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Renegotiate Rent, Cut Costs to Survive

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Photo: ©iStockphoto/alexskopje

Robert J. Renteria |

CHICAGO — It brings me great pain to witness landlords choking their tenants with escalating rents and offering no relief during these tough times.

I have witnessed more laundries close their doors in the past two years than I have in the past 22 years served in the coin laundry industry. Owners are faced with the potential of losing their businesses and, in many cases, their life savings because business is down and they cannot afford to pay their rent.

If you’re one of those owners, take this message as a call to action. Renegotiate your rent if you plan on surviving in this industry. Consult with your attorneys and get the help you need before it’s too late.

I’ve spoken with some landlords who are making rent concessions to avoid seeing their tenants close their doors and produce no rent at all. This is a good move—a win/win for everyone!

Of course, there are those landlords who will tell you “the lease is the lease.” Again, I suggest you get legal advice to provide the direction you need to protect you and your family.

Now is the time to buckle down and look for ways to cut your costs. Here are some suggestions for trimming the fat:

  • Lower the heat in the laundry during the winter months.
  • Make sure you are not wasting resources (water, gas or electricity). Working with an energy broker could save you a large percentage of what you might be paying.
  • Consider subletting space in your laundry to create more revenue.
  • Consider working additional hours to lower employee payroll.
  • Make sure you have energy-efficient washers, dryers and water heaters.
  • Consider acquiring refurbished or rebuilt machines when making replacement purchases.

Don't be one of the owners who will close their doors in 2012. Now is the time to take action to protect your Laundromat businesses.

About the author

Robert J. Renteria

Consultant

Robert J. Renteria is a national consultant based in Chicago. He has more than 23 years of industry experience, having helped develop more than 750 coin laundries nationally and abroad. The author of three books, he was named the 2010 Chicago Latino Professional of the Year and is the sole recipient of the 2011 International Outstanding Humanitarian Award. In 2013, he received two Dr. Martin Luther King Jr. Awards for his work in civil rights advocacy and educational reform. He can be reached at 312-933-5619 or robert@fromthebarrio.com.

Comments

cutting costs to survive

Cutting costs to survive, in my 44 years experience, leads to cutting prices which leads inexorably to OUT of BUSINESS signs.

In this city, the highest price laundromat has NEVER gone out of business. Conversely, the lowest price laundromat is always on the block to go down next.

Now I've always saved costs wherever I can, but NEVER to give a poorer wash and dry. Customers nowadays have a crappy energy effecient washer and dryer at home or down the street at a "modern" laundromat. I look for equipment that will give a faster, better wash and a faster, hotter dry and damn the energy costs. Of course I charge the highest price to use them.

In 2000, my Landlord tripled my rent to $100,000.00 a year, Take it or move out!!!!! I had 3 months to decide; 9 months until eviction. It took me 1 day to plan my strategy; double all my prices. By 3 months it was obvious I could pay the new rent (all the increase was profit) and I signed a 10 year lease for $1 million dollars!!!!

Now I did everything I could to give my customers value for their money. I made my hot dryers even hotter. I gave out free soap, free used hangers, bags, etc. Anything I could do that did not involve buying new equipment until I decided whether to stay or not....And once I did sign the lease, I borrowed money and bought 4 new 55 lb. washers immediately and over the next 5 years I bought as much new equipment as possible for $100,000.00

The first few years at the new rent were lean, but the last 7 were very good, and now, 12 years later with the rent "only" $110,000.00 a year, business is great.

The moral is: I watched many, many stores close with signs to their customers saying things like "my landlord is raising the rent, and it's not possible for me to raise my prices so I'm forced to close." Bull****.
You can raise your prices and still close if it doesn't work out. But you are closing for sure if you do nothing or lower them.

My golden rule is "You cannot undercut your competition to prosperity in the laundromat business"

Razer

If the landlord will not

If the landlord will not reduce the rent, I can tell you that raising the price alone will not fix the problem. My advice and what  I did..."Wash and Fold that included DELIVERY". Best thing I ever did.

I started the service about 3 years ago doing about 150-200 lb per week. We now do 1600-2000 lb per week and growing. When I began- my prices were $1 per pound. 2 months ago I decided to raise them to $1.30 per pound and had no complaints whats so ever!!

Its important to offer delivery then theres no limits on gaining customers. If you only offer wash and fold Drop Off, you will always be waiting on the customers to come to you.

I no longer depend on my walk in self serve customers, in fact to be honest im so busy with the wash and fold that im considering limiting my walk in hours so we can maximize the machines and time.

DW

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