SANTA PAULA, Calif. — When Chris Malcolm opened his first coin laundry about a year ago, he admits to being naive about the business. No false bravado for Malcolm.
However, by applying some of his business skills and getting plenty of advice from a helpful distributor, Malcolm has reached the point where “nothing freaks me out anymore.”
A NEW VENTURE
Malcolm sells commercial real estate in California. “That’s how I came across this laundry,” he recalls. He deals with office buildings in commercial centers, and discovered a rundown laundry for rent in a 50,000-square-foot center surrounded by a variety of businesses in Santa Paula, Calif.
While Malcolm found the opportunity interesting, he hadn’t been particularly impressed with what he had seen in other coin laundries. “In Los Angeles, they are not always the nicest.” But Malcolm saw potential in the struggling business. “The landlord wanted a nice, well-done laundry. I thought with new machines, people will come, and once they come, they will come back again.”
Malcolm knew the store needed work, but didn’t really know how much work, at least at the outset. “What’s funny is that the first [distributor] I met told me we could add some new machines, close the doors for a week or a week and a half, and then open. Me being naive, I etched this in concrete. I saw cash rolling in after the opening.”
He eventually hooked up with a new distributor, Ron Rothman, RCR Laundry Solutions, and discovered a new reality. A total rehab, everything from the drains up, was necessary. “This is not what I envisioned.” Malcolm ended up signing the lease in February 2007 and LaunderLand opened its doors in May 2007. “We had this great location in the center, but had to shut down the laundry for four months. If not for the great location, we might have been crushed.”
The rehab project ran over budget and there were little pitfalls here and there, he recalls. There was a lot of electrical work, and drain problems were an issue. Flooding was a common occurrence. “We added new drains and went out almost to the street.”
The laundry is about 1,900 square feet and has a good layout, Malcolm says. It features 15 top loaders and 15 front loaders (20- and 40-pound machines). Fifteen stack dryers complete the equipment mix.
Malcolm has already discovered that the larger machines are quite popular with his customers, as well as being efficient. As a result, he may add a 60-pound washer to the mix. “[Rothman] left room for a 60-pound washer. People want to use the larger washers and they understuff them, yet they overstuff the top loaders.
“If I could redo the whole mix, I would definitely add more 40 pounders and cut back on the 20-pound machines and go to 10 to 12 top loaders.”
Pricing is always a major concern for a new owner. The 40-pound washers are $4, the 20-pound washers are $2.50, the top loaders are $1.50 and the dryers are 25 cents/10 minutes. Malcolm has discovered a connection between pricing and customer attitude. “People are happy here. Yes, the dryer heat can be turned down, but people are happy getting 10 minutes of drying. You make the money on the washers. Drying is your loss leader. We are priced similar to the competition, but when we opened we were a quarter less on the washers.” The washer prices were bumped up about four months after opening. “We didn’t advertise the price hikes, but we might in the future.”
THE LEARNING CURVE
Santa Paula is a “cool, little city” of about 30,000, he says. It is referred to as the “Citrus Capital of the World.” The agricultural town is located about 65 miles northwest of Los Angeles. “Overall, the demographics of the town are mainly Hispanic. The town has a lot of apartments and old homes. There are a lot of seasonal pickers here.” It also helps to have a Hispanic market in the business center, he adds.
There are two laundries within a couple of miles, both are larger than his store, although one of them “isn’t great.” “We’re nothing beautiful, but we are clean and attended. That’s a key.”
When it was time to get insured, he realized that his store needed two things: an attendant and “traditional hours” (going 24 was a no-no). Malcolm soon realized that attendants generate business.
“When you are new, machines act weird at times. You need someone at the store to reset machines if need be. I’m 45 minutes away and visit two to three times a week, but I can’t always go and deal with a problem.”
LaunderLand is open 6 a.m. to 10 p.m. Monday through Friday, and earlier on weekends. He quickly discovered that he makes about two-thirds or more of his money on weekends. “If you get people on the weekdays, that’s icing. You could almost close your store for several days during the week, and play bingo in there, and you might not notice a dip in your income.”
Malcolm has had attendant issues. “This is a minimum wage job; you have to realize that. I’ve even had a lady on a work furlough. I’m a decent judge of character, but there are always going to be good and bad people in life.”
He has just recently started fluff and fold as a way to keep the attendants busy and generate some extra revenue. This extra service also allowed him to emphasize his marketing skills. He promotes this service with signage and ads in local newspapers.
“The smaller, local newspapers are the ones you want to deal with. Many of my customers read these papers.”
Malcolm, as part of his marketing plan, believes in giving people something — anything. When he first opened, he held a barbecue. He sent out coupons offering a free 20-pound wash after two 40-pound washes. He has also raffled off some bikes, which he had purchased at a department store. “This is good PR. I like the fact that people in this industry don’t promote. My experience shows that a little PR work really helps. I now want to build the weekly business; my weekend business is already solid.”
A HELPING HAND
Malcolm has also reaped the benefits of dealing with a helpful distributor. “Ron has really helped me out. The whole perception is that this is a labor-free business, one that everyone wants to get in.
“Ron straightened me out on the demand for larger machines, even though I thought he just might be plugging the larger machines for sale. I didn’t know about things like vending, but he helped even though this wasn’t his area. I didn’t know anything. I didn’t want hand-holding, but I needed direction.
“I’ve discovered that we can overcome problems by talking over the telephone. Nothing freaks me out anymore with the laundry. With his help, things will take care of themselves. You need to think in this business.”
CREATING A SPECIAL PLACE
Malcolm strives to create a profitable and customer-pleasing business. He knows what needs to be done. “I want to keep people happy. This goes back to the drying. It would be easy to turn the heat down, but you don’t want to be penny-wise and pound-foolish. Don’t let the customers leave in a bad mood. Just get the money back in the washers.”
What’s special about his laundry? He boasts about cleanliness and working machines. “I’m pissed when a machine is down at a store. Be proactive, not reactive.”
As far as amenities go, the little things count. “I’m starting to offer coffee in the morning. It’s a small thing, but a good thing. I want the field worker as a customer. I see these guys early in the morning, drinking coffee. I want them as fluff-and-fold customers. I need them. What does a pot of coffee really cost you?”
Another benefit he has is being located in a business center. A neighboring store gives people somewhere to go while waiting. While this helps, and he doesn’t feel the pressure to “entertain” customers, he realizes that he still needs to keep people busy to a certain extent.
A YEAR UNDER THE BELT
Malcolm has just passed his first anniversary as a coin laundry operator and doesn’t believe that he’s made any major mistakes so far. The biggest lesson he learned involved weekend business. “Everyone told me that weekends would be huge and the weekdays would be slow, but I didn’t totally believe this. I thought there would be a business spike, but wow!
“It’s really important to know [the customers]. Sometimes I give them a free wash. I’m definitely looking to expand. I’m not making money yet. But I sell real estate, and this is like owning a building. You’re not going to make money for two years. You also need to spend money to increase your revenue stream.”
Malcolm sees more laundries in the future, laundries offering more services or even being connected with other businesses. “Stand-alone laundries could be weak in the future. Put your laundry where there are other stores; give people something to do rather than just hang out in the laundry. I would like to be next to a Hispanic grocery store.”
As far as the extra services go, he recalls hearing about a coin laundry opening in Santa Monica, a high-rent district. “I thought, ‘How do you make money?’ If your rent is triple, you can’t charge triple for a wash. Ron told me that fluff and fold was essential. This goes back to offering other things; don’t just open you door. If you have employees, make them work.”
As you might imagine, this “rookie” operator doesn’t plan on standing pat. If the right situation occurs, he says he would like to dabble in commercial work, although he has some liability concerns about that.
“If you have anything that is different or special, do a mailer. Just advertise it!” Interesting words, for newcomers and veterans alike.