NEW ORLEANS — Where does the coin laundry industry stand, and what path will it take in the months and years to come?
Brian Wallace, president and CEO of the Coin Laundry Association (CLA), presented his organization’s insights and projections during a Clean Show educational session titled Current Trends in Laundry: 2013.
While many in the industry were impacted by the economic recession a few years ago, many owners felt a sense of overall confidence and security in the “recession-resistant” coin laundry industry, he says. “I think people came away with a renewed confidence, a confidence that [they’re] in the right business.”
And as the overall state of the nation’s economy and consumer confidence rebounded, so did the industry, according to Wallace.
“We’re coining the phrase, ‘The Laundry Confidence Index,’” says Wallace. “I think it’s on the rise ... [coin laundry owners] withstood that tough hit of the economy [and they’re] feeling good about being in the laundry business.”
One encompassing indication of confidence Wallace highlights is that there are “more new stores going in … especially compared to the 2009-2010 period.”
“Things are happening again,” he says. “People are making that investment in the business.”
Installing larger-capacity machines is not the only trend store owners are flocking toward when it comes to equipment, as many are seeking out ways in which they can provide alternative payment systems to customers, according to Wallace.
“It’s a fancy way of saying (store owners) are getting off the quarter, or I should say getting off the quarter as the only form of payment,” he says.
The move not only further provides convenience to customers who prefer to use alternative forms of payment, such as credit cards or tokens, but also streamlines the bookkeeping process for store owners.
“Many (store owners) are getting more and more sophisticated with respect to wanting to get the management data that comes out of these systems to be able to really understand what’s going on in the business, and that vend price flexibility,” says Wallace.
Wallace also touched on utility costs concerns, which he says remains the biggest problem amongst many laundry owners struggling with rising natural gas and electricity prices. He assures, however, that the trend of switching to efficient equipment could soften the blow.
In fact, in his observations, “new or re-equipped stores are routinely achieving expense ratios of 15% to 20%, or less.”
Also increasing are water and sewer rates, according to Wallace, who cited an American Water Works Association report that indicates there were average increases of 13.7% in water rates and 15.0% in sewer rates from 2010 to 2012.
Requesting a water evaporation allowance, adjusting vend prices, focusing on preventive maintenance and repairs, and continuing to invest in efficient equipment are among Wallace’s tips for saving money regarding higher water and sewer rates.
EMERGING SALES TAX THREATS
One other issue the industry faces, according to Wallace, is emerging sales tax threats.
“You’ve got many states that are looking to remove the sales tax exemptions as a way to plug state level budget deficits,” says Wallace, who explained that Laundromats are exempt from collecting and paying such taxes.
“You need to understand why we’re exempt,” he says. “It’s tough to collect … we’re providing a basic public health service to the neighborhood and we’re providing it to the lowest-income members of the community.”
Among the things that coin-op owners can do in regards to emerging sales tax threats, according to Wallace, is to get to know local legislators.
“Yes, you need to pay the money for lobbyists, but you need to add to that the fact you need to know your legislators. You don’t have to be a big contributor … just introduce yourself, make sure they know what business you’re in. It goes a long way.”
Despite the challenges that the industry will face in the future, Wallace remains optimistic about the state of coin laundries.
“We talk a lot about the old days (but) I think with the quality of operators … the efficiency, the equipment, the technology that’s been infused into our business, I clearly think that the best days of the industry are ahead of us.”