CHICAGO — As we come to the end of another year, where do you see your vended laundry operation? Is it improving? Growing worse? About the same?
While anchored in a service that is decades in the making, the coin laundry industry still is subject to influences both internal and external. While the basics of self-service laundry operations are largely unchanged, there are other factors at play when it comes to building your business.
American Coin-Op invited representatives from several manufacturers and distributors to size up the industry today compared to five years ago, to identify opportunities for stores to improve, and to establish the manufacturer’s, distributor’s and store owner’s roles in moving this industry forward. Their responses are being presented in a series of stories here throughout the month of December.
Seated at our virtual roundtable were:
- John Antene, president of coin laundry sales and marketing, distributor Coin-O-Matic
- Joe Frankian, president, distributor D&M Equipment
- Gary Gauthier, national sales manager, vended laundries, manufacturer Pellerin Milnor Corp.
- Kevin Hietpas, director of sales, manufacturer Dexter Laundry
- David Hoffman, sales manager, distributor Gold Coin Laundry Equipment
- Joel Jorgensen, vice president of sales and customer services, manufacturer Continental Girbau
- Bryan Rausch, regional sales manager, manufacturer Whirlpool Corp. Commercial Laundry
- Jim Rosenthal, North American sales manager, manufacturer Speed Queen
- Kathryn Rowen, North American sales manager, manufacturer Huebsch
- Mark Schram, North American sales manager, manufacturer Primus
Q: How do water conservation and energy savings figure into a store owner’s future success?
Rowen: Utilities can run anywhere from 10% to more than 40% of one’s overall expenses for running a Laundromat so, needless to say, it’s a line item that should be managed closely. Laundry equipment we manufacture today is fast, durable and incredibly efficient – the water savings can be upwards of 30% greater than with older models. In many cases, replacement of old equipment not only gives a customer bright, new, clean machines, but can provide a fast payback on the investment, sometimes in less than two years depending on how many turns per day your store averages.
Schram: Traditionally, the largest operating expense facing laundry store owners is the cost of utilities, mainly gas and water. Depending on location and size of store, 15-30% of a store’s gross revenue can be expected to be spent on utilities. History shows that water and sewer rates seldom go down.
Having flexible controls that can reduce operation expenses while maintaining customer satisfaction can be a game changer on profitability. The use of higher-G-force washer-extractors can also significantly reduce remaining moisture in the linen, reducing dry times. This doesn’t always have to mean a reduction in revenue. There is a delicate balance between profitability and customer retention.
Antene: Utilities will always go up. Manufacturers are keenly aware of this and produce energy-efficient equipment that saves a fortune on utility expenses. In most retool installations, the money saved from the reduction in utility consumption covers the debt payment plus plus.
Frankian: This is a huge area, especially here in our market: there has been a substantial increase in water (costs). Our new washing machines have a number of water-saving features, like adjustable water levels. Also, by adding high-extract washers, that will cut down the dry time, saving gas, which could also be on the rise if a harsh winter occurs. Owners who are proactive with their equipment replacement will have a huge competitive advantage over their competition who are not.
Gauthier: There are a lot of definitions to explain what a vended laundry does. But ultimately, we are in the business of reselling utilities—water, gas and electricity—to our customers. Reducing water and energy consumption within our processes simply allows us to resell utilities at higher margins for improved cash flow.
Hietpas: At the core, vended laundries are a utility reseller. We bring in utilities—gas, electricity, water and sewer—and we rent time on machines. The cost of utilities will always be the key variable cost to watch in our business. The great thing for laundry owners is that equipment manufacturers understand this, and we are always looking for ways to make equipment more energy-efficient. For their part, store owners need to keep an eye on their utility costs and be watchful of when their older equipment is just too costly to operate compared to new.
Hoffman: It’s almost a guarantee that water and sewer rates will continue to increase, so it’s important to have updated equipment, and to maintain the equipment you currently have to make sure it’s working most efficiently. That may include repairing any water leaks.
Jorgensen: By saving water and energy, you’re reducing costs that eat away at profitability. When you select highly efficient equipment and lighting, you’ll return dollars to profit and boost your store’s resale value significantly. Utility costs at an average vended laundry eat up between 25% and 27% of gross revenue. An energy-efficient store will likely drop utility costs to 10%-17% of gross revenue. A more profitable store is going to glean a higher resale value.
Rausch: Energy- and water-efficient equipment is not only a current trend, it’s also a major purchase driver. Being knowledgeable about the product and understanding how that product is impacting the environment, the store’s efficiency and its bottom line will attribute to an owner’s success.
Rosenthal: When most stores were established, utility expenses were a small percentage of sales, and most washers back then used five higher fill levels. This was common in the industry, as most manufacturers used the same basic machines for hotels and nursing homes. Today’s skyrocketing water and sewer rates demand the most energy-efficient equipment for success, and these modern commercial-quality products can provide up to 68% in water savings!
Additionally, a 2015 Coin Laundry Association (CLA) Survey reported that 65% of store owners consider the high cost of utilities one of the largest problems they face in their operation. However, installing new, innovative machines with advanced controls and higher levels of efficiency can drastically lower energy and water consumption, leading to lower utility bills and increased cash flow. For example, replacing 15- to 20-year-old equipment with a bank of 40-pound washer-extractors can result in a 68% annual water savings. New dryers can also save owners money on utilities, thanks to more efficient drying airflow patterns and shorter dry cycles.
An energy audit by your equipment distributor can help analyze your specific needs and help you prioritize your reinvestment needs.
Coming Thursday: What is a store owner’s level of responsibility?
Previous stories in our series:
Improving the Industry Roundtable: Where Do We Stand?
Improving the Industry Roundtable: Equipment and Store Condition
Improving the Industry Roundtable: Marketing/Promotions and Customer Relations
Improving the Industry Roundtable: Planning for Growth and Manufacturer/Distributor Aid
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].