RIPON, Wis. — When considering the case for replacing outdated equipment, remember that the initial investment, while not insignificant, can be quickly offset by an increase in profit. New energy-efficient machines can save thousands in utilities, improve customer satisfaction, and help decrease downtime and repair expenses. And the new equipment will continue to help boost the bottom line long after it has paid for itself.
EVERY GALLON COUNTS
While features of larger-capacity machines can help boost revenue and improve the bottom line, upgraded machines can also increase a Laundromat’s profitability by what they don’t do—use excess water and energy.
The 2013 Coin Laundry Assocation (CLA) survey found the average Laundromat owner spends 30% of gross income on utilities. With water rates on the rise—which have as much as tripled over the last 12 years, according to the American Water Works Association—every gallon counts. Rate increases are expected to continue due to new federal government mandates and the rising costs of resources needed to supply and treat water. With that in mind, it’s more important than ever to equip Laundromats with high-efficiency machines.
Russell Hylton, owner of five Laundromats throughout suburban Kansas City, says his utility costs average between 20% and 22% of his gross revenue. He recently realized how much he’s saved with newer equipment when looking into purchasing a sixth store, which features top loaders and dryers from the mid-1980s.
“I compared the owner’s volume and his utility costs with mine. The current store owner’s utility costs average between 30% to 35% of his bottom line. When you look at the dollars he’s bringing in versus the dollars in energy costs—it’s quite a difference.”
Water levels on older machines aren’t customizable, while machines with advanced controls can modify the amount of water used for each fill within a cycle. The adjustment will not be noticeable in regards to wash quality, but it will show up as a positive on a store owner’s utility bill.
“Our cost of doing business has gone down, even as our customer volume has significantly increased,” store owner Joe Paradis, Farmington, Maine, says. “The new machines are still saving us money. In just the last year, we saved $6,000 in utility costs.”
These savings, combined with the increased revenue from raising prices, are so significant that Paradis plans to open a second store in the next year.
Set aside sticker shock and consider the many benefits—both short- and long-term—that replacing equipment can have on a coin laundry operation’s profitability. Whether it’s less downtime, increased efficiency, new revenue opportunities or utility savings, all these factors have a positive impact on the bottom line. Store owners questioning whether to replace equipment should really be asking themselves, “Why not now?”
Miss Part 1? You can read it HERE.
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].