Company · Real Assets · Debt · 2022–2023

The Subscription Unlock: How a $30 Membership Made the Car Wash Buildable — and Financeable

For a century the car wash was uninvestable — episodic, weather-dependent, anonymous cash. Then operators put a membership on a card on file, and the business became legible to capital. Once it was financeable, it became buildable: a new tunnel put up for the cost of five turns of EBITDA stabilizes into an asset the market pays ten for. We were financing that arbitrage at the start.

For most of its history, the car wash was a business institutional capital would not touch. Revenue arrived one car at a time, in cash, only when the sun was out. No customer had a name. A week of rain was a week of zero. Nothing about it could be underwritten, so nothing about it could be financed — and a business that cannot be financed cannot be built at scale.

Then the operators changed one thing. Not the tunnel, not the soap — the relationship. For roughly $20–30 a month, billed to a card on file, a customer could wash as often as they liked. The unlimited membership converted an anonymous transaction into a named, recurring, cancel-anytime contract — a small act of trust, renewed monthly, by millions of people.

That one change re-priced the entire industry. And then it did something less obvious and more valuable: it turned a car wash into something you could develop for a living.

The Flip: From Weather to Wallet

The numbers describe a business that swapped its revenue engine in under a decade. Industry-wide, wash-club memberships grew roughly 43% from 2019 to 2022 — the fastest-growing service in the sector. By late 2024, member revenue across US car washes was growing 16.6% year over year while retail pay-per-wash revenue declined 5.3%. At the category leader, Mister Car Wash, the Unlimited Wash Club reached roughly 2.5 million members and 79% of wash sales by late 2025. Rain stopped mattering.

The reason the shift matters so much is the arithmetic of a subscriber versus a walk-up. A transactional customer is worth perhaps $30–225 a year and visits a handful of times. A member is worth $240–360 a year and visits twenty to forty times. One is weather; the other is an annuity. And the runway is early, not late: even after the boom, only about 14% of US wash customers hold a membership. The re-rating that already happened was driven by the first act of a much longer adoption curve.

There is a deeper tell in the data. Real car-wash revenue per thousand vehicle-miles grew +2.9% a year from 2007 to 2021 while miles driven grew +0.1%. The business was extracting more value from the same cars — the signature of a category becoming a service relationship rather than a spot transaction.

What the Subscription Unlocked

Recurring revenue is underwritable revenue, and underwritable revenue attracts leverage, real-estate capital, and private equity — in that order.

The wave was unmistakable. Leonard Green backed Mister Car Wash in 2014 and took it public in June 2021 above $4 billion. Golden Gate recapitalized Tidal Wave at roughly $950 million in 2020. Warburg Pincus bought El Car Wash in 2022. Oaktree backed Whistle Express in 2023 — the platform that by 2025 became the country's largest express operator at ~530 locations. Underneath the equity, institutional real-estate money financed the concrete: twenty-year absolute-net sale-leasebacks at 6–7% cap rates, a structure lenders will only price against revenue they believe recurs.

At the peak, express tunnels traded above 10x adjusted EBITDA — multiples that were unimaginable when the same asset was a weather-beta cash business. What changed was not the tunnel. The market was pricing the membership base — contracted trust — not the concrete.

The Buildout: Manufacturing a 10x Asset for the Cost of 5x

Here is the part the membership made possible, and the part we came to underwrite directly. Once a stabilized car wash reliably trades at 8–12x EBITDA in the private market, the economics of building one become extraordinary — because you can create that asset for a fraction of what it is worth the day it stabilizes.

The unit math is clean. A state-of-the-art express tunnel costs roughly $4–5.5 million all-in — land, building, equipment, development. Stabilized, it throws off $700,000 to $1.3 million of cash flow. That is a yield on cost in the mid-teens to mid-twenties percent — against a private-market acquisition price of 8–10x EBITDA, or a roughly 10–12% cap. In other words, the day a well-located tunnel fills its membership base, it is worth two to four turns more than it cost to create. Development is not a construction business here; it is a multiple-arbitrage business wearing a hard hat.

The disciplined way to capture that arbitrage manages the one real risk — construction and lease-up — rather than taking it head-on. The sharpest platforms forward-purchase: they contract new tunnels from developers at 5–6x pro-forma EBITDA, payable on completion with a modest deposit, so the developer carries the build risk and the platform acquires a finished, ramping asset below the acquisition market. Land and building are then financed through sale-leaseback at a 6–7% cap, freeing capital to do it again. Build or forward-purchase at 5–6x, stabilize into a 10–12x private asset, aggregate into a platform that strategics and sponsors pay 12–15x for, and — for the few that reach national scale — an exit the public market has valued above 20x. That ladder is the whole game.

And the runway for it is large. If subscription penetration climbs toward household norms, industry analysts size the addressable market roughly doubling from ~$13 billion to ~$29 billion, which would require the country's conveyor capacity to roughly double. A sector that needs to build its way into demand is a sector that rewards the people who can finance the building.

Where We Came In

This is not a pattern we observed from a distance. We arranged the debt for the first express car-wash platform buildout we underwrote — a national development-and-acquisition strategy backed by a global real-asset sponsor, capitalized to build and buy a starter portfolio and grow from there. Underwriting that facility — the site-level ramp, the forward-purchase structure, the leverage a lender would tolerate against a membership base still filling — is what turned an interesting consumer trend into a firm thesis. The sponsor ultimately took its development plans in a different direction, and the platform we financed did not become ours to own. The thesis it produced did.

That is the vantage we bring to the sector: not a spectator's read of a boom, but a financier's read of what actually clears — which membership bases a lender will lend against, which development yields survive a slower ramp, and how much leverage is too much when the annuity is still being built. It is the same read that, a year later, told us the boom had a bill coming.

The Tide Went Out Here, Too

Then the sector ran our firm thesis in miniature, on fast-forward.

Cheap capital did what cheap capital does: it overbuilt, roughly 900 new sites a year for five years. Zips Car Wash — 625,000 members, about $303 million of revenue — filed Chapter 11 in February 2025 under $654 million of funded debt, citing saturation and leases that no longer matched performance. Driven Brands exited US car washes for $385 million, well below what it spent to assemble the business. Multiples compressed to roughly 5–8x for typical express assets. And in 2026, Leonard Green took Mister Car Wash private again at $3.1 billion — below its IPO mark.

Read carefully, the bust confirms the thesis rather than refuting it. Zips' members did not stop washing their cars; its balance sheet failed, not its model — the membership base was precisely the asset the restructuring fought to preserve. What broke was the buildout discipline: too many sites, financed with too much debt, at multiples that assumed the membership ramp would arrive faster than it did. The assets that held value are ranked by one variable above all — membership penetration — and advisors now band express valuations explicitly by it, thin-membership washes at the bottom, deep-membership platforms still commanding 10–15x in private deals.

What We Take From It

The car-wash decade is the cleanest natural experiment we know of in a pattern we invest behind everywhere: when an operator converts episodic trust into contracted trust, the business becomes legible to capital — financeable, then buildable — and the market re-prices it within a decade. The subscription did not make the car wash better at washing cars. It made the cash flows nameable, measurable, and financeable, and that is what let capital build the sector rather than merely buy it.

But the same decade teaches the discipline half, and it is ours. The unlock gets you the capital; it does not absolve you of the entry price, the leverage, or the downside. The development arbitrage is real — you can genuinely manufacture a 10x asset for the cost of five — but only if you underwrite the ramp honestly and fund the business through a slow one. The winners of the washout are the operators and financiers who did both. Zips is what happens when you believe the arbitrage and skip the discipline.

The corner car wash spent a century as a business no institution could own. One monthly membership made it financeable, and being financeable made it buildable. The question we now ask of every sector we look at is the car-wash question: where is the episodic trust that, once written into a contract, turns a business you can only buy into a business you can build?

This piece is part of our thesis on Accelerating Transformative Growth. If you are building or financing recurring-revenue consumer real assets, we're glad to compare notes.