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Headed in the Right Direction (Part II)

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.Part two of this article focuses on extra profit centers, maintenance, pricing, attracting customers and equipment mix.6) What’s the status of extra profit centers? What other types of services might work?Dan Goldman, national sales manager, Wascomat Laundry Equipment — Extra services can provide a much needed pocket of profit, but only if they are promoted correctly. The most logical extra service is wash, dry and fold, and yet the national average is only 10% of overall sales. I am baffled when I hear from customers with attended stores who do not promote this as a profit center. Extra services must be promoted.There was a group of stores in the Midwest that actually had a bar in the laundry but all of them either got out of the liquor business or the self-service laundry business. Yet there is a terrific store in San Francisco that recently added beer and wine to their menu of coffee and cake and they are doing even more laundry business than ever before. The owner proudly has on display a plaque proclaiming that 34 couples met in her laundry and are now married.Lorie Landis, Duds N Suds, Cedar Rapids, Iowa — Commercial work is a natural. There are also car washes if you own the land next door to the laundry.We charge for in-store Internet access. It’s going well. People do enjoy it. Video games are fine for us, they generate a few hundred dollars every month. We have some tabletop games, a driving game and a pinball game. There’s no problems with the games because we’re attended. The games are for the customers, kids are told the games are for customers.A one-stop fabricare center? We had done some of this in the past; a full-time attendant did alterations. Now, we pass on the alteration work to the drycleaner we use for drop-off drycleaning. This whole concept probably hasn’t caught on yet because of labor concerns. But it did work for us. In addition, we do sell laundry baskets, bags and detergent. Overall, we’ve had a favorable experience with extra profit centers.Noel Cooper, distributor, Garden State Laundry Systems, Linden, N.J. — I honestly don’t see any new extra services. I don’t think tanning works because the government tells you not to use tanning booths. Some people will always try it, but I haven’t seen any successful tanning stores. That’s just my personal opinion.Drop-off drycleaning is good, but the problem I see is finding a good drycleaner to work with. The good drycleaners have their own businesses and don’t need to work with coin laundries.We have been very successful with stores that have been involved with vending. There’s more than candy and soda. Ice cream vending can work.Taking in commercial work means someone has to service the account. The history of our business is that absentee storeowners don’t have the time for this. The hands-on owner running four or five stores also doesn’t have the time to work commercial accounts. It takes a highly motivated person to work and develop these accounts. I don’t know of too many operators doing commercial work.7) What role can proper maintenance procedures play in cutting costs? What other things can you do to cut costs?Bill Villanova, operator, The Laundry Room, Mahopac, N.Y. — If you read American Coin-Op, you realize the importance of cleaning your dryers. Keep your hot-water heater operating at peak efficiency. I also have a set of double doors in one of my stores. They save a bundle on energy costs.I wouldn’t reduce my lighting, though. Lighting makes for a happy atmosphere. Also, if you have lights out, or lower lighting, it can make your store look kind of run-down.It can be a trap when you have new equipment. You may think you don’t need to practice preventive maintenance. Well, a lot of washers leak overnight; there can be problems with water valves. If I had realized this earlier, I would have changed the valves.Those little leaks, all day and all week, add up to money at the end of the year. I figured this out late one night. I actually could hear the leak when I put my head near the washing machine drum.If you run a tight ship, you might be able to put $200 a month back into your pocket. My stores have never really gotten that bad in this area.Taylor C. Smith, distributor, Commercial Equipment Co., Addison, Texas — One of the most important things is to have the dryer vents cleaned by a chimney sweep or some other specialist. Another thing to do is clean behind the dryers; all the lint and junk accumulates there. The lint can clog up the filter of the air conditioning system. If you’re not changing your filters in the air conditioning system once a week, it’s probably costing you more money to run the air conditioning. People don’t think about this.If you use air conditioning, you can turn the temperature up two or three degrees and people won’t even notice it especially if you install ceiling fans. Put the fans up high enough to keep them away from your customers. Ceiling fans are a good cost-saver.In addition, some operators don’t check the machines’ water hoses, drainage, etc. Check those machines all the time.Jay McDonald, vice president of product and brand management, Alliance Laundry Systems — Operators looking to cut expenses often overlook small maintenance items that can pay big dividends on utility bills.Two of the biggest areas to look at are the store’s tumblers and the hot-water heating system. Replacing a hot-water heater that’s 15 to 20 years old could save you 50% or more in the utility consumption needed to heat the water.Likewise, performing minor maintenance on tumblers, such as cleaning the duct work and inside the tumber, can help them run at peak efficiency.Make-up air is another potential costly area. If make-up air space isn’t sufficient, tumblers could be drawing the store’s air, which owners already have paid to heat or cool, versus the outside air.Owners should also look at their store as they would their home and understand how low-cost projects such as adding more insulation and new lighting can have significant benefits. They also may want to visit www.dsireusa.org/. That website lists, by state, various rebates available for energy-efficiency projects.8) Overall, where is the industry when it comes to pricing? Do operators really believe that pricing is the major drawing factor?Austin Sapp, Splash & Dash Laundries, Georgia — In my area of Georgia, pricing seems up to date. Around here, people have kept dryer prices the same but dropped the time.It’s been tough times in this industry for some, but this industry isn’t as price sensitive as some might think it is. It’s a must for people to use a laundry. I’m a little higher priced than my competitors and I believe people are willing to pay more for something nice.There are many reasons for pricing to be lagging behind in this industry. For one, some of the mom-and-pop owners didn’t want to put money into their businesses. But new investors are forcing others to change.When I came into the business, some of the stores in my area closed, but I also forced others to run more professional businesses. In terms of customer importance, I believe price is a 5 on a scale of 1 to 10.Van Merrill, Sparklean Laundry Systems Inc., Santa Fe Springs, Calif. — Pricing is low in California; some of the areas in the United States may be lower, but not many.However, many things in this industry are changing and pricing is a big part of that change. Owners who just compete on price are not as strong of a factor as they used to be, though they are still a factor. If these type of owners get challenged, their response would be to drop prices in order to compete. There are other ways to compete, such as offering a better laundry experience.Our laundries tend to be priced at the higher end. The more people who like a place, the more elastic the price can be. Price is still a key, but other variables exist. There have been lower prices because of equipment restrictions, but with card systems the pricing concept changes.Goldman— Pricing has slowly kept up, but in saturated urban areas many customers are afraid to raise their prices.The storeowners who invested in high-efficiency washers and dryers have had a much easier time in this regard. The reasons cited are that the high-speed washers produce noticeably drier clothes and the dryers reach temperature quicker, making the turn-around time faster.Jorgensen — As far as overall pricing goes, this is a very regionalized answer as some markets have adjusted vend pricing in accordance with utility rate increases and offer a fair price for a good quality service. Other markets have lagged behind in vending increases.Typically, the same areas that struggle to increase vend prices are still struggling to move their customers away from top-load washers that are inefficient with average wash quality and into more efficient front-load machines with their wash, capacity and detergent-use benefits. Change is difficult, but taking money out of your pocket on a daily basis is no way to operate a successful business with today’s challenges.Every consumer has felt the pain of natural gas, water/sewer and electrical service increases in their own life. They understand and the media coverage keeps it in front of the public on a daily basis. The time is right to analyze store profit margins, equipment efficiency/performance and vend prices, and make the needed improvements that will pay off in the short and long run for your business.Fear of competition and negative customer reaction have kept operators from raising pricing. Pricing is a drawing factor, as is store location, parking, signage, equipment capacity options, wash/dry capacity ratio, in-store service options, store maintenance (cleanliness) and customer service. If none of the other factors exist, price will be the only focus factor of your customer.Some of the most successful stores and businesses I have seen pride themselves on being the highest priced in the market. It allows them to afford to offer the highest level of service.9) Is it realistic to think that coin laundries can attract people with home equipment?Villanova — You can get these people. I have. A lot of apartment building laundries are terrible. The equipment doesn’t work. I have a lot of customers with access to washers. What can take them six to eight hours to do at home takes them about two hours at my store. Good laundries have an advantage over home laundry rooms.I never did any type of marketing to get these people. Word-of-mouth advertising works for me. One happy family in an apartment building will lead to several more customers. The best marketing approach is to have a good, well-run store.The hidden reality is that once you upgrade, you may be able to bring in enough new business to cover your notes. I did. The goal is to simply make your laundry the best possible store in all ways.Cooper — When it comes to attracting people with home washers, the most important thing is still location, location, location. Visibility is also key to attracting people. Twenty percent of the customers I would say at one of my son’s stores have machinery at their homes and have both the husband and wife working.People don’t want to do their wash — show them a great wash, a well-lit store open 24 hours where they can do a week’s worth of wash in one or one and a half hours.More and more people are flocking to good stores, but you have to operate your store properly to get these people. You have to do different types of advertising, maybe ValPak or even local cable TV. Some local cable companies offer a lot of packages that make advertising sense. You can get the people with home equipment if you show them the right things.Plus, if people stop using their washers and dryers they will cut down on utility costs. If the government was so worried about the environment, they would stop selling home washers and dryers and make people go to the coin laundries in order to save water, gas and energy. The list goes on and on. We have to educate people. The manufacturers, distributors and storeowners really have never gone out and approached the public in the right way.10) What factors go into determining the proper equipment mix? What are the current equipment trends?Smith — Look at water consumption when considering the proper equipment mix. Look to see if adjustments can be made on washers so you can use less water than what is recommended. Can you do special washes and charge more if people want to use more water? When it comes to special washes, plenty of people will use them and pay for them.Multi-tier pricing would also be helpful. We like to talk to the laundry owners about equipment mix. What ROI are they looking for? How do they want to satisfy the customers?One of our customers recently wanted to put in the largest washing machine in the United States. We listened to him and put in a 125-pound washer. The washer is doing great.If you’re going to be successful with your equipment mix you need to talk with your customers. It’s also important to be careful when expanding with bigger washers. One load of wash in a big machine can use four dryers. We have 45-pound stack dryers and also put in 50- and 75-pound dryers.McDonald — The equipment mix should center on one main focus — your clientele. Owners need to understand that their customers’ main drive is to get in and out of the store as quickly as possible. With that in mind, the industry is trending toward larger washer-extractors to help them accomplish this mission.Generally, these washer-extractors also have benefits to the owners as they are more efficient and profitable. Obviously, upgrading to larger-capacity washers is only part of the equation. Drying capacity must increase as well to keep customers moving. In this area, stack tumblers have been a major key in matching washer capacity.One danger with the ever-increasing equipment growth is sacrificing amenities. For instance, adding more and more larger pieces to your store may not make good business sense if it means cutting an attendant or another service to offset the up-front cost. If the move translates into three customers going elsewhere, you’ve likely lost money.Van Merrill — The 75-pound washers are really bringing customers in, especially in larger family areas. More and more operators are doing this. Some operators in 3,000- to 6,000-square-foot stores are putting in eight 75-pound washers. When we started putting them in it was only one or so machines even in the larger stores.California is an anomaly; there were a lot of small, top-load stores here. In the last few years, there have been more front loaders going in and the majority of the equipment is finally becoming front loaders.Be vigilant when it comes to turns-per-day. Watch for trends in your store. Be vigilant in terms of watching what your competition is doing with their equipment. You need to offer the customer something different. We put in larger washers and pair them up with larger dryers. It’s important to have a good mix of dryers, but it’s also important to have folding tables.Be prepared for your busiest times but also be concerned with what happens during the week. That’s why we are looking at drop-off service and commercial work.Think things through. If you squeeze new equipment in the back of your laundry, you aren’t really going to succeed. If you take out the 30-pound machines and put in 75-pound machines but cut the aisle space down to nothing, what have you really accomplished? Regardless of the equipment, if things aren’t comfortable in your store people won’t use it.Sapp — I want more dryers. I listen to my distributor. The perfect equipment mix will give you the perfect return. New owners trying to work up their own formulas may mess things up. Work with your distributor to get the right mix.Most of the people I’ve talked with, I tell them that larger machines make more money for you than smaller machines. By and large, I mean an 80-pound washer and 75-pound dryers. Go with the big boys.You can make a mistake by not matching the big washers and big dryers. Another mistake is to just put in one 80-pound washer and one 75-pound washer. That just serves one customer. You can say that you have a big machine, but you’re not taking care of your customers.Goldman — I believe the handwriting is on the wall when it comes to appliance-type laundry equipment. One owner of a busy store in Toronto told me that he puts out out-of-order signs on all of these washers every weekend. This customer and many more like him believe the top loaders use too much in utilities, require much more maintenance and create a bottleneck in their stores.It would also be a great waste of money to try and promote the bank of washers that has the lowest profit per square foot.Jorgensen — Demographics, space and utilities determine the proper equipment mix. The equipment mix can be another factor when it comes to setting your store apart from the competition. For example, stores boasting high-speed equipment (higher performance washers with high extract speeds around 350 G-force) can market the “get in and out in 60 minutes” concept. This is of great value to many customers. Laundries without high-speed washers can’t make the same claim.Another example may be installing a 125-pound capacity washer — definitely a unique size for most laundries. A store could then market the fact that it can take on huge loads of bulky items — quilts, rugs, blankets, commercial work, etc. A store without a really big washer would have difficulty making that claim.The current trends have been and remain size and performance. Large-capacity equipment appeals to more of the customer base because most every apartment or home owns or has access to small-capacity equipment. Customers are trending toward high-speed washer-extractors that can save time and money in the dryer. Ten years ago it was the unique store that offered a 75- to 80-pound washer, now it’s the odd store that doesn’t and many have two or more of these. The 125-pound washer is also becoming more popular as a unique marketing tool the customers really like to use.It is imperative to offer an adequate ratio of dry capacity to wash capacity. Customers judge the capacity of your store when they walk in the door based on the availability of dryers. We try to target a ratio of 1:1.2 or 1.3 for new stores or refits whenever possible. With new high-performance washer-extractors that extract four times faster than traditional hard-mount washers, that ratio can come down slightly, saving the storeowner money for additional equipment and offering the consumer more unique benefits for choosing that store’s service over another.To read Part I of this article, 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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