The Story behind the Aussie Success

For the last 18 years, industry pioneer Claude Roda has been transforming the way Australians wash cars. While still in his early 20s, he teamed up with his dad and another partner to launch the first Magic Hands Carwash in Melbourne, Australia. From the beginning, the Magic Hands operation was a cut above the competition. Not only did it offer a high-quality hand car wash, but it also gave customers a café in which to relax, flip through a magazine and sip cappuccino while their vehicles were being serviced. It didn’t take long before the Magic Hands concept developed a devoted following, and in 1998 a second location opened its doors. Then in 2004, Magic Hands blossomed into a franchise. Today, there are 42 Magic Hands Carwash locations performing 650,000 washes a year.

Roda’s father, an entrepreneur originally from Italy, is responsible for the initial Magic Hands design. Throughout Roda’s childhood, every Sunday morning his father would go to a small hand car wash and patiently wait outside at a little plastic table while his vehicle was cleaned. Roda’s father dreamed of a car wash-café hybrid that catered to Australians’ fascination with Italian-style coffee. So, the father-and-son duo, along with a third partner, transformed an existing operation into the first-ever Magic Hands Carwash café.

The first two stores, which opened four years apart, became the basis for Magic Hands Carwash’s successful business system. “The business culture was, first: fast, accurate service and, second: how to build a high-volume team and a high-volume operation,” said Roda.

This system seemed to generate dedicated team players. So much so, that many of the early production employees moved up the Magic Hands Carwash ranks, becoming key staff members or assistant managers. In 2004, these same employees approached Roda about starting a Magic Hands franchise with them as owners, and Roda agreed. This business culture which Roda characterizes as a “strong emphasis on being productive as a team,” is still the basic principal guiding the daily operations of Magic Hands franchisees.

When Magic Hands became a franchise, it also launched a second design model: the car wash spa. Catering to women, and especially busy moms, the car wash spas were located in shopping centers. While these locations didn’t offer the company’s trademark cafés, they did provide something many customers craved even more—convenience. Now, cars could be washed while customers bought their weekly groceries or ran other errands within the shopping center. Today, less than a decade after opening the first car wash spa, Magic Hands boasts 28 shopping center locations.

The Industry Down Under

While Magic Hands Carwash has expanded into four of Australia’s six states, the majority of them — 33 locations in total — are located in the state of Victoria. In fact, 43.5 percent of the country’s car washes operate within this state’s borders, considerably more than any other. Unfortunately, Victoria is also the state facing the greatest economic hardships, a fact which seems to be taking its toll on the regional car wash market. Compared to other Australian states, Victoria spends the least on marketing — 70 percent of the region’s car washes spend $2,000 or less annually — and charge the lowest prices nationwide, with the most popular automatic or tunnel wash averaging $12.83. Despite the belt-tightening on spending and the low prices, 60.9 percent of Victoria car washes reported a drop in revenue from 2010 and 2011.

Economic difficulties have not had the same effect on other regions. On the contrary, car wash locations in two other states, Western Australia and South Australia, have been thriving. While neither of the states reported decreases in revenue, 60 percent of Western Australia and 100 percent of South Australia reported revenue increases. Perhaps not coincidentally, these states also charge the highest in nation: with automatic or tunnel washes costing $16.6 and $17.2 respectively, about 25 percent more than in Victoria.

Even though car wash operations in South Australia and Western Australia are steadily growing stronger, it’s unclear how trends in individual states reflect the nation’s overall industry, which is still very much a cottage industry. According to Roda, the Australian industry’s slower development is partially the result of the car wash services that Aussies have had to choose from. “We have never had the same investment in either outlets or operators as the U.S. The consumer has never had a fast, high-quality offer that was available in many locations.”

Products and services are just one reason that Australians are less likely to head to a car wash than Americans. Roda explained, “It’s a bit of an Aussie past time to clean your car on the lawn in your front yard…I guess you can make a comparison to coffee. Melbournians are passionate drinkers of Italian-style coffee. While this is the case, Starbucks hasn’t been especially successful in Australia.” Australians already had a European-style coffee culture and Starbucks didn’t offer them enough of a reason to change it. The secret to Roda’s success has been to continually offer customers a whole new service experience or value that they hadn’t even realized was possible.

Changes on the Horizon

By any entrepreneur’s estimation, Magic Hands Carwash has been a great success, but if the business is to continue to grow, it will also need to periodically revamp its approach and design. With this in mind, the Magic Hands franchise is making changes to improve both the value for the consumer and the business model for the franchise. Roda explained, “In the car wash café stores, we are now looking at bigger footprints, larger properties…and we are evolving the brand to focus on values such as care, innovation and pride in motoring.”

As for the shopping center model, Roda is exploring ways to tailor the service approach the model’s primary customer: women and mothers. “We are catering to the customer by removing the technical jargon and bringing in female staff” to serve this demographic.

Roda is also on the brink of fine-tuning the Magic Hands cleaning process itself. In January, he spent nearly three weeks in the U.S., conducting research on flat-bed tunnels. He spoke with manufacturers and operators, deciding what equipment to use and how to operate it.

Don’t be fooled by the new tunnels, though. The Magic Hands franchise is not abandoning their tried-and-true hand wash model. Roda explains, “While we are installing more equipment to improve the time taken, improve the volume we can do, and improve the consistency of work, our brand and our business model is always about the attention to detail you achieve by doing it by hand…We see the tunnel simply as a piece of equipment that will help us deliver the highest quality workmanship.”

The franchise’s success has even led to possibility of expanding into Malaysia. At the invitation of a Malaysian fuel operator, Magic Hands will be running one or two trial sites in the country this year. If all goes well, “We will be exploring the car wash café model and may be establishing a franchised network of stores,” Roda said.

Making Magic with Design

While the future certainly looks bright for Roda and his innovative car wash company, his success and expertise are the result of 18 years of hard work. When asked what pearls of wisdom he has for new operators designing their first location, he said, “Start out by deciding what your unique selling proposition is going to be. Do some research. Trust your gut. Then design your store around delivering the proposition.”

When it comes to design, Roda also believes that operators shouldn’t compromise. On his January trip to the U.S., he saw that many operators “take a design and try to make it fit on a property where it doesn’t, unless they compromised. In doing so, they compromised some key areas such as the customer experience, productivity or safety.”

Australia’s car wash industry is not exactly like the America’s, and so, some may be tempted to discount Roda’s advice. Still, it’s hard to ignore a company that transforms an idea into an innovative new design, grows into 42 locations in less than two decades, and washes more than 650,000 vehicles a year. For some, growth like that may seem about as plausible as, well…magic.