How to Build Key Efficiencies into Your Full-Service Laundry Business
In last month’s column, I wrote about the keys to partnering with your local drycleaner, which will be one of the educational topics discussed at Clean 2017 in Las Vegas.
This month, I’d like to touch on another Clean Show topic – namely, maximizing labor efficiency within a wash-dry-fold operation. Like many laundry owners, you may be looking for ways to take your wash-dry-fold service to the next level. For most operators, getting more productivity from your frontline workforce is a major challenge. This presentation, which will be held on June 7, will focus on getting the most from those payroll dollars by incorporating efficient practices into your wash-dry-fold production.
The fact of the matter is that a wash-dry-fold service costs you labor dollars.
Some owners of attended stores mistakenly think their wash-dry-fold labor is free, since they’re already paying their employees to clean and interact with customers – wash-dry-fold, they believe, is just one more task, with no real impact on the business’ labor costs.
However, the reality of the matter is that it doesn’t take long for a successful wash-dry-fold operation to outgrow its available labor.
It’s important to look at the real cost of producing a quality wash-dry-fold product. In my experience, the average employee can process about 33 pounds of wash-dry-fold per hour – if they’re focused strictly on wash-dry-fold orders. In other words, you’re not going to get 33 pounds an hour out of a laundry attendant on a Sunday afternoon. For that matter, you’re probably not going to get 33 pounds an hour out of an employee at any successful laundromat any evening of the week. That type of production rate most likely will be limited to those “off hours” from Monday through Friday during the day.
With that said, what will those 33 pounds an hour cost you? At my store, we don’t start anybody for less than $11 an hour, and our average pay is $13 an hour. What’s more, many of us will be looking at a $15 minimum wage in the coming years – so our real labor cost to process wash-dry-fold is going to be in the neighborhood of $16 to $18 an hour.
As daunting as that sounds, what if you were a strictly self-service laundry attempting to remain attended with a $15 minimum wage? For such operators, at what point does it simply make no sense to remain fully staffed?
However, by offering a wash-dry-fold service, you’re giving your business the ability to continue to operate fully attended, because your full-service product will help cover your labor costs. (Please note that this is much different from thinking that your labor is free.)
Perhaps not surprisingly, recent industry surveys have shown an increase in the average cost per pound of wash-dry-fold, meaning that a lot of wash-dry-fold operators are raising their prices – not only because of the increased demand for this service, but also due to the fact that the cost to process wash-dry-fold is going up.
The first thing you need to do is figure out your costs for producing wash-dry-fold, as well as what you think we can get for this service.
Therefore, you must understand your labor model. What does it actually cost you per hour to employ someone? My guess is that most store owners have a pretty good grasp on this.
However, you might not be considering some of the new labor laws being proposed across the country – which are calling for such policies as mandatory paid time off and mandatory sick leave for employees. In addition to higher minimum hourly wages, these proposed mandates pose huge threats to your wash-dry-fold labor equation.
So, when building your budget, be sure to consider any potential labor laws and add those variables to your equation. For example, what would it cost you to provide 42 hours per year of mandatory paid time off – as they are proposing in my state of Minnesota – with a $15 minimum wage?
No doubt, the labor to produce wash-dry-fold is going to be your leading cost, so getting that expense as low as you can is your first task.
If you plan to offer a pickup and delivery service, this should be the next cost to consider. What does it actually cost to pick up and deliver wash-dry-fold laundry?
Of course, when you have work coming in, you can control that work and the labor that goes with it. However, if you’re just sitting in your store waiting for customers to come in, you’ll never know whether or not customers are going to come in that week, or what day they’ll come in – and you’ll never be able to effectively plan your labor around your wash-dry-fold business. In creating a wash-dry-fold business, understanding the costs and benefits of running the pickup and delivery portion of the operation is a critical aspect of sustaining a profitable operation that you can plan and build around.
So, let’s consider the labor costs associated with the pickup and delivery of wash-dry-fold laundry, including the fact that you also will have a vehicle that will cost a lot more to operate on a daily basis than your washers and dryers.
At my business, the goal we use for wash-dry-fold pickup and delivery is 14 cents a pound. If we can get below 14 cents a pound for pickup and delivery costs, we are doing good work. When we go above 14 cents a pound, the operation tends to get a little out of control.
With pickup and delivery, the critical part of the equation is controlling where your vehicle is going and ensuring a certain number of pickups and deliveries per hour. To hit our 14 cents per pound benchmark, our goal is for our drivers, in essence, to produce $250 of revenue per hour.
Clearly, the best way to meet those production and revenue goals is to be sure that the time between each stop is short. When we build our routes, we try to ensure no more than five minutes between stops.
Fortunately, there is some great software on the market that will track your costs and the productivity of your employees. Again, your total cost shouldn’t be more than 14 cents per pound, and a goal that we use is $250 of revenue for every hour a driver is on the road. Those goals enable us to pay our drivers between $15 and $18 an hour.
We’ve touched briefly on production costs, as well as pickup and delivery expenses with regard to labor. However, we will certainly go into more detail on those subjects – as well as show you some different ways to package your wash-dry-fold products and the costs associated with packaging – when we see each other in Las Vegas next month.
