RIPON, Wis. — You’ve made the decision to enter the vended laundry business. You might even have chosen a distributor and are proceeding with setting up financing. But there are still plenty of decisions ahead, such as equipment mix, store design and added amenities. Each should be carefully considered for its impact on how your store will operate and your time commitment.
MIXING IT UP
Many owners are having success by pairing their laundry with another proven business concept, such as a coffee shop, car wash or tanning salon. While there are a variety of versions of the coin laundry today, Evan Hirsh, owner of four laundries in the greater Pittsburgh area, suggests don’t forget your focus is laundry.
“Extras should be just that — extra,” he says. “It’s got to pay for itself and bring in a little to be considered.”
Dan Bowe, national sales manager for IPSO brand laundry equipment in North America, agrees with the cautious approach to combo businesses, adding that the size of your planned store will dictate whether you have space for an additional venture. Taking floor space away from the laundry will impact the number of machines installed and, as a result, affect profit potential.
Combination businesses must also make sense for your store’s location; and that means reviewing your demographics and target market with a distributor. A bar/laundry operation may be ideal near a college, but quite wrong in another neighborhood.
Offering vending, however, is another story. Snacks, soda, candy, video games, detergent, laundry bags and many other products are available for purchase at most vended laundries.
“A lot of people are putting in more high-end vending machines,” Bowe says, adding that ice cream has become a popular vending option recently.
“You have to understand, your average customer is a 37-year-old woman, with children,” Bowe explains. “It’s important to have things to keep them busy and vending selections for a variety of ages can do that.”
Craig Dakauskas, vice president of sales at Commercial & Coin Laundry Sales & Service (CLEC) in Gulf Breeze, Fla., recommends leasing video games. “The nice thing about a lease is you get a rotation of games, which is better for you,” Dakauskas says, versus buying games and being stuck with them for years.
However, there are vending equipment costs, whether leased or purchased, and Hirsh doesn’t like losing the personalized service that comes with having an attendant help customers — especially with items such as soap.
“Now with the emphasis on larger machines, single-size soap products just haven’t kept up,” he says, adding that in the future he’ll likely have attendants begin selling larger size products to customers utilizing larger capacity washer-extractors.
ATTENDED OR UNATTENDED?
Attended stores are on the rise. Bowe estimates 60 percent of IPSO’s new store projects are attended.
Hirsh believes that trend will continue as stores become larger, but admits trying to run a small (fewer than 1,500 square feet) attended store in Pennsylvania could be extremely difficult given a $7.15 minimum wage taking effect in 2008.
Owners are having attendants do more than just wipe down machines, sell soap and dole out change. They’re finding that adding wash, dry and fold service can not only pay for the attendant, but also be a profitable component to business. Some operations seek to maximize the potential of this offering by rewarding attendants with incentives or bonuses for growing the service.
“Everything you hear is that this is an aspect of the business that will grow the largest in the next 10 years,” Hirsh says. Bowe agrees and recommends owners planning for attended laundries start offering the service upon opening.
“I think you need to plan for this from the start — will you be using machines on the floor or installing on-premises machines in the back?” Bowe asks. He added that if owners don’t install machines in a back area from the start, they should plan ahead and at least have utilities roughed in should they want to add them at a later date. For these applications, a 50-pound washer-extractor and 75-pound tumbler are standard size units.
“The key is having available capacity,” says Jay McDonald, vice president of product and brand management for Alliance Laundry Systems, adding that owners must be careful not to compromise the number of machines available to customers.
McDonald agrees this segment of the business will grow as people become busier and suggests an additional convenience may emerge. Owners may seek out a major employer in their area to team with. Laundry staff could pick up laundry as employees come in to work. Staff would then process the loads and return them to employees as they leave work at the end of the day. McDonald sees this idea as being the ultimate in convenience and attractive enough to charge a premium rate.
“I think with an attended store, [drop-off service] generates a good revenue stream,” Dakauskas adds. “But if you’re going to be in business, you have to market it … the more services you can add to your laundry, the better off you’ll be.”
Commercial accounts, on the surface, bear a resemblance to wash, dry and fold service. However, these add-ons differ.
Bowe suggests owners start out with their wash, dry and fold service and get comfortable with it before seeking out commercial accounts. “You have to approach commercial accounts as a separate business from your vended laundry.”
Hirsh concurs, adding that in order to be successful, the laundry must offer pickup and delivery. That means likely hiring another employee, buying a vehicle and additional costs related to the vehicle such as fuel, maintenance and insurance.
A commercial business will require invoicing. Additional marketing and marketing materials will be necessary to build the business. This will translate into more paperwork, which can be a drawback for owners who were attracted to the laundry business because of its reduced management requirements.
Colleges, camps, beauty salons, doctor’s and dentist’s offices (excluding items with blood-borne pathogens) and small restaurants all may be good potential customers to market your service to. Hirsh cautions against pizzerias, because of the oils linens may contain and their risk for combusting in drying tumblers.
“The bottom line on commercial accounts is owners must recognize their unique nature,” Dakauskas says. “What looks like the simple expansion of wash, dry and fold service actually is far more involved. That’s why it needs to be viewed and developed as a separate business.”
THE TOOLS OF THE TRADE
It’s the subject of much debate, with owners having very strong views. What is the best mix of equipment for a coin laundry?
Dakauskas looks at capacity totals. His company will add up the capacities of the washers and size up tumblers to ensure adequate drying capacity. In the case of a 2,500-square-foot store, it might work out to 800 pounds of wash capacity and 1,000 pounds of drying capacity.
Choosing the proper mix of machines within those totals, however, is far more involved, and you need distributor input. “We’ll put in a mix that satisfies the demographics of the store, customers’ needs and is most practical for the owner,” Bowe says, adding that they’ll take into account the store’s size, demographics and competition in the area.
Part of the demographics analysis will be a review of the percentage of families served within the coverage area. Hirsh likes having at least one 80-pound washer-extractor in his stores, where large families are part of the customer base. He also counts his 50- and 60-pound units as being among his most profitable.
With their high extract speeds and large capacities, front-load washer-extractors often are far more popular with customers than commercial top loaders.
“Top loaders are dwindling quickly in our market,” Dakauskas notes. “Small front loads are taking the place of top loaders and contribute better efficiency for owners.”
Hirsh still sees a place for top loaders in today’s laundry market, even if it’s only a small role with four to six machines. “I think people walking in a store expect to see them,” he says. On the drying side, he’s a big fan of the new, larger, 45-pound stack tumblers and their profit potential. Hirsh has had “great success” marketing the price-per-pound story compared to 30-pound pockets and believes the 45-pound stack and others like it may erase the need for large, single-pocket 50- or 75-pound tumblers.
ADVERTISING YOUR LAUNDRY
Once owners have established a core customer base, it’s easy to become complacent and push continued marketing efforts to the background. Many in the industry agree that marketing is an important part of the business, but few owners do enough of it.
“It’s probably what we as owners miss out on most from an opportunity standpoint,” Hirsh says.
The key to effective advertising, Dakauskas explains, is not viewing money spent on these activities as expenditures, but rather as investments in the laundry business.
“You have to ask, ‘What’s the long-term effect of the marketing?’” Dakauskas says, adding that owners should try a variety of options, such as direct mail, posters, newspaper ads and other media, to see what works best in their market. It’s important, he adds, to remember that the core customer base of a vended laundry is constantly changing.
“What people forget is, with renters, there’s a big turnover... ask yourself, ‘If there are 4,000 apartments in your market, what’s the turnover ratio?’” Dakauskas says. Advertise throughout the year, he advises.
Bowe recommends allocating 2 percent of gross for outside advertising activities and 1 percent for in-store promotion. In-store marketing could include special time-of-day pricing, giveaways, contests, and incentive programs. Get those customers to return.
External promotions should be highly targeted with tailored messages or specials for specific audiences. For core customers, a direct-mail piece might focus on frequent customer incentives. The message on a mailing to secondary customers might tout the large-capacity machines for laundering quilts or drapes.
While promotional activities are important, owners also must understand that the most valuable advertising isn’t bought. “Word of mouth is No. 1,” Bowe says, adding that owners should strive to make their stores the cleanest, brightest and best-run facilities in their market. “You can’t just turn the lights on and forget about it.” Be active in managing the facility and hire quality people you can trust to strive for the same goals.
The laundry business offers investors a wealth of opportunities. Owners taking a progressive approach to their stores, services, amenities and marketing will be set to benefit from society’s customer base.
To read part I of this article, click here.
Randy F. Radtke is a public relations specialist at Alliance Systems, a manufacturer of Speed Queen, Huebsch, IPSO and Cissell commercial laundry equipment.