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Commercial Accounts: The Wave of the Future?

Paul Partyka |

CHICAGO — It’s a natural. That’s what many industry members have been saving for years when it comes to drop-off service or wash, dry and fold. While the names for this service may vary, no one disputes that it is the industry’s No. 1 extra profit center.With this in mind, are operators missing out on something more? Can commercial accounts become an important part of today’s coin laundry business? The term “commercial” may seem overwhelming to some of you, but should it? Could your coin laundry handle commercial accounts without disrupting your traditional business?Several operators who have commercial accounts offer their perspective on this emerging extra profit center. In part one of the story, Gary Gray shares his commercial experiences.COMMERCIAL WORK PUTS MACHINES TO WORK“We probably have been doing commercial work for about 20 years,” says Gary Gray, Fun Wash laundries in Arkansas. Gray runs 16 laundries and does commercial work at some of them.Gray’s biggest account is an event center owned by a radio station. “We do tablecloths and divider curtains. We also have a church account. They have a lot of events, so we do a lot of tablecloths; we even do the clothes for the clergyman. We have hair salons, and do work for a catering company at a race track.”Gray opened his first store in 1987, and says he was approached by someone to do commercial work.“The biggest thing is that most commercial accounts have special needs,” Gray explains. “With tablecloths there are usually unusual stains. What sets us apart from others is that we are willing to press a lot of items. We have a lot of self-service presses in our stores. We don’t solicit pressing work now, we only do it in conjunction with our wash, dry and fold service.”In terms of employees, Gray believes you’re better off if you have just enough work to keep one employee busy, while this person also keeps the store clean. “I’m a numbers guy. If you start hiring employees just to do this work, you need to bring in extra work just to be profitable.“All of our commercial accounts are done during the week. The stores doing wash, dry and fold are attended 11 to 12 hours a day. There are no problems with regular customers using the store and the commercial work taking place at the store.”Current equipment trends have made doing the commercial work somewhat easier. “Things fit together well. Over the years, we made the transition to larger-capacity equipment. For a long time, our laundries had 50-pound equipment. Now we have an 80-pound washer and 75-pound dryer. The customers like this stuff and it really helps with the commercial accounts.”As far as pricing goes, Gray charges by the pound for washing and drying, and charges by the piece for pressing. Prices range from 89 cents per pound to $1.20, and typically pickup and delivery adds an extra 20 cents per pound to the price. “Some customers want pickup but not delivery, some want it the other way around.”Meeting deadlines hasn’t been a problem, he adds, but if you have a deadline problem it’s much more of a concern than a traditional customer problem because you’re dealing with 200 pounds of work. “I have a general manager who deals with all the stores. The general manager will help out or even move 150 pounds or so of laundry to a different location if need be. Managers call the general manager when there’s trouble. If you miss a deadline or two, you’ve lost an account.”Should operators consider taking on commercial accounts? The good thing is that these accounts keep your equipment in use, and you get to select when to use the washer and dryer, he says. “It’s a great business to get into.”Gray does suggest that one learn the ins and outs of the self-service laundry business before venturing into the commercial arena. “Get [your self-service business] established, then learn wash, dry and fold before commercial work.”Another commercial concern is that individual businesses have different needs. “The biggest issue is if you make a mistake. We do our wash, dry and fold in cold water unless there’s a special circumstance. On some commercial accounts you have to use hot water to get the stains out and do some pretreating.“The biggest surprise is the claims that can be made, both from damaging clothes and things just disappearing.” Recently, he adds, one company that sends special bags to be cleaned said about 100 of them were missing. The claim was about $400. “They were a good customer so you can’t argue with them about who made the mistake. We fessed up and paid the claim and kept the customer. If you have a claim, deal with it right now. If it’s damage, deal with it within a week. If it’s missing clothes, it takes up to four weeks in order to make sure we don’t find the clothes.”Marketing is also a key piece of commercial equation. “If you’re going to be successful in this area, you’re going to have to do some marketing. I have incentive bonuses for the general manager and the store managers. Once they cross a certain point of revenue, 30 percent of the revenue is shared between the two individuals.“I challenge my general manager and managers to call on people, but we’ve only had limited success with this.“Any time we advertise, such as with Yellow Pages, we say commercial accounts are welcome. One of our TV ads stresses that we do commercial work. However, we describe commercial accounts a bit looser than others. Commercial accounts are any accounts that we bill monthly. This could include a family spending $100 a month on drop-off work.”MAKING SPECIAL ADJUSTMENTSHank Williams is in a unique situation. His Raymond Laundry, Raymond, Maine, is located in a rural town of about 3,000 people. However, when summer tourism kicks in, the area can swell to 15,000 people. Williams has a 2,000-square-foot store with an additional 600 square feet for storage.Williams offers drop-off drycleaning and drop-off laundry ($1 a pound for regular orders and 75 cents a pound for orders exceeding 100 pounds).“Because business is slow, I’ve approached restaurants. Some of these owners are upset with the commercial firms doing their laundry. I’ve had injectors installed on my larger washers (six in all), so I now clean napkins. I even have a small mangle (a laundry machine used for pressing fabrics) in the back room. It works on tablecloths and napkins. I couldn’t afford a commercial mangle, but I managed to get this one through an employee. It runs perfectly.“We offered our service to restaurants and they were intrigued. I’ve landed two restaurants since.”Injectors on coin laundry washers are not a common thing, but Williams had a special reason for installing them. He has a commercial account with a camp that houses cancer-stricken children. “These kids have weakened immune systems. I was worried about them developing infections from laundry products.” He was able to purchase an enzyme formulated to kill all bacteria. “This was a good thing, even though it drove up my costs.”What was surprising was that his regular customers loved the injector machines. “Things come out cleaner and brighter. All my customers can use the injector machines — every machine in the store is dedicated to the customer first and always. They can use these machines but I need to supervise the usage.” The 40-pound injector machines cost $7 and the 30-pound injector machines cost $6, soap included. “When the customers smell the results, they love it, plus they don’t have to buy soap.”Williams has a couple of restaurant accounts and a lot of camp work. “I opened April 2006 and that’s when we got the first camp work. They sent kitchen rags, towels and bags of clothes to test us out. I didn’t have any laundry background at the time. I said, ‘Let me know how you like it.’ We struck a deal and then a couple of other camps heard about us via word of mouth.“When I approached the restaurants, they all had commercial laundry accounts. I said, ‘Let me try to save you money.’ They sent me 50-pound bags of napkins. I washed them and learned from my mistakes. It cost me money to learn, but the restaurant guys were happy. I’m now doing rags, uniforms, tablecloths, napkins, everything. Another restaurant saw me carrying laundry bags and inquired about my service. They tried me out and I sold them. I match the commercial rate and don’t make a big deal of money, but I utilize my employees better.”If you’re going to tackle something like tablecloths, you need hotter water, Williams says. “It would be great if the industry made better cleaning products so we could go into competition for commercial work and offer a good product at a good price. I’m double-doing everything, first in dish-washing compound to get the oil and grease smells out and then a second time [using my enzyme] to brighten them and make them look nice.”With camp work, Williams says the camp people want everything done a certain way — don’t alter anything, don’t go cheap. “They pay me a good dollar and I earn it.” Williams handles all types of items for the camps.“Campers throw everything in the bags — shirts, towels, shorts, etc. The individual clothing from the campers comes to us and the camp sets up the transfer. I’ve done 300 blankets at a time, it depends on the needs of the camp. I’ve had up to 14 employees working for me. My camp laundry is not finished before 8 p.m. My regular customers come first. If it’s a slow day, my employees will use the machines earlier, unless customers come in. I meet deadlines. One camp sent 3,000 pounds; we started at eight at night and we were done by 1 a.m.”Williams charges 10 cents a napkin and pays someone 5 cents a napkin to do the work on the mangle. Camps are charged a flat rate, not a bag rate, for what they send over since the amount of items in a bag varies.His pickup and delivery service schedule varies depending on the needs of the restaurants. “I deliver and have a company van, and by offering this service I get more business. You will also get more business with fair pricing.”Williams solicits restaurant business when he dines out. “I find the owner and ask who is doing their napkins and offer to do some work for them at no charge. It’s simple talk.” If the restaurant decides to utilize his service, he matches what they are currently being charged.The good thing about the commercial side, he says, is that if you do good work, all the restaurants will get to know you and respect you. Even their employees will use your laundry, he adds.“The bad thing is that the profit margin is small. But you get work 52 weeks a year and keep the attendants busy.”THE ELDERLY: A GROWING MARKETPaul Wheelock’s laundry serves a diverse clientele in addition to handling a diverse workload. Wheelock operates Giant Wash - Sanitary Towel Service in Dubuque, Iowa. He took over the 1,200-square-foot store in 2003 and caters to a lower- to middle-income clientele.“We do wash, dry and fold plus work for the elderly, single men, small restaurants, small school systems and small bars/restaurants,” Wheelock says. “The commercial work had already been started when I purchased the store, and it has been steady. The biggest thing I have noticed is that more large suppliers have stepped into our market and have taken some of our larger accounts, but we have offset this with some more small-business accounts.”For the school districts, he handles kitchen linens. They pick up the work once a week and return it the next day. “We also do a lot of rugs on a weekly basis for the convenience stores and restaurants with one-day turnaround.”The elderly are generating a strong business surge, he says. “We do the laundry for the elderly. We pick it up and deliver it and send the bill to their children. Children are setting up accounts for their aging parents.” Wheelock bills the children on a monthly basis; some of the bills are sent as far as California. “This is the biggest growing market. We’ll come in for $15 a week and handle a single person pretty easy. They don’t have to do a thing. It’s a great way for someone to take care of their parents.”One employee usually works on the commercial accounts. The laundry is staffed seven days a week, from 7 a.m. to 10:30 p.m. “The only reason we can afford the staffing is because of the commercial business. It pays for it.” Most commercial work is done between 9 a.m. to 5 p.m., Monday through Friday.In terms of handling traditional customers and commercial accounts, the “regular” customers get top priority. “If the store gets busy, the commercial work gets finished in the evening. It’s not an issue. All the rugs are done in the evening between 8 and 10. We hang them at night and they are usually dry in the morning.”The largest equipment takes the brunt of the commercial work. The 50-pound dryer is used for rugs, and the largest washer, 50- and 75-pound, tackle commercial work. Customers are free to use this equipment.Regular customers pay $1.19 a pound for drop-off work (10-pound minimum) and there’s a $3 fee for pickup and delivery. Commercial customers (schools and restaurants) pay 23 cents per towel. There is a commercial minimum of $12.He sees profit potential in commercial work and has started doing radio advertising. “We’ve seen an increase in calls. Right now our business mix is 62 percent in-house and 38 percent commercial side.” (Traditional customer drop-off work is considered commercial business.)Wheelock admits that he hasn’t done a great marketing job. He’s dabbled in radio, advertising in local newspapers and has used coupons. The marketing is geared toward pickup and delivery accounts, both commercial and residential.”He has his own van and runs a route five days a week, from 7:30 a.m. to 11 a.m. “This is the only way to make it profitable, you have a short-term driver. It’s easy to find an employee to run this route. If you call after 11 a.m., you get next day pickup service. We haven’t had any deadline problems to this day.”Like others, he believes a major advantage to taking in commercial work is that it allows you to have your building staffed every minute of the day, plus you have better personnel because they are busy all the time and get to interact with customers while doing this work.“I don’t see any negatives except fluctuations in certain expenses like gasoline.” 

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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