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Where to Start? Tips for Entering the Commercial Laundry Business (Part 1)

New revenue streams available but operational challenges and headaches may be lurking

ATLANTA — What do you think it would take to enter the commercial linen and uniform rental market? There are streams of potential new revenue available there, yes, but also some new operational challenges and maybe some headaches.

If you run a self-service laundry, starting to service commercial customers might require adding personnel, some type of client management system, more programmable and/or larger-capacity equipment, and more physical space for order storage.

During this summer’s Clean Show, organizers hosted a trio of laundry and drycleaning business owners to discuss the best place to start the transition, how the industry works, and what competition exists, all to help attendees determine if pursuing commercial laundry customers might be the right move for them.

The panelists were Monika Manter of Balfurd Linen Service in Tipton, Pennsylvania; Kelley Dixon of St. Croix Linen in St. Paul, Minnesota; and Dan Campbell of Wash Around the Clock in Tallahassee, Florida. Each had a unique story to tell. First up was Manter.

TEXTILE RENTAL TRIO

She’s a fourth-generation co-owner at the nearly 100-year-old Balfurd, which operates two plants: one for retail dry cleaning and restoration and one for textile rental. The business began as a tailoring shop and had settled nicely into drycleaning work until the 1960s when Manter’s grandfather came across someone selling an at-home drycleaning machine at a regional trade show. He feared the trend would put retail cleaners like him out of business.

A friend of his who owned a car dealership had always wanted to rent uniforms, shop towels and the like, so Manter’s grandfather bought those products and began renting them to him. A few years later, Balfurd also began renting textiles to restaurant clients but then settled into doing healthcare linens.

“We started with nursing, and at the time, most nursing homes were COG [customer-owned goods], so they own their own products. They were looking for someone to clean them. So what we did was we took on that COG business at the time and as those products began to wear out, the nursing home didn’t want to buy additional products, so we converted them to textile rental.”

Balfurd was doing all of its work under one roof, which Manter says was “busting at the seams” in the late ’90s, so it built the 50,000-square-foot plant where it only does textile rental work today.

“We have two tunnel washers, four (flatwork) ironers, and it accounts for about 90% of our overall revenue of our business,” she says. “So we service three main markets out of that facility.”

First is food and beverage, e.g. restaurants, bars, bakeries. The main products Balfurd’s customers use are aprons, towels, mats, table linens and cloth napkins. Next is acute healthcare (large hospitals) and retail healthcare (chiropractic offices, outpatient facilities, rehabilitation centers). That product mix is a little different, Manter says, and includes blankets, towels, mats, patient gowns, and isolation gowns.

“And then our kind of last division is uniform rental. So that’s for auto body shops. It can be security uniforms, polos, all of that. So when I say it’s a textile rental facility, we own all of the product that we’re cleaning in that facility. So, all of those products then are rented to our customers. Every one of our customers in that facility is under a contract with us to rent from us for a specified period of time.”

Balfurd’s other facility is for dry cleaning and restoration.

“That facility does do COG. So we’ll do a hair salon, let’s say, and once their towels are cleaned, we’ll wash/dry/fold it for them and then deliver it back to them, but we have decided in our textile rental facility, we don’t do any COG whatsoever.”

The reason behind that decision, she says, is that “it’s really tough to have a ‘mixed’ plant.”

“So, if you have some customers renting and some doing COG, you’re having to keep orders separate for the COG customers, your washers aren’t filled to capacity with rental, you know,” Manter says. “It doesn’t matter when products come in, it doesn’t matter if the bar towel came from, you know, Dante’s Pizza or Olive Garden or wherever, you clean that product, you package it and it goes out to whoever needs it. So it’s a little bit easier to manage when you don’t have COG work in that plant.”

There are some cons to doing textile rental, according to Manter.

“There’s a big upfront cost to buy your products, and especially with the pandemic and the shortages and all of the logistical issues, it’s been harder and harder to get those products,” she explains. “And … you do need a big area to store products, because you have your products in inventory. And as you’re pulling out lower-quality products, you’re having to inject those products into your inventory, so you need some products on hand to do that because you can’t just be constantly purchasing every time you get a new customer.”

Another is that textile rental is more of a commodity business than COG laundry is.

“The competitors in the textile rental market are typically national chains and they will, you know, they drive the price down,” Manter says. “So you have to figure out a way to differentiate, figure out a way to get enough volume that you can be profitable at that lower per-piece price.”

But she says the market is growing, with space for more businesses to come in.

“We’ve seen a lot of smaller independents around us closing their doors or selling. And there’s a lot of room in this market. Like I said, our main competitors are the national chains and we’ve seen a lot of customers who don’t want—they want to deal with a family-owned and -operated business a lot, you know. Many of those restaurants, those farm-to-table restaurants, don’t want to deal with a national chain. So there’s definitely room in this market for more operators.”

Check back Tuesday for Part 2!

Tips for Entering the Commercial Laundry Business

(Photo: iStock.com/leezsnow)

Tips for Entering the Commercial Laundry Business

Monika Manter, fourth-generation co-owner of Balfurd Linen Service in Pennsylvania, shares with a Clean Show audience how her family’s business transitioned from doing only drycleaning work to adding textile rental services. (Photo: Bruce Beggs)

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