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Headed in the Right Direction (Part I)

Paul Partyka |

CHICAGO — Rising utility costs have caused many operators to take a closer look at their businesses. With this in mind, it’s a great time to look at the state of the coin laundry industry. American Coin-Op will address 10 industry topics. Manufacturers, distributors and operators will tackle the questions.Due to the length of this story, it will be presented in two parts.1) Give the coin laundry industry an overall grade.Bill Villanova, operator, The Laundry Room, Mahopac, N.Y. — I would give the industry a B today. I got into the business about 25 years ago. Back then, there were some horrible stores.The stores are much cleaner today, the machinery is better and the stores are more geared toward attracting more business because there are some professionals running the stores. Now, people are really trying to squeeze a living out of this business.On the negative side, the industry still has a bad reputation in the minds of some people. There are problems. In my area, municipal water is a problem. The town has the water and you can’t get it anywhere else. It can pretty much do what it wants with the water.I originally was going to give the coin laundry industry a lower grade, until I really thought about how many things have changed for the better.Van Merrill, Sparklean Laundry Systems Inc., Santa Fe Springs, Calif. — This is a thinker. I want to see the industry change from a self-service business into more of a full-service business. The thrust to card stores, more marketing, more in-store services, etc. is going on. This is a good thing. I would give the industry a B+, with focus being on energy efficiency and the machines that are currently available.In California, there is a lot of competition. Because of this, lower vend prices are in play. When the utilities go up, this really impacts the bottom line. The utility situation has helped justify some price increases, but the prices need to go up more.As far as problems go, I deal with a lot of landlords. They are very negative about laundries in general because of the old, unattended stores that exist in various shopping centers. When I see a dirty laundry with out-of-order machines I don’t like it because it gives a negative image to landlords, as well as other customers.We try to attract different customers, even customers with washers and dryers at home. You can draw these people if you have clean, well-run stores.Noel Cooper, distributor, Garden State Laundry Systems, Linden, N.J. — The coin laundry industry as a whole deserves nothing more than a C.In 50 years, the industry has never approached the general public and given them an understanding of what it has to offer in terms of time savings, energy savings, and things of that nature.What I hope is that since people continue to have less and less free time, sooner or later they will learn that coming to a coin laundry will get them more time in their lives.Joel Jorgensen, vice president of sales and customer service, Continental Girbau Inc. — I would grade the current state of the vended laundry industry a B. The industry itself is healthy with a mix of very sophisticated new investors and experienced veterans owning and building the majority of North American stores.The negatives are wildly increasing fixed cost items like utilities, rent, insurance and impact fees that make new-store site development more challenging than ever and existing store profit numbers sometimes too thin to afford needed upgrades.The bright and very positive part of the industry in this challenging time is that the good operators always find a way to adapt and thrive, while weaker competition tends to go away. There are ways to counter the challenges in every market and manufacturers of washers, tumblers, water-heating systems and card vending systems are offering solutions through technological advancements and greater efficiency.2) How does today’s operator balance his needs with trying to make a store as customer-friendly (adding furniture, etc.) as possible?Taylor C. Smith, distributor, Commercial Equipment Co., Addison, Texas — Your ROI (return on investment) is the most important thing. Talk to your customers and attendants, and see what’s really needed, and decide if the store is doing well without these things. If you really need something, you need to make it work. Asking questions is the key.Take advantage of the distributor’s knowledge. Get together with him and conduct a customer survey. Ask that distributor to check your store over in terms of things such as furniture, for example.Another way to deal with this question is to simply be observant. For example, take a close look at the people when they are unloading the dryers. Where do these people take their clothes?Most of the stores in my area seem to have enough amenities. We typically build stores that are large enough to include many of the basic amenities.Villanova — I just remodeled my store. The whole thrust of my thinking is that we deal with, for the most part, people on the lower end of the economic scale. If you give these people a nice, clean and modern place, and treat them with a little respect, you can charge a little more and won’t lose any business. I can say that for a fact. It’s all about treating people with a little dignity.In addition, you should charge a little extra, but you should also give a little extra. I added air conditioning a couple of years ago. It gave my business a nice, little boost and it was inexpensive. Where would you rather go, to a cool store or a hot, sweaty coin laundry?As far as furniture goes, people make due. I put as much furniture in the store as I can, in terms of tables and chairs. If you are short of furniture at times, people will adjust. They may go outside to sit or stand; some of them will even go and sit in their cars.Austin Sapp, Splash & Dash laundries, Georgia — I believe an operator going into business has to have the proper amount of square footage to balance all the needs, or he shouldn’t do it all. If you want to cut a nickel or two before starting, just stop. Whatever space and amenities you need, you have to account for it up front.You can balance your needs and the customers’ needs. A big percentage of your business occurs on the weekends. You must be able to accommodate this massive audience. People will leave on the weekends if you don’t have enough equipment. People go wrong when they size their store for Monday, Tuesday and Wednesday business, not their busy times.3) The last two years have been difficult in terms of rising utility costs. How has the industry dealt with this situation?Dan Goldman, national sales manager, Wascomat Laundry Equipment — The rising utility prices have forced many coin laundry owners to look seriously at retooling.The old concept of keeping old equipment alive simply because the replacement parts were available has changed. The fact is that washers and dryers designed 20 and 30 years ago were designed when gas, water and electrical costs were significantly less than they are today.Lorie Landis, Duds N Suds, Cedar Rapids, Iowa — I have tried to manage costs for one, but I had to pass on a price increase to my customers. There was no response from the customers. They seemed to understand. I only raised washer prices, but last year I also hiked my drop-off service price.Times have been tough for the industry, but I don’t know of any store closings in my area. I think my competitors also raised their prices to deal with the higher expenses.There are other problems here. In Iowa, we recently had the state’s minimum wage raised. In addition, there is a 1% increase in sales tax. We have to examine how we are going to deal with this.Cooper — Some of the people in this industry don’t have the vaguest idea of what they are doing in business. The good operators have sat down, looked hard and started to raise prices.I opened my first store in 1960, charged 10 cents for 10 minutes of drying and 25 cents for a top-load wash. Today, almost 50 years later, stores in my metro area are vending 18-pound front loaders for $1 or $1.25. They are also giving the drying away at 25 cents for 10 minutes. We have failed to keep in step with pricing. We are actually giving the general public the greatest bargain they can get.There seem to be very few stores that have gone out of business. I don’t understand why there aren’t more. The industry needs to change to get through these tough times. Some are doing this. There are guys getting $3 for an 18-pound wash. That has to be done. The card system can help owners adjust prices easily. Price hikes have helped owners survive the tough times.4) Where is this industry going to be in 10 years? Will there be more stores?Smith — It seems that many laundries don’t close, they just keep going on with second or third owners unless development tears them down. I believe that the industry is thriving right now. There is still a need for clean places to do your laundry.The economics in this country are changing. The middle class seems to be disappearing; there’s more wealth and people in the lower end of the economic scale. With this in mind, it’s a positive for the coin laundry business because lower economic scale people need coin laundries.Our trend is to build larger stores, some with card systems, because collecting becomes much tougher when you have more quarters. Some banks don’t even want to deal with so many quarters.As far as business practices go, we have thought about putting health centers in laundries because you have a captive audience that may not visit health facilities on a consistent basis. Mothers can bring their kids to the store and get them an exam, shots, etc. It’s a one-stop concept. We are actually looking at this option for a store in the Dallas area.Jay McDonald, vice president of product and brand management, Alliance Laundry Systems — Given current trends, I believe in 10 years we will see less stores, but much larger average sizes. We’re definitely doing more stores over 3,000 square feet and fewer less than 1,800 square feet.Even with fewer stores, overall pounds of capacity as a whole will go up. Larger, flat-screen TVs will become more prevalent in stores as will better sound systems to dull the laundry din.I also believe that business operations also will see continued progress in alternate payment systems, although I’m not sure how quickly biometrics will find their way into our industry. Clearly, these alternate payment options increase security at stores and may even be used to gain access to utilize the business.Landis — I think pricing will increase a bit in the future, but I can’t imagine it will get real high. The antiquated stores will close, and competition will ease a bit. The new coin laundries will be state-of-the-art stores and have different business centers inside of them. The stores will also be larger and more ornate.As far as today goes, I’m really surprised that drop-off business isn’t a part of every store. However, I understand in a way because some owners want unattended stores.5) How does an operator appeal to those with less free time?Van Merrill — Operators need to focus on marketing. Let the customers know that we can help them with their most important commodity — time. Let them know that they can occasionally use drop-off service, having someone do their wash, or visit the store and get their laundry done in a couple of hours.We have been effective using time as a marketing theme. We just had a marketing symposium, with marketing experts and our best operators.Coin laundry owners need to be true retailers rather than people just running a self-service business. A retailer has to market. In this industry, some people just do door hangers once a year, for example.New owners have brought marketing skills to this industry. Just opening a laundry with a bunch of machines; that day eventually will go by the wayside.Jorgensen — Operators need to market and communicate the “time-saving convenience” features a laundry offers to traditional and non-traditional customers. The “selling time” approach has service appeal to a broad demographic array of customers. In most markets, renters are a minority of the population in a store’s market and the majority of the population is simply uneducated regarding the benefits and service options today’s laundries offer.Interact with your customers, show and teach them how to properly load front loaders to capacity and the benefit to them of upgrading to larger machines. Also, recommend other services like fluff and fold and in-store drycleaning, options that they may not have considered or been aware of previously.Sixty percent or more of a store’s marketing should be done in-store to the existing customer base but this is often overlooked. The mediums of communication can include a store brochure, flyers and point-of-sale signage. Word-of-mouth advertising is proven effective and always is the most cost-effective. Clear and concise ads in local magazines and thrift papers reach a broad market and communicate a consistent message to all. Out-of-store marketing can also include direct mail, door hangers, radio ads or even cable TV spots.These options can be difficult to measure and expensive to initially produce. It is critical that storeowners become involved in local community efforts and with charitable groups. Participation with Goodwill Centers, women’s homes, local youth or church organizations is not only a great community support effort but is also valuable for awareness within the specific organization and may open up opportunities for press coverage of the event and your business.Sapp — Time is everything. Operators are trying to capitalize on this by using vans and doing pickups and even trying to cater to commercial accounts. If you get enough large accounts, you can even drop the price to 65 cents per pound and do well.I used billboards in the beginning to draw customers, but now my biggest marketing is word of mouth. I have thousands of customers and let them do the talking. As far as attracting people with home washing equipment, I’m beginning to see more of that crowd in my stores in the past year. They bring their clothes here to use the 80-pound washers and get their laundry done in an hour.I’m also seeing a lot of hunters using my equipment. After long trips, it would take them a long time to do their laundry at home. I’ve talked to some of them and they say they’re here because of the time factor. But you need the big machines in order to cater to them or else they are going to do their laundry at home.Landis — I will be sending out a direct mail card targeting different groups — not just the elderly, single men or double-income households — strictly focusing on drop-off service.We are already getting people in our laundry who have home equipment. I have a lot of moms with full household equipment who come in. In one and a half hours to two hours, they are finished with their laundry; they find this to be a time-saving experience. The other thing is that the double-income households can afford to use your laundry service.However, if you want these people, you have to work at it; they won’t just stumble into your store.To read Part II of this story, click here. 

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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