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Diving Into Diversification (Part 1)

Options, considerations to make before plunging into extra-profit centers

CHICAGO — Sunday has become the busiest day of the week at Mark Schottland’s Laundromat called Madeline Nashville.

Located approximately three miles from downtown Nashville, the laundry facility has only seven washers and eight dryers, and is nestled in just 400 square feet of space. One can imagine how busy the Laundromat must be.

“We have 10 or 11 regulars, and what I mean by that is people who come in [to] use five of the seven machines,” he says.

“There have been some days where we have a wait to get into the Laundromat, which is good and bad,” says Schottland. “Fortunately, we have plenty of other things for them to do.”

There certainly is more to his Laundromat, as Madeline’s is not only a neighborhood laundry, but a café, as well.

Establishing an extra-profit center as a complementary business is nothing new in the self-service laundry industry, as the core business is combined with other types of services, among them car washes, tanning salons and gas stations.

Exploring other revenue streams can increase profits, but what should operators know before taking the plunge?

American Coin-Op spoke with experts in the industry to find out.

IMPORTANCE OF DEMOGRAPHICS

“There’s no sense jumping into doing an extra-profit center without doing your due diligence,” says Terry Anderson, consultant for Midwest Laundries, Chicago.

Anderson has helped build several Laundromats throughout his career as a distributor, many of them with various extra-profit centers, like a dog wash, car wash and café.

“There are a lot of different things, but some of these things, you’ve really got to [ask if] there is a need for [it]. You have to look at your demographics and see,” says Anderson. “Is there an unfulfilled need that you can [fill]?”

Schottland took this approach when deciding to build Madeline in what he says is one of Nashville’s “quirkier” neighborhoods.

“I thought that the demographics warranted some amount of service where I located this, and we knew that, demographically, we were locating to a place that was high in renters,” he says.

“There isn’t one [like it],” says Schottland of his business. “Not only do we have the uniqueness of the bar/Laundromat in Nashville, but we also have the dessert element.”

The importance of demographics was an aspect that Mike Gilley, owner of Laundry & Tan Connection, Indianapolis, considered when he decided to add a tanning salon to his Laundromat’s business model in 1996.

Since then, he’s come to own 17 stores throughout Indianapolis and Kentucky. According to Gilley, 70% of his stores are a Laundromat/tanning salon hybrid.

“We were looking for an additional revenue source, and we had extra space,” says Gilley, as many of his locations are generally 7,000 square feet in size.

“It’s basically demographic-based,” he says. “How much revenue potential we think there is with the tanning depends on how much space we’re going to allocate in the store. Some stores, we have as few as five pieces of tanning equipment, some of them, we have as many as 22.

“It depends on the neighborhood and what we think the revenue potential is.”

A LAUNDRY STAPLE

One laundry-related extra-profit center that’s become an industry mainstay is wash-dry-fold.

“The wash-dry-fold service has proven to be a major revenue producer for most operators,” according to John Antene, president of coin laundry sales and marketing for distributor Coin-O-Matic, Alsip, Ill.

Anderson agrees, touting the various benefits the revenue stream can bring into a Laundromat business.

“[A] part of this that people should think about is if you’ve got a full-time attendant, wash-dry-fold can offset the cost of that attendant,” says Anderson.

“If they have wash-dry-fold orders to get out, not only are you keeping them busy, but you’re also offsetting your cost of having that attendant on payroll.”

LAUNDRY-RELATED SERVICES

Once established, having wash-dry-fold as an extra revenue stream can lead to other laundry-related channels, according to Antene.

“Operators can also enjoy additional revenue by acquiring commercial accounts. This area typically generates, once started, a guaranteed flow of income on a regular basis,” he says.

“Partnering with a dry cleaner to service your drop-off [drycleaning] customers allows operators the benefit of income by acting as the ‘middle man.’”

Anderson agrees with this approach.

“If the wash-dry-fold is successful, and you’ve got everything in place to make that work, the next step, if you have the room, would be to add the dry cleaning,” he says.

When taking on wash-dry-fold or commercial accounts, Anderson stresses the importance of allocating equipment for the service.

“The other part of this is, ‘Are you going to be using your existing machines, or are you going to set up a separate area with an ‘on-premise laundry’ washer and dryer so you’re not competing with your own customers for the use of the washers?” says Anderson.

“You’ve really got to be cognizant that … your wash-dry-fold orders aren’t out there pushing your regular customers out of the way, or using the machines that they want to use.”

Check back Wednesday for Part 2!

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(Photo: ©iStockphoto/IPGGutenbergUKLtd)

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Mark Schottland’s Laundromat/café called Madeline Nashville is located approximately three miles from downtown Nashville. The Laundromat portion is nestled in just 400 square feet of space and features only seven washers and eight dryers. (Photos: Courtesy of Mark Schottland/Madeline Nashville)

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Though the laundry can become extremely busy—particularly on Sundays, according to Schottland—Laundromat customers can pass their time and grab a drink or bite to eat in the facility’s café side.

Have a question or comment? E-mail our editor Bruce Beggs at [email protected].