One of the largest and fastest growing car wash companies in the country is based in the Netherlands and is just getting started.
Tommy’s Express has opened 48 locations in 2022 and has more than 400 in the works as the Netherlands-based company capitalizes on the exploding segment of the car wash industry. The $15 billion car wash industry is expected to reach $20.7 billion by 2028, according to Grand View Research.
There are 60,000 car washes in the United States, and about 15,000 of them are of the express conveyor belt variety. They are expected to reach 50 percent market share by 2027 or 2028, said Alex Lemen, CEO of Tommy’s Express and Tommy Car Wash Systems.
“The car wash industry is on fire and for good reason; it’s like quick service restaurants from the late 1960s,” Lemen said. “There is a new trend with the express car wash, automatic conveyor tunnels; they’re fast and convenient and powered by membership programs.
“This type of car wash has been around for a long time, but in the last 10 years it’s like McDonald’s and the car wash (which) has revolutionized fast food.”
Tommy’s roots go back to 1969 and include the original Quality Car Wash brand created in the Netherlands. In the 1990s, the business expanded to its current franchise model, which includes building new locations on land to accommodate its own equipment and a more unique look to the buildings compared to other box car wash companies. shoes.
“We’ve shipped hundreds to projects around the world and done probably 60 packages under private brand names, and we’ve seen those operators do well, but not as well as the corporate ones,” Lemen said. “It was like selling a fighter jet without a fighter pilot.”
Tommy’s Express was launched in 2016 and provides franchisees with a full range of equipment, services and training. Each car wash averages $3 million in annual revenue, and across Tommy’s business—including corporate-owned stores and equipment—revenues have grown between 25 and 50 percent over the past five years.
Tommy’s Express ended 2022 as No. 8 on DRB’s list of the 50 Best Conveyor Car Wash Companies, and the company was named the No. 1 Smartest Growing Franchise on Franchise Times’ Fast and Serious list. Lemen said the company plans to add up to 100 locations each year.
In 2021, Tommy’s Express announced a new $30 million headquarters scheduled to open later that year.
Car wash companies throughout the company are growing. As Tommy’s Express took the franchising route, private capital poured into the industry, as it did with industries like self-storage and manufactured housing.
Like other industries that have attracted PE money, the car wash industry has long been dominated by mom-and-pop companies with at most a few stores. But consolidation has become necessary in the modern era.
Lemen said the industry is extremely fragmented, with the 10 largest companies controlling 3 percent of locations nationwide. Ultimately, he said, the top 10 will make up 50% of the seats.
“The business is very automated with little labor, good margins, and it’s resilient to Amazon,” he said.
Crain’s Detroit Business reported on several PE car washes, including Southfield-based Jax Car Wash, which is No. 30 on the list of the largest conveyor car wash companies. Miami-based El Car Wash, No. 36 on the list, is entering Detroit with its PE money.
In West Michigan, Tucson, Arizona-based Mister Car Wash is probably Tommy’s Express’ biggest competitor. The largest conveyor car wash company in the US with 430 locations, Mister Car Wash entered the West Michigan market in 2017 with the purchase of Southland Auto Wash. Once owned by a private equity firm, Mister Car Wash went public in 2021.
Mister Car Wash generates roughly 75% of its revenue from its car wash memberships, and other express car wash companies are likely similar.
Car washes continue to pop up everywhere, generate a lot of consumer attention, and while there may be oversaturation, Lemen said that’s probably a long way off, even with Mister Car Wash having more than 20 locations in the greater Grand Rapids ■ area. For the membership concept to be successful, customers need easy access to locations.
“It’s a tight market,” Lemen said. “They are adding more, we are looking to add another 10 to 15. Despite the healthy competition, we both exist successfully.” We are happy for them and for us, but it shows the need. With more convenient locations, this will increase access demand.”