come out of it. Mister hit a low, maybe about a week and a half ago, they’re already up almost I think 30% in the last couple of weeks. So I think we’re just going to be… I think all together we’re going to see a stabilization going forward, and a much professional buyer going forward. But I do think that’s good for everybody. So, you know, we’re excited to see where how this market shakes out. But we’re going to see, again, innovation and technology. You’ll see really fast growth in 2024. I think we we started to see the tip of the iceberg in ’23. I think in 2024, you’re gonna see accelerated technologies coming in these tunnels like you’ve never seen before. AI and some other really cool things are going to be happening. So, you know, we’re looking forward to 2024 has been an exciting time for the car wash market. So, you know, cheers.

Matt

Yeah, absolutely. I mean, as you’re talking… I think maybe one of the first times you were on the podcast, we were talking about what inning are we in of this whole consolidation thing. And I think, at the time, we were still thinking we were in pretty early innings. At some point in the last couple of years, we thought that maybe we were getting a little further along in the game. I feel like, Jeff, honestly, it seems like we’ve gone backwards in earnings, because of this kind of pause, right? We’re still looking at… When you look at the top car wash organizations by number of locations, from a market share perspective, that is still so unbelievably low, which I think is great, because that means there’s still tons of opportunity out there for folks. I think sometimes it’s just a little hard to see that opportunity when you’re kind of in it day to day, and you’re looking at these numbers, and you’re getting these data points. You’re spending too much time watching the stock prices of these larger groups. That’s not indicative of what’s going on everywhere. There’s tons of opportunity. There’s lots of space to grow still. I’m pretty excited for 2024, too, but I will ask you, and maybe we’ll switch the analogy. Instead of what inning are we in, what quarter of the basketball game are we in, Jeff?

Jeff

You know, I still think we’ve got a long way to go. I mean, we’re maybe, call it, in the second half, right? You know, because when I look at it, there’s still whitespace. Now, with that said, you know, what we are learning is there are certain markets that have got less whitespace, that are starting to get saturated. When you look at markets like Phoenix, Boise, some of these other markets, you know, and you start looking at the amount of car washes, you know, you only need so many car washes per customer, right? And so some of these markets are starting to feel that saturation point. But there’s other markets that have a lot of growth, I do think you’re going to see, you know, in 2024, you’re going to see a few of these brands come out of this, and look a lot different than next year. I think you’re going to see some real winners that are going to have some fairly aggressive growth. I wouldn’t be surprised if we don’t see, you know, a couple of consolidators come together. You know, you’ve also got to look at the gas c-store guys that have entered the space, and they’ve entered it, I would say, with initial acquisitions. They’re still trying to learn to market, figure it out. But as they get smarter, you’re going to start seeing them continue to grow. So, you know, I do think, from an innings standpoint, we’ve still got plenty of opportunity to continue to grow. I just think it’s going to be… For sure, I think we’re in the second half of this. I think we’re just going to fill in the markets that we’re in a lot smarter. And we’re going to try to get more out of it. The other thing that could surprise you is going to be I think some differentiators that are going to come to market, we’re already seeing some guys playing around with, you know, indoor vacuums. Maybe some flex washes. You know, I just think the one size fits all model that was building out there… I think you’re going to see a few guys start getting a little more innovative and creative. Because I think the customer wants it.

Matt

Yeah, well, I will put this out into the universe as my one crazy idea that I’ve been thinking about for awhile. I am interested in seeing someone do an interior clean only. Okay? Think about that. Interior Express only. So the flex side of the business, but no wash components. Now, maybe that’s a dumb idea. And it’s probably is. But that’s the kind of stuff that might happen.

Jeff

I’ll tell you some of the innovation. I’ve seen in person this year… I’ve been in a warehouse, and I’ve watched the inside of a carwash being cleaned by robots.

Matt

That’s crazy.

Jeff

So when I say there’s still a lot of innovation ahead, the labor side of it is probably one of the biggest challenges that we all have, right? But I think you’re going to find labor coming together with technology to start solving the problem, I don’t think you’re going to solve the problem with just labor alone. I think you’re going to see technology is going to be a very important component in the car washing. So you’re just going to see… I do think we’re going to see innovation like crazy this year. Because, you know, especially… The good news is you’ve got a lot more tunnels; you’ve got a lot more customers. So it becomes more profitable. But we’re going to see innovation come from from all angles, because it’s still a very good business, a very profitable business, so it’ll be fun to see some of the new stuff that’s going to come out.

Matt

I can’t wait. I can’t wait. I’m excited to see what the wash of the future looks like. I think it’s going to be super fun to watch. The question I have to ask you to wrap this all up, Jeff, is one of my favorites. Because it gets back to the idea of making people better humans. So you can answer this however you want, but I want to ask you about something that we can do today. Whether we’re an operator, whether we’re just a human being at home with our families… What’s something we can do today, that’s going to make us better tomorrow?

Jeff

You know, I can tell you how we approach things, and it’s all… Our culture is built around being generous, by being givers. You know, in everything we do… There’s a lot of people out there that are always taking, taking, taking. I would just say, in general, be a giver, right? I mean, if somebody needs help, give them some advice. You know, there’s a lot… You know, at the end of the day, most of us have more than we need. There are a lot of people that can use our help. I mean, you know, we as a business are down significantly over the years past, but our giving went up. We did not stop our giving. And at the end of the day, we felt, for us… we have car washes. We’re continuing to tie to communities. And again, that’s another way of how, as an operator, you can become successful is become a part of the community. You’re not just a car wash, and so set up some giving programs. But I think, in general, I think all of us can really look in the mirror and say, How can we be a better giver? And I promise you, it comes back to you tenfold.

Matt

Yeah, I mean, the reality is, is that that piece of advice, be generous, be a giver, is something that can really differentiate you. Because not everybody is. Not everybody is, and so that stuff, when it’s genuine, like you all do, really stands out. And I think it’s something awesome to see.

Jeff

I appreciate it. And you know, for us, it’s all about relationships. You know, the a way we look at everybody is we want to listen, we want to hear what your concerns are, or what’s going on in your life. And really try to build a bond and relationship. We’re not in it for the short haul. This is, again, just like the car wash chains and operators, I think this is a marathon, and we run our business like a marathon. We’re not looking short term. And I think, you know, we’ve got to make smart decisions; we’ve got to be looking ahead. You know, if you just look at the world, and the way it is today, it scares the heck out of you. And it’s hard to watch the news, and what’s going on around the world. But I think at the end of the day, you know, what we can do is we can impact as many people in our circle as possible. And that’s all we can do.

Matt

Yeah, I love that. I love that. Well, Jeff, I will let you get back to your busy, busy day here. As your deals have been picking up, that’s great news for Amplify. But I just want to say thank you so much for for being on the show today. I expect that we will have you back again, so thank you again, Jeff.

Jeff

Anytime, Matt. Thanks, again, for having us.