Spark Car Wash Raises $30 Million in Series B Funding to Expand

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SPARK IT UP

Spark Car Wash has secured $30 million to expand its store base and bring modern, membership-driven carwashes to a region with high growth potential. (Read Here)

Expanding store base: Spark currently has three operating washes, four under construction, and a pipeline of over 32 locations. Spark is committed to providing an energizing carwashing experience through a focus on quality, service, sustainability, and community building.

Investment support: The Series B funding round was led by GoPoint Ventures, a venture capital firm that recognizes the potential in Spark's real estate strategy, market opportunity, and operational excellence. The partnership with GoPoint Ventures will enable Spark to become a dominant leader in their markets.

🧠 EDITOR’S THOUGHTS

Car Wash Craze: As many of you in the industry know, the express car wash market has been wild af in recent years. Here’s why:

• Profitability - Express car washes boast notably higher profit margins compared to other business models. They often yield profit margins ranging from 40 percent to an impressive 60 percent.

• Subscription Models - Weather and seasonality pose significant risks for car wash owners, influencing consumer behavior. Monthly subscription models mitigate these risks by offering customers unlimited washes, allowing them to clean their vehicles at their convenience, regardless of weather conditions.

• Sale Leasebacks - Among the attractive elements drawing equity groups to invest in express car wash businesses are sale-leaseback transactions. Substantial car wash operators capitalize on their strong corporate guarantee, recovering a considerable portion of their business investment by executing long-term leases and subsequently selling the real estate to private investors. This strategy enables these operators to leverage their robust corporate backing and extract value from their real estate assets.

• Lease Structures - They typically secure terms of 15 to 20 years, coupled with annual rent increments, offering a safeguard against inflation. Often, these car washes are priced below the costs required to replace both the building and the business. Express wash development typically incurs expenses ranging from $3 million to $5 million.

• Tax Benefits - The Tax Cuts and Jobs Act, particularly Section 179, grants car wash proprietors the ability to deduct all initial-year expenses for new equipment. Section 179 also accelerates depreciation over a 15-year period, a significant reduction from the previous 30-year timeframe. The only other net lease properties rivaling this depreciation advantage are convenience stores with attached gas stations.

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NET LEASE NUGGIES

• Mammoth Holdings has announced the opening of its newest location, Silverstar Car Wash, in Fargo, North Dakota. This marks Mammoth's 10th greenfield opening of the year and brings the total number of Silverstar Car Wash locations to 22. The expansion aligns with Mammoth's strategy of developing new sites and acquiring existing brands.

• Soapy Joe's Car Wash: Soapy Joe's opens its 21st location in Vista, California

• Walmart reported strong third-quarter earnings and revenue, surpassing expectations with growth in all segments. The retail giant also raised its annual outlook, albeit slightly below analysts' expectations, and noted the possibility of managing through a period of deflation.

• Sam Fox, founder of Fox Restaurant Concepts, is opening the much-anticipated Flower Child restaurant in Salt Lake City by the second half of 2024.

• Lee’s Famous Recipe Chicken unveils new restaurant prototype at annual Brand Conference. The prototype features a contemporary design with smart elements to enhance the customer experience.

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