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Self-Service Laundry Industry Pitfalls to Avoid (Part 2)

Laundry equipment is your primary revenue producer, so don’t short yourself

CHICAGO — When embarking on a new venture, we’re bound to make mistakes. Laundry investors are no different. There are errors that new owners are prone to make, especially during store conception or early stages of operation, that could cost them.

American Coin-Op sought the counsel of experts from several equipment manufacturers to identify some of the pitfalls to sidestep among the makings of a typical self-service laundry operation.

EQUIPMENT ACQUISITION (PURCHASE OR LEASE)

Avoid buying low-performance machines just because of price, says Tod Sorensen, sales manager for Continental Girbau. And Kevin Hietpas, director of sales, Dexter Laundry, warns against not doing enough “homework” before making a purchase.

“Equipment is the primary revenue producer of your service, and the reason customers come to your store,” Sorensen says. “Don’t short yourself on technology, performance or reliability simply based on price. The investment you make today will ensure you have the most efficient and profitable laundry for years to come and have an effect on future utility increases and ultimate resale value.”

“Many times, individuals who purchase an existing location are anxious to make improvements and they make an equipment purchase before they have a real plan or handle on what the store needs,” Hietpas says. “They may simply purchase newer models of what the store already has, not realizing that the existing mix of equipment was outdated and completely out of step with what is needed in today’s market.”

“Sticker shock” at the investment required for large-capacity machines could spur a new owner to purchase more small, lower-cost machines, thinking it’s the best way to update a location, he adds. “After their purchase, they quickly realize that this decision severely limits the store’s revenue-generating potential and isn’t what customers are looking for.”

Owners can miss an opportunity to closely consider capacity needs for their equipment mix, according to Chad Lange, sales director of Maytag® Commercial Laundry.

“With bigger capacities, multi-load machines allow for higher pricing, which means they can potentially bring in more revenue per wash than single-load machines,” he says. “Multi-load washers offer the benefit of high extraction speeds to help with fast drying, and quick turnover.”

“Often, store owners focus too much on the price of the equipment purchase/replacement instead of the impact and ROI it will have on their business,” says Aubrey Pollesch, Laundromat sales development manager for Alliance Laundry Systems. “When you look at things like utility costs and maintenance/repair costs, many times, you can come out money ahead when you purchase new equipment and increase price, increase modifier usage, reduce utilities/repair costs and take advantage of finance promotions.”

DAYS AND HOURS OF OPERATION

“An important pitfall to be aware of regarding hours of operation is that hours might be restricted by the terms of your lease, or even by the local municipality,” Hietpas warns. “If you are planning to operate 24/7, or you believe that maximum hours of operation are critical to the success of your business, it’s important to make certain that you have the ability to operate the way you need to.”

Pollesch recommends store owners understand their customer base and their surroundings when determining days/hours of operation.

“If their store is located in an area where there are factories/jobs that work a third shift, they could be missing business by not offering a 24-hour store or early hours. … If a store is in a less safe area and safety of attendants/customers is a concern, I recommend following the lead of what other co-tenants in the strip center or area are offering.”

PAYMENT METHODS AND ACCEPTANCE

Relying only on coins for payment can be a hindrance to future growth, some experts say.

“When you think of the millennial generation and those after, many do not carry cash,” Pollesch says. “Offering multiple payment options will help increase your store’s appeal. Plus, cashless systems offer rewards programs to drive customer retention. The added benefit to you as the owner is float and the ability to get increased spend from your customers.”

“Alternative payment systems bring customer loyalty, faster customer turnover and convenience along with expansive management and marketing tools,” Sorensen says. “Coins are labor-intensive and tie up cash in inventory.”

“Like with major equipment purchases, this is not a time to act quickly, this is a time to do your homework and to take time to understand the costs and benefits of the various options available,” says Hietpas. “There are various third-party options that can be adapted to both newer and older equipment, and there are new, factory-ready options that come ready to turn on. … In understanding the options available, it important to understand both the upfront cost (readers, wiring, etc.) as well as ongoing costs (replacement and maintenance, cards, subscriptions, payment processing, etc.).”

COLLECTION PRACTICES

First-time owners are always excited about collecting, Hietpas says, until they realize that it is a job in itself.

“A pitfall to avoid is getting into too much of a set routine, i.e. the same days at the same time,” he says. “While a set schedule might make it easier to plan your time, it also makes you a more obvious target if you happen to attract the attention of the wrong individuals.”

And if purchasing an existing store, purchase all-new coin boxes immediately, he advises. It’s the only way to be certain that you will be the only one with keys making collections.

Coming in Wednesday's conclusion: Equipment maintenance, store cleanliness, extra profit centers and advertising/marketing

Miss Part 1? You can read it HERE.