The giant manufacturer of household staples including Pampers diapers, Crest toothpaste and Gillette razors is forging a new business model: franchising car washes.
To jump-start plans for a nationwide chain of Mr. Clean Car Wash franchises, P&G in December acquired the franchise assets of Atlanta-based Carnett’s Car Wash, which has 14 locations.
“We need to look for new opportunities to allow us to grow,” says Bruce Brown, P&G’s chief technology officer. “That isn’t limited to things within our current business model.”
P&G is under mounting pressure to find new sources of revenue growth, particularly as more cash-strapped shoppers think twice about buying its premium-priced products. Wall Street is increasingly skeptical that the mammoth company can garner meaningful gains in its slow-growing product categories and a tough economy.
Professional car washing, which rings up about $35 billion in sales a year in the U.S., according to P&G estimates, won out as the company’s first major franchise push. “We want to blow this out to a national network of car washes,” Mr. Brown says.
The car-washing business has a handful of competitive advantages, says Nathan Estruth, vice president of P&G’s FutureWorks, which develops new business ventures. It lacks a dominant national chain, aging baby boomers are reluctant to wash cars themselves and more water-strapped communities are pushing professional car cleaning as a conservation measure.
Forming a franchise system, rather than owning locations, means “we don’t have to enter a capital-intensive business,” he says.
P&G knows people may cut down on car washing in the recession. But franchise guru James Amos notes that the franchise industry typically grows during economic slowdowns. With more people out of work, “there’s a larger pool of franchise candidates,” says Mr. Amos, chairman of P&G’s franchising-subsidiary board.
P&G, which scrutinizes shoppers down to the seconds it takes to notice a bottle on a store shelf, says it will offer franchisees detailed information about car-wash locations, consumer targeting and advertising response rates — techniques developed during the Cincinnati-area tests that P&G will combine with the Arnetts’ experience.
The Arnetts have deconstructed each step of a car wash in their franchisee-training process, including the precise location of where to start wiping a window and the direction in which the first stroke needs to go. Towel care also counts. “It matters what temperature you use to wash them,” says Mr. Estruth of the lessons learned from the Arnetts.
Finally, the Arnetts say, it’s important to add a little “Hollywood” to the process, which includes a theatrical snap of a towel before it is laid down in front of the car door so the customer can wipe his or her feet before getting into their car, Mr. Arnett Jr. says.
Source: WSJ, article by Ellen Byron