Eureka 432: What carwash companies can learn from F1

0:15You're listening to Eureka on Monocle Radio, brought to you by the team behind the entrepreneurs, the show all about inspiring people, innovative companies and fresh ideas in global business. I'm Tom Edwards. Ian Rickwood is the executive chairman of Aquasonic, a car wash company that's turning a somewhat mundane errand into a high-tech and hassle-free experience. Inspired by the Express Tunnel model in the United States, he set out to build a smarter, faster and more sustainable car wash, one that gets cast spotless in 90 seconds, using warm water, advanced chemistry and a little Formula One wind tunnel technology.

0:54Ian's a serial entrepreneur with a background at P &G and Pepsi and amongst other notable achievements he played a key role in bringing Subway to the UK. Now alongside his wife and business partner Emma he splits his time between London and the US where Aquasonic is making its mark. With locations rolling out across Florida and big plans for growth the company's on a mission to shake up a 15 billion dollar a year industry. So how can you incorporate F1 technology into a car wash business? And could it work in international markets? Here's Ian with more.

1:34Americans have a love affair with their car. Not all nations have that. And there's quite a lot of difference between European nations even. But fundamentally, you know, car, for a lot of people, it's at least the second largest asset that they own. And for many people, it's perhaps the primary asset they own if they, you know, living in rented accommodation. So I think the idea of looking after your car and looking after a valuable asset makes sense. And certainly that's how the Americans view it. We got introduced to the sector by some entrepreneurs out in the US and learned a lot through that process and have really built it from there.

2:03But it's probably worth me just saying to begin with, because car wash will mean different things to different people, of course. Very much within Europe, the general perception of a car wash will be you roll up to a gas station and you wait for 25, 30 minutes to go through something that does a chronic job and probably break shore. wing mirror, or you go somewhere else to the industrial estate where you jump out the car and again, you get it back 10 minutes later. We're nothing like that. Absolutely nothing like that. It's a space called express tunnels in the US, which are now very prevalent, but haven't really made their way in any meaningful scale into Europe yet, but I'm sure are going to come.

2:37When we got into the business, we said, okay, if we're going to be different and better, what are the key consumer needs? So it's all about consumer insight. And so we spent a lot of time really understanding that and we recognize that the things that really hack users off when they go through it is clearly if it comes out dirty still that's complete failure so therefore getting the right chemistry so we've really invested in in brand new chemistry and even something as small as you know if you think when you get in a shower if you want to get clean would you use cold water or warm water almost every car wash in the u.s uses cold water when it's trying to clean a car so you know we're going to be using warm water as one difference and we especially adapted the chemistry so it works better with warm water and gets to clean a car The other thing that really hacked people off was when it came out wet or slightly damp, because if it comes out like that and there's lots of dust in the air, you've spent this time going through the car wash, you've cleaned it off, and immediately it's got dust on it again.

3:28So we said, OK, there's clearly some drying issues. What can we do about that? Well, at the end of the day, it's kind of aerodynamics. So we went to some guys that we knew in Formula One who have wind tunnels, and we talked to them about it. They got, you know, being kind of mad scientists, they love the idea of what we're trying to do. And so they ran different car models through their wind tunnel to see what the optimal way would be to dry those cars. And one big insight they brought out for us was that the way that people were solving this problem historically was bigger is better. So people would say, put more blowers in, put more blowers in.

3:59And the blowers were going up and power was going up. But in reality, what they actually identified was all that was happening, wind was fighting each other. The air was fighting each other and not being very successful. So we've actually taken down the amount of consumption by about 30%.

4:16We started in the business initially doing what sort of somewhat impolitely called the lipstick on a pig strategy, where we acquired secondhand stores, thought we'd spend money on, you know, capex them out with better equipment and obviously drive revenues. And what we found is, whilst we had some success with that, that actually they didn't really perform as we hoped because, frankly, the industry was so backward, the technology didn't all work with each other and the data that you thought you would control, you didn't control. and there were just numerous issues. So we spent three years saying, okay, we love the macros.

4:45The macros are great. It's a high margin, recurring revenue business that's growing year over year, even grows in downturns. So the fundamentals are great, but we want to do it properly. We want to do it like a proper consumer brand would attack this. And that's the approach that we took. One of the sort of insights that we got from our experience was, you know, what makes a car wash super successful is it's all about the real estate. So it's all about location. It's all about the operations. And it's all about the marketing. Those are the three key ingredients that you're looking to succeed at.

5:16We want to get the very best locations. People who are going to a car wash will only drive about eight minutes or within three miles. So it's an incredibly convenient local purchase for people. Our stores are in great sights next to other retail centers that you're going to every single day. So an out parcel of a Walmart or a Publix or a supermarket or next to a large gas station that you're visiting regularly. So good prime locations. You'll be able to drive onto the forecourt if you're a member, which 80 % of our customers will be. If you're a member, it will recognize you straight away as you turn up.

5:48They'll say hi. In you come. Barry will go straight up. You'll go through a member lane. You'll go straight onto a, I guess, what you'd call like a travelator at the airport. You just roll onto a man. You're going to neutral. You'll sit there. 90 seconds later, you'll come out the other end. And you'd have had a very detailed, not a single person would have touched your car. It's all computer-generated equipment. and you'll get out the other end with a perfectly clean, unscratched and perfectly dry car.

6:19We want to be owner-run because, you know, we really are trying to set a very clear culture what we're doing, which is hospitality service. So we want to kind of give that service an appeal for people to come there. And that means having your own operations and your own culture. And we're very big on that with the team that we brought in and what they're trying to instill in the people we're now hiring. But I kind of work around on that because franchising is a good model and I've got some experience with that previously. But what we have done is introduced something called the branchise, which is for somebody who wants to own their own business and point at it and say, hey, I own that over there, but not actually run it.

6:49So they'll put the capital in for a given store or a bunch of stores, but our team will operate it for them. So it's kind of a mashup, if you like, of a franchise and owner operator called the branchise. some people already are probably thinking about it within europe because they would have seen it the opportunity as well but i think it's a big market and i think there's sort of plenty of space and it's so fragmented that right now we're just focused on what we need to do long term we'd love to bring it to europe honestly we're just passionate about it it's a really fun business it's been really interesting to get into our ambition is to stay in it for as long as we can to grow it as successfully as we can and wherever it goes it goes

7:36that was ian rickwood the executive chairman of aquasonic and you can learn more by heading to aquasonic carwash.com and that's all for this episode of eureka we'll be back at the same time next week eureka's produced by laura kramer with audio editing by jack jewers listen again and find out more at monocle.com. To contact the team, do feel free to email Laura on lrk at monocle.com. I'm Tom Edwards. Goodbye, and thanks for listening to Eureka.