CHICAGO — Sunday has become the busiest day of the week at Mark Schottland’s Laundromat called Madeline Nashville.
Located approximately three miles from downtown Nashville, the laundry facility has only seven washers and eight dryers, and is nestled in just 400 square feet of space. One can imagine how busy the Laundromat must be.
“We have 10 or 11 regulars, and what I mean by that is people who come in [to] use five of the seven machines,” he says.
“There have been some days where we have a wait to get into the Laundromat, which is good and bad,” says Schottland. “Fortunately, we have plenty of other things for them to do.”
There certainly is more to his Laundromat, as Madeline’s is not only a neighborhood laundry, but a café, as well.
Establishing an extra-profit center as a complementary business is nothing new in the self-service laundry industry, as the core business is combined with other types of services, among them car washes, tanning salons and gas stations.
Exploring other revenue streams can increase profits, but what should operators know before taking the plunge?
American Coin-Op spoke with experts in the industry to find out.
A BUSINESS WITHIN A BUSINESS
Before diving into any type of extra-profit center, John Antene, president of coin laundry sales and marketing for laundry equipment distributor Coin-O-Matic, Alsip, Ill., advises operators to consider how they will fund the venture.
“If the new profit center requires capitalization or investment dollars of equipment or hard products, will the funds be readily available, either through existing reserves or lending sources?” asks Antene. “If so, what are the best considerations to be made regarding loan terms and investment return?”
Terry Anderson, consultant for laundry equipment distributor Midwest Laundries, Chicago, agrees, saying, “[An extra-profit center] is an existing business within the business, and you have to look at it that way.”
“Starting any new business is always a gamble, but you want to have your due diligence and you want to make sure you have enough start-up money that you’re not going to be taking money from your existing cash flow to do [it],” he adds.
Schottland explains that he and his customers view his store as a true Laundromat/café hybrid, which he says is an advantage for his marketing efforts.
“I would say it’s 99% crossover. We may have some people who use the Laundromat, but for the most part, they duck away and grab a beer, or get something to eat,” he says.
“I thought the crossover would be much greater than it really is,” says Mike Gilley, owner of Laundry & Tan Connection, Indianapolis, of his tanning salon/Laundromat business model.
Though he acknowledges that customers come solely for the Laundromat or just for the tanning salon, he has seen some crossover, particularly for customers who are waiting for longer periods of time for their laundry to finish.
“It certainly was not a detriment. It brought additional people into the facility, so I would say it was a win-win for both sides of the business,” says Gilley.
‘DO YOUR RESEARCH’
“Always do your research before you jump in,” Anderson says of pursuing an extra-profit center.
“The additional services and products you provide should always be a win-win for you and your customers,” says Antene. “Consideration should always make the most economical sense while providing your customers the utmost of services and products.”
“The biggest thing is that if somebody wants to add an additional ancillary revenue source—whether it be tanning, whether it be a car wash, whatever it happens to be—they need to do their homework and do business with somebody that is a professional that understands the business,” advises Gilley.
One other piece of homework Anderson advises operators to complete is surveying their clientele to see if the venture could work.
“The simple thing to do is glean your customers’ [input]. … Is there an unfilled need in your area to support this?” he says.
“If you do your research and you come to the conclusion that [there is] … then it is a good profit center.”
Missed earlier parts of this story? You can read them now: Part 1, Part 2
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].