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Replace Equipment, Increase Profits (Part 1)

Why Laundromat owners need to look at upgrading a store’s machinery

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 — When considering the case for replacing outdated equipment, remember that the initial investment, while not insignificant, can be quickly offset by an increase in profit.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.

REDUCE REPAIRS, REMOVE GUESSWORK

A machine’s age should never be the sole reason for replacement. Equipment lifespan depends on many factors, such as usage, condition, and repair and maintenance frequency. Since upgrading to machines with advanced controls, multi-store owner Russell Hylton repairs machines less frequently and utilizes maintenance alerts to address issues more quickly.

“Once I get that new equipment in place, I typically do not have to deal with it for a very long time. It will run on its own – free of maintenance worries,” says Hylton, who owns five Laundromats throughout suburban Kansas City. “If there happens to be a problem, the service diagnostics tell me right away what it is.”  

According to a Coin Laundry Association (CLA) 2013 Survey, the average lifespan for washer-extractors and tumble dryers is 12 to 15 years. While none of Hylton’s 112 washer-extractors and 80 tumble dryers have reached the 10-year mark, his goal is to replace every machine in every store with new, technologically advanced equipment.

“Newer equipment allows me to run a more efficient and effective operation, which in turn provides me the time to operate five stores,” he says. “If I had old, beat-up equipment, there’s no way I could keep up.”

CASH IN ON NEW REVENUE OPPORTUNITIES

Upgraded equipment also means more turns per day. The simple presence of new machines allows owners to charge more per cycle, and advanced control features like time-of-day pricing and cycle modifiers help to strategically price machines and satisfy customer needs.

Store owner Joe Paradis of Farmington, Maine, says he’s experienced a significant increase in customer traffic since re-tooling his store with state-of-the-art machines. His customers can now choose cycle modifiers – such as pre-wash, more agitation time, additional hot and cold rinses – and select price options to best fit their budgets.

“Customers like the opportunity to see three different pricing options – low, medium and high – and then be able to make a choice,” Paradis says. “It also gives me an opportunity to raise pricing.”

Hylton says, “When customers take advantage of the cycle-modifier options, it means hundreds of dollars added to my bottom line.”

Following installation of new equipment, both Hylton and Paradis raised prices by an average of 25 cents (depending on the size of the machine). According to a CLA white paper, customers are willing to pay up to 10-20% more for updated equipment. Considering three and a half turns per day across eight 40-pound washer-extractors, the use of cycle modifiers can add up to more than $2,000 revenue each year, according to the CLA.

Another opportunity to increase revenue afforded by advanced controls is time-of-day pricing, which allows owners to optimize prices during peak laundry hours and reduce prices during slower periods.

Newer tumble dryers can also increase turns per day while reducing minutes per quarter and maintaining the same pricing. Larger-capacity machines allow customers to dry clothes faster, increasing productivity, profit stream and customer satisfaction.

Check back Wednesday for the conclusion!

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(Image licensed by Ingram Publishing)

Have a question or comment? E-mail our editor Bruce Beggs at [email protected].