Take Advantage of Large Commercial Laundries Inherent Weaknesses to Develop Your Own Commercial Accounts Business
Having just returned from this year’s Clean Show in Atlanta, I was encouraged by the number of self-service laundry owners who introduced themselves to me and then went on to explain how they planned to start commercial accounts businesses.
So, this month, I’d like to focus on how to figure out a commercial accounts business plan, as well as where you should be looking for commercial laundry.
The first thing to understand is that the commercial laundry world is huge. Hence, there are some very big players involved. In fact, the commercial laundry industry is so big that some commercial laundries will build plants to handle one specific type of product – they will build the manufacturing line around that product.
And some plants in the commercial laundry world are so big that they may have two or three production lines, each one specializing in different types of products.
This isn’t meant to scare you. By contrast, it’s to expose the Achilles’ heel of the commercial laundry industry. And that weakness is that a true commercial laundry plant – which processes items as efficiently as possible and builds an entire production line around one type of product – probably can run only that one product through its line. It certainly is the only thing that plant can run through that line at any given time.
Understanding this and, in turn, understanding that more than likely the products that these commercial laundries run through their plants are items on which you probably don’t want to compete with them, gives you the first step toward understanding where we, as laundromat owners, can fit into the commercial laundry world.
There are two major segments of the commercial laundry world. They are “medical”and “hospitality.”
The medical category can be further broken down into two types of plants. There are medical plants that deal specifically with hospitals and then there is light-duty medical work.
Heavy-duty medical laundry has to be done either at the hospital or in a special climate-controlled environment that prevents cross-contamination of clean, sanitized linens by dirty, soiled linens. (Most likely, this is not a segment of the commercial laundry industry that you, as a laundry owner, will be serving.)
On the other hand, light-duty medical can be done at a large plant with multiple production lines.
Hospitality laundry traditionally is the other main segment of commercial laundry, and it’s geared toward businesses such as restaurants or hotels. Some of these plants focus on just one of the hospitality segments, while others serve both.
In the restaurant business, for example, linens, tablecloths and napkins require special finishing equipment for each one of those lines. In fact, there are napkin ironing machines that sort the napkins, with up to five operators feeding napkins into one of these machines – at a rate of 30 to 40 napkins per person per minute.
On the back end of the washing process, they will sort the napkins and automatically separate them into bundles of 25.
With this type of operation, commercial laundries can offer finished napkins to customers for anywhere from five cents to 12 cents per piece. Of course, sometimes the price is going to be higher, especially if the distance between the plant and the restaurant is great.
With that being said, unless you can find a small niche restaurant, you probably don’t want to get into the restaurant napkin business.
At my store, we wash napkins for a couple of small restaurants, because their demand is so low. We do a few hundred napkins a week – maybe 600 to 700 on a busy week. That’s a niche we can fill because the commercial laundries don’t want to stop their big trucks for such low volume.
The other part of the hospitality laundry segment involves hotels. Many hotels simply don’t have the space or the capacity to process the amount of dirty laundry they produce, so they farm it out.
Like smaller restaurants, this can be another area where there is a niche for us. Clearly, the large commercial laundries have the 300- to 600-room hotels covered; that’s not something you’re going to be able to compete with. However, when it comes to smaller (40 rooms or less) hotels, that’s a client we can actually do custom work for.
The big commercial laundries will build entire processing lines based strictly on hotel linens – special ironing equipment, special washing equipment, specific chemistry cycles, etc. They’ll make it very specific so that they can do literally tons of hotel laundry at a time – quickly and efficiently.
Their problem is that they can’t handle small orders. They can’t do it efficiently. They are set up to do large volume more efficiently than anyone else. However, they are not set up to do small and custom volumes in an efficient, cost-effective way. They may do it, but they will have to charge more for it.
And, when they start charging higher rates – whether for light-duty medical laundry or small hotel or restaurant linens – an opportunity opens up for laundromat operators. It now becomes more efficient to compete with the big commercial guys.
Beyond the medical and hospitality segments of the commercial laundry world, there is a third major category – customer-owned goods. There are commercial laundries that specialize in customer-owned goods, and typically those plants are completely separate – they don’t deal with the rental linen business.
Some of their clients might be large party rental businesses, as well as larger hotels and restaurants with their own customized linens. And, although the customer-owned good plants have more capacity than our laundromats, there might be niches in we can compete, with our smaller machines (and, when I say “smaller,” I mean 80-pounders and up).
With regard to commercial accounts, what’s the “sweet spot”for our industry? What do those clients look like?
That list would include corporate housing facilities; bed and breakfasts; smaller, unique restaurants that don’t create a lot of heavily soiled items; massage therapists, light-duty medical facilities like spas; corporate gyms with their own linens; physical therapy/rehab facilities; and the possibilities go on and on.
What’s your niche?
You need to look for those accounts that are too small for the large commercial laundries – clients that have very specific needs.
Those needs could include anything from not wanting to expose their customers to the high levels of chemistry used by some commercial laundries to simply wanting to do business with someone who is smaller and local. It could be that this potential account is currently being overcharged by a commercial laundry because it’s too small and just doesn’t make financial sense for such a large plant. Or the client may just want to own their own linens with their own brand and their own feel – and not use whatever they would get from a standard, homogeneous linen rental facility; they want to be something unique.
Seek out those smaller, more unique businesses within your marketplace – and you’ll be on the right track to finding your commercial accounts niche.
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