Shining-as-a-service: Former Dunkin' Brands CEO talks conveyor car washes

Dave Hoffmann, Mammoth Holdings CEO, joins Yahoo Finance to discuss his new role operating a portfolio of 63 express conveyor car washes across 10 states.

Video transcript

ADAM SHAPIRO: We're going to shift gears because when you're a CEO, you know you have had a very interesting CEO career when, in one part of your life, it was time to make the donuts and then, in the next part of your life, it's wax on, wax off.

Let's invite into the stream Dave Hoffman. He is Mammoth Holding CEO and former Dunkin' CEO. I'm glad you like my cheesy humor. The temp sometimes tells me to keep my day job. The reason I said that is a lot of people may remember the days when you were the CEO at Dunkin' Donuts. But now you're the CEO at Mammoth Holdings, which is about car wash. And we're talking about 63 and growing. Tell us about this business and why you decided to do this.

DAVE HOFFMAN: Yeah. Thanks for having me, Adam. You know, first, I've always worked for iconic American businesses-- burgers and fries, as you mentioned, coffee and donuts. And to me, what's more iconic than the neighborhood car wash? You know, the owner-operators that I've met in this business across this country have worked incredibly hard and built really phenomenal businesses that most people don't know about. But, you know, like every other industry, things are changing. And they're looking for new ways to enhance their business and create value. And really, that's where Mammoth and my experience comes in. We are small, as you mentioned, and nimble, but well-established as a 20-year-old company. And look, when I look at this business, I feel like we're very poised to accelerate growth.

Mammoth is built on the simple proposition that we are made up of some of the very best car wash operators and minds in the industry who share common values around great operations, building great teams, and sharing best practices. And look, we're asking the best owner-operators across this-- across the US to join us and build a great company together.

And finally, I'd say, you know, for me personally, I'm having a ton of fun just bootstrapping this company with the team.

SEANA SMITH: So Dave, right now, you're talking about the fact that you're poised to accelerate growth. I believe you have 63 express conveyor car washes across 10 US states. When you look out five to seven years from now, what do you hope that number looks like?

DAVE HOFFMAN: Yeah. You look at our pipeline today of acquisitions, and with new store growth coming online, we see-- we're looking at about 100 today. But, you know, when-- I think what's most impressive about this industry from a pure business model standpoint is, look, average unit volume sit around 1 and 1/2 million, margins hovering around 50%. Subscription sales for us, or what we call club membership, is over half of top-line sales. And we've got a labor model that uses four crew during peak periods and two during off-peak periods. That's a pretty compelling model in a post-COVID world.

But, you know, to your specific question, when we look at density and penetration against, you know, a pretty reasonable frequency, we think new unit growth potential could be 4x what it is today, or four times what it is today, not just for us, but for the industry as a whole. And so we're out there, going to capture our fair share of that.

ADAM SHAPIRO: You've also got some big names behind you that agree with what you just said-- Red Dog Equity and the Pritzker family part of the PE firms that are looking at this. But I'm going to ask you as a car nut a question that I've died to know because I love taking the car to the car washes. I'm looking at the video right now. When you buy the full, you know, thing with the wax and the undercarriage and all of that, is it-- does it really do all of that or is it just the old stuff recycled and then sprayed back onto my car?

DAVE HOFFMAN: No.

[CHUCKLING]

No. It absolutely cleans and protects. And the technology around this has gotten so much better over the years. But look, we have a pricing model of around good, better, best. And if you wash more than one month-- or more than one time per month, it's in your best interest to get into the club membership. But look, multiple times, getting into the ceramics and the new technology around that-- it'll clean, protect, and make your car shine, but really make it last and look good for a number of years. And that's, you know, really-- when I looked into this really phenomenal technology-- and look, even on the environmental side, you know, there's-- I've been very impressed with what we're doing on the environmental side as well. I always felt like being a good corporate citizen has always been part of my leadership DNA. And it's a continuous improvement journey and not a destination.

But look, we reclaim and recycle over 65% of our water. And probably what you don't know, Adam, is a single car wash uses less water than the average person showering. And look, if you're washing your car in your driveway, that uses five times more water than washing at one of our Mammoth car washes. And that runoff ends up either in the storm drain or in the waterways.

So look-- a lot to be done there. But it absolutely delivers not only on the environmental side, but also in terms of protecting, really, one of the most important assets in a household, the family car, the pickup truck, the sports car, or whatever you're getting around on. And so that's what I really believe in what we're delivering against that experience.

SEANA SMITH: Now, David-- never would have guessed that you use more water taking a shower than you do for a car wash. So that was a very interesting factoid. But before we let you go, when you talk about expansion plans, talk about how you want to grow the company, of course, so many firms are running up against the fact that they simply can't find the workers they need right now. So with what you're looking at with the locations that you currently do have, are you able to find the workers that you need?

DAVE HOFFMAN: Yeah. We're not immune to what's going on in that space. But really, on the labor side, the express car wash tunnels have a very efficient labor model with, again, four crew during peak periods, which is about 25% of our hours during the week, and two crew during off-peak. So an average roster would be 10 people.

But, you know, what I am also leaning into is I think the-- you know, having grown big brands in other industries, especially in the quick service restaurant industry, I think the more interesting thing is that this is a very emerging industry and a great opportunity to grow with this industry and develop the future generation of car wash leaders. And so I'm here to bring in new talent and really shine a light on what I think is a really interesting opportunity to grow and build your career.

ADAM SHAPIRO: Dave, I'm just going to add to what you just said that it is more fun to take a 385-horsepower Jaguar through the car wash than it is to take a four-cylinder 1987 Hyundai Excel through the car wash. But either way, you get a good clean.

Thank you so much for joining us, Dave Hoffman, Mammoth Holdings CEO and former Dunkin' CEO.