Great. Thanks, everybody. We're gonna wrap up the day today with Mister Car Wash. We've got John Lai, Chairperson and CEO, and Jed Gold, CFO. Thank you guys so much for joining us. This is a great way to end the day, I think. I wanted to talk about the demand environment a little bit. You know, we've seen. We've been tracking, you know, credit card data for the category, which still holds up incredibly well on a three-year growth basis and versus a lot of other auto service categories too. I'm curious if you've seen any divergence between lower income versus upper income customers, what your typical demographic is actually, and then whether there's any big, you know, variance in how you're seeing spending activity.
Yeah. I'll kick it off, and then I'll turn it over to Jed to answer the specific questions around demographics and what we're seeing inside of our portfolio. Let me start just on the, on the, you know, the broadest level. What we love about our business and our service is that everyone loves a clean car, we serve multiple demographics across this wide spectrum of the U.S. car park. When we look at the positioning of our stores, we have beautiful stores that do really, really well in affluent neighborhoods, but we also have stores in more working class neighborhoods that do as well. we feel very fortunate that we deliver a service that everyone loves.
At the very core, you know, being in a business where cars continuously get dirty and will always need to be cleaned, people love the service, and they deeply value the fact that their car is clean all the time, is a really good space for us to be in. With respect to how our stores are performing, particularly those in a lower demographic profile, Jed, you've analyzed your team. The FP&A team has looked at that.
We've looked at quite a bit of this, and as John had said, is that this is a business that performs well across all income demographics. We've got car wash, car washes in lower income demographics, higher income demographics, and everything in between. These stores, the top line continues to comp positively. One of the drivers of that is 70% of the sales are subscription. As we've said, that subscription part of the business has held together really nicely. We haven't seen an uptick in churn. We haven't seen our Platinum members trading down into the base package. The usage of those UWC members has remained relatively consistent. Where you double-click on that and you see a little bit of a moderation is on the retail side of the business, about 30% of the sales. That is concentrated.
It's concentrated on the lower income demographic. The 150 stores or so that are in the lower quartile of income demographics, they're about 500 basis points lower than the average retail sales for the overall portfolio. A couple hypotheses behind that, and then I guess the leading hypothesis would be just the softness in the broader macro environment impacting those customers more than others.
Jed, I would say too that when we look at that contraction that what we think is temporal contraction in retail volume, it's really more of an effect of frequency and a reduction in frequency. I think there's also. It's important to note that we have done such a great job of taking our retail customers and converting them into members. We're moving this retail customer that is relatively infrequent into a program where they're adopting it as part of their regular purchasing pattern.
We've done such a good job that now we need to focus more on the retail customer acquisition side, which had not been a priority up until recent times. To your point, you know, I think it was beginning kind of in Q2, we started to experience this slowdown in retail, which as a top of the funnel to our member growth, has led to a slowdown in our member growth.
Mm-hmm.
For us now the focus is, hey, what can we do to drive retail traffic so we can continue this upward trajectory on the membership side?
Got it. You talked about how you're not really seeing your, you know, Platinum level customers trading down into other levels, and now you've added on the Titanium level. Can you talk about that and how that helps you pass through higher costs to the customer as well?
We think our pricing strategy is pretty aligned with the value of the service that we're delivering. We've never been the low price leader. We believe that we're delivering a premium service and that our pricing reflects that. Today it's a very affordable retail price point of roughly $10 for an express wash or $19.99 for the Base express membership plan or $29.99 for the Platinum express plan. To your point, we haven't seen any trade- down in membership plans from the premium to the more economical plan. For us, that's a huge win, right? That shows the stickiness and the loyalty and, you know, quite frankly, how much people value the waxes, the tire protections, the underbody sealants, et cetera. All the extra services that we provide, people love those extra services.
What we hadn't offered though, to your point, was a ultra-premium plan. So we had erred on the side of a very simple two-program model, and we knew that we were leaving some money on the table, that there was an opportunity for us to offer a premium program. You know, we refer to that as our top side anchor, and in early test results, we're seeing very favorable adoption of this membership plan. It's too early for us to share any numbers because we're still in pilot, and we wanna see how things ultimately settle out. We're very optimistic that this is gonna be accretive. To what degree? Will be determined. As we shared in our previous conversation, you know, the rollout of this new Titanium 360 extra service is more than just a new product launch.
It's actually a re-engineering of our entire wash process. We're taking our rinse improvement system and making it, even, cleaner. We're also, implementing a blower reconfiguration model. We're kind of re-engineering both how we not just clean the car, but rinse the car, and then dry the car while applying this extra wax application. That's a pretty involved process that's gonna take us roughly 18 months of conversion, given the size of our portfolio, which is now north of 430 stores. We wanna do this on a regional basis.
Again, it's one where we're very optimistic about the lifting effect that it's gonna have to our revenues. It's gonna be, we believe, to be a natural trade-up for many members, as well as acting as a lifting effect for our Platinum program too. The impact to our financials there'll be a lagging effect, and we're kind of staying on soft ground with respect to when we're gonna experience that, given the staggered rollout approach that we're taking.
Yeah. Liz, just to build on that just a little bit. We piloted in less than 20 stores. We haven't built anything into the guidance for 2023.
Mm-hmm.
-for Titanium. We do believe, to John's point, as we think about this over the longer term, it's gonna be accretive, and it's gonna be a natural tailwind. Because if you think about, we've got 1.9 million existing UWC members either in that base or Platinum.
Mm-hmm.
In addition to those retail customers that are coming in, they now have three different options. We also have those 1.9 million existing customers, UWC customers, that are now at bats to trade into this higher super premium package.
Got it. Okay. I definitely wanna spend, you know, at least, you know, five to 10 minutes on people. I mean, I think the car wash business is very capital intensive, and I've been fortunate enough to be able to walk through, you know, one of your car washes, thankfully, when it was turned off. It's not traditionally thought of as a labor-intensive of a business with these, you know, tunnel car washes.
Right.
You know, there are a number of personal interactions that happen between the customer, you know, and Mister Car Wash employees when they come in. Can you tell me about just how you prioritize that in your process, how that's differentiated, and then what's happening behind the scenes that the customer doesn't even see from a people standpoint?
Let me start by saying it is a low labor model, we're able to staff a store and wash a whole lot of cars, in some cases 150 to 200 cars per hour with, at the very lowest level, three people on the clock, but sometimes five people on the clock. There's a whole lot of efficiencies there. We've been able to do that through leveraging a lot of technologies, mechanization and chemistry, and automating almost every aspect of the wash process. To your question, there's these very key touch points 'cause we are in the customer service business. As service providers, having highly engaged, motivated, and dare I say, happy employees on our lots, our customers feel that.
Particularly in an environment where oftentimes it's a drive-through society that we're in, people's windows are up, we have 70% of our business is membership. The membership, our members don't need to roll down the window. They can zip through the car wash, and what they're greeted with is a wave and a smile. That non-verbal communication, that interaction, is actually very, very important 'cause it shows a level of respect and gratitude that oftentimes you don't experience in most retail environments. How we're able to deliver that is through some very basic fundamental tenets of taking care of your people. When we talk about taking care of our people, it starts with wages and offering comprehensive benefits, then really intense training programs, then career path progression. When we're.
For us, that's Mister’s Hierarchy of Needs . On top of that culturally, how we take care of them by treating them well, we think has led to, what we, what we consider industry-leading eNPS scores, so Employee Net Promoter Scores, which are industry- leading, as I mentioned. As a result, when you visit a Mister Car Wash, you see a skip in people's step, a smile on their face, and it doesn't come through having smile posters in the back room or cracking the whip. It comes from treating people with a level of respect, paying them well, and treating them well.
There's that direct link, which a lot of other companies have figured or either are figuring out or have figured out, which is, you know, when you take care of your team members, they're gonna take care of the customers, which will ultimately take care of the shareholders. We think that that's a really key contributor to our strong AUVs and our strong financial performance.
Mm-hmm. At the same time, I mean, a lot of companies here at this conference and, you know, over the last couple quarters have cited wages and benefits as a pressure point on margins. You've made a lot of investments in the, in that too. How does that impact your turnover rate, which, you know, because turnover is obviously really costly for a company as well, and how do you think about the return on investment from a human capital standpoint?
This is where Jed comes in, right? He and I are the yin and the yang. I can wax poetic about taking care of people and making them feel good, but Jed's like, "Well, where's the ROI?" Right? Where do I see an improvement in productivity? Jed, there's a number of metrics that we use to measure how efficient we are, right? How productive our people are. Through that lens, maybe you can expand upon.
Yeah, sure. I think, you know, there's a couple of different ways that we think about this and look at productivity initiatives internally, particularly around labor where. When you look at our cost structure, it's more representative of a consumer services company. If you look at the store-level labor chemicals line on our P&L, about 90% of that is labor and that store level labor. We're always looking at ways that we can become more efficient. Here recently, we introduced a new store labor optimization model where we've been a little bit more prescriptive in the targeted labor hours per store. We've seen about a 15% improvement going from 52 store level labor hours per day to 44 store level labor hours per day in our express stores.
That's been partially offset by some of the rate pressure, Liz, that you were highlighting. Rates in Q4 were up about 4% on a year-over-year basis during the quarter. Also partially offset by some of the investments that we're making in the talent development with our MIT and OLP program, which is essentially the program that we have in place to develop our frontline team members that are gonna move into these greenfield locations that we're building and are gonna operate those.
Yeah, Jed, I would also add that when you look at the labor market today, at least the way we look at it, the profile that we're looking to attract is we're looking for people-people. We're looking for folks that have good personalities, that are quick to smile, we can train them on the skills. We're not the only ones that are looking for those types of folks out there. There's competition for that talent. Right now, with the unemployment, which maybe you can expand upon unemployment right now because it's a little bit of a head-scratcher, I think, for most economists. It's still a very difficult market, and so we're having to pay up for that talent. We're happy to because, again, we see elevated performance and increased productivity.
What we haven't done, and we've been very conscientious of not just taking price to offset some of the weight. For us, it's about how can we wash more cars per labor hour? How can we, you know, wash more cars per labor dollar? We're demonstrating that we're able to do that through resetting our labor model, which by the way, again, I'm not gonna say we were running fat, but we certainly had some wiggle room, particularly in our top quartile stores that there's an old saying in car washing that volume cures all ills.
Mm-hmm.
For the big dog stores, they were given a whole lot more leeway than some of the stores on the bottom half of our portfolio. We said, "Hey, guys, you know, everyone needs to chip in right now. This is a time when we need to run efficient across the board." The one piece that we're not gonna sacrifice, and Jed touched on it, is on the Operations Leadership. Our Operations Leadership Program is a front-end loaded investment. That shows up as an OpEx expense, right, Jed? It's front-end loaded. When we look at our growth opportunity in front of us and our ambitions and this trajectory to be able to build more stores and, you know, complement that with some tuck-in bolt-on acquisitions, we need to have a team to be able to support that.
We're not gonna pull back on the throttle, even though we feel some pressure right now to continue to expand margins and grow the top line. We know that if we pull back on that investment lever, it's gonna have a negative consequence down the road. We're committed to that level of human capital investment, and we think it's the one area that really differentiates us in the end.
Yeah. Liz, just one final point on this, right? Net-net, all the investments that we're making, the efficiencies on the labor staffing, what we saw on the quarter was a 200 basis point improvement on a year-over-year basis when you look at store-level labor as a percentage of total sales.
Jed, so are you taking a victory lap now on that?
Yeah, we're gonna be happy about that one.
Yeah. If we can hold the line on labor in this kind of environment, I think again, that speaks volumes.
Yep.
We didn't really answer your turnover question. Not that we're dodging it. Turnover has remained relatively constant, and we think, you know, we've shown year-over-year improvements in turnover. We look at other metrics, though, and one that is not widely accepted as a common KPIs, but it's something that's important to us is eNPS, so Employee Net Promoter Score, which is the simple question: Would you recommend Mister Car Wash as a great place to work? As basic as that sounds, we score very high in those employee surveys. That's something that we keep a close eye on because I'm gonna circle back to happiness.
Yep.
As corny as that sounds, it's really important to us, because happy employees just perform better.
Yep. No, it's great. It was actually, it was interesting. At lunch, there was a presentation by David Tinsley from the BofA Institute, and he showed a chart of where, like generationally, we've lost workers, people just coming out of the workforce, and Gen Z was one of the bigger ones, which is really interesting.
Really?
Yeah, maybe they'll start coming back as they've already moved to, you know, new areas and might start finding jobs.
I just read another article where you're happiest in life when you're a baby. If you look at a smile, that's the happiness curve in life.
Mm-hmm.
From your 30s and 40s, you're the least happy.
Great.
As you get to 50s and 60s, you start getting happier.
It's not looking good for me.
That's why I can see some happy people in the audience.
There are some 30s and 40s right here, John, that it's the frown.
It's the young guys that are all stressed out.
Fantastic.
Liz, life is short, so why not enjoy the ride?
Right. All right. Well, I guess my last question on people then is just, is that really what holds back your growth from just going through the moon, it's just human capital, finding the right people, staffing your stores, making sure you have a bench of talent, you know, for running management in each of these locations?
It's a great question. I mean, the hardest part for us so turning up the knob, scaling this company and accelerating our rate of growth, it's so obvious. We have this leadership position in the space, right? We're number one in the U.S., but it's still a very relatively small market share that we enjoy. This opportunity for us to continue on this path and continue to grow to get to 1,000 stores is right in front of us. Why don't we just add more stores and do it even more quickly? What we don't wanna do is build a house of cards.
Mm-hmm.
What we don't wanna do is scale so quickly that our standards start to wane. You've seen that perhaps in other sectors, in other companies that perhaps there was outside market pressures that said, "Grow, baby, grow." For us, while growth is clearly a mandate, we wanna do it the right way. The cadence that we're on right now, this current path, you know, historically, if you looked in the rearview mirror and said, "Hey, Mister Car Wash," primarily through acquisitions had grown historically about 40-50 stores per year. That had been kind of our sweet spot and our comfort level, but we continuously tried to push that envelope to see how can we get there quicker. There is a race right now in the United States.
Mm-hmm.
There's this race to see who can control and who can have a more meaningful share in each one of the MSAs, and we're feeling that pressure as well. We don't wanna do it at the expense of our standards starting to go the other direction.
Yeah.
For us, to your question, it is all about people at the end of the day. If they are the most important piece of the equation, we can't just pluck them off of a tree and plug them into a store. They have to be well-trained. I think there's a misconception, and something I learned a long time ago, never underestimate the complexity of anyone else's business. This business is clearly not a push button, send the cars through, and they come out clean magically on the other end of the line. It's one that we have a big workforce, 7,000 team members, that are really, really critical to our success, and we need to continue to invest in them.
Great. I wanna turn to longer- term investments. You talked about growth and that being a mandate. How should we think about, you know, acquisitions versus greenfields? You've done more acquisitions in the past, but sort of changing over into more of a greenfield expansion model. Just thinking about priorities for future capital, like, where does that stand?
Yeah, I mean, the path to 430 some odd stores had been primarily driven through M&A and allowed us to scale up, I'd say, relatively quickly, relative to 20-year timeline. It got us to this critical mass position. We also saw the benefit of greenfields roughly four to five years ago, and some could argue that we were a little late to the dance. We quickly pivoted and have transitioned our focus to greenfield development. Jed can speak to the economics.
Right.
For us, it's the highest return on invested capital is through greenfield-
Mm-hmm.
much greater return profile than M&A today. We're very, very focused. We're not the only ones, right?
Mm-hmm.
We're very focused on greenfield development. For us, given just the cash on cash returns, the payback periods, and how that compares to, you know, what people have been paying historically in M&A.
Mm-hmm.
Greenfields for us make a ton of sense. I don't know if there's anything else you can add.
I think the thing I would add to that is, I mean, as we look at M&A opportunities, it's looking at it through the lens of the opportunity cost of if we put the capital to work on an M&A front, what it's gonna take away from greenfields.
Mm-hmm.
With the, we're seeing a year-two cash-on-cash return of just over 50% on our greenfield development. The highest and best use of capital right now is those greenfields. Also, I mean, this new initiative that we're working on with Titanium, we expect to see a really strong return on that capital that's put to work as well. Continuing to make these OpEx investments in the business as well. We're making a little bit more of an investment in 2023 behind marketing than what we had in 2022. We're testing a few different promotions and tactics to try and drive retail volume and drive trade into the UWC program.
Also, as I touched on earlier, the investment behind MIT and OLP, those people investments, which are key to supporting the greenfield development and what we have coming down the pipeline. Listen, we can't say enough good things about the greenfield program. We've got over 150 projects that are in the pipeline, somewhere in between site selection and open. It's about an 18-month process to get these stores open. It takes a little bit of time, but we've not only have the 150 stores, we've also got the capital lined up to support this between cash on the balance sheets and then sale-leasebacks on properties that we currently own. It's not as though we're gonna have to go out and take additional leverage on to support that pipeline as well.
Yeah. I think the cool thing is just the free cash flow from operations is significant enough for us to.
Yeah.
this growth opportunities in front of us. We're in a really good position just from a balance sheet standpoint.
Great. I guess, are property values getting any more attractive? We actually just had a real estate panel and, you know, granted these are our landlords talking about their business. Of course they think, you know, there's tons of demand and you don't have a traditional model where you could just be, you know, in any type of shopping center. Like, you have to have a specific type of lot. I'm curious about what, you know, current real estate values are looking like and how you approach that.
Yeah. back to, you know, we're not the only ones that are on a building spree right now.
Yeah.
There's quite a bit of activity in our space. Demand for good locations is at an all-time high.
Yeah.
Which is, as a result, is creating some inflationary pressure and competitive pressure on some of these A lots. If I could emphasize A lots, 'cause you know, we will, in some instances, roll the dice on a B lot, but we're not looking to just build stores indiscriminately just to add stores to our portfolio.
Mm-hmm.
Because there is a direct correlation to location, location. To your comment, you know.
Mm-hmm.
There's some unique characteristics about the profile of a location, starting with size. We typically need about an acre, but then the ingress and egress and the quality of that site traffic and really the profile of that retail trade area and the blend of rooftops and retail, all those things are taken into consideration. That said, we're somewhat agnostic with respect to demographics.
Mm-hmm.
Because again, our service appeals to a broad range of the motoring public. But, with respect to land values, which was your question, you know, we are seeing a slight uptick in the price of land.
Mm-hmm.
The economics around just what we're able to generate in year one, two, and three, it's not that meaningful right now.
Got it. I think traditionally, when you've entered a new market, you've done so through an acquisition, and then you kind of build on top of that. Have you ever or would you ever enter a new market through greenfield exclusively?
Yeah. We have in front of us today, you know, technically it's about 70-plus MSAs that we're in.
Mm-hmm.
If you cluster them and do it the way we look at it through more of an operational perspective, we're arguably in about 50 markets right now. In each one of those 50 markets, we have growth opportunities. Quite frankly, we think we could double our footprint in our own backyard.
Mm-hmm.
Before we seek new pastures, it would make sense for us to, you know, continue to densify fortress and increase our penetration in existing markets before we go out and move into new markets. That said, there are adjacencies where if we're in a market like California, and we're in the high desert just outside of Los Angeles, yet we see L.A. as an underserved market, and we haven't been able to find an attractive acquisition opportunity in the city of Los Angeles.
Mm-hmm.
Perhaps our penetration should be through a different path, which is through greenfield development. It's really important for us to have that infrastructure in place. The thing again that helps us deliver these outsized returns is that we have a team in place from operations management, facility maintenance, training, and HR in market.
Mm-hmm.
Not in the ivory tower in our corporate office.
Yeah.
Having that infrastructure, which again adds to our technically G&A, it's a regional.
It's a regional expense which hits in store-level labor.
Sits in store-level labor.
Yeah.
has allowed us to deliver the types of results that we're doing. It also gives us that benefit of being able to plug team members into stores as we're building them.
All right. Do you think the US market is pretty fully penetrated with car washes today?
Not even, not even close.
That's a loaded question.
All right. Well, tell me what the average useful life of a car wash is and how many sort of, you know, aging, like, in need of replacement car washes there are?
Let's go back to TAM though, right?
Okay.
I think, I don't think anyone really knows. There's a lack of good quality data out there. We can clearly look at the U.S. car park and say it's massive, right? 280 some odd million vehicles in the U.S. There's estimates around the number of conveyors in the United States. There's on the low end, 10,000, perhaps on the high end, 15,000. Somewhere in between probably lies the truth.
Mm-hmm.
You know, when in talking to other industry leaders, within our space, I think everyone firmly believes that the industry, in terms of the demand that's out there and the current supply, that the industry could double in size before there's any slowdown or maturation.
Mm-hmm.
There are certain markets where, and I'll pick on Lubbock, Texas, where Lubbock is probably an overstored market, happens to be a market that we're in right now.
Mm-hmm.
Those are few and far in between. In almost every other city that we're in, there is growth potential, and we're seeing that everywhere. That's a really good spot for us where we see this strong demand, lower supply, and then a expanding, more users coming into the category as they discover the convenience of an express car wash and how quick and easy it is. To your question on average useful life of equipment, you know, the way we maintain our equipment, I'm not sure we know. You know, there's kinda some conventional rules of thumb. At the 1 million car mark.
Mm-hmm.
On a particular component, it might be ready for replacement. Given the volumes that we're running, on average, if it's, you know, 250,000 cars a year.
Mm-hmm.
You can do the math at four years or five years, you're probably ready-
Mm-hmm.
To replace certain components. We do such a good job of maintaining our equipment and making sure that it's all operable and lubricated and that everything is working properly, that we're able to extend that useful life, I think, better than the average bear. That said, with Jed and our, the whole company's support, we have continuously reinvested back into our business and have not skimped. There's no deferred CapEx.
Mm-hmm.
All right. we have-
Yeah.
Ensured that the 99.8% uptime that we enjoy is a result of us making sure that we have... When something needs to be replaced, we'll pull the trigger on it.
Yeah.
Yeah, Liz, I think that's an important part of the model. The CapEx guide that we provided is embedded in that is what we refer to as maintenance CapEx. It's coming in and replacing an existing part or component. Something that just through the volumes that we run needs to be replaced on occasion. Then we also have some earmarked for growth CapEx, which is adding a new part or component or such as the Titanium 360 offering that you had talked about earlier.
Where those returns manifest themselves is when you look at the comp store sales on even our most mature locations, our 2012 and prior vintage, we continue to comp positive. It's a testament that we're upkeeping our assets, we're investing in these. The expectation is that the asset that the customer drives up to reflects the quality of the wash that they can expect when they go through.
Jed, if I'm going through acquisitions and I'm, let me say, cobbling together, stitching together a portfolio of stores, and I wanna create a unified brand that has enduring value for the long haul, the first thing I would need to do is connect the dots and make sure that the back end all speaks, so that it's the financial system, there's the point-of-sale system, there's the human resource system.
Operational standards, yep.
All those systems have been long-term material investments that we've made throughout the course of time. As a result, you're like, "Okay, what does that mean, John? That just means you have a efficient back office?" No, it means that from a customer's perspective, not only do they get a consistent experience in our stores, but that all the stores speak to one another. We can look at that customer through a 360 degree lens and know that if they wash their car in Austin or in Houston or in El Paso, that we're able to read them. For folks that have kicked the can down the road or chosen not to connect the dots, they're just delaying the inevitable. We're really happy with where we sit today because our stores are running like a top.
Great. I wanna make sure that I let the audience ask some questions. I do have some more. If anyone has one, please feel free to raise your hand, and there's a mic in the back.
We have car wash passes for any good quality questions as an inducement.
To that point about.
There's a question over there.
Oh, sorry. Go ahead. I'll ask another one.
No.
People are buying the assets, but arguably don't even know anything about it.
Yeah.
Just wondering what your thoughts are?
Yeah. You know, I think not only our success but other people's success has attracted, you know, even more interest in the space. By our estimates, there's roughly 25 to 30 PE firms of various size in the category today, all trying to establish their foothold and take a platform that they have acquired and looking to build that primarily through a regional lens. Today, you know, we don't see ourselves as a national player. We're kind of a super regional player in 21 states and 50 cities, and we have aspirations to someday become a national brand. There's a whole lot of regional activity, and we have the utmost respect for all of our competitors out there that are doing a great job.
Right now, you know, that has done is create increased competition from an M&A standpoint, and people have been paying up to get their foothold into the space. What we're seeing now, once they have gotten their first acquisition under their belt, is some rationality sets in, particularly from a valuation perspective. You know, their willingness to lean in and pay up for what we consider to be sometimes average or below average assets is starting to wane.
There's been kind of a cooling effect on multiples for sure, and we think that that's a good thing 'cause things have gotten a little bit irrational, and frothy and a little bit of a head scratcher for us on this disconnect between our current valuation and what some of the valuations that we've seen on the private side, and that divergence for us, given what we believe to be a really good operating model that we manage. We think over time that that's gonna converge and come back together. Right now, I would be remiss if I didn't say that I think we're undervalued, and that some of the private platforms out there, perhaps , they overpaid.
Go ahead.
I was wondering if you could talk about capacity throughout the daytime peak. Are there any markets where you're bumping along that? Has work from home in the last 3 years changed that and eased pressure on the system, or staffing model, and wait times? Am I off in how to go?
The cool thing about the demand curve inside our business is that there's been a smoothing effect. Back in the day, pre-subscription, we would see these traditional, you know, from a time- of- day and day- of- week standpoint. There was this bell curve from 10 to two, and then we would see this traditional Saturday, Friday, Sunday, and then kind of a Monday through Thursday. All of that changed with subscription. The beauty of our 70% subscription business is that we now have this more even curve, which makes it operationally, to your question, a lot easier for us to manage.
We don't see the bigger swings in demand, and we think that's driven primarily by the loyal, frequent members that come in, when it's less busy and they know the patterns of that store. Your point, which is very nuanced and beautiful, is that in this blended work environment, back in the day, you used to sneak out at lunch to do a couple of chores. Now you sneak out at 10 o'clock from your home office, and you don't have to sneak anymore. You're in your flip-flops, and you can go get some chores done. That's also been helpful for us.
When we look at the peak periods, which again is a great question, you know, one of the things we take great pride in is that we operate these super high volume stores that are set up to wash comfortably at 165 cars per hour, and we have a whole lot of stores that can easily wash 200 cars per hour. That's pushing the envelope. During the absolute peak periods right after a snowstorm in Michigan, when the roads are dry, cars are lined up to the street, and that's when you really make hay.
That's where good car washers and average car washers, you separate the wheat from the chaff because we're able to deliver a really clean, dry, shiny car at 165 cars per hour because of the investments that I was mentioning earlier in technology, mechanization, automation, and our people. We're humming and we're kicking butt. That said, when we're leaving cars on the street, which is car wash vernacular for, oh my god, those lines, we hate lines, right?
That also says, "Hey, maybe we should double down in that area." When we looked at kinda geographic expansion and how we should have a more blended, balanced approach to a MSAs, we would say, "Hey, in the southwestern quadrant of the city, we need to have a store." What we were neglecting was some of those mothership stores that were the high volume stores. In recent times, we're saying, "Hey, if we have a gold vein that's really doing well, let's go after it." Quite frankly, there are competitors that are saying, "Hey, let's find the highest volume Mister Car Wash to see if we can go after them." We will take on all challengers because in the end, we think the best operator will ultimately prevail.
Moving off of that point, do you schedule a car wash or scheduling as you think about, you know, folks do repeat visits, they're loyalty members, and so at that point, they might actually be comfortable with scheduling their car wash for next month or whatever it is.
Yeah. You're speaking about a consumer-facing scheduling app, for example?
Yeah. That's right, or even calling.
Yeah. We actually don't need to because the way our business is set up, even if there's a line at Mister Car Wash, people know that that line has flow. We use a lot of music metaphors, flow, rhythm, pacing, and tempo. A busy car wash at Mister, you know you're not gonna get sucked into a vortex and be locked into an environment 'cause there's that fear as a consumer of do I wanna commit to that retail store, and can I get out? At Mister Car Wash, they know that you can get in and out in five minutes, even when we're busy. The demand for a scheduling tool is actually not as prominent as you would think.
And on that point, I guess I have a sort of follow-up. Where. You know, you focus a lot on the customer experience. It sounds like, you know, wait times are not as much of a pain point as one might think they would be.
Yep.
What are the, you know, pain points that you can you know, solve with labor optimization, technology or otherwise? Like, what does the consumer want from you that you aren't doing right now and...
We think we're delivering on all the key fundamentals, which is quality, speed, super clean facilities, and then the differentiator is customer service. That's where we hear time and time again, if I go to a cocktail party, people will say, "What is it with your people? How are you able to get them to smile and wave and move with such a clip and treat us with a level of respect?" We said, "Because we treat them well and we pay them well, and we've got a culture that respects them." That's been the secret sauce for Mister Car Wash.
I mean, just one point to build on and clarification. You'd mentioned loyalty, right? Loyalty is thrown out in a lot of other industries and retail, and loyalty for us is trading that retail customer that comes in, call it 3 x per year, into the Unlimited Wash Club program, where they're coming in 3 x per month. Once they're in that UWC program, we've highlighted some of the investments that we've made recently on the digital app, the consumer-facing app, which the vision there is to help drive even better engagement, particularly with those UWC members, to help increase frequency, which will in turn result in a decrease in churn.
I see this is like the Oscars when the music starts to play. I wanna thank my mom and dad.
Please.
No, I wanna thank you, Liz, for your support and thank you for this great conference, and it's been a real honor. I know you saved the best for last. We appreciate-.
We sure did.
you, keeping us
Yeah. You mean the reception that's at 4:00 P.M.? Yes, that's next.
Are you buying the mojitos?
Bank of America.
Bank of America?
I think so.
You got it. Well, thank you.
Great. Well, thank you, guys. Again, reception at 5:00 P.M. on the second floor. Thank you.
Terrific. Thank you.