State of the Industry Survey: Operators Take a Hit in 2009 (Part 3 of 3)

CHICAGO — It’s been a battle: the self-service laundry industry vs. the recession. Some might also dub it the recession-resistant industry vs. the recession. Whatever you want to call it, it’s clear that the recession has impacted the industry.

While I thought this year’s survey story would be dominated by the economic data, there were other aspects of the survey that caught my attention. You may be surprised at what operators had to say about a variety of subjects.

American Coin-Op’s annual State of the Industry survey focuses on 2009/2010 business conditions, pricing, equipment, common problems, turns per day and expenses. In addition, for the first time, we look at utilities cost as a percentage of gross revenue.

The State of the Industry survey is a random, unscientific electronic mail poll of American Coin-Op readers who operate stores.

RAISING PRICES?

We asked operators if they have already raised washer and/or dryer prices in 2010 or intend to do so before year’s end.

Twenty-seven percent say they have raised washer prices this year or intend to raise prices by the end of the year. Thirty-three percent are not planning on raising washer prices this year, and 40% are undecided if they are going to hike prices in 2010.

Only 12% have raised dryer prices this year or intend to do so later in the year. Forty-six percent don’t plan on any dryer price hike, while 42% are undecided about raising dryer prices.

Last year, a slightly higher percentage (32% washers and 20% dryers) had raised prices or intended to do so before the end of the year.

ADDING EQUIPMENT

One-half of the respondents purchased at least one piece of equipment (washer, dryer, water heater, vender or changer) in 2009. In 2008, that figure was 45%.

Here’s a further breakdown of the purchases:

• In 2009, 17% of respondents purchased at least one machine. The average purchase was 5.6 machines.
• As for double loaders, 26% purchased at least one double loader. The average purchase was 9.7 machines.
• Twenty-six percent purchased at least one triple loader (also includes 50-pound and larger washers). The average purchase was 5.25 machines.
• Twenty-one percent purchased at least one dryer last year. The average purchase was 10.8 machines.

Based on the 2009 business figures, I expected the equipment sales to be lower. There were more comments about retooling efforts this year than in recent surveys.

SHOPPING IN 2010

Respondents were asked if they have bought, or plan on buying, any new machinery this year. Thirty-three percent intend to add something (washer, dryer, water heater, vender or changer) to their mix, or have already done so. Last year, this figure was 46%.

• Nine percent plan on buying, or have already bought, a top loader in 2010. The average purchase is (or will be) 7.7 machines.
• Sixteen percent plan on buying, or have already bought, a double loader in 2010. The average purchase is (or will be) 9.4 machines.
• Twelve percent plan on buying, or have already bought, a triple loader (including 50-pound and larger washers) in 2010. The average purchase is (or will be) 3.5 machines.
• Twelve percent plan on buying, or have already bought, a dryer in 2010. The average purchase is (or will be) 14.2 machines.

IT’S ALWAYS SOMETHING

When asked about major industry problems, 25 problems were mentioned. Here are the top-five industry problems:

1. High cost of utilities
2. Lack of customers
3. Dealing with employees
4. Dealing with loans
5. Vandalism

Three “new” problems made the list this year (lack of customers, dealing with loans, and vandalism). Also, “high cost of utilities” is usually a runaway winner in this category. This year, the gap between the No. 1 and No. 2 problems closed considerably.

TURNS

The average turns per day for top loaders are 3.2, down a bit from last year (3.8). The average turns per day for a front loader is 3.7, also down a bit from last year (four turns).

UTILITIES

We asked operators about their utilities cost (as a percent of gross). There were a large variety of answers, ranging from 11% to 45%. The most popular response is 20%, followed by 25%.

The average operator is paying 24% for utilities (as a percent of gross).

2010 BUSINESS FORECAST

Coming off some challenging times, it’s always interesting to get a short-term business forecast. Fifty-two percent expect their 2010 business to be the same as 2009. Thirty-nine percent expect business to improve in 2010, and 9% say business will drop in 2010 compared to 2009.

For those who believe business will stay the same, their top reason is a stagnant economy. Others cite a lack of new customers and new competitors. For those who believe business will drop in 2010, their top reason is the inability to deal with rising utility costs.

Marketing and an improving economy are the top reasons given by those who expect business to rise in 2010.

To read Part I of this story, click here.

To read Part II of this story, click here.