In Utah, a fast-growing chain of car washes is betting on itself and its ties to local communities, having turned down lucrative offers to be acquired by deep-pocketed private equity groups. Meanwhile, in Minnesota, an independent operator is finding success in her second career, and in nearby Wisconsin, a new generation has joined a thriving family business.
Amid a wave of mergers and acquisitions in recent years, many independent car wash operators have chosen to stand their ground and compete with larger brands backed by private equity. They recognize the threat from well-financed competitors seeking to muscle them out of their territories. In theory, the rise of unlimited wash clubs could tilt the playing field toward larger brands, as customers seeking to maximize convenience migrate toward chains with the largest footprints.
Buoyed by a track record of success, however, these independent operators remain undeterred. They have their own ambitious plans and are determined to protect their slice of a highly profitable, growing industry. When they stare down at their profit-and-loss statements, they don’t see storm clouds gathering; they see healthy businesses delivering on the American dream.
This is the second in a series of articles examining the impact of private equity on the industry. When car wash valuations crested several years ago, some independent operators cashed in on decades of hard work and sold all or some of their businesses. More recently, valuations have plateaued at a lower level, prompting some operators nearing retirement to reevaluate their plans.
For a variety of reasons, many independent operators have no plans to exit the industry anytime soon. Here are three of their stories.
Growing Fast Out West
Founded in St. George, Utah, in 2016 by Quinn Allgood and Conner Atkin, Tagg-N-Go Car Wash has come a long way since opening its first self-serve location through seller financing, student loans and credit cards.
In April, Tagg-N-Go added seven locations across southeastern Idaho by acquiring Rubber Ducky Car Wash and Snake River Car Wash. The company celebrated another milestone in August with the grand opening of its 30th car wash in Price, Utah.
Allgood said Tagg-N-Go has used some conventional financing to fund its rapid growth, but it’s also been a “bootstrapped journey.” The co-founders brought on partners to open their first express tunnel and subsequently bought them out. At one point, they had more than 40 individual lenders, including friends, family and community members, before consolidating those loans with a single investor. Later, that investor agreed to convert those loans into an equity position so the company could continue to grow, Allgood said.
With car wash valuations elevated in 2021, “we were seriously considering selling,” Allgood said. The company had just opened its sixth location and was scheduled to open a seventh later that year. Tagg-N-Go hired a broker and eventually fielded multiple proposals, including full buyouts, offers to sell a share of the business and “platform offers to grow the brand with us,” Allgood said.
Tagg-N-Go evaluated every offer but “saw some red flags from a customerexperience standpoint” and ultimately passed on all of them, Allgood said.
“If those washes were in our hometown, we wouldn’t feel proud to wash there,” he said. “That was a huge gut check. We’ve always taken pride in making sure any brand we align with shares our ambition for quality, service and community involvement. A lot of the chains we looked at were focused strictly on bottom-line performance. They were cutting corners, neglecting equipment upkeep and not investing in their people or local communities.
“To us, it felt like lipstick on a pig. They would paint the building, throw up a new logo and call it good. That’s not how we operate. The decision came down to our ‘why.’ We didn’t build Tagg-N-Go to flip it. We built it to make an impact for our employees, our customers and our communities.”
Allgood said there are tradeoffs with any growth strategy, and remaining independent can be more difficult. It’s harder to secure financing, it can slow down plans to scale the business and there’s greater personal risk, he said. But that strategy also has allowed Tagg-No-Go to invest heavily in its leadership training and workplace culture, which might not be priorities for private equity partners, he said.
“There is absolutely a way to grow without private equity,” Allgood said. “It’s not the easiest path, but it gives you more control, more purpose and more ownership in the decisions you make. That said, I don’t think PE is inherently bad. It’s all about who you partner with and whether they share your vision.
“My advice to other operators would be not to rush it. Be clear about what you want long term, and only bring in a partner who genuinely supports that vision. Whether it’s an individual or a firm, alignment matters more than the money.”
"We didn't build Tagg- N-Go to flip it. We built it to make an impact for our employees, our customers and our communities." — QUINN ALLGOOD, TAGG-N-GO CAR WASH
A Spirit Of Entrepreneurship
Jessica Zazworsky had worked in marketing for more than a decade, managing loyalty programs for brands such as Novartis, General Mills, Best Buy and Dairy Queen, when she decided to become her own boss. Her father owned a trucking and warehousing company, and his entrepreneurial spirit had rubbed off on her, so she set her sights on starting a small business.
This is an excerpt of an article from CAR WASH Magazine.
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