OAKBROOK TERRACE, Ill. — Overhead costs are among the many aspects of running a business that many vended laundry owners and operators grapple with on a regular basis.
This challenge has become even more difficult to manage in recent times, as the cost of minimum wage and utilities, specifically water/sewer, has increased for many vended laundry operators.
To help tackle these obstacles, Brian Wallace, CEO and president of the Coin Laundry Association (CLA), facilitated a lunchtime roundtable discussion titled Managing Rising Water Cost & Wage Increase during the Illinois Coin Laundry Association’s (ILCLA) recent membership meeting here at The Remedy Pub.
Though the meeting focused on wage and water increases specific to operators in the Chicagoland area, Wallace and several members of the ILCLA discussed best practices that store owners across the nation can employ in their own businesses.
RISING MINIMUM WAGE
The discussion of a rising minimum wage has become a hot-button topic, as more and more states and local municipalities have raised wages above the federal level of $7.25.
As of the start of the year, 20 states have raised their minimum wages above the federal level, according to the National Employment Law Project.
Several cities have implemented their own raises. This includes Chicago, where the minimum wage will increase to $10 per hour in July, and then eventually to $13 per hour by 2019, under an ordinance approved by Chicago’s city council and Mayor Rahm Emanuel in December.
At the national level, states like Connecticut, Oregon, Vermont and Washington will have minimum wages well above $9 per hour in 2015.
MORE TRAINING, MORE VALUE
With these implementations, operators may have already begun to consider ways they can offset these rising wages.
“Some of that focus ought to be how do you get more value out of these employees that you’re now spending more money on,” says Wallace. “I think it’s a reality of how are you going to maximize that investment, which is now a larger investment?”
Reaping greater value out of investing in employees, according to Wallace, goes back to an operator’s training and hiring processes.
“It really becomes incumbent upon the typical operator’s training, especially with ongoing development,” he says.
While some operators will work a couple of shifts training their attendant, Wallace urges them to do more.
“I think most would probably admit that there’s more that could be done from a training and development standpoint, even with, generally speaking, low-wage, low-skill workers,” he says.
“A lot of it comes back to … better training, better screening on the front end, and more of an engagement with the employee beyond that typical ‘work a shift or two, shoulder-to-shoulder’ then [turning] them loose.”
In addition to refining training processes, Wallace proposes leveraging current technology available as training tools, such as remote management devices.
“Those are some things that may or may not be at your fingertips, but I’m seeing some people do some creative things with smartphone technology [to] make sure that we’re asking [employees] to do the things that we need for them to do.”
VALUE IN THE EYES OF CUSTOMERS
With rising employee wages, among other overhead costs, operators may soon have to re-evaluate their vend pricing strategies, according to Wallace.
“Certainly, many may reach the conclusion that they need to change their vend price to cope with [rising wages and utilities],” he says. “The value proposition with the customer … is how do you justify that increase?”
This challenge runs rampant with many operators across the country, according to Wallace, who cited a CLA survey that asked laundry consumers to rank nine characteristics of a laundry, in terms of importance.
“‘Having an attendant’ ranked toward the very bottom of that list, which kind of struck me as counterintuitive,” says Wallace. “If you’re attended, you can take better care of customers.”
Several members agreed that having a well-trained, helpful attendant can help customers understand an operator’s decision to raise vend prices to be able to afford having the attendant on staff.
“I know when I’m traveling, when I pop into a store, [I wonder] is the attendant hiding? Are they on the phone? … Or, are they coming to the door to greet you? … You could tell right away the level of training, typically, when you walk into any laundry. That’s just an example of trying to have that value translate to the customer,” Wallace says.
‘PERPETUAL HIRING’
Though some states and municipalities have yet to explore/implement minimum-wage increases, Wallace explains that, according to CLA studies, the association’s “most successful operators” are already paying the highest wages.
“Does this mean that the person you’re already stretching to pay $11 or $12 mean that you’re going to need to pay them $15? Because all of a sudden now, they’ve become a little bit more marketable,” says Wallace.
He also acknowledges that employee turnover is common in the industry. To combat this, he urges operators to practice “perpetual hiring.”
“With the wages set to go up, that might be just as good a time as any to be taking applications,” says Wallace. “You may have somebody that you’re more than happy with at $8.25 but you’re not going to be happy with that same person at $10, and so, maybe it’s time to turn over.”
Check back Thursday for the conclusion!
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].