Problem Definition
QuickWash is a family-founded chain of 22 express-exterior car washes in Georgia and the Carolinas. Each site is a single conveyor "tunnel" where drivers stay in their car, pay at an automated kiosk and use free vacuums afterwards. QuickWash earns money in two ways: single ("retail") washes averaging $14, and an unlimited monthly membership that lets members wash as often as they like for a fixed monthly fee, charged automatically to a card.
The express car-wash model has boomed in the U.S. The International Carwash Association (ICA) estimates the North American car wash market at about $15 billion in retail sales, reports that nearly 80% of U.S. drivers now use professional washes (up from about 48% in 1994), and estimates that more than 500 new washes open every year. The leader in the format, a listed chain with about 550 sites, now earns about 79% of its wash sales from members. But growth has a downside: in 2025 one large chain with about 260 sites went through Chapter 11 bankruptcy, citing competition, debt and market oversaturation.
QuickWash generates about $38 million in revenue with an EBITDA margin of about 30%. Its board has approved $20 million of growth capital and has set a target: add at least $5 million of annual EBITDA within three years. The CEO sees two routes: build new sites in growing suburbs, or invest in the existing 22 sites to grow the membership base. What should QuickWash do?
Additional InformationAsk for dataInterviewer’s data
Provide only when the candidate asks relevant questions:
- Each QuickWash site sells about 60,000 retail washes per year at an average of $14, and has about 2,500 members paying an average of $30 per month
- Members make up about 52% of QuickWash's wash revenue
- About 3% of retail washes result in a new membership sign-up each month; about 6% of members cancel each month
- Site-level EBITDA margin is about 35%; corporate overhead is about 5% of revenue
- A new site takes about 12 months to find, permit and build, and then 2-3 years to reach mature volume
- QuickWash owns its land at 15 of its 22 sites
- The founder's family owns the business and does not want to take on new debt
Question 1Structuring
The CEO asks you how you would approach the decision. Lay out how you would structure the problem.
Hint · Structuring
Build 3–4 branches that are specific to this client and question, not a generic framework. Check they don't overlap and together cover the problem.
Try it first, then checkCheck my answerModel answer
1. Goal and constraints
- a) +$5M annual EBITDA within 3 years
- b) $20M capital, no new debt
2. Option A: Build new sites
- a) Cost per site (land, building, equipment)
- b) Mature revenue and EBITDA per site
- c) Ramp-up time (build time plus time to mature)
- d) Local market: competitor tunnels nearby, traffic, population growth
3. Option B: Grow memberships at existing sites
- a) Membership base = sign-ups per month / cancellation rate per month
- b) Levers: sign-up rate (license-plate cameras, app, staff incentives), cancellations (failed-card recovery, perks), price and tiers
- c) Incremental profit per new member, net of lost retail washes and extra wash costs
- d) Investment and running cost of the program
4. Risks and fit with the business
- a) Market saturation and new competitors
- b) Execution capacity (a small team building sites vs. running a program)
- c) Whether the two options can be combined within $20M
What the interviewer is looking forInterviewer’s viewInterviewer’s view
This is a candidate-led case, so the candidate should drive: lay out a structure, say what data they need, and ask for it. A good candidate compares the two options on EBITDA impact, cost and time. A strong candidate breaks membership economics into its drivers (sign-ups, cancellations, price) and new-site economics into build cost, ramp-up time and mature profit. An excellent candidate notices that the three-year deadline matters because new sites take a year to build and several years to mature, and asks about local competition before assuming new sites will perform like old ones.
If the candidate waits to be led, prompt once: "What would you want to know next?" and note it on the scorecard.
So What? cascade:
- Level 1: both options can grow EBITDA
- Level 2: they differ sharply in capital needed and time to profit; the board's deadline is three years
- Level 3: a membership is also a defense. A member who pays monthly is much less likely to switch to a new competitor, so membership growth protects the existing $38M as well as adding to it
Question 2Numeracy
The CEO shares the economics of both options. How much EBITDA does each option add, and does either meet the board's target?
Hint · Numeracy
Write the formula before you plug in numbers, keep units and zeros explicit, and sanity-check the order of magnitude at the end.
Exhibit 1Option A, New Site Economics (per site)
| Item | Value |
|---|---|
| All-in development cost (land, building, tunnel equipment) | $5.0M |
| Mature annual revenue | $1.6M |
| Site-level EBITDA margin | 35% |
| Ramp-up: Year 1 / Year 2 / Year 3 / Year 4+ | Construction (0%) / 60% / 85% / 100% of mature EBITDA |
| Sites affordable with $20M | 4 |
Source: QuickWash case file
Exhibit 2Option B, Membership Program (22 existing sites)
| Item | Value |
|---|---|
| Program | License-plate recognition cameras, app sign-up, card-failure recovery, staff sign-up bonuses |
| One-time investment | $150K per site |
| Running cost (marketing, bonuses, software) | $40K per site per year |
| Sign-up rate (% of retail washes per month) | 3% today, 4% target |
| Monthly cancellation rate | 6% today, 5% target |
| Retail washes per site per month | 5,000 |
| Incremental EBITDA per added member | $150 per year |
Incremental EBITDA per added member: $360 membership fee - $168 lost retail spend (the member previously paid for about one $14 wash per month) - $42 extra variable wash cost (members wash more often) = $150.
Source: QuickWash case file
Additional InformationAsk for dataInterviewer’s data
- Share Exhibits 1 and 2
- If asked: "Year 3" means the third full year after the board approves the plan
- If asked: assume the membership program reaches its full effect by Year 3
Try it first, then checkCheck my answerModel answer
Step 1: Today's membership base (check)
- Sign-ups: 5,000 retail washes x 3% = 150 new members per month
- Steady state: 150 / 6% = 2,500 members per site (matches today's number)
Step 2: Membership base after the program
- Sign-ups: 5,000 x 4% = 200 per month
- Steady state: 200 / 5% = 4,000 members per site
- Added members: 4,000 - 2,500 = 1,500 per site
Step 3: Option B EBITDA
- Per site: 1,500 x $150 = $225K per year
- All 22 sites: $225K x 22 = $4.95M
- Less running cost: $40K x 22 = $0.88M
- Net: $4.95M - $0.88M = about $4.1M per year
- One-time investment: $150K x 22 = $3.3M; payback: $3.3M / $4.07M = about 0.8 years (roughly 10 months)
Step 4: Option A EBITDA
- Mature EBITDA per site: $1.6M x 35% = $0.56M
- Four sites at maturity: 4 x $0.56M = $2.24M per year
- Year 3 (85% of mature): $2.24M x 85% = about $1.9M
- Capital: 4 x $5.0M = $20M; payback per site: $5.0M / $0.56M = about 9 years
Step 5: Compare
| Option A: 4 new sites | Option B: Membership | B + 2 new sites | |
|---|---|---|---|
| Capital | $20.0M | $3.3M | $13.3M |
| EBITDA in Year 3 | ~$1.9M | ~$4.1M | $4.07M + 2 x $0.56M x 85% = ~$5.0M |
| EBITDA at maturity | ~$2.2M | ~$4.1M | $4.07M + $1.12M = ~$5.2M |
| Meets $5M target by Year 3? | No | No (~$0.9M short) | Yes (just) |
Key insight: The membership program is the better use of money: about $1.23 of annual EBITDA for every $1 of capital ($4.07M / $3.3M), against about $0.11 for new sites ($2.24M / $20M). Combining it with two carefully chosen new sites meets the target and still leaves about $6.7M in reserve.
What the interviewer is looking forInterviewer’s viewInterviewer’s view
The candidate should first find the new steady-state membership base. Members stabilize when the number of new sign-ups each month equals the number of cancellations. If they are stuck, prompt: "If 150 people join each month and 6% of members leave each month, where does the membership base settle?"
Then they should calculate the EBITDA of each option in Year 3 and at maturity. The key insight is that Option B delivers about twice the EBITDA of Option A at one-sixth of the capital, and much faster, but on its own it falls about $0.9M short of $5M. A strong candidate then proposes a combination.
So What? cascade:
- Level 1: Option A adds about $2.2M at maturity (only about $1.9M by Year 3); Option B adds about $4.1M
- Level 2: Option B uses $3.3M of capital, leaving $16.7M; a mix of B plus two new sites meets the target in Year 3
- Level 3: new sites are a slow, capital-heavy way to grow in a saturating market; the best growth is inside the sites QuickWash already has
Question 3Judgement & Insights
The CEO asks where to start. Exhibit 3 splits QuickWash's sites into three groups. What do you conclude?
Hint · Judgement & Insights
Read the exhibit title, axes and units first. Lead with the ‘so what’, then back it with one or two numbers.
Exhibit 3QuickWash Site Groups (FY2025)
| Site group | Number of sites | Avg. members per site | Monthly sign-up rate | Monthly cancellation rate | New competitor tunnels within 3 miles (avg.) | Change in retail washes vs. 2023 |
|---|---|---|---|---|---|---|
| Suburban, no new competitor | 9 | 3,100 | 3.5% | 5.0% | 0 | -2% |
| Suburban, new competitor nearby | 8 | 2,300 | 3.0% | 7.5% | 1.6 | -11% |
| Highway / urban | 5 | 1,800 | 2.4% | 6.0% | 0.4 | -4% |
| All sites | 22 | ~2,500 | ~6% |
Source: QuickWash case file
Additional InformationAsk for dataInterviewer’s data
- Share Exhibit 3
- If asked: "new competitor tunnels" are express washes opened by other chains within 3 miles of a QuickWash site since January 2023
Try it first, then checkCheck my answerModel answer
1. Competition is hurting eight sites
- Cancellations run at 7.5% a month at sites with a new competitor, against 5.0% at sites without one
- Retail washes fell 11% at these sites, against 2% at quiet suburban sites
- At 7.5% monthly cancellations, a site needs 2,300 x 7.5% = about 173 sign-ups a month just to stay flat
2. The highway / urban sites have a different problem
- Their cancellation rate is average (6%) but their sign-up rate is the lowest (2.4%): passing drivers on highways are less likely to commit to a local membership
- The program's sign-up tools (license-plate cameras, app) matter most here
3. Where to start
- Wave 1 (first 6 months): the 8 threatened suburban sites. Reducing cancellations protects existing revenue before competitors take more share
- Wave 2: the 5 highway / urban sites, focused on raising sign-ups
- Wave 3: the 9 strongest sites, which already perform best and have the least to gain
4. Where to build
- Only in growing suburbs with no express tunnel within about 3 miles
- Check planned competitor openings through local permit filings before buying land
What the interviewer is looking forInterviewer’s viewInterviewer’s view
The candidate should spot that the eight sites with a new competitor nearby have the highest cancellation rate (7.5%) and the steepest fall in retail washes (-11%). Competitors are winning over QuickWash's customers, and members are cancelling. A strong candidate draws two conclusions: first, roll out the membership program at the threatened sites first, because members are the customers most likely to stay; second, new sites should only be built where there is no tunnel nearby, because a new QuickWash site in a crowded area would face the same pressure. An excellent candidate links this to the wider market: more than 500 new washes a year and a large chain's bankruptcy are signs of saturation.
So What? cascade:
- Level 1: sites facing new competitors are losing both retail customers and members
- Level 2: the membership program is also a defense of existing revenue, not only a growth play
- Level 3: new-site selection must screen out areas with competitor tunnels; the "build" economics in Exhibit 1 assume a site that faces no new competition
Question 4Synthesis
The CEO meets the board tomorrow. What is your recommendation?
Hint · Synthesis
Answer first: the recommendation, two or three reasons with numbers, then risks and next steps.
Try it first, then checkCheck my answerModel answer
Recommendation: QuickWash should make membership growth its main strategy and add only two new sites, in low-competition suburbs.
1. Launch the membership program across all 22 sites (about $3.3M)
- Raise the membership base from about 2,500 to 4,000 per site by lifting sign-ups from 3% to 4% and cutting cancellations from 6% to 5%
- Adds about $4.1M of EBITDA per year, with a payback of about 10 months
- Roll out first at the 8 sites facing new competitors, where cancellations are highest
2. Build two new sites (about $10M)
- Only in growing suburbs with no competing tunnel within 3 miles
- Adds about $0.95M by Year 3 (2 x $0.56M x 85%) and about $1.1M at maturity
3. Result
- Year 3 EBITDA uplift: about $4.07M + $0.95M = about $5.0M, meeting the board's target
- Capital used: about $13.3M of $20M, leaving about $6.7M in reserve for a third site or to buy a struggling competitor's site at a good price as the market consolidates
Risks and mitigations:
- Price sensitivity: industry data show voluntary cancellations rising, with higher membership prices and a tighter economy named as likely causes. Avoid raising the $30 price during the rollout; add perks (for example, a premium tier) instead
- Competition: more new tunnels may open near QuickWash sites. Track cancellations by site each month and respond locally
- Execution: a small team cannot build four sites and run a program at the same time. Hire a dedicated membership manager
Next steps:
- Pilot the program at 3 threatened sites for 90 days to confirm the 4% sign-up and 5% cancellation targets
- Start site searches for two new locations in parallel, with a board decision at month 9
- Report membership numbers by site group to the board every quarter
What the interviewer is looking forInterviewer’s viewInterviewer’s view
The candidate should lead with the answer, support it with the numbers from Questions 2 and 3, and name risks and next steps. A good candidate recommends the membership program. A strong candidate recommends the combination (membership program plus two new sites) and shows it meets the $5M target. An excellent candidate adds a stage gate: build the two new sites only if the membership program is on track after 6-9 months, and keep the remaining capital in reserve.
Data Sources
Company figures for QuickWash are fictional. Market facts below come from public sources and are rounded for interview math.
- North American car wash market of about $15 billion in retail sales; nearly 80% of U.S. drivers use professional washes (up from about 48% in 1994); more than 500 new washes are built per year; about 17,500 conveyor washes in the U.S. -> International Carwash Association, "Carwash Industry Information", accessed 2026, https://www.carwash.org/industry-information
- Market leader: about $1.05 billion (FY2025 $1,051.7M) net revenue, about 550 (548) locations, 29 new greenfield sites in 2025, nearly 2.3 million members, members about 79% of wash sales in Q4 2025, adjusted EBITDA margin about 33% (32.9%) -> Mister Car Wash, "Mister Car Wash Announces Fourth Quarter and Full Year 2025 Results" (GlobeNewswire), 2026, https://www.globenewswire.com/news-release/2026/02/18/3240074/0/en/Mister-Car-Wash-Announces-Fourth-Quarter-and-Full-Year-2025-Results.html
- Average revenue of about $30 per member per month (derived: about $1.05B x ~79% member share / ~2.3M members = about $360 per year) -> same Mister Car Wash release, 2026 (author's calculation)
- Industry membership revenue up about 10% year on year while retail wash revenue fell about 4%; total monthly member cancellation about 8% (7.9%), with voluntary cancellations rising (4.9% a month) and higher membership costs and economic conditions cited as likely factors; monthly sign-up (conversion) rates of about 17% at sites with 4,000+ members, about 10% at 2,000-4,000 members and about 2.4% below 2,000 -> International Carwash Association, "Rinsed Releases Q2 2026 Quarterly Car Wash Industry Report", 2026, https://www.carwash.org/car-wash-news/rinsed-releases-q2-2026-quarterly-car-wash-industry-report
- A member is worth about $444 in revenue over 36 months, against about $104 for a repeat retail customer -> Rinsed, "Rinsed Releases a New Quarterly Car Wash Industry Report" (Q3 2025), 2025, https://www.rinsed.com/news/industry-report-october2025
- Express tunnel construction cost of about $2.5M to $8M+ excluding land (about $2M to $5M in the Southeast), plus land of about $0.5M to $4M+; tunnel and wash equipment is about 25-35% of construction cost; used as the basis for QuickWash's $5.0M all-in cost per site -> Terrapin Construction Group, "Average Cost to Build a Car Wash in the USA (2026)", 2026, https://terrapincg.com/news/cost-to-build-carwash-2026
- A chain of about 260 express washes filed for Chapter 11 in 2025, citing competition, debt, lease costs and market oversaturation -> CRE Daily, "Zips Car Wash Files For Bankruptcy as Car Washes Dry Up", 2025, https://www.credaily.com/briefs/zips-car-wash-files-for-bankruptcy-as-car-washes-dry-up/
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