A Look Back at the Past 12 Months – And a Peek at What Lies Ahead for the Laundry Industry in 2017It’s that time of year again – a time to reminisce about the 366 days gone by (yes, it was a leap year)… and to try to get a feeling for what the next 365 have in store.Everyone does it – from the largest television networks to the most niche bloggers. This month, we will be inundated with all that 2016 had to offer in the way of politics, sports, music, movies, literature and so on.
Of course, the results of the historic November election in many ways will serve as a backdrop to all that occurred this year and definitely will impact small business in 2017 and going forward. From immigration policy and minimum wage to the Affordable Care Act and the eventual makeup of the Supreme Court, all business owners and consumers alike are eager to see what directions the new administration and Congress plan to take.As for the self-service laundry industry specifically, store owners in 2016 continued to ponder alternative payment systems, larger equipment, utility costs, rising water rates, commercial rents, shifting marketplace demographics, vend price decisions, energy-efficiency measures, drop-off laundry and home delivery options, staffing and more.“2016 was a good year for vended laundry with various changes, such as multi-store owner growth,” said Chris Brick, product and training manager for Whirlpool Commercial Laundry. “Former single-store owners chose to grow investments by expanding their vended businesses to include two or more facilities.”In addition, the past year saw more sophisticated, business-savvy operators flock to the laundromat business than ever before.“This is great for the industry, as this type of investor is normally higher net worth and not afraid to spend a little more money on his or her store in order to get it back,” explained Rick Case of Dexter Laundry. “These individuals are investing in larger equipment with more technology and advanced ways of operating their stores. By doing this, they are creating excellent customer experiences that are changing the laundry concept.”Another major trend and highlight of 2016 was the continued upgrade of existing stores with larger and more efficient equipment, Case pointed out.“Aging equipment plus low interest rates made 2016 a great year to rehab stores,” he said.“More store owners are upgrading their equipment and fixtures to reduce operating expenses,” agreed Jim Rosenthal, Speed Queen North American sales manager. “Many of our store owners are experiencing the benefits of retooling with state-of-the-art equipment – it gets laundry done faster and easier, improves a store owner’s ROI and it adds to the resale value. Additionally, it helps meet customer demands, as today’s consumer is looking for clean, safe laundromats complete with the latest amenities and innovative equipment.”Industry growth is healthy, Case added. “Some markets still impacted by the recession bounced back this year,” he said. “The result is that locations for new laundromats are getting harder to find, as rates are on the rise.”Ironically, as the app economy in the U.S. exploded in popularity in 2016, one of the more well-known players in on-demand laundry service – Washio – went out of business this year. The company’s assets were quickly acquired by one of its competitors, and the full-service, home-delivery business model remains one of the laundry industry’s most intriguing storylines and opportunities for market growth.This year also seemed to enjoy more instances of laundry owners who were willing and able to give back to their local communities in a variety of ways, noted Kathryn Rowen, Huebsch North American sales manager.“The LaundryCares free laundry events, coordinated by the Coin Laundry Association, are just one of those examples,” Rowen stated. “As more efforts by laundry owners are focused on engaging the consumer base via different mediums, such as social media, these events are better attended and their positive impact on the communities helps build business and goodwill – as well as bringing visibility to the fact that the self-service laundry is an important gathering place in many communities.”Indeed, the CLA’s LaundryCares Foundation partnered with The Laundry Project, based in Tampa, on 11 such events in 2016, which ended up totaling more than 25,000 pounds of laundry washed at no charge for 234 families in need.For 2017, the CLA is developing a plan to support its members who are interested in hosting such free laundry events at their stores in the future. What’s more, a multi-store free laundry day in Las Vegas is in the works, to be run in conjunction with The Clean Show in June.Industry ChallengesOf course, every year offers its own business challenges. And, when looking back on 2016, two of the biggest hurdles to industry growth were a continued steady increase in water and sewer rates and the constant lurking threat to the self-service laundry sales tax exemption.“Sewer fees have become a significant challenge in some areas, as the cost has continued to escalate,” Rosenthal noted. “And some store owners are not raising their vend prices quickly enough to cover these and other increased costs.”In fact, water and sewer costs will soon be the most expensive utility for a majority of all laundry owners, according to most industry insiders.“Water and sewer rates are on the rise faster than ever, and it’s impacting almost every market,” Case concurred. “There is also the issue of water taxation, like in the city of Chicago, where municipalities are looking at ways to add funds to their budget. If they haven’t done so, laundry owners should monitor their water and sewer rates to see the cost rising rates are having on their profits. Don’t just let rising rates eat your profits away. Most manufacturers continue to invest in making equipment more efficient; today’s washers are extremely more efficient than equipment even five years ago.”“In 2016, it seemed like the industry was constantly fending off legislation of one type or another that threatened to raise costs, such as increasing water rates, minimum wage increases in multiple states, Obamacare hikes and threats to levy sales tax on services in multiple states,” Rowen said. “I have a great deal of respect for the local CLA affiliates and the individuals who have done what has been needed to keep these at bay in the short term. Unfortunately, a new presidential administration likely will mean these elements will rear their heads again in the upcoming year.”Clearly, replacing older equipment seems to be a consistent challenge for many laundry owners, according to Brick. “Although it’s never easy, investing in new, energy-efficient equipment not only helps to increase customer satisfaction and retention, it also helps to reduce utility costs. These are benefits that will pay off for years to come,” he said.Among some of the other hurdles many owners faced this year were rising impact fees, increasingly arduous government and municipal regulations, higher buildout costs in several laundry markets, and the pressure of ensuring adherence to the Affordable Care Act.2017: What’s Ahead?So, what lies ahead for next year?At the CLA, one of next year’s highlights no doubt will be The Clean Show, which is scheduled for June 5-8 at the Las Vegas Convention Center. This year’s show is already on pace to top all metrics from the successful 2015 event in Atlanta. Next year’s show will feature a strong and timely educational agenda – with sessions covering such topics as what laundry owners can learn from the latest retail trends, how to grow sales through Facebook, maximizing labor efficiency within your wash-dry-fold service and more.From a governance standpoint, long-time multi-store owner Jim Whitmore will serve as the 2017 Chairman of the CLA Board of Directors. Jim has made no secret as to his passion for the environment, and his goals of energy efficiency and sustainability for both the association and the industry couldn’t come at a better time – with water and utility costs on every store owner’s mind these days.“I believe 2017 will continue the trend of replacing old equipment with new, efficient equipment that adds additional revenue streams to offset higher water and sewer rates,” Rosenthal said. “Additionally, I expect to see larger stores with equipment that offers store owners customizable options to meet their laundry needs and alternative payment systems.”For her part, Rowen said that she’s excited to see more owners embracing and leveraging social media to engage and communicate with their customers.“The ones who are doing it very well have a platform that is epi-centered on providing a positive customer experience,” she explained. “They actively manage their Facebook pages, Yelp reviews and Google Places accounts, and take any negative interactions and turn it into an opportunity to take action and respond – and that’s visible to the rest of their customer base.”Customer experience continues to be front and center in stores as well, with more frequency of owners rehabbing with the newest, energy-efficient equipment, she added.“Convenience and customer service will continue to be the cornerstone of a successful brick-and-mortar retail business,” Rowen noted. “In addition, the meteoric rise of smart phones as a primary vehicle for getting and sharing information continues to underscore the need to actively manage marketing initiatives using social media. And, lastly, with an expectation that natural resources like water and utilities will certainly rise, I expect continued rehab of older stores and construction of new ones with a particular focus on creating an inviting ‘oasis’ for customers using the most energy-efficient and aesthetically pleasing equipment that ensures that customers will be in and out of the store as quickly and hassle-free as possible.”Brick pointed out that today’s manufacturers are developing new web-based, wireless programs that enable owners to manage their laundry facilities remotely, via computer or mobile devices.“With this latest technology, an owner can remotely set up and modify vending prices to maximize profits, review cycle data, understand ongoing maintenance needs by receiving fault-code notifications, receive information on money collection and analyze laundry usage patterns,” he said. “This gives owners more freedom and flexibility in their laundry operation management – especially if there are multiple stores to tend – and also helps reduce downtime if a machine should need to be serviced.”He predicted that technology will continue to drive the self-service laundry industry in the future. “More and more customers will see the growth of improved payment options, such as mobile payment, which removes unnecessary friction from the laundry payment experience,” Brick said.Of course, the trend toward larger equipment and advanced technology to manage stores are here to stay. Moreover, high-extract washers continue to be best in class for today’s quality operators.“We’re seeing more and more customers putting in high-extract machines to create better performing laundromats,” Case said. “This gets customers in and out more quickly, and the overall customer experience is better. This trend will continue to grow over the years.“More multi-store owners will add to their fleet of stores and equipment,” he continued. “The laundromats that are being built today are so superior to the stores of the ’80s and ’90s. Today’s quality laundries provide an excellent customer experience with fast, efficient equipment. These operators are in acquisition mode and want to grow.”Our First Year in the Laundry BusinessThe past year also marked the inaugural year in the self-service laundry business for more than a few entrepreneurs. As a result, we asked the owners of two of these brand new laundry operations to share the unique perspective of their first year in the industry:Jack Lanning
In & Out Laundromat
Lowell, Mass.I was looking for a way to retire, so basically the laundry business is my retirement plan. I wanted a business that was not extremely complicated and one that didn’t require me to be hands-on on a normal daily basis.There are two business highlights that jump out at me during this first year. One of them is how appreciative my customers are. Every time I’m in the laundromat, I have customers expressing gratitude that I opened a laundromat in their neighborhood. And, to go along with that, one of the aspects of the business I was nervous about was how the customers would treat the equipment and the facility – and I’m amazed at how well they look after things. It makes me quite proud to see the customers really taking care of the place, cleaning up after others. They take a lot of pride in this laundry.The second highlight for me was developing a team with my store manager and attendants, as well as being involved almost on a weekly basis with the sales representative from my distributor, Garment Machinery Co., along with my contractor and my real estate agent, who’s out looking for a second laundromat for me. I really have a great team of employees, as well as a great group of people I work with to develop my business.Of course, there were some challenges along the way. For me, learning the programming of the machines and the software of the POS system were pretty common challenges. Also, simply understanding my customer base; for example, one early mistake I made was not having signage in Spanish, despite a strong Hispanic clientele.You have to hire the right people, so I needed to learn how to ask the right questions during the hiring process in order to discover whether or not a candidate was a good fit. Fortunately, I’ve hired four employees and have had no turnover.I had a couple of surprises along the way, too – one positive and one negative.The negative surprise actually occurred during the building phase. I was scheduled to open up at the end of September 2015, but the store didn’t effectively open until January 1 of this year. That set me back about $30,000.I would stress to anybody looking at getting into the laundry business how crucial it is to develop a strong team with your distributor, your builder and your real estate agent – and, especially if you’re new to the industry, find someone who is experienced in building out laundromats. Also, be sure to include some type of clause in the contract with your builder that clearly states the expected finish date.My second surprise was much more positive. I knew the store was going to be successful, just by researching the neighborhood and market demographics, so I was anticipating hitting the break-even point in six months. However, we started breaking even in the third month of operation.So, I surpassed that goal. But, basically, what I wanted to accomplish in 2016 was to develop a good understanding of the laundry business and then start looking to open my second self-service laundry. And that’s what I’m in the process of doing right now.In 2017, I would like to see a 25 percent to 30 percent increase in business at my current laundry. As for my second store, I’m currently looking for locations in the same general area. I want to try to do something a little bit larger than this store, which is 2,200 square feet; however, it’s really more important that I just find the right location.Once I find the right site, I’ll build a store to suit that location – whether it’s 1,200 square feet and 100 percent self-service or 4,500 square feet with 120 machines will depend on the location.Dan Thanh Dang/Gary Miller/Bangtam Miller/Quynh Simon
Wash-N-Fold Express
Edgewood, Md.It all began with cheese. We wanted to start a business that we could manage while still working our full-time jobs, so we thought we’d open a cheese shop. However, when we started writing a business plan and looking for a location, it didn’t come together easily. We also realized we couldn’t manage it part-time. That was the first sign that maybe cheese was a bad idea.Then, as we were weathering the aftermath of a snow storm one day, we saw a car wash packed to the gills with customers. It got us talking about what people in our community really needed all year long, such as clean cars – and clean clothes! We talked about how people in town had to take an $18 cab ride, round trip, to go wash clothes at the only laundromat on the other side of town.At this point, we started doing research on demographics and reading up on opening and running laundromats. We joined the Coin Laundry Association and began reading the articles in PlanetLaundry magazine; this was immensely useful reading and provided us with a ton of guidance, since none of us had any experience in the laundry industry – unless you count the years my family members and I spent doing our laundry when we were young.This time, when we sat down to write our business plan, it practically wrote itself. And, from 40 years of living in this community, we knew exactly where we wanted to locate our business. Everything really came together.Of course, we’d be remiss if we didn’t mention the excellent advice we received from our local Dexter representative, Bob Cannon of Launette Equipment Co., who boasts more than 30 years of industry experience. He talked us through a lot of different business issues. He helped us decide what size machines to install in Wash-N-Fold. He helped us with the layout, when we described how open we wanted the space to look. He conducted a site visit and advised us on many pre-construction aspects that helped us on the front end, before we even broke ground, to make sure the construction schedule went smoothly.There are so many highlights of our first year in business that it’s hard to list them all. Four months after opening, we broke even for the first time. That was exciting! We partnered with a community school to offer literacy lessons to preschool children, while their parents receive a couple of free washes. We also partnered with a couple of local churches that surprise our patrons by paying for their laundry on random weekends. Those have been really amazing events. And we also were pretty excited when we got the first 1,000 people to sign up for our frequent wash program – quite simply, they do nine washes with us, and the tenth wash is always free, on any size machine. It’s all been very rewarding.However, the thing that makes us smile every time is when our customers thank us for opening the store, or they tell us how much they love that our place is so clean and friendly or that our customer service is terrific. That means a lot to us.
Our biggest challenge during this first year in business was finding the right employees. Our entire business model is based on customer service. We’ve been through a number of employees this year, because not everyone gets what we’re trying to do here. We don’t want our employees to just sit behind a counter. Our belief is that our customers can choose to do business anywhere.When you come into our store, does someone help you in? Do they help explain how to use our machines? Do they sign you up for our frequent wash club? Do you feel welcomed? Do you feel like you’re part of a community? The answer to all of those questions should be, “Yes!” At times, we feel like we’re bartenders without the alcohol. We talk to our patrons, get to know them and listen to their hopes and dreams – as well as their struggles. Sometimes, we laugh with them, and sometimes we give them a shoulder to cry on.
Of course, we have other daily challenges, too. How much do we need to purchase in supplies? Do we have a place where we can store all our supplies? What do we do with clothes left behind by customers? How do we manage working full-time jobs while also running the laundromat? It has been a lot of seven-day work weeks for all of us. Do we have a good work-life balance? Probably not.Once the doors of Wash-N-Fold were open, there were a few surprises headed our way. Our biggest surprise also was our biggest lesson learned. We hired an employee who we discovered was stealing from us. It was a big blow to our morale and a huge disappointment, because we like to consider ourselves a big family. However, that episode taught us to tighten up our processes and create new sets of checks and balance measures to track every transaction that takes place.
As for our business goals for 2016, we wanted to reach the break-even point. We told ourselves that, in our first year, if we could pay our bills and our employees every month, we’d be happy. And we’re doing that.
Of course, in 2017, we want to do better than break even. We want to establish our business as more than just a laundromat, but a community center as well. We recently held a flu clinic in our laundromat that was rather successful. We also want to start offering financial literacy classes for our customers. In addition, we’d like to create a scholarship fund for Edgewood High School, which is the school from which we all graduated.In addition, we’re adding another 80-pound washer to meet the demand for more washing capacity at the store. We also want to continue to refine our processes as we learn more about our business. To that end, we’ve purchased Dexter Live, a system to monitor the activity on our machines – which will help us track our peak hours, as well as staff the laundry for our busy and slower times.In 2017, we want to get our employee situation in line so that we have a core group of staffers who can run the store when we’re not around. We’re focused on attracting the best people possible so that we can continue to pay above the minimum wage, train them on our standard operating procedures and even offer them a 401(k) plan after they’ve been with us for a year.
All in all, if we continue in the direction we’re headed, we hope to build upon our relationship with the neighborhood and become profitable. We feel so fortunate and grateful for our clientele and thankful that we are able to give back to our community.What’s more, we often talk about expanding our laundry business, whether that means adding to the space we have now or – if we do very well – opening up another self-service laundry somewhere else. We don’t know for sure what the future holds, but we try to enjoy every moment, taking it one day at a time.
