CHICAGO — Plenty happened in the “middle” of the year. April was highlighted by the annual state of the industry survey. The Clean Show took place in June. In addition, there were several stories about how operators dealt with rising utility costs.
It’s rare these days to hear someone admit to making plenty of mistakes. Mike Gilley started small in the laundry business and had to discover the ins and outs the hard way. He learned his lessons well. He’s owned some 30 laundries and builds super-sized (6,000 to 8,000 square feet) combination coin laundries and tanning salons today.
What are the keys to his success? First, he likes the economies of scale of the larger stores. His company is not driven solely on price; business is attracted based on providing the customer the best experience possible. In addition, he builds in areas that can support a large-format store and he does plenty of marketing, including radio and TV advertising.
April, once again, features the state of the industry survey. Here are some of the survey highlights:
2006 Business vs. 2005 Business
In terms of overall coin laundry business (gross dollar volume), 60 percent of the respondents report an increase in 2006 compared to 2005. The average business increase in 2006 was 8.1 percent. On the negative side, the average decrease for operators in 2006 was 15.2 percent.
Sixty percent of respondents report an increase in drop-off service (gross dollar volume) in 2006. The average drop-off business increase is 13.5 percent, up from the previous year’s (2005) figure (10.8 percent). Forty percent of the respondents saw their drop-off business decrease. The average drop is 23.2 percent.
Fifty-eight percent of respondents had an increase in vending sales in 2006. The average vending gain is 7.6 percent.
The price range for a top-load wash ranges from 75 cents to $3. The most popular top-load prices are $1.50 (36.4 percent) and $1.75 (21.4 percent). The most common price for a small front loader (18 pounds) is $2 followed by $1.75. Moving up in size, the most popular price for a 25-pound wash is $3. The price range for a 30-pound machine is $2.75 to $6. The most popular price for a 40-pound machine is $4, and $5 is the most popular price for a 50-pound machine.
Overall, prices have gone up a bit since last year’s survey. In addition, where the prices are similar to last year’s prices, the gap between some of the prices is narrowing — with the higher prices closing in on the lower prices.
Here are the most popular dryer prices:
1) 25 cents/8 minutes
2) 25 cents/6 minutes (tie)
2) 25 cents/7 minutes (tie)
4) 25 cents/10 minutes
5) 25 cents/5 minutes
Thirty-five percent of respondents say they have raised washer prices in 2007 or intend to raise them by the end of the year. When it comes to dryer pricing, 23 percent of respondents say they have bumped up the prices or plan to do so by the end of the year.
Shopping in 2007
Thirty-two percent of respondents have bought, or plan to buy something (washer, dryer, vender, changer or water heater) this year. If you just focus on washers and/or dryer purchases, the number drops a bit to 29.6 percent. Sixteen percent plan to add at least one top loader in 2007; the average expected purchase is 6.1 machines.
What a headache!
Respondents were asked about their biggest industry “headaches.” The two top problems are high utility rates and too many coin laundries. Twenty-three different problems were mentioned.
Sixty percent of respondents believe 2007 will be the same as 2006 in terms of business. Thirty-one percent believe 2007 will be a better year than 2006, while only 9 percent expect a drop in business in 2007.
The average turns-per-day for top loaders is 3.69. For front loaders, it’s 4.2 turns-per-day.
The key to successful advertising, according to Dion Marcionetti, is knowing where your market is and what makes your laundry stand out. When putting together an ad, look at your store and come up with a list of advantages that a customer could make use of if he/she visited your store. The advantages on your list could include:
• off-street parking
• convenient hours of operation
• large quantity of washers and dryers
• friendly attendants
• automatic doors
• plenty of folding tables and carts
• drop-off laundry service
• clean and safe environment, and
• special pricing on certain days.
The Clean Show was the focus in May. A complete preview of the biennial show was presented. Sixteen thousand people are expected to take in the exhibit and educational sessions.
Kevin Roberts, owner of Suds Your Duds Laundromat in Granbury, Texas, was starting to get fed up with his older dryer models. He discovered that newer, more energy-efficient models made a big difference not only in the costs of utilities, but customer satisfaction as well. A little math showed that he was spending $55.68 per day on the older dryers, and only $34.07 on the new ones. That was just the propane costs. The gas savings weren’t the only benefit. The customers liked the machines so much that sales increased, he says. He saved 28 percent a month on utilities, while at the same time his gross sales went up 13 percent, he recalls.
Ted Edwards, Ted’s Laundry in Sylva, N.C., was also fed up with rising gas prices. He attacked the problem in a slightly different manner. He took out 34 front loaders and replaced them with 34 soft-mount, high-speed extract washers that spin clothes so dry that drying time, and thus usage of the bottled gas that runs the dryers, is reduced. He estimates that 10 minutes’ drying time is saved per load. He also replaced his older-model water heater with an on-demand, gas water-heating system. He saved 16 percent on his average monthly bottled gas bill, even though his overall business stayed about the same. And that’s despite an increase of 21 cents per gallon in the average price of bottled gas for the same period.
Don Miller offers some dryer maintenance tips. He urged operators to employ a rigid lint-removal schedule. The lint screens also need to be checked. Coated screens lead to reduced air flow, which means poor drying and an increase in gas consumption. Also, don’t forget to inspect the inside of the exhaust pipes for lint accumulation. Lint will coat the side walls of the pipes and reduce the size of the exhaust system. This “choking down” of the pipe size may cause dryers not to work properly — they cycle off on high-limit thermostats and displease customers in the process.
Manufacturers, distributors and operators sound off about the state of the coin laundry industry. In Part I of the story, respondents give the industry an overall grade, look at ways to make stores more customer-friendly, address rising utility costs, discuss the industry’s future and try to figure out ways to attract new customers. On the grading question, the consensus was that the coin laundry industry deserved a B.
Have you ever considered opening a laundry in a lower economic area, but decided to pass on the project? Angel Reynoso has three coin laundries in Cicero, Ill., right outside of Chicago. Some would consider Cicero a less-than-ideal location for upscale stores. One of the keys to Reynoso’s success is that he has established a good reputation in Cicero. Reynoso had a grocery in the area and people knew him.
It’s no longer unusual to speak about or offer large (75-pound plus) front loaders. Eight brands are represented in the equipment review.
More and more operators are turning to commercial accounts as a way to generate additional revenue. Several operators share tips on how to manage this service. Here’s what they have to say:
• Current equipment trends make things easier. With larger washers, more work can be processed.
• Don’t miss deadlines unless you want to lose accounts.
• Learn wash, dry and fold before you tackle commercial work.
• Some commercial work may require extra work (stain removal problems, for example).
• Be prepared to deal with claims.
• You need to market this service.
• You need to establish some sort of pecking order, such as making sure your regular customers come first.
• Your profit margin may be small, but the work keeps your attendants busy and machines occupied.
Fifty-seven percent of respondents to a Wire survey say they won’t cut back on help or reduce hours to deal with the new minimum wage. Eighty-five percent of respondents say they pay their employees more than the federal minimum wage or their state’s minimum wage.
The Clean Show drew 14,667 and topped the previous show — Clean ’05 in Orlando, Fla. There was 227,950 net square feet of exhibit space, slightly lower than the Orlando show. The Show’s coin laundry educational sessions covered a variety of topics, including looking to the industry’s future and 10 ways to boost the bottom line. The exhibit hall featured a host of new equipment, including new energy-efficient top loaders, larger dryers (both stack and single-pocket) and front loaders in different sizes, including a hard-mount, 14-pound machine.
Do you have problems with your attendants? Mark Benson offers some advice on how to get your employees to work as a team. Benson urges operators to say hello to all employees upon entering the laundry. In addition, it’s important to ask their opinions about things you’re considering for the store. He also urges owners to let employees watch how you deal with customer issues. By doing this, they can eventually deal with myriad problems and become more valuable to you.
To read Part I of this article, click here.