For the past few years, car washing has been gradually side-lined by the growth of the forecourt convenience retailing business as well as the competition from hand car wash operators.
Much debate has taken place within forecourt businesses nationwide over whether the valuable space taken up by the car wash machine could be put to better use as part of an extended convenience store, or food to go franchise, and car washing dispensed with altogether.
But at Park Garage Group, the Kent-based Top 50 Indie, the decision is clear. In the past year it has embarked on a major investment programme, spending £1 million-plus boosting the car wash operations on its 48 sites. The 24-week programme kicked off in June and included the installation of 20 new rollover car washes, 28 jet washes plus moving from tokens to ’buytime’; 30 vacuums, and 48 air/water machines; as well as striking new cladding, LED lights and general electrical upgrades.
The investment is part of an ongoing review at the Park Garage Group, which was founded in 1975 by the parents of the current managing director Sunil Tandon, who runs the business with his brother Balraj, the CEO. It’s very much a family business, with Sunil’s son Hemant coming on board earlier this year, adding a new dimension to the business by injecting some youthful enthusiasm and ideas to complement the experience of the older generation.
The company has a fairly even spread of BP, Texaco, Gulf and Shell fuel brands on its owned sites, as well as managing about 10 Total/Esso sites. Average fuel volume across the group is 3.7mlpa.
"We are business people so we will always look at any opportunities to expand the network, but our current strategy is to concentrate on the sites we’ve got and see how we can maximise their profitability," explains Sunil. "Our main focus is our three core ’earners’: fuel, the shop, and car valeting. Once you get those fundamentals right, the rest is just cherries on the top. So we have been working together with our commission operators to provide our customers with the best service and facilities we can at any of our locations. We want to engage our customers so they stay with us for the long term."
The company has operated its sites with commission operators since 2012, having always previously run them directly. The change was all part of the increased focus to get the most out of each site.
"We looked at the cost structure of the business and various operating models and decided on moving to commission operation," says Sunil. "It was a big step for us to do that, having always had direct operation. But now the structure is settled in, we’re very happy with the way it’s working. It brings the focus back to a family business the commission operators bring their family in to work with them, so it’s not just about a big family business, it’s lots of small ones as well.
"The commission operators have a vested interest in the business it’s their stock, and they add their personal touches and use their entrepreneurial flair. But we assist them through the marketing of our Park & Shop brand. They are also supported by a great field operations team."
The Park & Shop brand was launched in 2003 and is highly visible across the company’s network. The company is committed to the brand and Sunil believes it brings them many advantages: "It’s our brand, we can do what we like with it, and we don’t have to pay anyone any fees. Having the Park & Shop brand has given us 4-5% margin. It gives us a lot more flexibility to work with our own suppliers, have the shop laid out how we want, and what best suits us as a company. Because we’re hands on, the manufacturers and suppliers come direct to us, and to the commission operators, so their messages are driven right through to the customer.
"Also since June we have changed our shop supplier to Bestway, which has worked really well for us the company has been very supportive. It has brought the cash & carry approach into the wholesale side of the business; and our operators really understand where the deals are too. Bestway is very good with its marketing and promotions we know certain deals will just fly through the roof, such as the recent Red Bull and Celebrations deals. The operators couldn’t have ordered more quickly if they tried."
The company’s car wash operations have also come under the microscope: "We looked at our car wash operations and we could see they needed some investment although despite that they were still doing very well. It was the right time for us with good access to funding while interest rates are low.
"Because the cost of labour is a big issue, we felt we could get a better return on capital investing in car washing than say, a Subway operation.
Park Garage Group has always had an interest in car washing and Sunil knows that people still take a pride in their cars; and particularly for ladies. He says they feel safer coming to a clean, well-lit professional-looking forecourt, rather than queuing at some of the more dubious-looking hand car wash operations.
"Also the fact other forecourts are moving away from car washing we saw as a big opportunity," stresses Sunil. "Motorists still expect to see car washes/jet washes on a petrol station. In order to meet that expectation we had to give our offer a modern twist with newer machines and an update of all the facilities."
The company has worked with Washtec on the project and already the results have been impressive according to Sunil, with the jet wash business showing a 20% growth simply by moving from tokens to ’buytime’. "It was a huge change for us as we’ve always had tokens," he says.
Ben Hogan, UK sales manager at Washtec, says the whole of the Park Garage Group business has a comprehensive understanding for the benefits of a first class valeting offer: "That’s why the relationship works so well given that our main goal at WashTec is to deliver maximum customer benefit," he says.
"The scale of the investment programme shows a commitment to position themselves as a leader in the valeting industry, they understand that when it’s done well, a first-class automated valeting offer can deliver a return on investment beyond the reach of other sectors of the petrol retailing industry.
"The appreciation for re-investment in automatic washing that these guys have shown and the need to keep their equipment ahead of the game is something we are beginning to see echoed across the industry, where on the whole we are noticing a realignment by the public with automatic washing.
"The decline of hand washing over the past 18 months seems to be continuing as innovations on our car washing equipment keep our customers one step ahead.
"Everyone at WashTec is delighted to have delivered on such a challenging installation schedule and we are now already working with Park Garage on future solutions to help streamline their valeting business and deliver more reward and benefit."