Featuring some of the largest leaders in the industry.
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Hello everybody. This is Harry Caruso, founder of car wash advisory. And thank you so much for joining another episode of our podcast today. We have a very special guest that of Pete Manny, CEO of zips car washes, and we are going to have a lot of fun here today. So Pete, thank you so much for joining us. Thanks, Harry, newly minted CEO.
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One last point before we jump right in. Dennis zimberoff, managing director here at Car Wash advisory, is also joining us, and with that, Pete, talk to us more about this newly minted position. Sure glad to be at zips. It's very exciting part
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coming out of chapter 11. So post emergence,
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lots of momentum, lots of wind in our sails, right side of the balance sheet. So all those things are very positive, having had some experience in this previously through when wash depot went through this back in 2000 2001
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was a it was a great experience, as hard as that sounds, or has you know, different as that might sound, it was one of the best experiences I've ever had in my business career. A couple things happened there.
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First of all, nothing galvanizes a team like going through a crisis situation like that, and it absolutely did, but to come out on the other side positive
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really gives you an appreciation for everything that you have right, and everything that you had to fight for, and wash depot was was better for it, and ever since, is probably one of the strongest, financially balanced companies in our industry that you don't hear much about,
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but they are fantastic company. Hope to do the same thing here at zips. So coming out,
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money in the bank balance sheets been restructured,
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learning about the team here and everything that they've done in their battle for survival, which was really extraordinary. But the people that are here are a good team, and we're going to work with them and get them organizationally prepared, through operations, through training, through facilities maintenance, kind of that the key parts there, and take them to the next level.
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And Pete, we have so much to discuss today, and I want to make sure that we focus most of all on what lies ahead, because that's the exciting part. But with that being said, I mean, you did it in terms of zips coming out in the timeframe proposed. I have to be honest, I am shocked.
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Well, in speaking with the lenders, and I started speaking with them, probably the
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towards the end of January, they were pretty
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on top of everything, and they they enlisted some good companies, Alex partners, Hilco, Evercore,
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and they had a plan, and they stuck to the plan, and really worked, worked it out well with the REITs and unsecured creditors. And, you know, hats off to them. I had very little to do with that process, for sure, but they they took some experienced people and through the new lenders, HPs, Brightwood pennant Park and some others,
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had some really strong departmental people that guided the process. So they're happy to be out.
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They're looking forward to the next chapter. For sure, we're in close contact often, as you might imagine.
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So Pete, let's talk about that next chapter. Give us give us the story here. Give us the scoop. What does the next chapter for zips look like? Well, really, the next chapter is centered around people and making this a people development company, right?
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This company is going to wash 2025, hopefully 30 million cars, and that that's not done with people in an office, right? That's done with boots on the ground. Where's the excitement? Where are the great people that are going to provide a great customer experience every day, consistently? Right? Everything we do at the site level
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is it's 100 different tasks, and none of them by themselves, are difficult, but to do it day in and day out, consistently,
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from site to site consistently, there's the trick, and that's where operations comes in and training and proper maintenance. So one of the first things we're going to do is stand up a robust training platform, an LMS learning management system. We're.
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That will encompass not only technical training, but culture, expectations, how to work with each other, how to work with customers, things of that nature that will make the experience at each one of our sites better.
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That counters into operations. It will also come into play with with preventative maintenance and what's expected at the site level versus the facilities maintenance department. They have a great facilities maintenance department here. These guys have really done a good job and without a lot of resources to do it.
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So now deferred maintenance, right? That'll be taken care of here. It's being taken care of right now, but over the next 12 months, the properties will be
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presentable to all customers 100% of the time, right? We're looking for zero downtime, which is great.
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Previously at True Blue, we had gotten to a consistent 99.7%
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uptime,
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which is fantastic, right? And every time. And we did that because every time that we
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came across a problem, whether it was a conveyor down problem. How long was that conveyor down? It was down for two or three hours. Well, what was the root cause of that problem? We would go back and try to incorporate that into training, to train out that problem, right? And we weren't always 99.7%
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we started at 90 and we got to 92 and then 95 and we train those things out.
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That's why all those things have to work hand in hand. Because when you do find that problem, who's handling that? Is that an ops problem? Is that an operational issue, or is that a facilities maintenance issue? Right? Do I have welds breaking? We don't really have our site managers welding, nor will we add zips? Right? That's a Facilities Maintenance job, but it's the ops job to make sure the track, you know, is greased, air pressure is correct. Do we take the link out of the chain? Are my rollers wearing properly? All those simple things that that preventative maintenance and ongoing maintenance need to be so that is part of the that is the plan, right, to get a consistent quality consumer experience every time at every site. It
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sounds like a lot of accountability on the site level. Which people have this idea that accountability is a negative, it's somebody coming down on them, but I'll be honest, I think it, I think it enhances, actually, the culture to an extent otherwise impossible. Harry, I love accountability. It's sight, yeah, because think about this, you come to work, you wash cars, you go home. You come to work, you wash cars, you go home. How exciting is that? Right? But if I'm teaching you a little bit about chemistry, a little bit about grassroots marketing, about your P and L, how to operate a business, how to take care of consumers. Now you're not only having fun at work, but we're building a career. So we want to have a defined career path and a formalized training program.
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We're exceeding beyond with anyone coming into the car wash industry is going to think is a job. The last thing I want is somebody to be here until they think they're going to find the next best job. We are not as car washing 20 years ago, might have been a stepping stone industry or stepping stone job to the next best thing. It's no longer that. And you don't need a college degree to make six figures in the car wash industry.
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Talk to me more about the culture. So I think that this is fantastically exciting. Here we are with and I'm no sort of offense or disrespect whatsoever, and everything that's done to date, because it has been fantastic. But coming into a situation where you have a company of this size and scale that is almost a blank canvas in terms of culture, what's the goal? In terms of what is the pro forma culture of zip supposed to be? I wish it was a blank canvas. It's a heavy lift right now, because while I can come in with these great ideas and concepts and even execute them.
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The folks that have been here have that have been through this, and I we saw this at Wash depot as well. Show me the money. Show me what you're going to do, right? They're not going to believe it until they see it. They've had some promises made that weren't followed through. So right now, all eyes are on myself and the executive team and the ops team and the facilities team to see if we're going to carry forward with our promises, you know. And one thing I can tell you that I learned.
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And
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from Greg Anderson, who's the CEO of wash depot, is you keep every promise you ever make. That being said, we're going to make very few promises. I
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think that's the right way to do it, right? That's the only way to do it. It is. So we're going to look for some quick wins, some things to build back culture, some employee perks that that we can do
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that don't cost a lot. Focus groups, for example, how about we just ask the employees, the team members at site level, what do they think would make this company better?
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It goes a long way to correcting what's wrong. It also goes a long way into building the culture like, hey, someone's actually going to listen
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to me. Now, whether that happened before or not, I can't tell you, because I wasn't here. But
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as a side note for our listeners, because I just cannot not say this, we were interviewing a candidate for a financial analyst position today, I kid you not the words that came out of their mouth. What did you not like about your last role? I'd like to work somewhere where people care that I work there. That's what they said.
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I thought it was simple yet resoundingly clear. And it's funny how quickly that can become. Not so the case. It's huge, and it goes into retention. You know, it's 22% of people
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leave their job because of money. It's typically not because of money. It's because of who your direct supervisor is, or the culture of the company, or no one's listening to me. Or I don't feel like it can develop here.
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Those are huge.
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So how do you, and I don't mean to harp on this, but just because, goodness knows, what an interesting topic for listeners, how do you provide a upward verticality for site level employees at a car wash company? So it's actually a tree,
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because the tree is operations. It could be maintenance, it could be training, it could
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be sales, it could be to the corporate office. So there's this, there's this career development tree, okay, now, traditionally, people are going to move up. They're going to come in as a team member. They're going to move into sales supervisor, Assistant Manager, manager, district manager, traditional, okay, but then you have that person that every time the maintenance guy is there, the maintenance tech is there, he's following them around, going, Hey, what you what are you doing?
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That guy gets identified. That person could be a girl. That person gets identified as an apprentice. So we have our apprentice program, right? So you have an apprentice, tech one, tech two, tech three, Maintenance Manager, divisional Maintenance Manager.
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There's that branch. Then you have people that are just very good, that maybe are a site manager or district manager, but they love to train, and that person moves into the training field as you build a good learning management system. And I know people refer to an LMS as an online tool. That's only part of it when you're training to be effective in our industry and probably every other industry, it is. It's not only online training, but it's it's workbooks, it is hands on training. It's shoulder to shoulder training to be comprehensive and be very good at what you want to do.
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It's wild,
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and it sounds like from an organizational standpoint. I mean, it makes sense to have people cross trained in different elements as well, because it makes them more robust as as employees. And they're also your biggest advocates from the recruitment side, which I would imagine you guys are looking at doing right now. We are. Yep, that's a great point. So cross training people once again, we'll, let's start with if I'm, if I'm the person that's guiding cars into the tunnel all day, and I do that eight hours a day or six hours a day, you know, six days a week or five days a week. How fun is that?
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Right? Where, if I can teach you sales and tunnel operation and possibly some management, how to schedule or how to work in the back room,
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you're just adding value to that person's career.
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As far as recruitment goes,
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we're going to be looking for the best and brightest people with car wash experience, people without Car Wash experience, people that are looking to develop that maybe aren't happy where they're at
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or don't feel like they're developing, sure that's going to be a great a great place for us to find good people. And Pete, would you go ahead and say that zips truthfully, wants to be offering long term careers for these people. Yeah, that's the goal.
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Right? So, yes, that is the goal, and that's how you scale a business. Which let me head into that, because we are looking to scale a business
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through the restructuring. Zips will drop down from 277
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stores to somewhere between 202
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20
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but within the next year, we expect to have Greenfield possible M and A
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opportunities and selective obviously, we want to grow in the areas that we're strong in, in the regions that we're strong in,
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and get some bolt ons there, but also some Greenfield opportunities.
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So with that, once again, you need people, and those people, you want to have them trained, indoctrinated into your culture, right? So going back to training like we'll talk about the interview process the every time you hire somebody, you change the fabric of your company, the DNA changes right for the better, or possibly for the worse. So the interview process, the hiring process, is huge, and laying out the expectations and
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how we treat people, and making sure that in the interview process, what we tell somebody is exactly what we live up to,
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yeah, yeah. That's integrity, right? And that shines through in terms of you're mentioning all these strategies, which is, again, fantastically exciting, and I think something that everybody and every listener is going to be very much looking forward to seeing.
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I just want to sort of explicitly state this zip is not going to stay at the at the site count that the starting point is going to be, is it no business? Yeah, the new owners, the lenders, which are now the new owners,
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have believed in growing the business
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and holding it. So
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this will be an exciting venture going forward.
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They understand where the investment has to be, investment in training, investment in facilities, maintenance, deferred maintenance,
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investment in in staffing the properties properly
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and making sure that that customer experience is consistent along the way at every store.
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So Pete, do you have aspirations or a vision for zips as far as being more of a national player, or do you feel like it would be more of like a super regional focusing, say, as an example, southeast or what? What's kind of your feel for that? Dennis, great question.
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I think the sweet spot in our industry itself is for Super Regionals, right? Agreed. Mr. Is a great company, 550
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ish stores.
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They're getting close to being a national brand, but still,
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still not right. I would rather be the best car wash in every neighborhood
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then try to be a national player. So Super Regional is where I see us best fit, and with that building out areas that we're currently in. So yes, I would love to be a super regional. We'll take North Carolina, for example. We're in Asheville, Winston, Salem, Raleigh, Charlotte.
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That that kind of concentration gets us good play,
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you know. So maybe expanding between Raleigh and Winston, Salem, there's Greensboro, Burlington, that whole area, that whole i 40 corridor, we'll call it. I can see it's building out there,
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where we're in Myrtle Beach, Hilton Head,
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I can see is building out South Carolina.
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You know, for example, we're pretty decent in Southern Virginia, possibly expanding to mid Virginia. And so that cluster, that southeastern cluster, I think would be good. Am I
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going to go try to go try to build 100 car washes in Atlanta, probably
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not, or huge, or something like that. You know, we've, we've talked about in generalities, not with zips, but take a, take a MSA or
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like Houston,
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right? It's very hard to own a market like Houston, but you could own a quadrant.
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So,
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yeah, no, it makes sense, especially from brand synergies, basically getting that spider web effect. I think North Carolina and South Carolina are great examples, because essentially, you have, you know.
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Towns, what, 45 minutes from each other. And if you consistently see the brand, it's, it's a home run, right,
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right? But being that, that center, that synergistic player in a local market where you live, work, play, shop,
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that's, that's where it's at.
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Let me ask you on that note, so so very often, one of the conversations that gets brought up in the industry is the benefit of being exactly what you're saying the neighborhood. Wash, your local in the community you're entrenched in that community. Question I have for you that I'd love, and I think most listeners would love to get your opinion on is, is it possible to get all that benefit of being the community wash while still flying the banner of a zips or a mister, if done properly, can you still have that benefit? Absolutely. I think it's disassociative.
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Okay? I think people will.
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They're still looking at as the local car wash, if it happens to be a mister or zips, or a quick collect, or whatever it is, even though it's a bigger brand. And
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I think then what happens is, you're in Raleigh, North Carolina, and you wash your car to zips, and then you happen to vacation down to Myrtle Beach and you see a zips. Well, you already have that confidence, right? I think there's very little overlap in that.
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As far as nobody's buying a membership, because I can use it in Myrtle Beach, even though I live in Raleigh. Okay,
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it's a nicety. It's a nice to have,
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yeah, well, and especially with the
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training that you're looking to implement, if they come on site and have that great experience, customer experience, they're guided on, well, the properties are well maintained, etc. That's only going to increase your credibility. I mean, I think you and I would both agree that Mr. Best in class with that triple you really are, yeah. I mean,
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yep, they've done a fantastic job with that. So Pete, you bring such a unique perspective. How long have you been in the industry, all in all?
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Well, I just tell people, north of 30 years at this
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point. I grew up in the industry. Yes. So this question that seems to become, you know, almost perennial, if you will. Of are we oversaturated? Is there white space? Is there room to grow? Are there too many car washes in the country coming with the background and the perspective that you have given wash depot and everything before and in between? What's the answer to that question? You missed my great ICA panel discussion, Harry, that's because you were you were doing your own session, which I heard went very well. Thank you.
22:54
There's room for everybody. There are some markets that are saturated, but what you're starting to see now are the better operators coming out and really concentrating on improving their operations, shoring up what they already have, as opposed to trying to build 20 or 30 more.
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I think that with the cost of capital right now, people are reassessing ROI before they jump in and build five at a time, right? Or just reassessing if they build one.
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So there's that.
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What I think you're not going to see for the next five years are the people that came in just to build and turn
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because those people are sitting on some properties right now. They're trying to sell. And they're getting
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a realistic approach to what the multiples are, right? The 1516, 18 multiples are not going to happen. No, no, I don't think so. I don't think so. You don't think so either.
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I think they're 10s, you know, and you're really good properties are going to be 12, maybe, maybe a little north, depending on how bad somebody needs it, if it, if it really complements their already existing footprint.
24:17
Yeah. In that vein, Pete, one of the questions that that we get asked pretty frequently from from different operators, is, what are your thoughts on horse trading from the perspective of, you know, let's say, you know, zips has a single site in Tucson, and Mr. Has, you know, a single site in North Carolina, and it makes sense for for the properties to be swapped. Do you see a future for that, or do you think that's that availability would be there? What are your thoughts? Actually, I do because right now,
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and I think that's going to happen over the next two years,
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okay,
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I see players looking.
25:00
To really shore up their regions and make sure that they're the one or two player. And if I can do that and we can benefit each other, then yeah, absolutely.
25:12
And not to mention a lot of these locales, their portfolios are becoming more mature, which I think makes that trade more palpable for both sides, at least. And let's jump back a couple of years when when M and A was strong and people were building, and I think a lot of people were just trying to gain store count without really thinking of geographic presence,
25:38
and they scattered themselves without thinking about how hard it is to operate these things, right? And I can remember, you know, having a conversation with Greg Anderson. We had 84 stores at watch depot,
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and we were looking to sell 27 of them. Now, as an operator, I'm like, I don't want to sell anything
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ever.
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And Greg said, You're beating your head up against the wall for no reason. We can make as much money with 57 as we can with 84
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and he was right,
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well, and especially because it's close to the, you know, the nucleus of the operation, you know, department, because the farther you you get spread, and also the dilution of operational talent in the industry is, is definitely, you know, there, because you bring up a fantastic point,
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right? We've seen with with the entrance of private equity in our industry, and it just exploded.
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You know, there was no school of car washing. So you took people that in in companies that had this multitude of talent, and now they're off in 12 different companies. So dilution of talent, and then as we grow, those people get elevated. They're away from the customer. They're not facing the customer anymore, and you're bringing in this talent which doesn't have the tenure.
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Hence the real need for knowledge and learning management systems. So what's happened is the the knowledge that we used to pass down to each other,
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right is is now into a learning management system, because we have to train 100 people in 100 different locations.
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So systems have changed to help us with the growth in our industry, which is fantastic look. I was telling somebody yesterday, like
27:41
15 years ago,
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this wouldn't be the conversation. The conversation would be, how do we promote professional car washing versus at home car washing? We don't have to do that anymore, because we have educated the consumer through the growth in our industry that washing your cars become the fabric of America,
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right? So it's pretty commonplace, and the next generation growing up that hopefully buys a car will will already have that kind of ingrained
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crazy to think about. It really is
28:20
so Pete to turn to a more maybe topical discussion. We get approached constantly about whether or not zips is spinning off sites, spinning off sites, spinning off sites. So maybe we could take a quick second to address whether or not that is or isn't the case, and to what extent there's some truth there. Sure. I think that was all really in conjunction with the with the chapter 11, right? And I think that's all been negotiated back through the REITs, and it's all a done deal. I don't see anything occurring in the future, in the near future, as far as trading stores or selling stores
29:02
for the foreseeable future. If anything, we're going to look to add store count.
29:09
That sounds exciting. It is. It is first. We got to make sure the wheels are on the train the right way, and then before we go out and add
29:18
because once again, there have been several platforms out there that we've seen that have grown too fast without the proper organizational structure
29:28
and
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their their EBITDA isn't what it should be, their operations aren't what it should be, their consumer experience isn't what it should be, probably their employee retention isn't what it should be. We want to get those things right, build a strong foundation.
29:48
Yeah, go ahead. Oh, I'm sorry, Harry, I was just going to ask Pete from just a super high level. We don't have to get in the weeds, but obviously, you know, from a CapEx perspective, and.
30:00
Rebranding the stores, any plans for that, or, you know, giving them, you know, face lifts, you know, that sort of thing we do. We have a pretty extensive budget for refresh, remodel and refresh, which we are starting. We have
30:21
46 sites in permitting for remodeling and refresh already, so we're going to come out of the gate strong. And then as far as deferred maintenance goes, we have a budget to take care of that, and then we have a pretty robust ongoing repairs and maintenance budget
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aside from normal capex.
30:40
So we're going to be enhancing our chemical distribution program to be more efficient. There we're looking at point of sale systems
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and data collection,
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so just as a few things. And then, as always, you know quality of the car revolves around water quality and equipment quality. So yeah, well, thank you for answering that.
31:06
So Pete, pretty excited about the future. That's what I was going to ask. So as a last note here and again, we cannot thank you enough for having or for being willing to come on. What? What do you want to leave? Listeners, watchers, this whole thing? What should everybody know about zips? Moving forward from here that zips is a good company with good sites and good footprints, good site layouts, good bones, and we're a good company looking to become a great company. And how's the CEO
31:38
overwhelmed currently,
31:41
but super happy to be here and about what we're about to do to our 1800 team members. Hopefully we're going to make them very happy. I can't wait to watch all this come come forth. Pete can't thank you enough for having you or for, you know, joining us here today. For listeners, stay tuned for our upcoming episodes and thank you so much for tuning in. Harry Dennis, thank you very much. Thanks. Thanks, Pete. All the best to you. Thanks. Bye.
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495 Brickell Ave #707
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