An Interview with Tennessee Laundry Owner Kenneth Cherry
Kenneth Cherry opened his first self-service laundry in 1959 in Livingston, Tenn., back when the industry was still in its infancy. Today, he owns three stores. Over the years, Mr. Cherry has always been a price leader in his market and was the first store owner in Tennessee to offer tiered pricing for cold, warm and hot water.
Mr. Cherry joined the Coin Laundry Association in 1961, and in 1969, he was elected to the Board of Directors of the Tennessee Coin Laundry Association, a group with which he remains active. Also in the 1960s, Mr. Cherry was instrumental in the passage of a sales tax exemption for self-service laundry owners in Tennessee. He received the CLA’s Leadership Award in 2002 and remains a strong leader and mentor to other operators, as well as being a true laundry industry pioneer.
Please discuss your life before getting into the self-service laundry business.
Before I got into this industry, I was working for a health insurance company. I started working there in 1953 and, by 1980, had worked my way up to being the CEO. In all, I worked there for 43 years. So, for the majority of my laundry career, I’ve also held a full-time job.
I also made investments. Nothing was given to me. I bought land early in life as an investment, and I was a partner in apartment and office buildings. I believed early on in making investments.
When did you first get involved in the self-service laundry industry?
I opened my first coin laundry in Livingston, Tenn., in June 1959; however, I actually started building that store in 1958. That was well before we had a state coin laundry association here in Tennessee, and even before there was the national organization.
We were kind of on our own. But it turned out to be a good investment.
What attracted you to this industry in the first place?
Of course, those were the early days, so there weren’t many other people you could talk to about the industry, even within the industry. But, to me, it seemed like something in which I could make money, that would be a good investment, and that I could run despite the fact that I also had a full-time job.
How would you best describe the “early days” of this industry?
As I mentioned, we didn’t have a state trade association to belong to and we didn’t even have a national group. The National Automatic Laundry and Cleaning Council – which later changed its name to the Coin Laundry Association – didn’t form until 1960. And, as I remember, the Tennessee trade organization came along shortly thereafter.
Back in those days, it seemed like you just couldn’t get much information about the business or running stores, mainly because there wasn’t a lot of information to be had – not a lot of history yet.
However, even then, I really enjoyed the industry. But I’m sure we made a lot more mistakes than the store owners make now.
What are the biggest changes you’ve noticed in the industry since you’ve been involved in it?
Of course, we’ve seen the manufacturers improve their washers considerably. They use less water and electricity than they used to. That’s crucial for laundry owners, because you’ve got to keep your utility costs down. Water is critical, especially on the West Coast right now – and it’s going to become more critical down the road. All of the sewer lines in this country are old, and they’re going to have to be replaced. That’s going to cost money, and those of us in the laundry industry are going to have to help pay for it.
The manufacturers also make so many different sizes of washers today so that you can better serve the needs of your customer base. That’s much different than before. Today’s customers expect that variety. In my market, they expect 100-pound washers.
The distributors also have improved a great deal, and it’s important to partner with a distributor you can trust. In my case, I was lucky enough to find an outstanding one right from the beginning, having met Durwood Davis of Star Distributing in the early days.
My relationship with Star has been a long one, and it has helped me tremendously along the way. I’m fortunate to say that I’ve helped them along the way, too. When new washers offering tiered pricing for cold, warm and hot water became available, I installed those in my store. As far as I know, I was the first owner in Tennessee to put that pricing structure into effect. And this helped Star, by showing how well this new technology worked in a real world laundry setting.
Stack dryers also have changed the business. When I built my earlier stores, we didn’t have that option. Of course, now all of my dryers are stacked, except for the 75-pounders. That doubles my capacity.
Today, alternative payment systems and credit card acceptance is really changing the landscape of the industry as well.
What did your first laundromat cost you?
It was a 1,200-square-foot store, and it cost me $25,000. As I remember, it had 20 toploaders, five 50-pound dryers and one 25-pound washer, which we called a “Big Boy” in those days. Can you imagine? Twenty-five pounds – that was the “Big Boy.” But that’s all the manufacturers had available. And I only installed one of them, because that’s what the distributor recommended.
Back then, I was charging 20 cents for a topload wash, and a dry was 10 cents for 10 minutes.
What’s your laundry operation like today?
Today, I own three laundries one hour south of Nashville in Columbia and the adjoining towns. The store in Columbia is 4,500 square feet, while the others are 1,200 and 1,500 square feet, respectively.
In what ways have laundry customers changed over the years?
Laundry customers expect a clean store, and they expect you to have the variety of equipment to take care of their needs. They’re more educated about the laundry business than they were back in the early days.
For instance, when I opened my first store, they still had wringer type washing machines serving that particular town, and many people were dedicated to that style of washer, even though it was out of date.
Today, customers have more choices, and they expect a better experience.
Have laundry owners changed over the years?
I think you have to be a better businessperson today. You have run a more efficient operation. And you have to price for profit, because you need to keep the store updated. The equipment companies are making machines that are a lot more efficient than they were even a few years ago, so you’ve got to be in a position to be able to afford to update equipment often.
Several years ago, the CLA developed websites for all of its members. And, of course, in addition to that, we now have our own website, too. So, owners are much more tech-savvy as well.
Back in the early days, you could make mistakes, but today you can’t make that many mistakes. You’ve got to think it through and be a strong businessperson to be successful, because it’s such a large investment now. And, with increased competition, you need to be right the first time.
In my case, I believe in owning the building and property, which isn’t cheap. But at least then it’s your building, and you don’t have to worry about a lease running out or a landlord forcing you out – which happened to me.
I used to have a fourth location that was leased. I had been there for 25 years, and then the landlord asked for so much money that I couldn’t afford to stay there. Fortunately, I was able to sell the store, rather than closing down.
Please tell me about your current activities within the industry.
My son-in-law, Bruce Dixon, handles the day-to-day operations. However, although I’ve been retired for 19 years, I try to get to the stores every day. I like to thank our customers for coming in and doing their wash with us, and they seem to appreciate that. In town, people will see me and occasionally say, “That’s the man who will thank you for doing business with him.”
I want to treat my customers like I want to be treated. We’ve really got good customers. After all, if you don’t have customers, you don’t have a business.
On Sundays, of course I go to church, but I’ll usually go to the stores in the afternoon for a while. I like to stay in touch with what’s going on with the business.
From your standpoint, what are the major hot-button issues facing laundry owners today?
I think the biggest hot buttons are utilities, particularly water. Natural gas today in my market is pretty reasonable, but at one time it was $2.60 a therm; you could hardly find any laundry owners in the United States where it ran that high. So, I’ve seen the market change.
Utilities will always be a hot button for laundry owners. They’re here to stay.
Although utility costs that represent about 25 percent of gross sales are touted as the national average, I’m at approximately 13 percent. And I give CLA President Brian Wallace a lot of credit for helping me to get my utility costs down that low. When I was the president of the Tennessee Coin Laundry Association, I would see him from time to time, and we’d talk about the industry. I would ask him what the “better” operators did, as far as utilities, not just the “typical” operators. I wanted to measure myself against the better owners.
In my career in insurance, I was never interested in being average. I wanted to be the best. And it’s the same with my laundry operations.
How did your insurance career help your laundry career?
There is definitely some carryover. In health insurance, we had to collect premiums, and those premiums had to pay all of the claims, as well as all of the operating costs. I had to be sure I had the premiums high enough to cover those costs. In that industry, if you ever get behind, it’s very difficult to catch up.
It’s the same principle in the laundry industry, just on a smaller scale with an individual operation. You’ve got to price for profit and hold back some reserves. I’ve seen a lot of operators in our state who didn’t do that, and consequently when they got ready to replace equipment, it cost so much more than they could imagine.
In recent years, a number of states have been battling their state legislators to keep self-service laundry exempt from sales tax. Your state faced similar fights years ago. Would you mind discussing those particular sales tax victories?
In the mid to late 1960s, we had a sales tax on self-service laundry in Tennessee – and the laundry owners here worked with the legislators to get that removed.
Believe me, if you’ve ever had it, you don’t want it again. In our state, the sales tax was 9.75 percent. If you’ve got that coming out of your gross income, buddy, that hurts your bottom line.
Of course, we told the legislators how laundry customers are usually in an income bracket that gets hit the hardest by the tax, and how it is a health issue, as far as having clean clothes. And we got self-service laundry exempted from the tax.
The issue came up again in the late 1980s. This time, a group of laundry owners went to the state legislature. We met with them, and they never pursued removing our tax exemption.
The topic arose a third time in the 1990s; the state legislature is always looking for tax money everywhere. This time, the Tennessee Coin Laundry Association hired a lobbyist, and we successfully fought for our exemption.
This is why the state associations need to have a little money set aside. I imagine these issues will come up again and again. They won’t go away.
The key to winning those battles is educating the lawmakers and the CLA provides some compelling reasons as to why self-service laundry should not be subject to sales tax.
Plus, I was a lobbyist for the health insurance industry in the 1980s, so I knew several of the legislators, which helped with our laundry battles. I knew where to go to get results.
Another huge challenge to your laundry business occurred when a large automobile manufacturing plant closed in your market. Would you mind discussing how this impacted your stores… and how you coped with that loss of business?
We lost 25 percent of our business. When the plant closed, about 6,000 employees left. They went somewhere else to work. Believe me, that will shake your world.
We had to not let that get us down. We had to keep a good outlook – that’s part of the ups and downs of business. In my experience, you better have a little reserve set aside, because when your business goes down 25 percent, it’s hard to make a profit.
We continued running our business as usual. We tried to do other things to attract customers. We advertised more, even developing some television ads in our local market. But you can’t let it get you down, because you’ve got to remember that if you do what you need to do there will be better days.
With longevity comes a certain perspective on those ups and downs of the business cycle. What has your career in coin laundry – and experiencing the tough times and the good times – taught you about the laundry business?
You’re going to have some ups and down, and you better prepare for them as best you can. Again, run a good, solid business. Also, have a good distributor who can help you. And develop a good relationship with the CLA.
I’ve been fortunate enough to be in business for 56 years. I’ve learned that laundry owners need to be organized, and they need to participate in their state associations, as well as in the CLA. Believe me, you’re going to need them. And it will make you a better operator.
Do you have a philosophy that guides the decisions you’ve made in business… and in life?
In business, whatever you do – in my case it was insurance and laundry – always be the best you can be. Don’t be average – be in the top tier.
With investments, do your homework, your due diligence. I’ve been fortunate in life. God has been good to me.
I know that giving back and philanthropy are certainly part of that philosophy. Can you please discuss this aspect of your life?
I’ve never said much about it. I’ve been generous with the church that I attend. I’ve given to Columbia State Community College, where they have been gracious enough name a 500-seat theater there the Kenneth and Ramona Cherry Theater. I’ve been fortunate enough to be involved in giving to a private school here. And I’ve also given to an autistic center in Columbia; those parents have a difficult road to hoe, and I’m so fortunate to be able to give there.
I better quit right there, or my tongue will get too loose. I simply believe that, if you’ve been fortunate in life, you need to share some of it with others.
What have been the biggest mistakes you’ve made in this business over the years?
Without a doubt, the biggest mistake was installing coin-operated drycleaning machines. You haven’t seen those in 40 years, but I put in two of them.
I didn’t do my homework, and it fell flat on its face. I couldn’t even give that equipment away. I had to haul it off for junk.
What’s been the most gratifying aspect of your life in the laundry business?
Going into my stores, seeing satisfied customers have a good laundry experience and being able to talk with them. I’ve also greatly enjoyed meeting other laundry operators at the Clean Show, on the state level and at distributor service schools.
It’s always enjoyable to meet other people in the industry. We’ve got a lot of good people in the laundry business.
In general, what’s the key to longevity in this industry?
The key is finding a good location, being a good businessperson and pricing for profit – as well as keeping a clean store and really watching the business. You can’t just open a store and then never come around. Another key is developing close relationships with the CLA and your distributor.
What keeps you active in this business after all these years?
I personally enjoy it. I’m seeing my business grow, and we hope to make it better every year.