What does it take to make an extra service profitable?
CHICAGO, Ill. — We all know it’s a natural — coin laundries and extra profit centers. For many years, operators have offered their “captive” customers candy and snacks and drop-off service.
Is there more to offer? Can an aggressive operator get distracted by extra profit centers? What does it take to make an extra service profitable? Distributors from across the country share their views about extra profit centers and the possibility of creating a one-stop shopping experience for laundry customers.
IF YOU DO SOMETHING, DO IT RIGHT
“Newer stores, where price per square foot isn’t too expensive, offer snacks, candy, games and vending with a better splash,” says Karl Hinrichs, HK Laundry Equipment, Armonk, N.Y. “The crane games are popular, and classic video games, such as Ms. Pac Man, are growing in popularity. We have found that milder, non-violent games appeal to the central masses, families.”
If you decide to add a new service, there is the question of marketing, Hinrichs says. “Marketing is a classic problem with operators. They just don’t realize that they’re building a foundation for a set of businesses. For example, with drop-off laundry, some only put counters in. The area looks exactly like the rest of the store. Look how drycleaners utilize the drop-off counter. If you want to go high-end, you have to do it right. Can you expect $7-an-hour attendants to sell and upsell services? It takes a drycleaner a long time to train a good counter person.”
If space is available, and you’re deciding whether to add an extra piece of equipment or an extra service, ask yourself some questions, Hinrichs advises. “Is there a need? What about the drying and folding capacity? What size of machine should I use? If you have an attendant, think about the other services this person can do. It’s easy to just put in a washer.”
Is it possible to attract someone without laundry to your store? You would almost need a stand-alone business, Hinrichs explains, such as a three- or four-bed tanning salon, and market it, to accomplish this. This might also be accomplished if you rent out laundry space to people who perform services such as hair styling.
“We’re always looking for anything that keeps customers busy and entertained such as food, snacks and the Internet. A key-cutting station might also work.”
Hinrichs offers this bit of advice to operators: “If you’re going to add a business, ask yourself if you would ever start this subsidiary business all by itself in the same shopping center. If you would, put it in your coin laundry. If you wouldn’t, don’t even get distracted by it.”
DON'T FORGET CUSTOMER SERVICE
When it comes to extra profit centers, “video and vending is big in my area,” says Chuck Post, Southland Laundry Systems, National City, Calif. “Drop-off drycleaning is also big.”
While coin laundry customers seem to be prime candidates for extra services, Post offers this warning: “If you don’t design your business to look like you’re in that business, you’re not going to be very successful in that business.” This is especially true with drop-off laundry and drycleaning, he adds.
Operators should also remember the value of marketing. “Our industry would be headed toward greatness if we marketed it better and provided more service to customers.”
Post says the laundry industry has attracted people who don’t want to be totally involved in the business, or simply enjoy the fact that managing stores isn’t all that time-consuming. “However, management problems can surface when extra services are offered.”
For those trying to decide on how best to utilize any extra space (new equipment or extra service), Post says his company provides new equipment analysis for customers. “The big mistake people make is that they get sidetracked with extra profit centers; your emphasis should be keeping on top of the coin laundry.”
Post believes the idea of one-stop-shopping at a coin laundry isn’t that far-fetched. “A clothing center in the right area can make sense. It would handle drycleaning, some retail sales and fluff-and-fold. It’s possible to do this. People take drop-off laundry to a drycleaner and not a coin laundry, yet the drycleaner is more expensive.”
As far as new profit-generating ideas go, water vending has proven popular, Post says. “Some of the water venders are outside the store. These operators can make good money in some cases.” Post has also noticed tanning booths and fruit bars in stores.
Whatever you offer, Post says a greater emphasis on customer service can always pay off. If a customer wants to leave the store instead of waiting for the wash cycle to end, he explains, you can have your attendant move the clothes to the dryer and then fold the clothes. “This would be for a small charge, not the full drop-off price. You service your customers better. Laundries still have a bad image; without promotion we can’t maximize our potential. This industry should be much larger.”
While some laundries search for an ideal extra profit center, it already existed in South Carolina, says Stan Bradley, Laundry Systems of the Carolinas, Spartanburg, S.C.
“We used to have game machines that paid off money, but [South Carolina] outlawed them,” Bradley explains. “The laundry owners didn’t own the games, but split the profits. The attendants paid out the cash. The state started a lottery after the poker games were outlawed.”
While Bradley believes different extra profit centers can work, once the poker games disappeared, the attendants also disappeared, especially in the smaller stores. Owners wondered if an extra service would justify having an attendant.
“If you’re going to do drop-off work, you need about 3,000 pounds or more monthly to justify having an attendant.”
Making a decision about adding an extra vender or extra equipment shouldn’t be that difficult because there’s usually space (not close to the utilities) set aside for venders in the design process.
What he is seeing is that given the opportunity to fill extra space, owners are looking to add larger washers. “We’re seeing more 40- and 60-pound machines. There are even 80-pound washers going in.”
While extra profit centers, outside of vending and games, aren’t big in Bradley’s area, one customer has tanning booths and one customer is putting in an ice cream parlor adjacent to the laundry. Bradley also believes that a postal center, where one could pick up parcels, might work.
ASK YOURSELF SOME QUESTIONS
“I’ve seen post offices, tanning salons, fast food, exercise equipment, drycleaning, wash, dry and fold and commercial accounts,” says Steve Grigsby, Jetz Laundry Systems, St. Louis, Mo., when asked about popular extra profit centers. “More people are aggressive today. In the metro area, where most of the stores are attended, 99.9 percent of them have extra products/services.”
Grigsby echoes the sentiments of other distributors when it comes to marketing extra products and services. “The best example I can give is one about a metro laundry that didn’t promote the bundle business. It usually takes six months to a year to make money; it took this person three or four years to make money. Does marketing help? Most definitely.”
When looking to add a new business or service, start asking yourself questions:
Space is always a consideration. If, for example, you were interested in offering fast food, it would probably require more space than a drop-off drycleaning service. “Most services will need at least 500 square feet of floor space.”
Grigsby says a coin laundry, in the right situation, could possibly attract people not interested in washing and drying. “We have one store with tanning that does quite well. About 25 percent of the people come to the laundry just for tanning.”
Looking for something to sell? Grigsby says bottled water might be worth investigating. “One customer developed a good bottled-water business. He sold water by the gallon and in five-gallon containers. It’s unusual, but it has worked.”
With the advent of larger washers in today’s stores, there are new opportunities when it comes to providing some type of commercial service.
“We have one store that I’ve been watching,” Bill Reed, Daniels Equipment Co., Auburn, N.H., says. “The owner’s daughter and son-in-law have been going to health clubs to pick up clothing and bring it back to the laundry for wash, dry and fold. They have now increased their pickup service to three times a week. If the business grows large enough, the owner will add machines just for that work.”
Whatever you try to offer in order to generate extra revenue, you have to remember that customers have tunnel vision, Reed says. “People get used to doing the same things at the laundry. They don’t look around to see what’s new. Marketing is very important.”
To prove this point, Reed recalls when one owner installed a 125-pound washer. “The owner put out notices about the machine. People wanted to use the machine before it was even bolted down! That machine is doing fantastic today.”
The one-stop-shopping theory is possible today, Reed believes. He says the right stand-alone business, in conjunction with a coin laundry, could have people without laundry, visiting the store. “A convenience-type store might be a natural thing for this.”
However, not all good ideas take hold, he admits. In Massachusetts, one laundry owner wanted to put in a gas pump next to the store, he recalls. The government put a stop to the plan.
Whether you put in an extra profit center or not, the goal is to generate as much revenue with your store as possible. “I’ve even seen people back away from the extra profit centers, and instead put all their energy into improving the store — painting it, sprucing it up and adding new equipment.”