CHICAGO — How do you know your store is performing up to expectations? Are you missing opportunities for service expansion? What about the potential for expanding your business to include a second store?
In order to make these types of determinations, you need two things: performance goals and performance data. Benchmarks can help a store owner decide if his/her operation is running well or if it might be time to make some changes.
This month, American Coin-Op polled representatives from several laundry equipment manufacturers and payment systems makers, all of which offer data collection and/or management tools, to review how store owners can crunch the numbers, then act on what they find.
BASICS FOR GAUGING PERFORMANCE
So for purposes of tracking a vended laundry’s business performance, what basic information might an owner want to gather on a weekly, monthly, or otherwise regular basis?
“Today’s vended laundry owner would want to track the number of turns per day, per machine,” says Wayne Lewis, sales manager for payment systems provider ESD. “This provides them with a benchmark of first whether they are hitting their objectives with regards to break-even points for any financing provided. It also gives them objective levels for specific profitability goals.”
“Identify and track the key performance metrics,” advises Joel Jorgensen, vice president of sales and customer services for laundry equipment manufacturer Continental Girbau, “which include revenue by machine and cycle type; machine by category size; revenue breakdown (self-service, wash/dry/fold, vending, drop-off dry cleaning); turns per day (individual machines and store average); machine usage per day (track busy and slow times); utility costs (water, sewer, gas, electric); labor costs (payroll, uniforms, training); marketing costs; and other fixed and variable expenses.”
“Owners today absolutely need to collect data on overall revenue, turns per day and usage by capacity and location within their facility,” says Kathryn Rowen, North American sales manager for laundry equipment maker Huebsch. “While fast availability of this information is important for owners, it is also paramount that they receive immediate notification of error codes and vault openings.”
For Michael Schantz, president of payment systems provider Setomatic Systems, it’s “Turns/revenue per day. I also like the idea of studying revenue by hour of the day to be used to decide on hours of operation (open/close times) and having the appropriate help on duty if an attended Laundromat.”
“Week over week, owners should be tracking basic revenue and usage information,” says Amanda Konczal, director of marketing and customer support for laundry equipment manufacturer Dexter Laundry. “It is important to note usage trends based on day of week and time to help set your pricing structure. Monthly, you should analyze utilities, repair costs (including labor), attendant labor as well as any other ancillary revenue such as wash-dry-fold or vending.
“You should also monitor competitive activity on a regular basis. This could be monthly or semi-annually, depending on how competitive your market is. You should know your competitor’s equipment mix, pricing, machine capacity, age, water usage, and washer-to-dryer ratio.”
Oleg Stepanov, representing payment systems provider Mitech Integrated Systems (Laundroworks), believes it’s important to look at three metrics: profit, utilization, and customer retention.
“At the highest level, tracking the store's profit (crudely defined as revenue minus utilities minus depreciation minus lease minus labor), especially if making changes, is critical. If benchmarking against the industry, you want to look at profit per square foot,” Stepanov says.
“However, profit or even revenue does not contain information about what actions should be taken to improve performance. As a start, it is important to understand the degree to which supply meets demand. Utilization, a measure of what percentage of time a machine or group of same-size machines are being used during a particular time of day, is a good proxy and metric to track.
“Finally, the customer retention metric should be obvious: are customers coming back to the store?”
“Understanding turns (how many times a machine is used) will help a laundry owner understand demand on each size machine as well as demand during peak times,” says Chris Brick, NE regional business development manager for Laundrylux, North American supplier of Electrolux and Wascomat laundry equipment. “This knowledge can help a store owner create pricing specials during slow times or raise prices on higher-demand machines.”
“To better understand business performance, owners should understand how business variables (utilities, machine usage, machine maintenance, building costs, payroll, customer demographics, etc.) affect revenue,” says Dave Richards, vice president of payment systems provider CryptoPay.
He cites an example of two washing machines, a 30-pounder purchased in 2000 and a 60-pounder purchased in 2012.
“If I’m not tracking number of turns and revenue generated per machine, I might choose to replace (because of age) the 30-pound machine when it is having the least use and impact on revenue,” Richards says. “There are obviously other factors that could affect this decision, and the point is without data on usage, maintenance history, energy consumption, etc., the decision is made ‘because I’ve been in the business for 20 years.’ That experience is important and data should be used to validate and/or guide the decision-making process.”
“Certainly, they would want revenue reports,” says Tom Weisheipl, a regional sales manager for laundry equipment maker Speed Queen. “They would also benefit from time-of-day pricing reports, cycle modifiers, and reports showing turns per day. Owners should capture this data per machine or capacity to make informed business decisions. Many also want to see if there were any error reports indicating maintenance items that need to be addressed. Store owners also will want reports to show if, and when, the coin vaults and service doors were opened.”
Steve Marcionetti, president of payment systems provider Card Concepts Inc. (CCI), points to sales by equipment type (size), turns per equipment type, and average spend per customer.
“For card-only stores, income and sales are different,” Marcionetti remarks. “Income is how much money was added to cards, sales is what was used at the machines, and the difference is the ‘float.’”
Coming in Part 2 on Thursday: How long to collect meaningful data, and then putting data to good use