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Is it Time to Retool Your Laundromat? (Part 2)

Here’s what’s needed to determine if proposed project makes financial sense

CHICAGO — Your self-service laundry is looking a little worse for wear and your customer base is thinning out a bit. It might be time to make a change in an attempt to capture (or recapture) market share and boost revenue.

You have a retool in mind, but what precisely is a “retool”? And is such a concept limited to equipment only or can it involve other aspects of your operation?

American Coin-Op invited several representatives from vended laundry equipment manufacturers to answer some questions about the nature of retooling projects and what operators stand to gain by making over their stores.

In Part 1, they defined a “retool” and looked at how aspects such as equipment age and/or condition, efficiency and store layout might impact deciding to retool a laundry or not. Let’s continue: 

Q: When considering a retool, how might the following aspects of an existing store’s laundry equipment impact the decision?

CAPACITIES

Tod Sorensen, Sales Manager – Western U.S., Continental Girbau: Think big. A retool is the perfect time to offer big, 80- to 130-pound-capacity machines with automatic chemical injection. Our experience tells us that big washers are highly desired by customers and can help set your store apart from the competition. The auto soap/detergent and softener injection simplifies life for customers, adds to your profit potential and helps keep your equipment clean.

Matt Conn, Senior Marketing & Product Development Manager, Whirlpool Corporation Commercial Laundry: Owners must think through the value of smaller and larger machines and what the proper mix will be to support that location’s customer base. Larger capacities bring a higher vend but the owner should really look at how much value both he/she and the customer gets from those large machines.

Joe Purbaugh, Senior Direct Sales Specialist for Alliance Laundry Systems: A retool should always include upgrading the capacities of the store’s washer and tumble dryer mix. A business needs to grow to survive. In vended laundry, growth is bolstered by incorporating larger-capacity machines into your store’s mix. The larger the capacity, the greater you set your store apart from your competitors and the more you can charge per vend.

CONTROLS

Conn: An upgrade to machine controls will likely come with most new machines. The owner should spend time with the distributor to understand the functionality and benefits of these new controls. They may also want to consider what types of controls might be easily adopted by the Laundromat’s consumers. Are they tech-savvy? Would they value the incremental features that come in more advanced electronic control systems?

Purbaugh: Equipment microprocessors or controls are very important in so many ways. They can be programmed to deliver several marketing functions, such as “time-of-day” pricing, or special vend, which can automatically discount the price of doing laundry on the day or days of your choosing. … This can help increase traffic in your store on a slow day, decrease wait times in your store on busier days and pull customers from competitors who are not offering time-of-day pricing.

Sorensen: Yes, controls are a way to make your store stand apart, while adding to your bottom line. But the controls on the market are not created equal. Do your homework and know the ins and outs of a control before purchasing a washer or dryer.

PAYMENT OPTIONS

Purbaugh: Operators are seeking out alternative payment systems to cash for a number of reasons. … The U.S. has suffered a coin shortage due to COVID-19 and laundry owners have suffered as a result. Many of them are turning to third-party payment systems, or equipment with built-in payment systems to avoid this in the future. Payment systems not only take the hassle of securing coinage out of the picture for the owner but allow the customer to start a high-priced vend machine with the swipe of a card or the scan of a QR code. Payment systems are much more convenient to use, and they allow a host of management and marketing functions that did not exist with the coin-only systems.

Sorensen: Understand the payment systems on the market so you can offer customers exactly what they want. In the process, you’ll gain remote management tools that make life much easier. The equipment you choose should be flexible and seamlessly interface with all current and future technology in how customers want to pay.

Conn: Moving to digital and/or card-based payments should be top of mind for any owner. There are many benefits including better accountability, machine monitoring and more complete information about usage patterns. Also, consumers carry cash less. Having a form of payment that accepts cards or digital currency could mean a lift in overall store revenue.

OTHER

Conn: Owners should always be considering competitor Laundromats. Because we know the customer experience is important, as surrounding stores retool and offer more advanced or efficient equipment and other amenities in their store, this can prompt an owner to consider changes to prevent attrition to competitor stores.

Q: How can one calculate if the retool of an existing store would make financial sense?

Gary Gauthier, National Sales Manager, Vended Laundries, Pellerin Milnor Corp.: Traditional return-on-investment analyses are needed to make smart choices. Suppliers are eager to provide store owners with costs for new machines and other improvements. Determining the best way to pay for those upgrades is always a decision best made after a review of personal finances and store revenues.

Kevin Hietpas, Director of Sales, Dexter Laundry: From a purely financial standpoint, a well-done retool makes the most sense for an owner with a longer time horizon. That way, the owner has plenty of time to truly enjoy the fruits of their retool effort. If an owner even thinks their store needs a retool – it probably does, and if they aren’t ready to do it, they should sell the store and let the new owner get down to business.

Purbaugh: There are a number of replacement equipment calculators out there, and most are proprietary. They will show you how replacing your old, inefficient equipment with new, super-efficient, larger-capacity washers and tumble dryers will not only earn you more revenue but decrease your utilities and decrease your service calls. These factors combined can make your monthly finance payment on your new replacement equipment package, while putting a lot of extra money in your pocket. Plus, with accelerated depreciation on new capital equipment, the tax write-off will help you to keep most of those profits.

Sorensen: Cost of equipment installed; increase in vend prices; reduction in service and parts costs; reduction in utility costs; increase in customer turnover when busy; general appearance of laundry; value of promoting grand reopening or anniversary; and tax and depreciation benefits.

Conn: There are calculators out there that are available to show what the impact of a retool could have on utilities and revenue. Estimating impacts to store traffic can be harder to understand. Your local distributor will be able to help with access to calculator tools, an understanding of local demographics and the competitive landscape for laundry services in your area.

Check back Thursday for Part 3, discussing the financing and timing of retool projects, plus the impact on vend pricing strategy

If you missed Part 1, you can read it HERE