ABC Fine Wine & Spirits is looking to diversify by getting into the car wash business.
The Orlando-based chain is early in the process of evaluating locations for future car washes, chief marketing officer Sean Kelly said in an emailed response to questions from the Orlando Sentinel.
The business name is Tux Car Wash, but ABC is still in finalizing details of its structure, Kelly said.
“This is another way for us to diversify our business,” Kelly said. “Right now, we are still early in the process and are still exploring to see what opportunities there are for our overall business portfolio with this concept.”
It was too early for Kelly to release specific details on the project, such as the timeline or how many existing ABC stores could be converted to car washes. He added the priority is looking at available and future properties.
“It’s not unusual for us to convert older stores from time to time, especially when we build new ones nearby,” Kelly said.
ABC has 123 stores in Florida and continues to open two to four stores a year, Kelly said.
“ABC Fine Wine & Spirits has multiple new wine and spirits stores under construction and in development around the state of Florida and that is a key focus for us,” Kelly said. “We’re also exploring opportunities in the car wash business as a way to diversify our business.”
But it is typically harder for companies to achieve above average results when they engage in “unrelated diversification,” said Christopher Leo, an associate lecturer of integrated business at the University of Central Florida.
Car washes and liquor stores are two completely different industries, he added.
“It’s definitely one of the most unusual cases of unrelated diversification that I’ve seen,” Leo said.
Unrelated diversification is less successful because the core skills don’t necessarily transfer over, Leo said. He gave an example of a tire business trying to open a restaurant, which would require a different set of skills than selling tires and performing automotive services.
An example of related diversification might be a car wash company going into janitorial services as they would have knowledge about chemicals and equipment, Leo said. He said related diversification tends to be more successful.
“I’m not saying that they wont be successful,” Leo said. “It will be harder for them to find the right synergy in order to achieve a competitive advantage in both industries.”
He sees a benefit of getting into the car wash business now.
“The car wash industry is expected to grow as more folks start to travel a bit more with the COVID restrictions being lifted up,” Leo said.
Kelly said the move is about diversifying the portfolio of the family-owned company.
“At ABC, we are always seeking new opportunities and ways to cater to our communities,” Kelly said.