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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.”

Location

Choosing to rehab a store means you’re locked into that location, Dixon says, while building new gives the prospective owner the flexibility to select the best site for his/her business needs.

Whether new or rehab, Graham asks his clients if they’re comfortable with the location. “You’re the one who has to go there all the time, so it needs to be in an area you don’t mind going to.”

Risk and Regulation

Building a new store means taking on more financial risk than you would if rehabbing, plus it’s generally more expensive, Dixon says. “Like starting any new business, you have more pre-revenue time. You have a lot more time before you bring in dollar one.”

When choosing to rehab, Renteria favors fixing any machines that still have useful life, then looking to buy rebuilt or refurbished machines. “This will cut your expenditures about 50% and make for a much better ROI at the end of the year.”

Buying and rehabbing an existing laundry often means the new owner can avoid some expenses and some bureaucracy.

“A lot of times, you can avoid impact fees and code restrictions, which are huge,” Dixon says.

For example, Davidson County, Tenn., where Nashville is located, charges an impact fee of upwards of $3,000 per washer, Dixon says. The impact fee charged in Houston is $1,500 to $1,700 per washer, Graham adds.

“If you buy existing, you’re grandfathered, so those fees are paid,” Graham says. “That’s a pro for refurbishing an existing store. And you don’t have to go through as much red tape either, unless you do a complete rehab of a place.”

“If you buy [an existing store], someone has already gone through that process,” Dixon says. “You still have to pull permits, but it’s a whole lot easier to pull a permit to put in new equipment or upgrade electrical or do something like that than to build a new store.”

Building Customer Base

One potential benefit for choosing to rehab an existing laundry is that it already has a customer base. You have the opportunity to speak to the store’s customers and get ideas for how you can develop the business and attract more people.

With a new store, you must build that customer base from zero, Dixon says.

“You’ve got to be thinking about how to get your message to the people in your area,” he says. “You want to think very hard about within a 1-2 mile area, but you also want to think about miles three to five away from your store. How do I reach the people one to two miles from me in an urban setting? In a rural setting, it could be 15 miles.”

Which is Easier?

“It depends on what part of rehab you have to do,” Douglas says. “I prefer new, because you go by all the new codes. And you can build it the way you want to built it, the most efficient way.”

“It’s a case by case basis. A lot of times, in a retool situation, you get into working with the current business owner and negotiating and all that rigamarole that you have to go through to actually buy the business in the first place. Once you own the business, the retool would be easier, because there are (fewer) levers to pull, (fewer) variables to think about.

“But there are things about building a business that are easier as well, because you can build from that blank canvas.”

Click here for Part 1.

MARFA, Texas — A well-known business strategy is to run two businesses under one roof, share the overhead, and mingle the clientele. Perhaps the best example of this in our industry is Tumbleweed Laundry.

Daniel Browning is the “Laundromateur” who pulled off the magical feat of combining an ice cream parlor, coffee shop and Laundromat. The genius is that Browning has a monopoly in all three markets.

Ingenuity is What Makes America Great

These days, Tumbleweed is doing quite well. It’s the only place in town to sit down, chat with friends, eat an ice cream sundae, and do your laundry all at the same time. The big advantage is that one staffer mans the entire operation. When Browning does his commercial volume, he and another helper are also on premises.

“That’s a big plus,” Browning says. “I know some Laundromats don’t have a person there. But we do, so we can take care of problems right away. But we are also there to take care of the ice cream and coffee trade. It’s really a good, efficient use of labor.”

Tumbleweed runs with 10 Dexter T-300 30-pounders, four 45-pounders (front loaders?) and six double-stack dryers. Prices are $3.50 for a 30-minute wash and 25 cents for a six-minute dry. “Our prices are pretty good,” Browning says. “They could be higher, but I want to balance intake with customer needs. In other words, I want to be reasonable.”

The commercial volume pays the equipment bill. That includes about 600 pounds of sheets a week from the hotels and bed-and-breakfasts in town. (One establishment, Hotel Paisano, is famous for having housed stars Elizabeth Taylor, James Dean and Rock Hudson while they filmed the movie, Giant, here.) Tumbleweed also maintains a commercial linen service, renting out about 1,000 napkins a week and hundreds of tablecloths to area restaurants. Browning calls his commercial business a “boutique” operation. Generally, the service is same day, and the customers drop off the work.

Browning pegs his Laundromat’s utilities cost at a shade above 25%. “That’s not too bad, since our gas company is owned by two cities, and rates are very expensive,” he says. “The 25% also includes commercial work, which requires heavy utilization since so much ironing is necessary.”

As an efficiency gauge, the 25% utilities cost standard is for a strictly retail operation. Of course, renting the upstairs apartment also helps offset the building costs. So all in all, Browning is pretty satisfied with the way things are going. Such a combo would have more problems in a larger town, he believes, but it works just fine in Marfa.

What’s next? Browning has his sights on opening a second Laundromat/coffee shop combo in Alpine or Fort Davis, both within 30 miles of here. Alpine has two Laundromats, but Browning feels his offering would be far superior and win a dominant share of the market. He knows this because several customers travel the 30 miles to his facility to do their laundry. Or maybe they just love ice cream.

Ingenuity is what makes America great. And Browning surely shows what can be done in a tiny Texas town. Serving many needs under one roof can be the perfect strategy.

Click here for Part 1.

CHICAGO — If you finally have a handle on running one self-service laundry, have you thought about adding a second, or even third, store? Are you worried about overextending yourself? Does experience make the store-add-on process a bit easier?

Three owners share their views on the various challenges that running more than one store present.

How Many is Too Many?

How many stores one operator can handle by himself depends on the type of stores, says John Brennan, a multiple-store owner in the Tampa, Fla., area.

“If the stores are unattended, four is good for me,” says Brennan. “Four to five attended stores (2,800 square feet plus) is also about what I can handle. After that, repairs become an issue.”

“How many stores one can handle is a difficult question, because it depends on the way the stores are set up,” says Jimmy Brinkley, a multiple-store owner in South Carolina. “If the stores are less than 3,000 square feet and attended, one person can handle as many as four. After that, you need a repairman or another person to help, unless you want to work yourself to death.”

Phillip Viccinelli, a multiple-store owner in Texas, looks at it a bit differently. He operates two large, fully attended stores (3,500 and 3,800 square feet), and says three stores of this type would be enough for him.

Problems/Benefits

With multiple stores, dealing with employees is the biggest challenge, Viccinelli says. “I vastly underrated the employee issue. I have two children, and I voluntarily inherited six more by opening two stores.”

Other than gaining experience from the first store, Viccinelli says there are no benefits gained from multiple-store ownership.

Brennan says dealing with employees and “bad” timing when it comes to certain issues are his key challenges. “Problems at stores never happen at a convenient time. Problems can pop up at two or three stores at a time. You have to manage your time and visit the stores.”

Multiple-store ownership has meant taking advantage of some supply and part specials (buying in bulk), Brennan says. His marketing efforts are also made a bit easier. “You can list two or three stores in one ad in the same weekly newspaper.”

While incurring no major damage to his stores, Brinkley says vandalism is a major challenge, despite utilizing surveillance cameras. He believes vandalism can occur at any store, regardless of whether it is attended or unattended.

“Challenges are the reason we are in business. We thrive off of these things.”

Brinkley is also involved in the snack, car wash and storage businesses. He has been able to take advantage of “bulk” purchasing and even integrates some of his equipment from other businesses into his laundries.

“The car wash business is five or six years ahead of laundry in terms of technology.” It’s not uncommon for him to buy changers for his car washes, and eventually use them in the laundries.

Creating a Chain

Brennan has thought about establishing a chain, but knows that this hasn’t worked for others.

“Each area is different; not all areas are set up for the same type of operation, such as with McDonald’s.”

Franchising would be a problem, he adds, because the service you would be selling is not unique enough.

Brinkley agrees with Brennan. He says you can’t take a plan like McDonald’s and put it into effect; you have to cater to the clientele of the market. “None of my operations are alike. Then you have to put someone in charge, and they won’t know what they’re doing. A group of investors wouldn’t care about the laundries. Laundromats don’t run themselves.”

Viccinelli has a somewhat different take on the subject. “I’m sure a chain could be done.” He’s even thought about franchising. But he also sees some problems with these concepts.

“The down side would be creating a mid-layer of management controlling the money. The equipment mix would also have to be considered.

“The profitability of this business doesn’t justify extra layers of management.”

Click here to see Part 1 of this story.