A Look at Some of the Operational Metrics and Key Data Owners Should Be Monitoring to Keep Their Laundromats on Track for Success
[This is the second in a multi-part series on some of the key performance indicators laundromat owners should monitor regularly. You can read Part One here.]
In Part One of this series, some of the laundromat industry’s leading manufacturers discussed what they considered to be the key performance indicators for today’s laundry businesses… and why these metrics were so critical to running a successful laundromat operation.
This time, we asked a few of the top laundromat operators across the U.S. to share what specific numbers and statistics they regularly rely upon to assure their operations are on track with their business goals:
Colleen Unema
Brio Laundry
Bellingham, Wash.
I look at machine income month to month, but I also run comparisons of period to period from the previous year. I always want to see growth – not just “income.” I’m after that percentage increase… or decrease, as the case may be with the pandemic shutdowns.
In addition, profitability and employee engagement go hand in hand. As a result, I also look at commission reports as an indicator of attendant engagement and our customer-centric approach to attending the laundromat. We sell a lot of soap and laundry-related products – so, if sales are slow, we have a problem.
For me, the final piece of the puzzle is how many pounds of laundry are in the queue, as compared to previous week, the previous month, and so on.
I’ll consult these performance indicators a couple times a month. I have a spreadsheet in which I can enter a few numbers to see these statistics graphically. And the newer POS systems are keying into the business’ KPIs – with the click of a button, I can track my progress and view statistical comparisons. In fact, I couldn’t do any of it without quality POS software and cloud-based systems.
After running a laundry business for a while, you intuitively begin to know some things about your operation. However, your senses can sometimes prove unreliable and cannot stand up to the cold, hard numbers. What you think and what is real are often two different things, especially when it comes to engaging your attendants to help you grow your business.
I don’t always look at “when” self-service customers come in, since we are busy seven days a week. In fact, after reviewing the numbers, we will be extending our business hours in the next month. We’re simply too busy to close up at 10:00 p.m. Of course, being fully attended, this decision required the careful study of performance indicators, income and staffing in order to justify the cost of extended hours.
In addition, the KPIs helped determine the direction of our marketing messages. After the COVID-19 shutdown and limitations, we advertised the notions of “safe, clean and easy to do it yourself.” And our growth curve for the self-service segment of the business rebounded quickly.
The best advice I can offer is to stick with the program. Don’t just read numbers. Compare them and calculate the rate of growth. Plot the rate of growth, not the income in dollars. Train yourself and your employees to focus on building business – not just counting coins.
Personally, one industry statistic that I believe is overrated as a performance indicator is turns per day. TPD can be fudged. It’s a nice number to look at for general purposes, but I would rather look at a count of something real – like money – than a calculation of turns as an indicator of income.
Larry Adamski
Muskegon Laundromat
Muskegon, Mich.
I compare my monthly gross sales to same-month sales for the previous year, and then I calculate what percentage up or down my business is. This gives me an early feel of how the business is doing that year. Repeating this process for each month as we progress through the year usually solidifies the trend.
Comparing annual sales to the prior year’s annual sales establishes how the business actually performed after the year is over.
I also like to calculate total utilities as a percentage of total sales to get a feel for my operating efficiency, versus my vend pricing. I like this figure to be under 10 percent.
Lastly, I will multiply my total sales by 16.5 percent to establish a maximum budget for the following year’s labor cost.
Chuck Hinkel
Laundry Depot
Waterloo, N.Y.
On a monthly basis, I like to track turns per day, per machine model, to see what each size of equipment is most popular with my customers. In return, I can monitor usage and be able to phase out any unpopular or non-revenue-generating machines and replace them with more popular pieces of equipment that will generate more money for the business.
I also monitor my monthly utility costs, with the target being that these costs represent 15 percent to 18 percent of my gross revenue.
With the emergence of QuickBooks and other accounting software, I’m able to compare month-over-month and year-over-year expenses and growth.
It shows me growth year after year, because I can look at my numbers in real time, which helps me to make purchasing decisions for new equipment that will meet my customers’ wants and needs.
I think some laundromat owners get too caught up in what profit percentage they think they should be making. There are too many variables from store to store for there to be a truly universal number throughout the industry that everyone should be doing. Everyone has a different type of client base and business model.
Marty Mullican
Owasso Express Laundry
Owasso, Okla.
At my laundry business, we focus mostly on ratios and percentages, rather than specific target numbers. For example:
- We want total utilities to be less than 12 percent of top-line revenue per month.
- We want wash-dry-fold total revenue to cover our staff payroll each month.
The key for us is to manage to the most relevant expense items in the business, other than rent – that would be utilities and labor/payroll. In other words, “major in the majors,” and the rest will follow. Focus on how revenue is linked and varies to expenses, and then manage to optimize there.
Manage major expense KPIs and focus on the customer experience – and, as a result, revenue and profit will grow.
The two largest non-lease expense items are utilities and payroll/manpower. If we can keep those two KPIs in line, managed against revenue, everything else with the business seems to take care of itself.
At Owasso Express Laundry, we collect and record those numbers daily. We review key stats weekly and monthly. And we manage and adjust our operations quarterly.
No doubt, technology has help in this process. Our payment system and point-of-sale software provide us with great reporting detail – it’s extremely accurate and easy to obtain.
We record our revenue daily into a spreadsheet that tracks and graphs our critical metrics – daily, weekly, monthly and annually. Without our payment and POS systems’ reporting features, doing the analysis would be a huge chore and, therefore, probably not get done on a consistent basis.
We adjust our staff’s hourly pay and head count to a large extent based on our wash-dry-fold production. All of our employees know this, and that’s the key. That alignment keeps our wash-dry-fold quality high and mistakes to a minimum. We’ve raised our WDF pricing to keep this business segment’s top-line revenue in sync with our payroll. Of course, this strategy has worked both ways – we’ve also added staff and given raises when our wash-dry-fold revenue has increased. Post-pandemic, especially in 2021, our wash-dry-fold business has really taken off.
Our self-service washer and dryer vend pricing is also linked to our monthly utility costs. After all, it’s much easier to justify a vend price increase tied to utility costs, simply because our customers are experiencing the exact same price hikes at home.
Personally, we don’t track turns per day operationally, because the TPD stat isn’t linked to an actual expense. It simply calculates the average number of times each washing machine is used every day. I believe that TPD estimates can be helpful in creating an income pro forma, which bankers like to see, or in determining an equipment mix during a laundromat planning phase. However, tracking turns per day operationally provides little relevant insight when compared to the major-expense-versus-revenue KPIs. These numbers would be of help if considering remixing your washer size during a laundromat makeover and retool.
Again, the key for our laundry business is to manage the most relevant financial/expense KPIs in the business, other than rent. And those are utilities and manpower/payroll. Focus on how revenue is linked and varies with key expense changes, and then manage to optimize from there.
Above all, keep it simple. Manage key expense KPIs (utilities and manpower/payroll) to revenue, focus hard on the customer experience, and revenue and profit will grow.
Art Jaeger
Santa Clarita Laundry
Santa Clarita, Calif.
Information, observation and action are the keys to success in any small business. Without good information, you are flying blind, guessing, praying and gambling.
With that said, just because you have information doesn’t mean it’s going to help. After all, the wrong information – or too much information – very likely can be more destructive than having none at all.
So what numbers, statistics and key performance indicators are important to help maximize the growth of your laundromat business? Perhaps obviously, it’s only the information you’re going to use to make a decision, to take an action, or to review or measure a result.
With quality software and current bookkeeping, you can run comparative reports and analysis on a timely basis, while you still have sufficient time to make meaningful changes during the year.
Specifically, here’s what I regularly track at my laundry business:
- Detailed weekly turns per day by equipment size, with accompanying monthly and annual summaries.
- Detailed monthly utility summaries with all key statistics noted from the invoices, as well as cost per unit of measure – such as therms, watts, etc. – and usage/dollars per day calculated.
- Detailed service logs, for each individual piece of equipment.
- Monthly tracking of wash-dry-fold productivity by employee.
Collecting the right information all begins with a proper foundation. Learning to keep and maintain your own current books and records is well worth it. Your chart of accounts needs to be detailed enough to be useful, but also general enough not to become a burden.
Next time, some of the industry’s leading providers of payment systems, POS software and pickup-and-delivery solutions will weigh in on the topic of KPIs for laundromat success.
