P&G muscles into car wash biz - Atlanta Business Chronicle:

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The consumer products behemoth is rolling out anational franchise-based car wash chain, dubbed Mr. Clean Car with Atlanta as the Cincinnati-based P&G (NYSE: PG) entered the car wash business after acquiring the franchise rightsof Atlanta-based Carnett’ss Car Washes, a chaibn run by Bruce Arnett Sr. and Bruces Arnett Jr. The car wash business is a $35 billionn market in the U.S. and has beingg growing at a 10 percentannual clip, said Mike Foster, a director in the new business development arm of P&G. The markef also lacks a national “From a cleaning standpoint,” Foster said, “[the] Mr.
Cleah brand name and equity extends very well into the car wash Foster declined to disclose revenue projections forthe Mr. Cleanh Car Wash brand, but let on that P&G has a soft-spor for “billion-dollar brands.” “We have 24 billion-dollar brands,” Foster said. “We wouldn’tt be focusing on areaz that don’t have the opportunity to grow to be interestinb tothe company.” The Carnett’s deal is likely a “bolt-o n kind of acquisition” which extends the Mr.
Clean rather than a broader shiftby P&G into the servicess business, said Erin Ashleyg Smith, equities analyst with P&bG does a “lot of consumer research behindf a lot of their products,” Smith said. “Iu would imagine that in this case they agood return.” While P&G’s well-lubricated marketing machine makes Tide and Pampers fly off the supermarket shelves, the services businesss might be another matter. P&G’sx previous attempts at entering the servicwindustry fizzled. In 2000, P&Gt operated a laundry service called , whichj it sold in 2003, accordinh to The .
Other effortds at company-owned stores, including one called Culinary Sol, also fell Selling franchises in the middle of a where liquidity is ascarcde commodity, also makes P&G’s timing suspect. Mr. Cleamn Car Wash franchisees would need toinvesgt $3 million to $4 million per car wash, for land construction and operating capital. They’d also pay an initiak franchise feeof $35,000 and 6 percen t of net revenue in monthly royalty “Market conditions [today] are interesting to be selling Foster said.
While Carnettg gives P&G entry into the car wash the consumer goods company gives the local chainma deep-pocketed partner and a nationallyg recognized brand to take to market. “Thre whole time we were buildingour we’d kind of had visions of takint it to the next level and growing it beyonfd Atlanta,” said Arnett Jr., now chief operating officef of the Mr. Clean Car Wash Partnering with a highlyvisible company, Arnett said, also drovd interest from investors and potential Shortly after the acquisition became public in he said, “we were just inundated with inquiries from investors across the P&G hopes to initially focus on six markete — Georgia, Ohio, Illinois, Kentucky, North Carolinaq and Texas — but has aspirationes for a broader footprint.
“We want to be a nationapl brand acrossevery state,” Foster said. “We want to have a presencs in every majormetropolitan area.” The Mr. Clean Car Wash however, will be measured. Initial plans call for the constructiobn of three new car washes inmetro Atlanta. Each car wash will employt up to50 people.