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A Business within a Business: Running a Drop-Off Service as a Separate Entity

Paul Partyka |

Like other owners, Stephen Banko Jr., who has spent about five years in the coin laundry industry, has made his fair share of discoveries. First, he realized he could do much more with a larger store. He also discovered that everything works better when he has a well-organized system in place.Banko’s Emmaus Avenue Laundromat in Allentown, Pa., is really two businesses under one roof. In addition to the laundry, he considers the drop-off service, which began in April, a separate entity.SETTING UP SHOPWhile this is Banko’s second store, it’s the first to offer drop-off service. “I do drop-off here because the store is larger and I need attendants here to answer questions,” Banko says.The Emmaus Avenue Laundromat, which is less than one year old, is 5,500 square feet. It features 67 front loaders and 53 dryer pockets, yet the emphasis is on different equipment for drop-off work.“I have about 400-450 square feet devoted strictly to wash and fold. I wanted to build a business within a business. It’s on the books as its own entity. We cater to the average person; there’s no drycleaning. We do the wash, dry and fold and then shrink-wrap the clothing and get it out the door.”The 24-hour Laundromat is attended from 6 a.m. to 10 p.m. Drop-off orders are only taken at these times. “[The drop-off area] is a secured, attended area. When you walk up to the counter, there is a motion-activated glass enclosure. The window opens when you near it, and closes when you step away. There’s also a complete POS [point of sale] system. We weigh the clothes, generate a work ticket and guarantee 24-hour turnaround. Rush service is available.”Regular orders are 85 cents a pound, and rush service is $5 extra. There are also fixed prices for comforters, pillows and horse blankets.Pickup and delivery service is available on certain days. Orders are picked up on Thursdays and delivered on Mondays. Customers pay an additional $5 for pickup and $5 for delivery.“We’re one of the most reasonably priced stores in the region. We’re within about an hour and a half of New York City, where you might pay $1 or $1.15 a pound.”A CLOSER LOOKThere are several reasons for his success, he says. “Everything is done in a self-contained room. Attendants use 30- and 50-pound on-premise laundry (OPL) washers. With this equipment, attendants don’t have to add soap, bleach or softener.“Everything is all good with this equipment. The No. 1 thing is having automatic soap dispensing, which allows me to buy soap in bulk.” In addition, having this equipment frees up all of his machines for regular customers — a key point during a busy weekend.He credits his distributor (Dan Massimini, Equipment Marketers) for suggesting the OPL equipment. “I’m very thankful for this.”Customers are also happy because his employees do a reasonable amount of stain treatment preparation, he adds. “After we sort the clothing, we use a stain remover on the obvious stains. You have to find a happy medium here; you need to be careful because you don’t want to have attendants spending too much time on this and slowing down the process. However, for the most part, [we think the customers notice this] and it pays off.”Banko keeps a close eye on the profits. “Almost any system can be compromised,” he admits. “But my POS system tracks data pretty darn well. The machines also keep track of the cycles pretty well. I came close to one problem, but it was discovered within hours. I also keep a high level of video surveillance: most seen, but not all seen. You have to keep on top of this.”Emmaus has seven employees, all of whom may work at the drop-off service. “You need to stay on the employees, and let them know you’re watching them. In most cases, if someone is going to steal from me, they better work fast or be in collusion with another worker, because a co-worker may catch them. I also pop in quite often.”GAUGING BUSINESSWhile the service is still fairly new, certain trends are developing, he says. “Thursday, Friday, Saturday and Sunday are hot drop-off days. The good thing is that the store is still busy all week long. We do Tuesday and Wednesday coin specials to balance the customer load.”Banko has also noticed that out-of-town people make up a nice percentage of the drop-off customers. For example, construction workers working on a specific project near the laundry for a couple of months have taken advantage of the service.It’s challenging but possible to get regular customers to try drop-off service. “We watch people coming in to find who might be interested in drop-off work.”Marketing plays a role in the early success of the service. “I market mostly to motels. A phone book ad has just started. I really expect this Yellow Pages ad to be beneficial, especially with contract work. And, I did a newspaper coupon. That was so-so, but I will try it again. I don’t give up. I’ve even done door hangers.” Word-of-mouth advertising is also crucial, he adds.LEARNING AND IMPROVINGNot everything has worked out perfectly, he admits. The pickup and delivery service has its fair share of headaches. Orders are accepted within a five-mile radius of the store, with some customers opting for either pickup service or delivery, not both.“First, the price of gas is a problem. [With this service,] you also have an employee out of the store. Then, there’s the liability issue.”Pickup and delivery customers are provided with a bag and can set the clothes by their door. Banko keeps a credit card number on file to keep billing simple. When returning the clothes, he prefers that someone be present to accept the order. “In some areas, if you leave the clothes, there are laundry thieves.“You just don’t make money with [pickup and delivery service,] you lose money.”Owners just starting to offer drop-off service won’t find customers waiting at the door, he says. “You need to do all the right things, be patient, and keep working at it. Get a system in place. Have an accountability program, be it a cash register or a computer system. That’s a necessity. There should be no hand-written receipts! Don’t take away anything from your walk-in customers. They need the machines and the specials. Not all of them have a lot of money.”Banko’s goal is to have the drop-off profits cover all his employee expenses — and he’s pretty close to reaching this goal. “I’m about 99% where I need to be. Bring on more work. My people can knock it out. You just don’t want employees wasting time, that’s why a system is needed.“In the future, the way I laid out the wash-and-fold area, I can sell the drop-off business as a separate entity and get rent from someone.”

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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