Hartford Business Journal

14 HARTFORDBUSINESS.COM | AUGUST 21, 2023 Jim Fontanez (left) is the co-owner of Kingz Kar Wash, which recently debuted in New Britain. Kingz Kar Wash employee Ivan Guadalupe (right) stands next to Bill Jodice (center), president of PDS Engineering and Construction, which led the build-out of the facility. HBJ PHOTO | STEVE LASCHEVER Awash in Cash Private equity investment, lucrative membership model spur CT car wash boom By Hanna Snyder Gambini hgambini@hartfordbusiness.com A local business owner recently bought and then sold a Hamden car wash property within six months, making a $200,000 profit on the real estate. The facility dates back to the 1970s, and now joins a flood of recent car wash sales and new development projects that will bring more modern vehicle cleaning services to the state. Numerous Connecticut towns — including Windsor, Cheshire, Enfield, East Hartford, Newington, Bristol, Wallingford and Waterbury — are awash in land-use applications for new car washes. The recent surge in activity is being spurred, in part, by capital injections from private equity firms, which are attracted to car wash businesses because they are high-cash-flow operations that come with real estate and repeat customers, experts said. For example, private equity-backed Russell Speeder's Car Wash of Connecticut in July purchased the Hamden facility, at 210 Skiff St., for $1.95 million. It was sold by Nick Magnotta, of Trumbull, who originally bought the property in January 2023 for $1.76 million. Russell Speeder's was founded in Norwalk in 1963 by the Shullman family. The company expanded over the years to 21 locations with over 260 employees and just under $60 million in revenue, before it was sold in 2022 to New York City-based private equity firm New Mountain Capital, according to a company history on the LinkedIn profile of Mike Shullman, who led the sale. New Mountain, which says it has $37 billion in assets under management, now operates Russel Speeder's under its Summit Wash Holdings company. Summit, which is dual headquar- tered in Norwalk and Florida, says its strategy is to acquire and develop express car washes in key markets, and implement improved operations and membership programs that provide reliable revenue streams. Summit now consists of several car wash operators with 37 sites across the Northeast, Florida and Nebraska, it said. The U.S. car wash industry was estimated to be a $15.2 billion market in 2022. It's projected to grow at an annual compound rate of 5.7% through 2030, according to Grand View Research. Fast growth Milford-based Splash Car Wash, which has 18 locations in Connecticut and New York, was recently acquired by Boston private equity firm Palladin Consumer Retail Partners. CEO and co-founder Mark J. Curtis said he started Splash with one car wash more than 40 years ago, acquiring a second facility 14 years later. As the concept of washing cars by hand on a conveyor began to grow, Splash got a third location in Norwalk in 1996, "then we got a few more here and there." Five years ago, Splash was up to 20 locations before Palladin took a majority stake in the company, said Curtis, who retains some ownership. Private equity funding allowed Splash to acquire more facilities and update existing car washes. Now with 1,200 full- and part-time employees, the company's portfolio has grown exponentially, from 20 car washes over 40 years up to 60 in the last five. Splash was always profitable, Curtis said, but he wanted the capital to grow more quickly. "And it was hard to grow as fast as we wanted," due to "limitations of local financial institutions," he said. "We were not able to finance multiple deals," which range from buying or renovating existing car washes to building new, he said. Having a successful car wash means staying in or venturing into underserved markets, with densities that will support it, Curtis said. Flooding the market Bill Jodice, president of South Windsor-based PDS Engineering and Construction, has seen first- hand growing demand for new and renovated car washes. Today, nearly 10% of construc- tion jobs by PDS are car washes, as opposed to zero demand for the projects just three years ago, Jodice said. He's also seen the influx of private investors, with car wash ownership sometimes changing hands in the midst of construction or renovation. PDS built the new Kingz Kar Wash & Auto Detailing at 924 W. Main Street in New Britain, which debuted in May. It had been a Diamond Brite car wash before it was revamped by owners Bill and Steve Wells and Jim Fontanez. The team invested $6 million 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 $15,000 $12,000 $9,000 $6,000 $3,000 0 REVENUE (IN MILLIONS) U.S. CAR WASH INDUSTRY GROWTH

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