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Business Holds Steady, Distributors Say

Paul Partyka |

CHICAGO — Nearly 58 percent (57.7 percent) of coin laundry distributors had an increase in business in 2006, while 15.4 percent saw business decrease in 2006, according to American Coin-Op’s annual distributor survey. Business stayed the same for 26.7 percent of the distributors.These figures are almost identical to last year’s survey data. Last year, 58 percent of the distributors saw an increase in business over the prior year. In fact, the tone and numbers of this year’s survey are quite similar to last year’s survey.GOING A BIT DEEPERWhy was business better for some distributors? Why did some distributors see a drop in business?For those distributors experiencing a decrease in business last year, here are some of the most popular reasons given for the downturn:• Construction costs are too high.• The high cost of utilities is keeping investors away.• Equipment costs are rising.• Fewer investors called on us in 2006.• Business was slow in their part of the country.• Their businesses went through staff reductions.Here are some of the most popular reasons given for improved business in 2006:• The company hired new salesmen, became more aggressive.• More investors, customers were interested in the business.• Better, energy-efficient equipment is available.• Marketing efforts have improved.• Older stores are starting to update.REPLACEMENT BUSINESSNew store sales generate a lot of buzz, but replacement sales business is often the foundation for many distributors. Fifty-four percent of the respondents say replacement sales were up in 2006 compared to 2005. Only 19 percent say replacement sales dropped last year, while 27 percent of the respondents say replacement sales stayed the same.These figures are somewhat better than last year’s figures. Last year, 48 percent of the respondents reported an increase in business, with 19 percent saying replacement sales dropped. Two years ago, 43 percent saw an increase in business, and 22 percent saw a decrease.NEW COIN LAUNDRIESDistributors were asked how many new laundries they built and/or to whom they supplied equipment in 2006. Thirty-nine percent of the respondents built or supplied equipment to three or fewer new laundries in 2006.What are the most common numbers when it comes to building and/or supplying equipment to new laundries last year? Here are the most popular answers (in order):1) three laundries2) no laundries3) one laundry4) eight laundries5) 12 laundriesOther popular responses are two laundries, four laundries and six laundries.In keeping with the new laundry theme, distributors were also asked if their 2006 new construction total was more, less or the same when compared to 2005.Half of the respondents say new construction was up last year, 24 percent say new construction was the same, and 26 percent say it was down.THE IDEAL EQUIPMENT MIXWhat type of equipment is actually going into new coin laundries? Are top loaders still being put in newer stores?Sixty-two percent of the distributors put at least one top loader into their new stores. Last year the figure was 73 percent.Here is a list of the most popular number of top loaders (in order) put into new stores in 2006:1) zero top loaders2) 10 top loaders3) eight top loaders4) six top loadersNewly constructed laundries in 2006 have 9.5 top loaders. (This figure does not factor in the top loader-only stores.) In the past three surveys, the top loader average was 8.2, 8.3 and 8.5.Here are the most common numbers of front loaders installed in newly constructed laundries last year:1) 25 front loaders2) 30 front loaders3) 40 front loaders4) 10 front loadersNewly constructed coin laundries in 2006 have an average of 28.2 front loaders. In last year’s survey, the figure was 26.3.The most popular number of dryer pockets in stores is:1) 40 pockets2) 30 pockets3) 20 pockets4) 60 pocketsThe average newly constructed laundry in 2006 has 34 pockets.  In last year’s survey, the number was 30 pockets.BIG DREAMSWe often hear about larger laundries going up. How large are the laundries that went up in 2006? Here are the most popular store sizes:1) 2,500 square feet2) 3,000 square feet3) 2,000 square feet4) 4,000 square feet5) 1,500 square feetTwenty-five percent of the new stores are 2,000 square feet or less. Forty-eight percent of the new stores are more than 2,000 square feet but not more than 3,000 square feet. Twenty-seven percent of the new stores are more than 3,000 square feet.The largest laundry in this year’s survey is 5,200 square feet. The smallest new store is 1,500 square feet.The average newly constructed coin laundry in 2006 is 2,831 square feet.THE TOTAL PACKAGENew laundries in 2006 average 9.5 top loaders, 28.2 front loaders and 34 dryer pockets. They are, on average, 2,831 square feet.New laundries in 2005 averaged 8.2 top loaders, 26.3 front loaders and 29.6 dryer pockets. The average store was 2,546 square feet.The top loader survey results are mixed. On average, there are more top loaders in 2006 new stores than 2005 new stores. However, only 62 percent of the distributors said they put in at least one top loader in 2006 new stores. Seventy-three percent of the distributors put in at least one top loader in 2005 new stores.MAKING THINGS A BIT EASIERThe most popular reason for distributors having success in 2006 is growing markets. Other popular responses to this question include:• more investor interest• new equipment is easier to sell• better architects and contractors, and• the availability of card systems.On the negative side, distributors cited a host of reasons that made selling newly constructed stores more difficult. Here are the most popular responses:• dealing with high rents and landlords• tap fees• too many laundries in the market• rising construction costs, and• rising insurance rates.THUMBS UP OR THUMBS DOWN?Distributors were somewhat upbeat about 2006. They were asked how they expect overall sales to be in 2007 compared to 2006. Distributors usually are optimistic when it comes to making projections.Sixty percent of the respondents expect 2007 overall sales to be better than 2006 sales. Thirty-two percent of the respondents expect sales to be the same in 2007 as they were in 2006, and only 8 percent of the respondents believe sales will be lower in 2007 than they were in 2006. 

About the author

Paul Partyka

American Coin-Op

Paul Partyka was editor of American Coin-Op from 1997 through May 2011.

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