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: Before we talk about making improvements, we need to assess where the industry stands today. How would you describe the current state of the vended laundry industry? Are things generally better, worse, or the same compared to five years ago?
Antene: The state of the vended laundry industry is very good and considerably better than five years ago. Our customers are very optimistic about their businesses these days.
Frankian: Here in our market that we serve (Chicago and suburban Chicago, northwest Indiana and southern Wisconsin), I have seen a better state of business today than five years ago. We are building more new stores and doing major retooling on older Laundromats at a higher pace.
Gauthier: The vended laundry industry is definitely stronger and smarter than it was five years ago. In 2011, many parts of the country were still digging out of the financial crisis we experienced in 2008-10. Access to capital has improved for our industry, which is typically a sign of a stronger overall economy, but also a good health indicator for our specific market.
Hietpas: The state of the industry is much stronger today. Five years ago, many areas of the country were still in the early stages of recovering and rebuilding from the economic challenges of the mortgage crisis. Securing financing for a new project was not easy, and rental rates in many areas of the country had not even started to come down. Looking back, I think most laundry operators would tell you that the worst was behind them, but things had only slowly started to improve.
Hoffman: I would say that things are about the same as five years ago. Even though we’ve seen utility costs rise and rents rise, we’ve seen many of the operators increasing vend prices to offset that increase and keep profit margins the same.
Jorgensen: Overall, the industry is stronger than five years ago. Weaker stores are disappearing, while better managed and stronger stores are prospering. The industry enjoys more sophisticated owners who do a good job overseeing operational management and use advanced equipment and card payment systems. While there’s still lingering, inadequate, hobby laundries that need to be updated or removed, overall, the vended laundry industry is robust.
Rausch: It’s definitely an exciting time to be in the vended laundry business. Compared to five years ago, we’ve seen various changes, including an increasing number of multi-store owners. Former single-store owners are choosing to grow their investments—expanding their vended business to include two or three more facilities.
We’ve also seen vended store growth in high-traffic areas to meet the need for self-service laundry. This is likely to continue—with the potential to add wash/dry/fold services based on the customer base.
In addition, we’re seeing a push toward new owners taking possession of older laundry facilities, who are conducting complete facelifts on dilapidated stores. As part of these renovations, owners are installing newer, energy-efficient equipment, which is a trend that has remained constant throughout the years. Energy-efficient equipment, which appeals to eco-conscious patrons, also helps to reduce utility costs and can increase a store’s bottom line.
Rosenthal: Currently, the vended laundry industry is thriving and continuing to grow. Store owners who advertise, promote and reinvest in their business with cutting-edge equipment are reporting strong vend revenue and profit growth. Our customers who replace outdated machines with equipment that features advanced control systems are able to manage their businesses more efficiently and have unprecedented levels of profitability. In fact, customers expect to pay 10-20% more when using new equipment, and beyond the opportunity to increase vend prices, there are many new profit drivers the innovative equipment provides.
Rowen: Based on what we’ve seen, I would have to say the industry is very strong right now. We came out of the recession in 2009 with a vengeance, and the development of newer, more durable and certainly more energy-efficient equipment has fueled a major increase in equipment replacement. The return on investment with replacement is extremely attractive in terms of both operating expenses and customer experience. Customers are looking for a positive retail experience and are opting to frequent the Laundromats that are well-run, clean and provide important amenities, such as free Wi-Fi.
Schram: The coin laundry industry is very robust in most markets. The improved economy over the last five years has helped loosen up credit while keeping interest rates at historically low levels. This is a great time to invest for the future.
Many new stores have increased footprints, and have added more customer amenities and larger-capacity machines. The image of the coin laundry industry improves every year, which has also increased customer expectations.
Coming Thursday: Seeking and planning for improvement where equipment and store condition are concerned