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. In Part 2, it was aspects to include capacities, controls and payment options, and calculating if a proposed retool makes financial sense. Let’s continue:
Q: How does financing a retool project differ from financing a new laundry, if at all?
Kevin Hietpas, Director of Sales, Dexter Laundry: For an owner who has taken time to develop banking/financial relationships during their time in business, there should be more options for financing a retool than for financing a new laundry. A new laundry is a bit of an unknown for many banks, but an existing laundry has a track record to build on. Since equipment will likely be a significant part of the cost of the retool, owners will find lots of options for that aspect of their retool effort. Manufacturer finance companies … are offering financing at some of the lowest rates ever.
Joe Purbaugh, Senior Direct Sales Specialist for Alliance Laundry Systems: That all depends on the finance equipment promotion that the manufacturer is running at the time of purchase.
Gary Gauthier, National Sales Manager, Vended Laundries, Pellerin Milnor Corp.: Financing a retool can be easier with the right lender. New equipment is easily collateralized and funding approvals are usually prompt. Retools that focus more on building enhancements – particularly if the space is rented – have less appeal to lenders.
Q: How long might a retool take to complete and when is the best time to schedule it?
Purbaugh: A retool can take anywhere from 30 days to one year, depending on several factors. If building permits are required, you are going to have to apply for a permit with the city, which can take some time. If you need to change your electrical service, like switching from one-phase to three-phase service, this process can get stretched out by six to eight months, depending on how backed up the utility company is.
Tod Sorensen, Sales Manager – Western U.S., Continental Girbau: Timeline is directly dependent on project scope: Equipment only with no requirement for significant utility upgrades or bulkhead moves, three days to two weeks. Major modifications, including utilities, moving walls and bulkheads, depending on many trades hitting deadlines to prepare for new equipment may be 30 days or more. I recommend doing a retool in phases so your laundry is always in operation and business (is) impacted as little as possible.
Matt Conn, Senior Marketing & Product Development Manager, Whirlpool Corporation Commercial Laundry: The size of a retool affects your store’s downtime. Bookending that downtime with clear information and service to your customers helps combat any lost revenue.
First, even a simple analysis of days with the most foot traffic and most profitable days can help give insight into scheduling a retool. Second, preparing customers for the event can help them choose to use your store just before or after the retool and be aware that it’s a temporary situation. Knowing that improvements are coming can be an incentive to keep customers from switching preferred stores.
Third, evaluating areas of the store for retool so that customers still have clear pathways to the functioning machines and spaces can help lessen the impact of the downtime. Finally, once the retool is complete, owners should celebrate it. Clear signage, pricing information and details on the machines’ capabilities and improvements all show customers a level of service and help to get them using the newest machines quickly. Even incentivizing with coupons or specials at the end of a retool can help to alleviate any losses during the project’s downtime.
Gauthier: I like to target slow periods for big jobs. Let’s go back to my factory example when talking about retools. (Here at) Milnor, we just brought in some new sheet metal equipment into our plant. We did it around the holidays, knowing that interruptions to worker productivity would be minimized, and that we would have a buffer of time to accommodate any delays or unexpected problems. There’s nothing better than having workers – or vended laundry customers – return and see major upgrades in a short amount of time.
Hietpas: The timing to complete a retool could be just a few days or a matter of weeks – it all depends on the nature of the retool. For retools involving the relocation of, or making room for, more larger-capacity equipment, the retool is likely to take longer due to the physical infrastructure needed for those machines. Most laundries try to avoid a complete shutdown for more than a few days, so they’ll schedule the downtime for their slowest days and will let customers know about the outage well in advance so they can plan accordingly.
Q: How might a retool impact a store’s vend pricing strategy?
Sorensen: If your equipment and offerings are unique, you can charge more than the average laundry. Do your homework and set your laundry apart.
Conn: When retooling a store, an owner should revisit his/her pricing strategy. With newer technologies, the owner may have the opportunity to shape pricing based on times of high and low demand for the store. Also, the owner will be able to test what happens with increased/decreased prices. A retooled store will generally lead to an opportunity to increase vend pricing, but understanding the sweet spot for that pricing level will be market- and store-specific. According to the Coin Laundry Association (CLA), customers are willing to spend up to 20% more to use new equipment.
Gauthier: Customers are willing to spend more in an environment that is upgraded and shows respect for their business. We see it all the time – the best time to raise prices is when major improvements have been made.
Hietpas: It’s quite common to see a location increase prices after going through a retool. Customers get to enjoy doing their laundry in a nicer environment, and they understand that such investments cost money.
Purbaugh: Retooling your store should always command an increase in vend prices. Your customer base will be happy that you replaced your old equipment with new, larger, cleaner-looking machines and should be willing to spend a bit more to use them, especially if they feel like they are getting a larger load capacity and a better wash and dry.
Check back Tuesday for the conclusion, discussing new marketing opportunities and some ways to retool beyond equipment
If you missed earlier parts, you can read them here: Part 1 - Part 2
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].