The 'universe of car washes in the U.S. could be double or four times what it is today,' Mammoth Holdings CEO says

Dave Hoffmann, Mammoth Holdings Chairman & CEO, joins Julie Hyman and Brian Sozzi to discuss the future of the car wash industry.

Video Transcript

BRIAN SOZZI: From selling cold brew coffee and Beyond Meat sandwiches to now laying out a strategy for car wash domination. That is where we find Dunkin' Brands former CEO Dave Hoffmann, who is the new chairman and CEO of Mammoth Holdings. Dave is here with us now. Dave, nice to see you again here. I guess you won't have to answer any earnings questions, so that's good. Last night, I was thinking back to 2018. I remember you telling me you started working in restaurants when you were 16 years old, and you spent your whole career there. This is a little bit of a career shift going into the car wash business. Why did you make it?

DAVE HOFFMANN: Yeah, and good morning, Brian and Julie. Great to be back here with you. Look, I'm calling you from Vegas, and we've just wrapped up our annual ICA International Car Wash Convention. And it's my first one. And I can tell you, the owner operators here are fired up and energized about how dynamic this industry is.

You know, for me, personally, it's an industry that I believe is primed for disruption. That's what caught my attention. I think huge opportunity and, frankly, one that I found irresistible because of what you just said, Brian, which was I felt like I could take my unique experience of working shoulder to shoulder with owner operators over the last 30 years and make an impact on this market.

BRIAN SOZZI: We hide nothing here. And full disclosure-- I did not know there was a car wash convention. Now you are the ninth largest player in this industry. Who is number one? Is there a national chain that operates hundreds of these things?

DAVE HOFFMANN: Yeah, there is a national chain out here, and I would correct you by saying we're the seventh largest recently. And look, broadly speaking, it's a fragmented industry, around 10,000 car washes in the US, that has what we believe is great opportunity to leverage efficiencies across our Mammoth platform. And, you know, from a pure positioning standpoint, today, we sit at 80 locations with 21 owner operators.

Our average unit volume's hovering around 1.5 million, margins north of 50%, which is amazing. Subscription sales, which wasn't in the QSR business, is over half of our top line sales. And we've got a very efficient labor model that uses four crew during peak periods and two crew during off peak periods. And so, I think, based on my experience in my past, this is a model that stacks up really well in a post-COVID environment.

And, you know, if I could just go on a little bit longer, Brian, from a growth perspective, when we analyze today and why we get so excited, when we look at density against a reasonable penetration and frequency, we think the universe of car washes in the US could be double or four times what it is today. So we're very excited about it. We're one of the few pure play express car washes in the industry. And so, we're excited and we like our positioning today.

BRIAN SOZZI: These are heavily automated car washes. You have to be minting money right now, no? And we've seen a pandemic -driven car boom. What are you seeing just financially?

DAVE HOFFMANN: Yeah, you know, look, we like our-- we like where we sit today in our positioning. And we feel like we've got a very strong balance sheet in financials. And, you know, look, the express car wash is very efficient. Like I said, it has a labor model of about a roster of 10 crew, four during peak, two during off peak. That's a very efficient model. Our margins, again, north of 50%. And from a financial standpoint, look, our debt to EBITDA is less than one turn.

So we are on the move. There's a lot of energy in our system. But ultimately, it's going to come down to what I call the trifecta for success for us, which is, it's going to be three things. One, our ability to integrate aggressive M&A while we're building new sites, profitable sites, across the country. And at the end, it's what I've been doing for 30 years and why we're bringing in these great owner operators. It's a passion for delivering the best customer experience in the industry. If you do those three right, you're going to be successful in this industry. And that's what we're focused on.

BRIAN SOZZI: And Dave, quickly before I let you go, when's the IPO? I mean, they don't bring in a guy like you to just sit there and do nothing. I mean, the business has to be set up to come to market soon, no?

DAVE HOFFMANN: Look, it's a frothy environment, as you know. But look, we're focused on being the very best Mammoth. I'm thrilled to be here. We're assembling the very best owner operators in the industry, ones that have a passion for running great operations, building a great culture, and sharing best practices. I love our platform.

I think we're unique because we are owner operator led. That's what spoke to me and why I joined. And look, wherever we lead-- wherever we go after that, you know, the owner operators are going to have a seat at the table and be able to guide us on where we're going in terms of our future. So that's what makes Mammoth unique versus every other player in the industry.

BRIAN SOZZI: All right, well, we look forward to following your new journey. Mammoth Holdings chairman and CEO, Dave Hoffmann. Got one of these car washes by me. I paid $45 for a wash next week-- last week. I could use a much cheaper one.