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Increasing Profits by Increasing Capacity

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Eric Greenberg |

WALTHAM, Mass. — We’ve all heard the phrase “bigger is better.” That statement can hold true when deciding to install large-capacity machines in your store. Manufacturers continue to build larger machines, and for good reason—larger-capacity machines improve profitability.

The steady growth in popularity of machines with capacities of 60 to 80 pounds has allowed manufacturers to construct reliable and durable products that have increased in longevity, have better utility consumption, and allow owners to be competitive in the marketplace.

MORE PROFITABLE

Store owners need to consider how much profit is possible per square foot. See how much space your machines are taking up and their capacities. If you can decrease the number of machines while maintaining or increasing their combined capacity, you can boost your profitability per square foot, since the machines will be consuming fewer utilities—it takes less energy to run one machine than two.

As an example, consider replacing five small machines with four larger machines that take up the same amount of square footage. The rent doesn’t change for this space, but the vend price of the larger machines increases. If each machine is being used up to three turns per day, gross income rises by approximately 20% per day, without adjusting the amount of space in your store.

By controlling variables, such as utility costs and vend prices, owners can see increased profits through these larger and newer machines.

Older machines are less efficient and wind up costing owners more, reducing their profitability. Newer machines are engineered to use up to 30% less water and energy than previous models, resulting in savings for owners looking to upgrade. Using the example above, the water and sewer costs can decrease by up to 44% when four larger machines replace five smaller ones.

ADDED BENEFITS

Although profitability and utility savings are major considerations in selecting large-capacity machines, the equipment can also help move customers through your store more rapidly.

In the busy world we live in, customers want to get in and out of a Laundromat quickly. By offering larger machines, customers can clean larger loads, helping to reduce the amount of time they spend completing the laundry chore. Helping customers save time is something they will appreciate, which can turn them into loyal customers.

Additionally, larger machines can improve the traffic flow in your store because customers are able to do their laundry in larger batches. During busy times—like the weekend—an efficient traffic flow helps increase revenue.

The machines can also make your store the preferred stop in the area. Since it’s important to stay ahead of the competition, if your store offers larger-capacity machines and the one down the street does not, you are more likely to win the business.

GOOD EQUIPMENT MIX

Of course, a store cannot have only 60- and 80-pound machines; a good equipment mix is still essential when considering the addition of larger-capacity machines.

Although a large-capacity machine can be profitable at various locations, they have become especially popular in inner-city locations. Generally speaking, there are larger families in cities. More people mean more clothes, and the larger machines help these families get in and out of a laundry quickly.

IMPORTANT CONSIDERATIONS

As with any major business decision, there are certain factors that owners should be aware of when considering the addition of larger equipment to their store. This is when the help of an experienced distributor comes into play.

The first question an owner should ask is, “How am I going to pay for this equipment?” You must be sure that the equipment selected is going to be profitable for your business down the line. Your distributor should be able to provide a quantitative analysis of the projected utility savings and profits with the addition of these machines. And because large machines are not the best fit in all circumstances, this report is essential for a laundry owner to decide whether or not their store will profit from the equipment.

Structural changes also need to be taken into consideration when deciding on larger machines. For example, an 80-pound washer-extractor requires a concrete pad to be added to the floor. Plumbing and electrical systems may also need to be redone to handle the larger machines. Additionally, the hot water heater may need to be adjusted to handle the increase. Again, these are all costs to consider when pulling the initial quantitative report with your distributor. As long as the projected profit outweighs these costs, the store should consider investing in the larger machines.

FUTURE SAVINGS

As the trend continues toward the addition of larger machines in stores, it’s important to be aware of the benefits these machines can bring, including profitability, utility savings and customer loyalty. As with any major project, it’s important to consult with your distributor to ensure you choose the most profitable option for your store.

About the author

Eric Greenberg

American Equipment Sales Corp.

Vice President of Sales

Eric Greenberg is the vice president of sales for American Equipment Sales Corp., a Huebsch distributor based in Waltham, Mass. He has more than 30 years of experience in the commercial laundry industry, and can be reached at egreenberg@aclslaundry.com, 800-747-7837.

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