Content about Coin-Op 101

ADDISON, Ill. — Super-size it. Would you like peppers? Would you like to add cheese?

This is a common concept adopted by restaurants nationwide. Although the phrasing may differ, “upselling” is a familiar concept to American consumers. Most restaurants offer a good product without the extras, but eateries and other businesses have found that consumers like being given the option to make their own choices about the type of product or service they want. This in no way means the original product or service is inadequate without the add-ons.

What does this mean for our industry? Let’s take a look.

Although there have been many Laundromat innovations in recent years, the two most valuable, in my opinion, were:

1. The ability to offer additional service options on vended washers and dryers.
2. The ability to offer an alternative payment method such as card systems and its effect on the industry.

I would like to focus on these and explain how they tie together.

UPSELLING IN THE LAUNDROMAT

Several years ago, washer manufacturers introduced the ability to offer additional services to customers for additional vend price. Long before that, they offered the ability to sell hot and cold washes for a different cost. Competitors that did not have these sophisticated machines kept their prices low, ultimately reversing customers’ perceptions of the new pricing structure. Today, we have the ability to offer a quality wash, and customers who feel they will benefit from an extra wash or extra rinse will pay more for what they perceive is a superior wash result. This is upselling with no pressure on the customer to pay more money unless he or she chooses to add services.

This is a powerful tool to increase volume. For many years, we in the industry have been trying to figure out how to increase our revenue by giving customers choices they want, which increases revenue without the perception of increased pricing. I will show what this means in dollars and cents when we talk about the card systems.

Most manufacturers have an ability to offer these options, but each does it in a slightly different way. Additional service options have to be made easy to understand and easy to use, but this doesn’t mean you provide less service and make it up in add-ons. We have to learn from industries that are successful in marketing upselling options. We need to offer good results at a fair price, plus the ability to let our customers decide if they want to spend more. It’s their choice.

CYCLE OPTIONS + CARD SYSTEMS = MORE REVENUE

Another way to add choices into the Laundromat is by utilizing a card system. These systems, which began as an alternative to accepting coins, have been available for many years. They have come a long way. Card systems are used today by owners who want to operate their businesses with all the advantages that most retail businesses offer. I’m going to touch on a few of these advantages, but this is really just a small representation of the benefits of managing a card-operated laundry.

First, card systems build loyalty. Once a customer uses a card and leaves a balance on it, they will more often than not come back to your Laundromat. The ability to accept credit cards and to use penny incremental pricing helps keep your vend prices in line with your utility costs. There are a variety of marketing programs available to help increase your volume. Coupon programs give laundry owners the ability to offer rewards directly to the customer without an attendant and without fear of coupon fraud.

Card systems can also provide the ability to account for revenue and employee hours. Reports are available that reflect business revenue totals, individual usage, customer information, income by the hour, equipment usage, and average money spent per visit. This is just a small sample of the information that is available.

I have been able to gather reporting to solidify the value of the extra-wash and extra-rinse options. My family owns and operates three laundries with equipment that has these add-ons available. The stores are located in different geographic areas and have differing ethnic demographics. A report from one of our stores shows equipment usage over a five-month period.

The numbers focus on extra-wash/extra-rinse usage and what it means in terms of additional revenue.

• The 80-pound washers processed 4,112 loads, of which 1,498—or about 36% of the total number of loads—used an “extra” button. At a 50-cent upcharge per load, an additional $749 was collected from the six machines.
• The 30-pound washers processed 13,180 loads, of which 2,908—or about 22% of the total number of loads—used an “extra” button. At a 35-cent upcharge per load, an additional $1,017 was collected from the 16 washers.
• The 40-pound washers processed 10,999 loads, of which 2,859—or about 25% of the total number of loads—used an “extra” button. At a 40-cent upcharge per load, an additional $1,143 was collected from the 14 machines.
• The 20-pound washers processed 11,877 loads, of which 2,662—or about 22% of the total number of loads—used an “extra” button. At a 30-cent upcharge per load, an additional $798 was collected from the 12 washers.

That adds up to $3,707 in additional revenue for this store in five months. Extrapolate that to a year and the added revenue comes to $8,899. The numbers speak for themselves, and that’s on top of the normal vend prices! Keep in mind that these were customer choices; they made them of their own free will. That’s upselling.

In my experience, that kind of additional revenue (80%) goes to the bottom line. Without a card system, our stores would not have the tools to properly evaluate those numbers and help make any future equipment purchases.

Talk to your distributor about the options that are available. Evaluate this information to see if these innovations will work within your budget. In today’s business climate, any advantage that will help a business grow must be seriously considered.

I have heard many excuses for not moving forward with new innovations. The list would be so long, it would take another article to cover them all. The reality is, without these advantages, your business may struggle. Your choice.

CHICAGO — Whether you are buying your second store or selling your fourth store, it’s easy to understand why your stomach is churning. Costly buying/selling mistakes must be avoided. A little bit of tossing and turning is par for the course, but one of the best ways to ready yourself for a key transaction is to get some professional advice.

In lieu of some antacid, American Coin-Op offers a host of buying and selling tips courtesy of industry veterans.

GET A SECOND OPINION

If you are buying a store or building one, having high-speed equipment is key, says Larry Larsen, a managing member of Laundromat123.com with more than 30 years of experience in the ownership, management and construction of Laundromats. Larsen is also a licensed real estate broker active in the sale of self-service laundries.

Get the help of a professional when it’s time to buy, Larsen advises. “Would you buy a used car without having a mechanic check it out?” A broker, distributor, etc., can see little things that you miss, he adds.

Larsen also suggests getting a fee-based second opinion. “For $300 to $500, you can get the view of someone who isn’t worried about getting a commission.”

Most distributors should have the necessary demographic information, he says. This information is also available online. Larsen lists population density, the percentage of renters in the area, and the age of the area housing as demographic keys.

Older housing means no laundry rooms or just small ones, which is good for self-service laundries, he says. “Your major competition will be people with home equipment, not other laundries!”

Don’t focus on population within a ZIP code, but instead look at the number of people within concentric circles of one-half, one and two miles in an urban environment, he advises. “ZIP codes can cover too large of an area.”

To avoid unpleasant surprises, Larsen urges prospective owners to visit city hall and pull permits, as well as ask around to see if any new laundries are going up. Urban owners should mainly focus on the laundries within a half-mile of the store they intend to buy.

“Drive around within a one-mile location of the store and look for vacant spots where a new store might go up. Ask other laundry owners about this. Do the work yourself; don’t rely on your broker to do the research.”

Looks can be deceiving, he warns. Get a copy of the water and other utility bills, tax returns and any record of income. “You also want to look at a store and decide how you can improve it. A store that needs work can turn into a more profitable investment.”

Larsen also believes that it’s crucial to get a woman’s opinion when you are examining the store. “Some men haven’t washed clothes in 20 years!”

When acquiring a store, not getting a fee-based second opinion and not studying the lease are the two greatest mistakes made, he says.

You also need the help of an industry professional when selling, he notes. “The pros know people in the business and can help you find a buyer. I’ve never seen a seller lose money in the long run by getting help. A good broker will help you get every possible dollar.”

Advertising the sale is part of the process. “Newspaper advertising has diminished. Instead, tell other industry members about the sale, go to association events, and use industry-specific websites that feature business sales. It’s also crucial to pass out flyers to other laundry owners within five miles of your store.

“If you have a real estate agent, he can put the store in the [Multiple Listing Service]. The information goes to other brokers who might want to sell the laundry and get the commission.”

When meeting with a buyer, you’ll want to know how much money he/she has and the money source. “I don’t deal with people who are putting up their home as a guarantee to buy.” It’s also important that the buyer knows how much money will be needed immediately after the sale for a deposit on the lease, insurance costs, and even quarters for the changers, he adds.

There are numerous ways to price a Laundromat. In California, multiples are used, Larsen says. For example, an owner can take the monthly net and multiply it by 50 to 60 or up to 75 to 80 to establish a price. When doing this, be careful about your income data and consider the expenses of the new owner. “For example, the new owner may do his own repairs.”

Don’t be surprised if you are asked why you are selling, and don’t be surprised if the buyer bolts if you don’t deliver a satisfactory answer, Larsen says.

“In this economy, people are looking for a good investment. A laundry is a good investment, and a fairly priced store will sell.”

STUDY THE LEASE

Do you like to purchase a store or build one? “With an existing store, you can get an excellent infrastructure,” says Dan Bowe, Speed Queen national sales manager. An existing store can also ease your water and sewer concerns, he adds. “The downside to an existing store is that you’re stuck with the layout.”

It’s exciting to build from the ground up and create your own look, Bowe says, while still having flexibility. The downside to building is utility-cost concerns.

Bowe also advises buyers to work with some type of broker, preferably an industry-specific one. A good broker knows all aspects of the business and can help you understand the lease, he says.

The ideal location should have a large number of renters, low- to medium-income residents and a high population density, Bowe notes. Average age of the rental properties is key.

Take a look at the laundry’s retail neighbors. Is there a good synergy among the businesses? Will their customers use your laundry? Will neighboring businesses impact laundry parking? The broker should play a key role in answering these and other questions, he opines.

Trial counts and trial collections can help establish the value of an existing store, Bowe believes. However, in order to get a fair count, he strongly suggests bringing in a third party to install new coin boxes.

Store evaluations can be tricky, he admits. For example, laundry business is seasonal. Visiting a store during the slow summer business period might cause a buyer to believe business is always bad. Bowe recommends focusing on whether the infrastructure can handle change, and if the visibility is good. Poor parking and bad windows are red flags. “Simply, if the owner hasn’t reinvested in the business, you will have to make improvements.

“The importance of the competition varies between markets, but everyone would probably agree that if there is no laundry near the store, that’s probably more of a red flag than if there is a laundry.”

The most common mistake made when buying a laundry is signing a bad lease. “Typically, you want a 10-year lease with two to three five-year options.” You also need to calculate what the maximum rent will be, he adds.

It’s important to use a qualified professional when you’re selling a laundry, he says. In some cases, a qualified broker may have a number of representatives trying to market your property. The broker can also assist the potential buyer with financing, Bowe adds. “You won’t save money or time if you don’t have a broker.”

Sellers want qualified buyers for creditworthiness and ones having enough cash, he notes. Do a credit check. Because of today’s credit situation, Bowe believes the days of the buyer getting cash by refinancing his house are pretty much over. It’s also standard for distributors and brokers to set the buyer up with financing, he adds.

When pricing your store, one common formula is to take true net sales, more importantly EBITDA (earnings before interest, taxes, depreciation and amortization), and use a multiplier of four to five. “People are looking for a 20 to 25% cap rate of return.”

The average store sells about every three years, he notes. “The best time to sell is winter when you have your best business.” However, a good industry-specific broker can navigate a summer sale and explain the cash flow through the seasons, he adds.

Bowe cautions sellers to avoid two key mistakes: taking on the task yourself to save money and misrepresenting the store income (potentially leading to court cases). “If you haven’t continuously reinvested in your business, you probably can’t expect to sell the store for what you paid.”

Check back tomorrow for Part 2: Know the buyer, and eliminate mistakes

WALTHAM, Mass. — We’ve all heard the phrase “bigger is better.” That statement can hold true when deciding to install large-capacity machines in your store. Manufacturers continue to build larger machines, and for good reason—larger-capacity machines improve profitability.

The steady growth in popularity of machines with capacities of 60 to 80 pounds has allowed manufacturers to construct reliable and durable products that have increased in longevity, have better utility consumption, and allow owners to be competitive in the marketplace.

MORE PROFITABLE

Store owners need to consider how much profit is possible per square foot. See how much space your machines are taking up and their capacities. If you can decrease the number of machines while maintaining or increasing their combined capacity, you can boost your profitability per square foot, since the machines will be consuming fewer utilities—it takes less energy to run one machine than two.

As an example, consider replacing five small machines with four larger machines that take up the same amount of square footage. The rent doesn’t change for this space, but the vend price of the larger machines increases. If each machine is being used up to three turns per day, gross income rises by approximately 20% per day, without adjusting the amount of space in your store.

By controlling variables, such as utility costs and vend prices, owners can see increased profits through these larger and newer machines.

Older machines are less efficient and wind up costing owners more, reducing their profitability. Newer machines are engineered to use up to 30% less water and energy than previous models, resulting in savings for owners looking to upgrade. Using the example above, the water and sewer costs can decrease by up to 44% when four larger machines replace five smaller ones.

ADDED BENEFITS

Although profitability and utility savings are major considerations in selecting large-capacity machines, the equipment can also help move customers through your store more rapidly.

In the busy world we live in, customers want to get in and out of a Laundromat quickly. By offering larger machines, customers can clean larger loads, helping to reduce the amount of time they spend completing the laundry chore. Helping customers save time is something they will appreciate, which can turn them into loyal customers.

Additionally, larger machines can improve the traffic flow in your store because customers are able to do their laundry in larger batches. During busy times—like the weekend—an efficient traffic flow helps increase revenue.

The machines can also make your store the preferred stop in the area. Since it’s important to stay ahead of the competition, if your store offers larger-capacity machines and the one down the street does not, you are more likely to win the business.

GOOD EQUIPMENT MIX

Of course, a store cannot have only 60- and 80-pound machines; a good equipment mix is still essential when considering the addition of larger-capacity machines.

Although a large-capacity machine can be profitable at various locations, they have become especially popular in inner-city locations. Generally speaking, there are larger families in cities. More people mean more clothes, and the larger machines help these families get in and out of a laundry quickly.

IMPORTANT CONSIDERATIONS

As with any major business decision, there are certain factors that owners should be aware of when considering the addition of larger equipment to their store. This is when the help of an experienced distributor comes into play.

The first question an owner should ask is, “How am I going to pay for this equipment?” You must be sure that the equipment selected is going to be profitable for your business down the line. Your distributor should be able to provide a quantitative analysis of the projected utility savings and profits with the addition of these machines. And because large machines are not the best fit in all circumstances, this report is essential for a laundry owner to decide whether or not their store will profit from the equipment.

Structural changes also need to be taken into consideration when deciding on larger machines. For example, an 80-pound washer-extractor requires a concrete pad to be added to the floor. Plumbing and electrical systems may also need to be redone to handle the larger machines. Additionally, the hot water heater may need to be adjusted to handle the increase. Again, these are all costs to consider when pulling the initial quantitative report with your distributor. As long as the projected profit outweighs these costs, the store should consider investing in the larger machines.

FUTURE SAVINGS

As the trend continues toward the addition of larger machines in stores, it’s important to be aware of the benefits these machines can bring, including profitability, utility savings and customer loyalty. As with any major project, it’s important to consult with your distributor to ensure you choose the most profitable option for your store.

OMAHA, Neb. — Customers come to your Laundromat to do their laundry, but what if you could offer them extra services, drawing them into your store more frequently, while producing more profit for your business, and reducing your actual staffing out of pocket costs?

Extra profit centers provide a variety of additional revenue opportunities, and some require little extra work from you and your employees. 

These business opportunities can be broken up into two categories: those that lie within your core competency and directly relate to laundry, and ancillary projects that can be add-ons to your main business purpose.

LAUNDRY-RELATED CENTERS

There are some extra profit centers that are common to the laundry industry, such as vending machines for everything from soda and snacks to detergent. These are an easy, low-maintenance option for a small amount of extra work that can easily result in 10% more revenue per month.

As the laundry industry changes and grows, many owners have added or are looking to add wash-dry-fold (WDF) services to their offerings or to increase their existing offerings to include commercial accounts. There are several ways that owners can adapt this service to fit their businesses’ needs.

One way to increase your existing service is by partnering with a local dry cleaner. Establish a program where customers can drop off at your location for both services; work with the dry cleaner to determine the timeline and revenue split. It’s important to choose a dry cleaner that is in close proximity to your store, but is far enough away that it also will benefit their business—this is a partnership and both sides must profit to be successful.

A word of caution when choosing your dry cleaning partner: evaluate their prices in relation to your core demographic before making a deal. Some stores charge $1.15 per pound for drop-off and have a 10-pound minimum to ensure profit.

Pick-up service is another way you can adapt WDF to suit your business. Set a delivery radius around your store, up to 20 miles, and charge per pound to accommodate the increased costs. The amount you charge will depend on your area of the country, but make sure to set a poundage minimum to ensure profitability. Also, make sure to target not only residential areas but also small businesses that may not have laundry on-site. Pick-up is particularly important for growing your commercial laundry revenue to include clients such as spas, catering companies and salons.

If your store is close to a college campus, offering a WDF service for students can be profitable. A way to do this is by offering a flat fee for the semester that is automatically charged to a credit card at the start of each term. Programs like these have become popular over the past year. An easy way to quickly grow your student business is partnering with an established provider, such as dormmom.com, which provides student and residential laundry service across the country.

Lastly, if you begin offering WDF service, be sure to let your local special events centers know. Entertainers have laundry needs, and you can quickly make yourself indispensable by making them aware of your services.

Check back tomorrow for Part 2: The ancillary services you may offer are limited only by your imagination...

PITTSBURGH — Congratulations, you’re a successful laundry owner. You have a great location, a solid customer base and well-maintained machines—but now what? It may be time to look at expanding your business and opening a second store.

By now, you know the basics of running a laundry business. Unfortunately, a complete replication of your first store may not make for a successful second store. It is important to go back to the basics and look at everything from location to equipment mix and store naming.

LOCATION

Here’s a challenge for you: don’t just find a location as good as your first one, find one better. Understand that this is no easy task and will require lots of time and research.

The first thing you should consider when looking for a location is how far away from your original store your second one should be. Carve out an area of no more than an eight-mile radius from your original store and use that as your market. Having your stores in close proximity—no more than 45 minutes from each other—allows you to easily move between stores. Also, if your stores are all close together, it can be a great way to corner the market from your competition.

Now it’s time to talk with your distributor. Since you already have a successful store, you most likely are already working with an experienced distributor. Make sure to continue to cultivate that relationship, as it can be a great benefit when looking to purchase an existing store or build a new store.

Distributors typically have information on existing Laundromats coming up for sale and will approach you to judge your interest. The distributor can easily identify whether this laundry is a potential good investment, knowing the performance and location of the store.

Rehabbing a store has its pros and cons, but can make a great second store if proper due diligence is done. A benefit to choosing a store to rehab is that utility company charges and codes are more likely to be grandfathered in, meaning you will not have to deal with the hassle of obtaining multiple permits from the city and retooling plumbing or electricity to meet building codes. This varies between municipalities, so make sure to ask your distributor before assuming this is the case.

If there are no stores for sale in your target area, it’s time to start scouting other possible locations. Get in your car. Learn about your surrounding neighborhood. Look for areas where there are many apartments or maybe even a college campus. Once you’ve identified an area, it’s time to consult with your distributor. Your distributor will be able to pull detailed demographic reports that will be able to provide you with an idea of the surrounding population near the proposed location. If the demographics look favorable, it may be time to buy the land or storefront and start your second store.

ADVANCED CONTROL OPTIONS

Whether rehabbing a store or building one from the ground up, it’s time to rely on what you’ve learned from your first store. You already know what works—now it’s time to make it even better. Look at the machines your distributor has to offer; there are probably new advancements since you last purchased equipment. It may also be time to look at investing in advanced controls if your previous store doesn’t have them. Advanced controls can be a great resource for multi-store owners.

Certain manufacturers produce controls that allow an operator to program a machine right from their PDA. With the control, you can alter the time-of-day pricing and retrieve audit data right from the palm of your hand. Reports pulled can detail how each machine performed throughout the day. If a machine is taking too long to drain or is not filling with water to the appropriate level, the report will show this. Without these reports, it may take days or weeks to catch problems like these. In conclusion, these reports help prevent wasted energy and water.

Specific controls can give owners the option of choosing from up to 30 water levels, which can save thousands of dollars a year in water and energy savings when compared to older machines without advanced controls. Customers can benefit from having up to 24 cycle selections with these controls, keeping them happy and in turn giving your store a good reputation for being technologically advanced.

THE INVESTMENT

Although the rewards and return on investment can be great from owning multiple stores, the initial investment for a second store is not inexpensive. It’s important to work with your distributor and commercial laundry machine manufacturer to develop a financing plan that is suitable to your needs. Some commercial laundry manufacturers will allow you to finance directly through them, which streamlines the financial process.

Financing through a laundry manufacturer is far better than using a bank. Manufacturers not only understand the industry better than anyone else, but can also tailor a financial solution that meets an individual laundry owner’s and/or facility manager’s needs.

Choosing a financial service provider that is unfamiliar with the commercial laundry industry can lead to unnecessary risks and costs, including overpaying for services, hidden fees, slower response to time-sensitive opportunities, and limitations on the long-term success of the business.

Another financial area to consider is the cost of employees in your new store. Many stores in the Pittsburgh area are unattended, for example, but the trend is moving toward attended stores. Customers want to be able to interact with someone when they have a problem. This is a great benefit for customers who want face-to-face interaction and for you, having the peace of mind of someone always being on-site to deal with any issues that may arise. If you do choose to open an attended store, you will need to factor in this additional cost.

If looking at an attended store, I would suggest a credit/debit card store. Although the upfront investment of a card system is more than a traditional coin system, the ROI down the line may be higher. Along with that, card systems save busy multi-store owners time since they do not have to empty coin boxes regularly, or make multiple trips to the bank on a weekly basis.

FINISHING TOUCHES

After you have all your logistics figured out, it’s time to name your store. I suggest that multi-store owners keep the same type of name for each store. Customers will make the connection between your stores; if you’re already known for running one successful business, why waste time rebuilding your reputation?

Throughout the whole process of becoming a multi-store owner, it is important to have confidence in your distributor and your equipment manufacturer. They will be your go-to source during this transition and before you know it, you could be opening your third, fourth or fifth store!

CHICAGO — You’ve come to a point where you’re considering opening a new coin laundry. But should you build it from the ground up, or should you look at rehabilitating an existing store? What are the pros and cons of each?

“There are great arguments for both sides, but there are some catches that you want to look at, whether you’re buying a new store or retooling a store,” says J.D. Dixon, owner and president of National Laundry Equipment, a Huebsch distributor based in Nashville, Tenn. “Both can be great investments.”

Robert Renteria, president of Midwest Laundries, Chicago, and a regular contributor to AmericanCoinOp.com, says he’s seen more “born-again” laundries than ever before in the past year. “The key now is to find laundry locations that are in operating condition but in need of a facelift, or that are closed but have an up side when the competition and demographics are taken into account.”

Setting the laundry apart from its competition has to be at the heart of the decision-making process, advises Carl Graham, vice president of coin sales for Scott Equipment, a Dexter distributor based in Houston, Texas. “Unless you build a bigger, better burger, they’re not going to come.”

Infrastructure

When building new, you can start from the ground up to create a clean, modern infrastructure so it can handle the laundry equipment you plan to install, Dixon says.

“A lot of times, the problem we run into with retools is the owner wants to put in a whole new bunch of equipment and you walk in and find out, ‘Wow, we’ve got some serious infrastructure issues.’”

You may discover that the electric, water or gas service is insufficient for your project’s needs, or may even be substandard because “unlicensed electricians and gas people” have done the work in the past.

“You find wires and lines and plumbing going in all different directions,” Dixon says. “You wonder why the equipment acts like it has a ghost in it, and it’s really not the equipment. It’s really your infrastructure. You’re bleeding amps, or something weird is happening.

“That happens more often than not in a retool. It’s pretty amazing when you walk into these places and you see how things have been set up. And it seems like the older the laundry, the worse it is.”

But that isn’t always the case, according to Graham. “Rehabbing has its definite advantages, because you have most of your infrastructure in place. You just have to modify stuff.”

You can eliminate any concerns about infrastructure issues with new construction, according to Dixon.

“You don’t have any of those problems with a new store,” he says. “You get to put it in the way it’s supposed to be, and you know that you’re not going to have any odd issues with your equipment.”

Design

From the outset, building a new store provides the owner with what amounts to a blank canvas. There will be some constraints based on the space available, but the opportunity exists to design a store that is highly efficient and thus equipped to get customers in and out in the shortest time possible.

“You can tailor the space exactly to the demographics of your area,” Dixon says. “You can tailor the ergonomics of the space. You can tailor even the way the building is lit and colored, location, painted, and floored, everything, based on the folks that are living around there.”

What works in one store may not work in another. For example, you might choose a color scheme for a Miami store that you wouldn’t for a store in Lexington, Ky.

Rehabbing an existing store presents limitations, Dixon says, and Graham adds that a project could turn out to be more expensive than buying new if extensive work is necessary.

“You’re limited on your space and your setup,” Dixon says. “A lot of times, when you’re retooling a store, it’s going to be hard to change the ergonomics. Unless you want to get into tearing up the floor and rerunning drain lines, things like that, you’re basically going to put equipment where equipment already stood.”

“You might have to gut the whole place out and sometimes it costs more to rehab a place than to build new,” Graham says.

Advances in laundry equipment, particularly a shift from top loaders to front loaders, can enable a new owner to fit more capacity into the same space, Graham says.

“I’ve got two 7,000-square-foot stores that I’m revamping right now,” he says. “We’re reducing the stores by a third but we’re increasing the volume of capacity they can have and reducing their electrical and water usage.”

Building new means a much more extensive project than a rehab. “There’s going to be a whole lot of construction on this that you’re hoping to miss on the retool,” Dixon says.

Tomorrow: Location, risk, regulation and which is easier...

CHICAGO — Making the decision to shift your store’s payment system from coin to cashless, or to a hybrid, can require a great deal of research and planning. There are implementation issues from the outset, and you need to be prepared to market your operation’s changes and educate your customers about the system’s benefits and how they can best use it.

American Coin-Op invites several manufacturers of payment systems to answer some questions that the average self-service laundry owner might have:

ACO: What are the top two or three reasons why laundry owners may be hesitant to go cashless?

Michael Schantz, president, Setomatic Systems:

Totally cashless systems can be expensive since they require the owner to convert every machine in the Laundromat. They must also purchase at least two “Add Value Stations” for customers to reload or purchase their card.

The owner will continue to purchase several hundred cards a month for the life of the store. With a hybrid system, you do not have to convert the entire store or buy “Add Value Stations” or cards. The cost of entry is much more reasonable.

Many customers simply will not purchase a prepaid card. These consumers include tourists, seasonal washers (blankets, spring cleaning, etc.), the elderly, and the impoverished who can’t afford to leave anything on their card. In this industry, we can’t afford to lose even one customer to our competition.

Steve Marcionetti, product manager, Card Concepts:

Owners that are hesitant either believe that their customer base will not understand or adapt to the technology, or they believe that the systems are too expensive.

The best way to overcome the fears of customer acceptance is to either visit stores in similar demographics that have a system and talk to the customers, or talk to the storeowners and ask them about customer acceptance and if it affected their business.

As both a solution provider and a storeowner, I have found that the fear of customer acceptance is not warranted and that 99% of the consumers that use Laundromats have already accepted card-based technologies in other aspects of their lives.

For owners who believe that the systems are too expensive, we have easily been able to show strong return-on-investment formulas that make the investment easier to tolerate.

Ryan Carlson, director of marketing, WashCard Systems:

People are worried that all their business is going to get sucked up in fees. If they do the homework and can run through a number of scenarios, they’ll see that, at worse, they’re breaking even.

Kevin Hietpas, director of sales and marketing, Dexter Laundry:

Since there are now systems available to go cashless at a wide range of costs, the two main reasons we see are a customer’s concern that patrons won’t adjust to the new system and the store will see a loss of business, or they are apprehensive about the higher level of technological complexity they are adding to their store.

Amy Gitlin, president, ESD:

First are IRS guidelines. New changes require all merchant statements to be filed along with tax returns.

Second, owners think consumers who use their laundry do not have credit or debit cards because they are not affluent. The simple fact is that 85% of U.S. consumers have a credit and/or debit card. The other 15% use prepaid debit cards. Therefore, you can bet that customers of Laundromats also have credit and debit cards.

Finally, most laundry owners do not agree with the time and cost that can be saved by not dealing with coins and cannot make the cost of installing a payment system of any kind make sense.

“It only takes a few hours a week to collect my store” is the line we hear often. Most people report that coin collection totals about 10 hours a week. But when examining this statement more closely, you will find this activity to be costly and time-consuming. If an owner’s time is worth $40 an hour, that’s $20,000 per year and many hours consumed.

ACO: What are the hallmarks of a successful cashless payment system?

Marcionetti: Like anything, commitment is the most important thing to ensure a successful implementation of any system. Most systems are easy to use, but storeowners should commit to understanding the system and its capabilities so that they can properly train their attendants. When the attendants are well versed on how to use the system, the store’s customers really adapt easily and enjoy using the system.

Carlson: The devil is in the details. How user-friendly is it? Does it automate the heavy lifting for various tasks? Does it give operators control over their ongoing costs or their strict lock-in? Is there flexibility to be used on different pieces of equipment?

Hietpas: Ultimately, the owner determines the success of any payment system. If the owner is pleased with the performance and reliability of the system, it’s a success.

Gitlin: Quite simply, the hallmarks of a successful cashless-payment system implementation are reliability, customer friendliness, efficiency, marketing, and support from the manufacturer and distributor.

Schantz: Setomatic believes the hallmark of a successful payment system is its flexibility to give the laundry customer the choice to pay with any method they desire. That is what will keep new customers coming and drive added revenue. You need a payment system that will not be obsolete in a few years.

Web Exclusive Tomorrow: How are technological advances impacting the cashless store? What level of after-sale support should be expected?

Click here for Part 1.
Click here for Part 2.

To learn more about payment systems:

Card Concepts — laundrycard.com
Dexter Laundry — dexter.com/laundry/products/management/
ESD — esdcard.com
Setomatic Systems — setomatic.com
WashCard — washcard.com