MOUNT VERNON, N.Y. — Equipment distributor Todd Santoro recently shared some thoughts about providing extra services for your laundry customers and how certain additional revenue streams require little extra work to put into place (Coin-Op 101:Extra Creativity Can Lead to Extra Profit).
Today and tomorrow, American Coin-Optakes a look at two laundries that couldn’t be more different as far as geography and demographics are concerned, and how their owners approach the offering and management of extra profit centers.
MEGAMAT SUPER LAUNDROMAT, MOUNT VERNON, N.Y.
When Conrad Cutler responded to American Coin-Op’srecent poll about extra profit centers, his list for the Megamat Super Laundromat in Mount Vernon was a lengthy one: vending machines, laundry bags, wash-dry-fold services, drop-off/commercial accounts, video games/pinball machines, moving truck rental, rug cleaner rental, ATM, and car care equipment (vacuum, air machine, and fragrance machine).
The 5,000-square-foot store located in a low-income, predominantly African-American neighborhood just north of New York City is open 24 hours, seven days a week, and is advertised as the “home of America’s largest washing machines.” (For the record, the largest machine there holds 125 pounds.)
Cutler, 22, only recently graduated from Syracuse University with a degree in supply chain management and entrepreneurship and emerging enterprises, but he’s been running Megamat since August 2009.
His family owned the property, a former warehouse, and had leased it to a tenant who installed the mega-laundry. When the tenant went bankrupt after five years, the young Cutler was called on to take over the operation so the family could avoid the accrual of real estate tax on a vacant property.
Cutler successfully renegotiated the tenant’s sizable outstanding note with the finance company and instituted a renovation plan that would take four months to complete and cost $30,000.
Expanding the breadth of services offered by the laundry was always part of his business plan.
“We took the store over in a bad situation, so we needed to do whatever we could, not only to bring up the revenue but also to increase the foot traffic in there,” Cutler says. “Diversifying the services that we offered to the community was the way in which we developed a large customer base.
“My objective in having so many different auxiliary revenue streams was not only to generate money but also to bring people into the Laundromat who might not come in there regularly otherwise.”
And that’s mighty important when you consider there are 46 coin laundries within four square miles serving 65,000 people. That’s a lot of competition, so it pays to offer services that set you apart from the rest.
All of the non-laundry equipment is serviced by outside contractors (eight, by Cutler’s count) that pay Megamat a portion of the revenue.
“The most important thing to me is that we have 100% uptime on all of our equipment,” he says. “One of the most detrimental things you can do in the laundry industry is to have equipment that’s out of service. Not only do you not make money off of it, it also makes the store look bad.”
Cutler depends heavily on a staff of six attendants to manage the around-the-clock operation when he’s not there. All are trained extensively in customer relations, equipment troubleshooting and store management, he says. The store wouldn’t be able to offer the number of added services that it does without them.
“One way that we’re able to compete so well … is because of the staff that we have,” he says. “They’ve all been in the laundry industry for a long time, way longer than I’ve been here. They know how important customer service is, not only to me but to the customers as well.”
Among the Laundromat’s most popular auxiliary services are U-Haul truck rental (it’s one of the few Northeast businesses to offer it around the clock, according to Cutler) and pay-as-you-go Internet service (at the rate of $1 per 10 minutes; most people living in and around the neighborhood don’t own a computer or have Internet access, he adds).
“I would say that the ATM, the vending machines and the (video) games are kind of just an extra. They don’t really bring in that much money.”
Megamat’s newest extra profit center is carpet cleaner rental. In the first 30 days of offering the service ($27 to rent the machine for 24 hours), just one person rented a machine. But it was a person who’d never visited the store before.
“After three months, I think you’ll be able to tell if the real estate that it’s taking up in your store, and the liability of operating it, is worth your time or not,” Cutler says. “If you see an upward trend where it’s at least doubling every month for three months, it’s worth keeping.”
Extra profit centers are a “dual-edged sword” that can just as easily hurt the operation if they’re not treated with the same level of care and concern as the laundry, Cutler says.
“You really have to make sure that you’re giving excellent customer service in all aspects to whoever walks in the door, regardless of whether they’re washing clothes or just putting 25 cents in a gumball machine,” he says. “That’s really what’s going to keep the business going is maintaining the same level of customer service for every customer.”
Tomorrow: We visit The Service Station in rural Thompsonville, Ill., where owner Nova Randolph’s business offers laundry, tanning, Internet and copy/fax services for her hometown.