Dog Spas, Hookah Lounges, and Lamb Chops

As car washes go public and attract private equity, some are offering surprising new amenities.

Good morning!

Here are today’s highlights:

• Ami Kassar says the SBA is acting like a bunch of drunk corporate types.

• Home prices rose nearly 20 percent in February.

• Radical pay transparency may be coming to a city or state near you.

• Will the drive-through help Vietnamese food go mainstream?

RETAIL

Car washes are experimenting with surprising new business models: “Past the walls of purple plush and faux alligator club chairs, there is a bar where guests can order margaritas, a bottle of SweetWater 420 local beer, premium bourbon, gin and other adult beverages. Depending on the time of day you can order omelets like ‘The Beamer’ with gulf shrimp, mozzarella, tomatoes and spinach, or lunch and dinner options ranging from an assortment of fresh salads to even bourbon-glazed lamb chops. Sometimes, guests can enjoy puffs of cooled smoke from rented hookahs under golden chandeliers.”

• “‘A lot of people came in dropping vehicles off, then would go to dinner, to Starbucks, Dunkin’ Donuts or Waffle House. And I was like, it’d be cool to have something housed in one building to extend their stay and increase average tickets,’ said Lemont Bradley, owner of Auto Spa Bistro, who came up with the idea to provide amenities after his first car wash business closed 20 years ago.”

• “Mr. Bradley says he is getting creative with amenities and services to make his car wash more like a club. Others are doing it to entice interest from investors, particularly since car-wash chain Mister Car Wash raised more than $560 million in a June 2021 initial public offering.”

• “At Clean Ride Auto Spa in Sioux Falls, S.D., customers can enjoy a freshly brewed cup of locally roasted coffee inside the Clean Bean, its coffee shop. ... Clean Ride car-cleaning and detailing packages range from $12 to $450. They also have a dog spa.”

• “Setting up a car wash is much more expensive than it was decades ago due to technology advancements and rising real-estate prices. Mr. Wulf said it is part of the reason owners are turning to private-equity groups for investment. About 15 years ago, he estimates it was around $2.5 million to set up an express exterior car wash. Now he puts that figure at $7 million.” READ MORE

FINANCE

The SBA has reopened the EIDL program, and Ami Kassar is not impressed: “I can't believe that I am even writing this: the SBA has reopened applications for those who have already applied to see if they want more money before the program runs out of money. As a result, tens of thousands of small business owners have received emails suggesting they apply for money if they want to. As I have said before, the SBA is acting like a bunch of drunk corporate-type people, trying to prove they can use their budget before a calendar year ends. There is no proof of economic injury required for these programs. It’s an embarrassment and puts taxpayers' money in jeopardy.” READ MORE

THE ECONOMY

Home prices rose nearly 20 percent year over year in February, “according to the S&P CoreLogic Case-Shiller US National Home Price Index. Phoenix, Tampa and Miami reported the highest year-over-year gains among the 20 US cities tracked by the index. Phoenix led the way for the 33rd consecutive month with home prices rising 32.9 percent from the year before. It was followed by Tampa and Miami, which saw 32.6 percent and 29.7 percent gains, respectively.”

• “Today's S&P Case-Shiller Index highlights a housing market experiencing a renewed sense of urgency in February, as buyers worked through a small number of homes for sale in an effort to get ahead of surging mortgage rates.”

• “Real estate markets have seen supply-chain disruptions from the war in Ukraine. Mortgage rates have also been rising fast, climbing above 5 percent for the first time since 2010.” READ MORE

FOOD & BEVERAGE

A slew of Vietnamese restaurants are betting they can be the next big thing in fast food: “In recent years, several Vietnamese restaurants with the same idea have opened in Houston, including Oui Banh Mi, Saigon Hustle, and Kim’s Pho & Grill. Outside Texas, there’s Simply Vietnam in Santa Rosa, Calif.; Mi-Sant Banh Mi Co. in Brooklyn Park, Minn.; and To Me Vietnamese Sub in Calgary, Alberta. All these restaurants have drive-throughs and owners who are trying to attract a broader fan base for Vietnamese cooking by marrying its flavors with American convenience. ‘We are going to shift toward more of a Chick-fil-A type of concept,’ said [Paul]. Pham, who was born and raised in Houston, home to about 150,000 Vietnamese Americans, one of the largest Vietnamese populations in the United States. ‘They are the godfather of this business, right?’”

• “Paul Pham, an owner of this Hughie’s and another a few miles away, hopes that one day, his restaurant will be as ubiquitous as Dairy Queen. Next year, he’ll open a third location, and has plans to expand in Texas and perhaps beyond.”

• “In his vision, the drive-through — a classic American innovation that harnessed the fast-food business to the nation’s car culture — is also a potential vehicle to make Vietnamese food the next cuisine to join that success story.”

• “He believes that Americans’ increasing familiarity with Vietnamese cuisine makes it the ideal food for the next generation of drive-through restaurants.” READ MORE

HUMAN RESOURCES

Are you ready for radical pay transparency? “Businesses in New York City are facing a new pay transparency law that will likely cause strife among current employees. In March, the City Council approved legislation that will require employers, starting May 15, to list minimum and maximum salaries on all job opportunities. The bill applies to any company with four or more employees. The only exception regards employers of domestic workers, such as nannies or housekeepers, who must post salary information regardless of staff size. As written, the law impacts approximately 200,000 businesses and 30,000 nonprofit organizations across the five boroughs.”

• “Other states, including California, Colorado, Connecticut, Maryland, Nevada, Rhode Island, and Washington have some sort of pay transparency laws already in effect.”

• “In April, the five borough chambers of commerce and the Partnership for New York City, a nonprofit whose membership includes nearly 300 CEOs from the city's top corporate, investment and entrepreneurial firms, wrote a letter to the council noting that the law will prompt existing employees to inevitably question how ranges offered to job candidates relate to their own compensation.” READ MORE

It turns out Gene Marks is not a fan of remote work: “You would think that I’d be a big supporter of remote work because my 10-person company has been fully virtual for over 15 years. But my experience has been mixed. While running a virtual firm is a great way to keep overhead low, I sometimes feel like I’m running the world’s most dysfunctional company! That’s because my team rarely gets to see each other and never benefits from the camaraderie, socialization, and innovation that occurs when a group is in the office, factors which I feel are very important for building a long-term sustainable business.”

• You can bet I’ll be asking Gene about that “world’s most dysfunctional company” comment when we bring back our Dashboard podcast in the very near future. READ MORE

REGULATION

New rules will phase out the sale of incandescent light bulbs: “The Biden administration on Tuesday adopted two new rules that set stricter energy efficiency standards for light bulbs. Those standards would effectively phase out the sale of most new incandescent bulbs — the pear-shaped orbs with glowing wire centers — in 2023. Much of the country is already lit by LED lights, which the Department of Energy estimates last as much as 50 times as long as incandescent bulbs and use a fraction of the electricity. That revolutionary shift has already driven down electricity demand in American homes, saving consumers money and cutting greenhouse gas emissions.”

• “Once the new rules are in place, Americans will collectively save $3 billion a year on their utility bills, the department said, at a time when higher energy costs have been squeezing household finances.”

• “The stricter standards will also cut emissions of planet-warming carbon dioxide by an estimated 222 million metric tons over the next 30 years, an amount equivalent to the emissions generated by 28 million homes in one year, the department added.”

• “The phaseout had been on track to begin earlier, in 2019. But the Trump administration, bowing to pressure from some of the world’s biggest incandescent light-bulb makers, stalled the effort.” READ MORE

POLICY

Ten years later, Steve Case cites the JOBS Act as an economic success story and calls for more Congressional action: “Washington needs to help the nation’s entrepreneurial community stay ahead of our increasingly aggressive global competitors. We need to ensure that the fruits of American entrepreneurialism are tangible to more Americans in more places. Finally, after years of frustration, we need to re-establish the faith the American people once had that Washington can come together to meet the most important challenges facing the country. We’ve had some successes of late, including the bipartisan infrastructure bill passed last year. But when it comes to innovation, other more distant examples prove that these sorts of bipartisan accomplishments can have enduring impacts.”

• “To that end, Congress should quickly pass the Bipartisan Innovation Act — a.k.a The America COMPETES Act of 2022 — which will help American entrepreneurs compete globally, and in particular with state-subsidized firms in China.”

• “Second, Washington should expeditiously create a Startup Visa program capable of stemming the outflow of entrepreneurs and innovators from the U.S. By one recent count, 200 of Fortune 500 companies were founded by immigrants or their children.”

• “Third, Washington needs to expand the opportunities people have to invest in companies before they go public. Despite previous attempts to reform the accredited investor rule, crowdfunding remains too difficult for too many investors and entrepreneurs to navigate.” READ MORE

THE 21 HATS PODCAST

Careful what you wish for: This week, Liz Picarazzi tells Shawn Busse and Paul Downs about the remarkable, dream-come-true, my-product-in-Times Square PR gift she just received. Of course, this is entrepreneurship, so even when dreams come true, there tend to be complications. Liz’s business is getting a wave of publicity at a time when her fabricator in Shanghai has been locked down for almost four weeks. She’s talking to domestic fabricators as well, but they, too, will be dependent on raw materials that have to come from China. It’s a problem, she tells us.

• You can subscribe to the 21 Hats Podcast wherever you get podcasts.

If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren