Content about Illinois

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 — Ralph Wagner, who owns Wash ’n Dry Laundry Services in Morris, Ill., has been working in the coin laundry business for 14 years. His store an hour southwest of Chicago occupies 2,000 square feet and features Maytag equipment totaling 33 washers and 26 dryers.

Up until last June, his business was strictly a self-service laundry. But since then, his sales have risen 25%. Why? Wagner attributes it to an extra service he started last summer, one that many laundries may already offer: wash/dry/fold.

Getting into wash/dry/fold was something he and his wife had always wanted to try. Wash ’n Dry competes with a couple other Laundromats in the market of about 25,000 residents, but the economy and the lack of actual wash/dry/fold service in the vicinity pushed Wagner to pursue it.

“We feel right now, with the economy coming back, that [it was] a good time to start it,” he says. “In our area, we only had one other Laundromat that offered the service.”

Wagner reached out to Kevin Meyer, president of distributor Dolphin Laundry Service, Bensenville, Ill., to help him get started. “It’s a tough thing to get going, but it’s gone pretty well,” Wagner says. “A 25% increase in our revenue is pretty good.”

Chris Brick, regional sales manager for equipment manufacturer American Dryer Corp., explains that up to 80% of attended coin laundries in the United States offer some form of wash/dry/fold service. “Wash/dry/fold brings a different customer base to a lot of laundries.”

“Household washers [or] small equipment within apartment buildings can have trouble handling comforters,” says Meyer, “so it solves a need for prospective customers.”

Considering the convenience such an added service offers to customers, it’s no wonder that many coin laundries have decided to cash in.

Dick Ruel, national sales manager at equipment manufacturer Maytag Commercial Laundry, attests to the profit potential. “If it were not for wash/dry/fold services, some laundries would not turn a profit.”

How much does such a service contribute to a store’s total gross revenue? Gary Gauthier, national sales manager for equipment manufacturer Milnor Laundry Systems, says it varies from store to store, while Meyer cites a range of less than 5% to up to 30%.

Considering how many laundries offer this service, what considerations must one take to truly profit from wash/dry/fold? Brick says the key to mastering the service starts with organization.

HIRING AND INSURANCE

With policies in place and any equipment issues resolved, the next consideration is employing an attendant.

Hiring an attendant should ultimately pay for itself, according to Brick.

“To me, the better way to look at it is you would want a minimum of 50% of whatever their labor cost is to attend [their] laundry, they should try to generate in wash/dry/fold,” he says. “If you look at a guy that’s spending $60,000 a year in labor, to me he needs to generate at least 50% in wash/dry/fold revenue [or] $30,000.”

To keep labor costs down, Wagner, his wife, and, on occasions, his son and daughter pitch in to process the store’s wash/dry/fold service. While his store only has one part-time employee that helps with the service, he plans on hiring a full-time attendant.

“We’d like to have one full-time employee hired by the end of the year,” he says. “Hopefully we have enough accounts established [so] that we can maintain [it] and make it profitable.”

What qualities should a store owner look for in a candidate? Brick suggests seeking the right combination of experience and personality. Look for a person who has “a good personality, and someone that is going to communicate positively with your customer base [and] make them feel welcome [but] doesn’t mind washing, drying and folding clothes.”

Protecting your business against damage claims is another important issue to address, and that’s where insurance coverage comes into play. “With residential laundry, the standard insurance policy should suffice,” Meyer explains. But if a store wants to get into commercial accounts, “Owners should consult their broker to ensure the proper amount of liability insurance is in place.”

Besides the possibility of lost or damaged garments, there is another potential liability: “left items,” or items that customers forget they had brought in for laundering. Preventing these occurrences all goes back to an owner’s policies and procedures, and establishing a reliable tagging system, Brick says.

“When [a] customer comes in and they sign that ticket, some [stores] will take that ticket with a magnet and when that load goes into the wash, that magnet is stuck with that ticket on the wash,” Brick says. “When the load moves to the dry … the ticket never leaves the load.”

PRICING AND TURNAROUND

Charging by the pound is “the way to go now,” says Brick.

In his experience, Ruel has seen pricing range between 65 cents to $1.50 per pound. Brick says that some stores have a $5-10 minimum.

Meyer and Gauthier agree on the per-pound trend, but add that some laundries charge separately for bulky items such as comforters.

“Our recommendation is always determine your costs to process, and what the desired profit and price [is] accordingly,” says Meyer.

For Gauthier, transparency is key when it comes to pricing. “It’s important to make sure that a store’s rates and policies are clearly published and easy to understand.”

As for turnaround time, Brick explains that most fully attended laundries offer same-day service for garments brought in before noon. If a load is received later than that, many stores will have it done the next day.

But as with any business, rewarding loyalty is a top priority. If a regular customer brings something in and requests same-day service, “absolutely you provide that service for the regular customer,” he says.

“You try to go above and beyond to keep that business.”

Check back Wednesday for Part 3!

OAKBROOK TERRACE, Ill. — The Coin Laundry Association (CLA) will be providing 10 hours of education at the 2013 Clean Show, slated for June 20-22 in New Orleans.

Sessions on the agenda include:

Coin Laundry Trends for 2013

CEO Brian Wallace will discuss where the coin laundry industry is going and how that may affect attendees’ businesses so that they can plan for profits.

Internet Marketing Success Stories of Coin Laundries

What works in the laundry industry when it comes to Internet marketing and social media? Kim Fenolio, CLA’s director of Marketing and Online Development, will present case studies, offer examples with results, and analyze what it took to carry it all out.

Social Media: Which Tools Laundries Should Embrace

Where should laundry owners focus their time and energy when it comes to social media? Learn the must-dos and best practices of social media for laundries.


Best Practices for Wash/Dry/Fold and Commercial Accounts

Learn the best practices of marketing, sales, operation and production to follow when processing commercial accounts or wash/dry/fold orders.


Advanced Laundry Lease Analysis

Examine the fine print of a lease and learn how to secure one that works in the laundry’s best interests.

The ABCs for Potential Laundry Owners

What does it mean to invest in the laundry industry? A moderated panel will walk attendees through an in-depth look covering key numbers, reports, lease information and the due diligence that one would use when determining if getting into the laundry industry is right for him or her.

The Keys to Successful Multiple Store Management

Every laundry owner wants to grow their business and increase their profits. Many in this industry take it to the next level by expanding their business into a multi-store operation. Learn what it takes to grow a chain of laundries by taking a look at some of the most successful laundry owners in the country.

To learn more about the Clean Show, visit the event’s website.  

ALSIP, Ill. — As we move into 2013, there are three areas that store owners should be ready to consider: equipment upgrades, marketing, and vend price increases.

All three are completely controllable and warrant a look in the coming year, especially if owners want to remain profitable. A large issue that’s impacting all three is the cost of water—a significant portion of a Laundromat owner’s monthly expenditure. In 2013, owners can expect water costs to become an even bigger challenge.

Water rates have surged in the past 12 years, according to USA Today’s study of 100 municipalities. The study noted that in more than a quarter of these municipalities, water prices at least doubled, and even tripled in a few. As the cost of water continues to trend upward, working with your distributor to find a solution that helps reduce water usage and keep utility costs as a whole from eating away at store profits will be essential in 2013.

Some owners are still on the fence about replacing their equipment because of current economic conditions. In many cases, however, monthly water savings can cover the cost for monthly equipment finance payments. For example, owners who operate a 2,800-square-foot facility and continue to use older equipment risk losing as much as $10,000 a year in profits due to unnecessary water usage.

EFFICIENCY UPGRADES

Washers that were replaced a decade ago can be considered inefficient. Manufacturers have invested significant resources into upgrading equipment with advanced technologies that enable store owners to spend less on utilities. With the right machines, owners can reduce water costs by 25-50%.

Controls also play an essential role in utility management. Newer control platforms have the ability to customize water levels, with some providing as many as 30 different options. The flexibility to change water levels allows owners to further decrease their water expenses and continue to provide customers with the best wash performance.

If reduced water expenses and revenue enhancers weren’t enough to encourage upgrading of machines, maybe the ability to operate their store from anywhere in the world will excite operators. Advanced controls are networked to a central computer, which means store data can be accessed remotely to monitor store activity and usage as long as the operator has a computer with Internet access.

Controls can be programmed with a single command, rather than going from machine to machine. Consider the management time savings. Manually, it would take hours to program 20 20-pound washers compared to seconds using an online data system. In addition, owners can see up-to-the-minute data on store activity, capture the history of each machine, and view maintenance reports to help decrease machine downtime.

VEND PRICES

Once an operator has replaced his or her equipment mix to help manage increasing water costs, he or she needs to consider raising vend prices, which will also contribute to overall profitability and cover the costs associated with monthly business expenses.

Many municipalities continue to raise real estate taxes to help cover the expense of rising deficits. In order to remain successful as a business owner, you need to make necessary adjustments.

Price increases depend upon the market, so there’s no real rule of thumb when deciding how much the cost of services should go up. But with new equipment in place, customers will be willing to pay a little more to use state-of-the-art machines.

Advanced controls also offer revenue enhancers. Some control platforms allow owners to create their own medium- or heavy-soil program, adding wash options like pre-wash, longer agitation time, and additional hot or cold rinses. Owners can in turn increase vend prices based on the cycle modifier selected. The benefit is an additional 10-15% increase in wash revenue. Controls can also offer time-of-day pricing, which allows owners to change vend prices to optimize profit around peak hours.

If you intend to raise prices, the best practice is to inform customers before doing so; this gives them time to plan for the increase.

style="margin-bottom: 0in; line-height: 100%;">Use a number of communication mediums, including the store website, newsletters and in-store signage. It’s important to provide information on why you’re increasing costs, so customers have a clear understanding that the raise is necessary to continue providing the high-quality services they’ve come to expect. Be sure to reiterate that with the new controls, they will maintain full control over their wash and how much they spend.

SMART MARKETING

To attract more business, and further improve profitability, it is critical to market your store. Few store owners are taking full advantage of marketing opportunities, but even on a small budget it can be done effectively.

As 2013 begins, make sure to budget accordingly for marketing programs. As a rule, I recommend 1% of profits be used for internal programs, while 2-3% is used toward external programs such as advertising and social media.

Social media continues to increase in popularity. Opening a Facebook page to promote your store is easy, and best of all, it’s free. Use your Facebook URL (example: facebook.com/yourstore) on direct mail pieces, on store signage, or pass out a flyer to customers in the store. Once you’ve captured their attention, you can promote in-store specials on your page.

More than half of the population today obtains its information from the Internet. If you don’t already have a website, get one. You can draw your customers online by including the website address on local advertising pieces and through your social media program. Likewise, your website can also direct viewers to your Facebook page to view specials.

If you’re willing to spend additional time investigating, you’ll likely uncover several other opportunities to participate in marketing programs on a regional level, such as community newspapers and billboards.

While 2013 presents some challenges, there are many solutions that offer opportunities for profitable outcomes. Contact your distributor and learn how to maximize profitability.

THOMPSONVILLE, ILL. — Equipment distributor Todd Santoro recently shared some thoughts about providing extra services for your laundry customers and how certain additional revenue streams require little extra work to put into place (Coin-Op 101:Extra Creativity Can Lead to Extra Profit).

Today, American Coin-Op takes a look at the second of two laundries that couldn’t be more different as far as geography and demographics are concerned, and how its owner approaches the offering and management of extra profit centers.

THE SERVICE STATION

The Service Station, Thompsonville, Ill., is divided into two parts: it’s half coin laundry and half tanning salon and office center offering copy/fax/scan service and a pair of Internet kiosks.

Owner Nova Randolph grew up in the Southern Illinois village of 600 people. When she returned to Thompsonville several years ago to raise her family, she found that few local businesses remained. Among the shuttered was a coin laundry.

Randolph works full time as an accounting and computer sciences instructor at a community college located a little more than an hour away. During the course of conversation with other Thompsonville residents, she often heard how they had to drive to larger communities 10 to 12 miles away for shopping and other retail services.

“There were no laundry facilities. There was no type of office service available for anyone to make a copy or send a fax. … Also, the Internet service here, the population here is very rural, so the Internet service is only available within 2½ miles of the city limits.

“I came up with the idea to put a bunch of different services together for the community and do them all out of one business. I don’t think any one of those businesses could ever stand on their own.”

Randolph found a centrally located building with access to two highways that carry lots of traffic by her store’s door every day. It was renovated so each half of the store can be accessed independently, yet a doorway inside connects the two halves.

She opened the Laundromat last December and the tanning salon in May. The copy/fax services and the Internet kiosks were just added within the last month or so.

“My original plan was to open it all at once,” she says. “We did most of the work ourselves, other than what was required by law. So it took us from last August until the middle of December to remodel the Laundromat side.”

Midway through the remodeling, Randolph decided that one portion of the multi-service business needed to be completed so it could start generating revenue. “We decided to go ahead and focus on one side of it and get it done and making money. … We were able to get the Laundromat open and leave it open while we over on the other side getting the remodeling done for the tanning and the Internet (kiosks).”

Equipment and remodeling for the “Internet/tanning/fax/copy” area cost approximately $10,000, according to Randolph.

The 1,000-square-foot laundry is equipped with five top loaders, two 20-pound front loaders, five dryers and a stack dryer. She plans to add a triple loader later this year. There are soda and candy venders, plus she plans to add a soap vender soon.

Randolph spends about 45 hours a week at The Service Station during the summer, 30 hours a week while classes are in session. The laundry is attended only when the two-bed tanning salon is open, and a couple of family members step in to manage the business if she has a scheduling conflict.

The laundry is open from 6:30 a.m. to 10 p.m. Monday through Friday, and 9 a.m. to 10 p.m. Saturday and Sunday. The tanning salon is open 3-10 p.m. Monday through Thursday and noon to 6 p.m. Friday and Saturday.

It’s not unusual to see folks come in do their laundry and then surf the Internet or take care of some business work while their clothes are washing and drying, Randolph says.

The tanning beds—one a stand-up booth, the other traditional—are generating about as much revenue as the laundry, Randolph says. And she’s looking to add a spray tan booth in the future.

You have to give an extra profit center at least a year to see if it’s worth keeping, she believes. “It would have to make enough that it wouldn’t be more lucrative to put something else there. And there are some things than are much of a pain than others to maintain. If something were a lot of trouble and it’s not bringing in that much extra profit, I would probably look for something else.”

At the time of Randolph’s interview, The Service Station was set to begin offering drop-off laundry service. And she’s not done thinking about adding other extra profit centers. Randolph is now considering adding either a hairdressing station or a nails station to complement the tanning salon.

“I can’t tell you how many people that see me in the Laundromat and thank me for putting this in here,” she says. “That I have just helped them out so much and made their life so much easier.”

Click here for Part 1!

NAPERVILLE, Ill. — Most laundry companies use standard leases for the properties they serve, but most leases either don’t address or don’t properly address many important issues that can arise when dealing with customers, according to the law firm of Russel G. Winick & Associates, which specializes in laundry services law.

A properly written lease should protect a laundry company’s rights and offer strong leverage in all situations. Here, according to Winick & Associates, is a partial list of issues to be considered:

• Renewal Clauses — Will they accomplish your goals? Are they clear, and presented properly?
• Termination Notices — Is it clear when they must be served, and when they are effective?
• Foreclosures — Are your leases drafted in ways that minimize the risk of foreclosure?
• Breaches/Damages — Do your leases allow you to recover the maximum if they are breached?
• New Ownership — Is it certain that they will be required to honor your leases?
• Right of First Refusal — Do you have one? If so, will it really help you to retain locations?
• Service Obligations — Are they feasible, and do they avoid creating a risk of termination?
• Rehabilitation of Properties — Do your leases give you practical rights in this situation?
• Holdovers — If the landlord lets you stay after your lease term expires, are your rights addressed?
• Attorney’s Fees — An attorney’s fees clause can actually reduce legal costs, Winick & Associates says, by making lessors less likely to breach a lease, for fear of the consequences.
  
  Many customers will agree to a fully mutual attorney’s fees clause, such as, “In the event of any legal action arising out of this lease, the prevailing party shall be entitled to recover all costs incurred, including reasonable attorney’s fees, in addition to all other available relief.”