Summit Wash Holdings Opened 24 New Locations in 2023

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Summit Wash Holdings Opens 24 New Locations in 2023 (Read More)

Summit Wash Holdings, a car wash company, has expanded its store count from 28 to 52 locations in just one year.

• Explosive Growth: Summit opened 17 new locations in the last half of 2023, including recent openings in Florida and Connecticut.

• Commitment to Excellence: The company's Chief Development Officer recognizes their dedication to excellence and ambitious plans for further expansion.

• Partnership for Growth: Summit formed a partnership with Russell Speeder's Car Wash and later partnered with an investment firm, reinforcing their commitment to growth.

🧠 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.

TRIPLE NET TENDIES

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NET LEASE NUGGIES

• Tasty Restaurant Group expands with Dunkin' acquisition. Tasty Restaurant Group, a portfolio company of Triton Pacific Capital Partners, purchased 17 Dunkin' restaurants in Vermont. The CEO, Robert Rodriguez, explained that the acquisition was appealing due to Vermont's strong preference for Dunkin'. Tasty Restaurant Group now operates a total of 37 Dunkin' stores in Vermont and North Carolina. Rodriguez, a seasoned industry veteran, believes in focusing on customer experience and employee satisfaction for success. With an aggressive development plan, Tasty aims to elevate standards and improve execution across its brands. (Read More)

• Restaurant real estate landscape to face challenges in 2024 and beyond - Despite pockets of development, the restaurant real estate industry is expected to remain challenged due to supply and demand factors. Limited development in recent years has led to an all-time low, and shopping center construction has been affected by the pandemic. However, CBRE predicts a rebound in the second half of 2024, with consumer spending countering economic headwinds. Office vacancy rates will peak, office construction will slow, and retail availability rates will decline. Luxury retailers are looking to expand in resort markets and underserved major metros. (Read More)

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