Content about Robert Renteria

CHICAGO — The cost of iron for new products is going up dramatically. Meanwhile, increasing utilities cost and escalating rent are eating up laundry profits.

I have been researching the best way for you to maintain your existence in this industry. When purchasing machines, you must seriously look at refurbished washers and dryers as an option.

The cost to purchase refurbished equipment is well under 50% versus buying new. The average “life cycle” for most owners to stay in this industry is three to five years. What’s the point of digging yourself into a hole you may never be able to dig yourself out of?

Now, the newer machines are more energy-efficient and offer warranties, which is important. But if the refurbished or rebuilt machines are purchased from a reputable company that stands behind the quality of its work, you will come out ahead, bottom line.

Recently, I did some consulting for an investor who decided to go 100% refurbished for his remodel. He saved about 58% of the total cost of going new, or more than $165,000.

Now, if you do the math and calculate what your monthly payment would be on the additional expense of buying new equipment, you are looking at eating right into your bank account big time.

Many laundries are closing across the United States, mainly due to high rents that need to be adjusted. If you’re just getting into the game, you’d better plan on doing some good negotiating to get your rent reduced to a level that will help keep your business going.

If you’re looking to stay in the game long term, and this is going to be your new life, then I recommend that you look at new products, especially if you’re planning on building a new Laundromat.

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 — “You got the best deal ever.”

The new buyer told me that was the seller’s comment when they closed the deal and began to walk away from the table.

But how good a deal was it?

Not only was the laundry not generating the revenue that the seller had reported, it was so far off that the buyer has been paying $2,500 out of pocket every month for the last few months to cover the expenses.

Playing the for-sale-by-owner (FSBO) game is risky, especially without having audited financial statements and tax returns. In this case, as in many, the seller misrepresented the deal and now the buyer is in trouble.

My Advice: Don’t Buy FSBO

When I say this, I am trying to reinforce the need for you to work with a laundry professional when you are looking to purchase.

Let’s define “laundry professional” in greater detail. This is a person who has a full-service company that can take care of you after the sale. Do not buy from people/brokers who are only going to sell you the laundry and have no vested interest in the industry.

There are all kinds of scams going on out there. Buyer, beware.

With all my experience, even I can’t save you if you’re in too deep. Do yourself a favor and find a laundry professional and company that can support you in the beginning, during, and when you decide to transition out. Otherwise, you are risking everything—your family’s needs always come first.

Before You Buy

First things first, find a laundry professional who can truly support you. Avoid those out there who want to only meet at coffee shops or the laundry location—that is a big red flag. Perform due diligence regarding the people who are helping you as well as the people selling their laundries.

Visit the business location of the person you are looking to trust with your hard-earned dollars. Examine the service department, parts department, showroom, marketing department and sales offices. Talk with the service techs and look over the service trucks. And, talk to owners who have purchased from these people.

If someone—anyone—tells you how great they are and how much experience they have but can’t show you any proof, run the other way. Don’t be fooled by the fancy-car–driving slick talker who only wants your money and a commission.

All of this sounds basic, but I can’t tell you how many times people have gotten screwed over when they easily could have avoided it. I have nothing to gain by trying to save you, but you do have everything to lose.

You will be safer by following these easy recommendations, but please contact me if you have any questions and I will do my best to point you in the right direction.

CHICAGO — In the past, the main focus was always on internal operations — machine maintenance, cleanliness, attendant training, etc. All of these things are important, but with today’s economy being tight, you must focus on external partnerships.