Absorption of higher labor costs through car wash price revisions
First written in FY2024-Q1. 2 of 3 entries say "Advanced", first in FY2024-Q2. Latest entry: FY2024-Q3.
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- FY2024-Q3AdvancedAnnual report
「For car-wash services whose prices were raised from September 2023, the number of vehicles washed at all LABO stores increased 14.4% year on year from July 2023 to March 2024. The number of vehicles without KeePer coating, for which the price increase was larger, rose only slightly, by 0.3%, while the number of vehicles with KeePer coating increased substantially, by 31.2%.」
Even after the September 2023 price increase for car-wash services, the number of vehicles washed increased 14.4% year on year from July 2023 to March 2024. In particular, vehicles with KeePer coating increased 31.2%, indicating that demand and the additional revenue effect continued after the price revision. - FY2024-Q2AdvancedAnnual report
「Accordingly, we raised the price of pure-water hand-wash services, which have the highest labor cost ratio, from 1 September. Costs increased in July and August before the price increase, but from September onward the additional revenue generated by the price increase has continuously offset the impact.」
The company raised the price of pure-water hand-wash services from 1 September and explained that, from September onward, the additional revenue generated by the price increase has continuously offset the impact of higher labor costs. - FY2024-Q1First statedAnnual report
「Because the company raised car-wash prices from September, the ¥42 million increase in labor costs from the September base-pay increase was almost fully covered by ¥37 million in additional car-wash revenue for September. However, the ¥74 million impact of the base-pay increase in July and August increased selling, general and administrative expenses and reduced profit. From October onward, the company expects to continuously offset higher labor costs from the base-pay increase with additional revenue from higher car-wash prices.」
The company revised car-wash prices from September and first provided specific details of its policy to absorb higher labor costs from base-pay increases through additional car-wash revenue. The ¥37 million increase in car-wash revenue almost covered the ¥42 million increase in labor costs for September, and continuous offsetting is expected from October onward.