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Look Before a Laundry Leap (Part 1 of 2)

Paul Partyka |

CHICAGO — Are you looking to make a larger splash in the laundry industry? Are you ready to go beyond self-service laundries? If so, you may be thinking about exploring opportunities in the multi-housing laundry industry. The two industries are similar in some ways (The Same Only Different, American Coin-Op, April 2011).

Having experience in the self-service laundry industry is one thing, but expanding into the multi-housing laundry side is far different, says David DeMarsh, BDS Laundry Management, St. Paul, Minn.

A Big Load

Starting out in multi-housing laundry operations requires contacting an apartment owner or management company to solicit business. However, if you perform due diligence, you will quickly discover that there are only two to four national “players” competing in this industry, plus some smaller, regional competition, DeMarsh says.

“There has been a lot of consolidation in our industry,” he says. “Smaller companies have been bought out. Competition is tough.”

If dealing with the cost of operating a self-service laundry has proven to be a daunting challenge, becoming a route operator might seem overwhelming, DeMarsh notes.

“A small investment in the multi-housing industry is not a good idea,” he believes. “Running just a couple of laundry rooms is not the norm.”

To illustrate the scope of a “traditional” multi-housing laundry investment, DeMarsh says the Multi-housing Laundry Association bylaws require individuals to have at least 1,000 machines before they can join. With some laundry rooms only having a pair of machines, this could mean operating 500 locations, he adds.

“If you are trying to compete in this industry, keep this in mind: A typical route operator may have 5,000 to 6,000 machines on the small end; larger players may have more than 500,000 machines.”

Along with having a large number of machines and operating a multitude of laundry rooms, technology is now making the multi-housing laundry investment even costlier, DeMarsh explains.

While some self-service laundry operators shy away from cashless solutions, route operators don’t want residents searching for quarters. Traditional card systems, as well as debit- and credit-card usage, are being used in more laundry rooms. With an accent on efficiency, online technology and 24-hour service are now business norms, he adds.

“If you look at 20 new laundry rooms, 18 would probably offer some type of card operation. The card trend was apparent at the recent Clean Show.”

Relying on some type of card system also means reducing vandalism or theft, DeMarsh notes.

Keep in mind that these investments can be justified because operators are striving to make laundry tasks easier for the residents and streamline their business as much as possible. Unlike most self-service laundry operators, route operators are concerned about dealing with a large number of laundry rooms and time-consuming collections. “This isn’t like walking around a traditional Laundromat and collecting from the machines.”

Simply, time is money. “Efficiency is the key to the operation, and all of this comes with a cost.”

Even though a good number of self-service laundry operators only employ one or two attendants, numerous American Coin-Op surveys have consistently shown that “dealing with employees” is a major industry headache. If you don’t like dealing with employees, you might want to think twice before contemplating a multi-housing laundry investment.

An investment in the multi-housing industry generally requires hiring some type of salesperson to solicit business from apartment owners, etc., maintaining an office staff, having someone to schedule calls, and using service technicians to keep all the equipment up and running, he says. “This isn’t where a small-business operator would like to go. This is definitely more of an employee-driven business than self-service laundries.”

Even with a large staff, there is constant pressure to properly maintain numerous laundry rooms, he admits. The convenience of a laundry room is no guarantee of success.

“People may not use the laundry room if it isn’t kept up—and they shouldn’t. You need a kept-up facility, properly priced equipment, and working equipment. Give the people run-down machines in a run-down atmosphere, and they will go somewhere else—and they should. This isn’t rocket science, but it is a challenge.”

Tomorrow in Part 2: 10 ways to keep self-service laundry customers happy...

About the author

Paul Partyka

American Coin-Op

Paul Partyka was editor of American Coin-Op from 1997 through May 2011.

Comments

It's seems this article is

It's seems this article is trying to discourage people from joining a relatively low cost, low labor oppurtunity business.  I am a business major and it makes no sense why economies of scale have any impact on this business.  Which means your being a large company has little impact in starting out. One of your quotes are “A small investment in the multi-housing industry is not a good idea,”“Running just a couple of laundry rooms is not the norm. ” . The question of what the norm is to me is irrelevant; however a more appropriate questions is can you make money starting out small.” DeMarsh says the Multi-housing Laundry Association by laws require individuals to have at least 1,000 machines before they can join. Any Association that bars small businesses is not worth joining, and it sounds more like  a political lobbying group.

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