Business Leaders Take a Close Look at Key Factors Shaping the Vended Laundry Market in the Coming Year
The laundromat industry is currently navigating a complex landscape shaped by economic challenges, technological advancements, and shifting consumer preferences.
Although acknowledging some obvious potential headwinds facing the industry, laundry business insiders have expressed true excitement over the opportunities for growth, innovation, and community engagement in 2024.
Given that, what “headlines” from this past year will help shape laundromat operations going forward? What trends seem to be taking hold? And what should store owners be concerned with as we ring in a new year?
We recently posed those questions to an expert panel comprised of industry leaders representing several segments of the laundromat business:
King Lee
Senior Regional Sales Manager
Dexter Laundry
Fairfield, Iowa
The cost of doing business is a big topic these days due to several key factors: rising utilities, higher interest rates, and the cost of labor. If store owners haven’t raised their prices this year, they’ve missed the boat. Inflation has been in the news all year, so consumers have been used to seeing prices go up everywhere else.
The continued interest rate hikes the first part of the year, coupled with three large bank collapses and rising inflation, were the biggest business stories to emerge in 2023. The interest rate hikes, along with higher equipment costs, certainly affected store owners as the cost of new equipment – and the monthly payments – rose significantly.
With that said, I see the continued interest in more service-oriented amenities such as wash-dry-fold and pickup and delivery, as certain segments of our society rely and depend on those services. In fact, the service sector represents more than 76 percent of the United States’ GDP and continues to grow. So, if our economy is based on a more service-oriented economy, I can see the vended laundry market moving toward more customer-centric services, rather than self-service.
By contrast, we’re still facing a continued labor shortage across the country and rising labor costs associated with the shortage. The minimum wage is going up on a state-to-state basis, but one would be hard-pressed to find those willing to work for the state minimum.
Personally, what are you most excited about heading into the coming year? I’m most excited about the continued emergence of newer investors into the business. People outside of our industry have taken notice of the great potential for secondary and primary sources of income from the vended laundry market, whether it’s through retooling traditional laundromats or going into the wash-dry-fold and pickup-and-delivery models. And, although change can be unsettling to many, our industry is continuing to evolve – and I find that an exciting and positive trend.
Jennifer Whitney
Vice President of Business Development
Eastern Funding, LLC
New York City
Wash-dry-fold and pickup and delivery emerged as hot topics for the industry in 2023. The interest picked up tremendously, as evidenced by the attendance at CLA’s WDF Workshop in Nashville this fall. Both of these industry segments will continue to be areas of interest for the business in 2024, as owners seek to create new revenue streams out of their existing operations.
In the business world in general, inflation was a factor in 2023, with owners paying more for almost everything, from utilities to equipment. The first part of the year featured rising interest rates, as the Federal Reserve sought to tame inflation. Although rates still may be relatively high, there are signs that inflation may be easing, which will be welcomed by laundromat owners in 2024.
Labor shortages and labor costs also were of concern to many laundry business owners. And these issues are likely to impact laundromats again next year.
In 2024, there will be continued opportunities for laundromats to grow their revenue through untapped revenue streams, such as wash-dry-fold service and new stores. Demographic shifts in certain parts of the country brought about by those moving to new states may present opportunities for existing owners and new investors.
Additionally, technology will present greater opportunities for laundromat owners. The advances in the software that helps owners monitor and manage everything from payments to individual machines will present even greater opportunities for multi-store ownership.
Of course, rising equipment prices and interest rates that remain elevated are two potential headwinds laundromat owners will have to keep in mind going into next year.
Personally, what are you most excited about heading into the coming year? I’m excited about passion of industry participants, as well as the interest in the industry from potential new investors. Additionally, I’m excited about the willingness of experienced operators to share best practices with others. You can see evidence of this at the many Facebook forums and groups, the various industry podcasts, and even at the in-person events. It’s real proof of the lasting appeal of our industry.
Paul Hansen
Su Nueva Lavanderia
Chicago
For me, the biggest news in 2023 was the continued new investment by those other than individual owners. This includes franchises, manufacturer-owned stores, and private equity. Also, the rapid increase in the use of technology – such as the continued evolution of alternative payment systems, digital marketing, and AI – is changing the game in our industry.
No doubt, the other big news this year has been the increase in interest rates and the cost of new equipment. We haven’t seen interest rates like these since the late 1990s. Those rates and the high cost of equipment will mean that those who haven’t been reinvesting in their stores will find it much more difficult now. This should create opportunities for forward-looking operators to be able to find deals on “ZombieMats” out there.
I believe that pickup-and-delivery and wash-dry-fold services will continue to flourish. However, I feel that at some point some consolidation will occur – as many owners perhaps don’t realize the amount of time and effort that goes into adding and running such full-service ventures, and some may decide it’s simply too much.
Although interest rates will probably start to come down a bit in 2024, the increase in employee wages and benefits will continue to be a concern for many. For example, my city of Chicago just passed a law requiring 10 paid days off per employee.
Personally, what are you most excited about heading into the coming year? The opportunity to continue growing by acquiring existing locations or building new ones.
Yvette Morton Williams
Wash & Spin Coin Laundry
Atlanta
To me, 2023 was a year of many mergers and acquisitions, and I expect that we’ll see increased competition among store owners as interest in our industry continues to grow. I also feel that owners shouldn’t expect relief in pricing for equipment, parts, or supplies anytime soon, due to the consolidation among distributorships.
This year our economy suffered some major blows. The combination of massive interest rate increases; increased utility rates; and rising costs of equipment, parts, and supplies – coupled with the continuing labor shortages – made 2023 more of a challenge than previous years. I don’t see these things reversing for 2024. Perhaps the rate of increase will slow; however, store owners will be forced to raise prices to contend with rising operating costs, and consumers will expect a better experience as a result of this – and we better be prepared to deliver it.
The more things change, the more they stay the same – and I believe 2024 will look similar to 2023, in terms of opportunities within our industry.
The number of operators relying on quarters will continue to decline. The use of cashless options will continue to increase, and this trend will include cashless and hybrid locations. Also, wash-dry-fold will continue to be an important part of our industry, and it likely will continue to grow as the interest in pickup and delivery expands.
We’ll see the number of multi-store operators increase. Additionally, the number of business-savvy operators will rise, as the popularity of the laundromat industry will continue to attract investors with a wide range of experience and deep pockets.
I also think the number of payment system providers will continue to grow as multi-store operators demand better operational efficiency, with many of them bringing their experience in other industries to the laundromat business.
In all, we are at a point of explosive growth in our industry. We all will be forced to shore up our operations in preparation for the new, larger laundromats that no doubt are being planned for our own backyards. And, unfortunately, market saturation in certain areas will result in some facilities closing, since a community can produce only a finite amount of dirty laundry.
Personally, what are you most excited about heading into the coming year? I’m looking forward to some relief from the current labor shortage, and I suspect 2024 will be the year for this. I’m also excited to see an increase in the number of better options for doing laundry in communities where the level of services historically have been subpar. This continues to be a terrific industry, and I’m ecstatic to remain involved after 14 years.
Neal Shapiro
WashTime
Chicago
To me, the biggest story of 2023 was the WDF Workshop in Nashville, where nearly 300 people gathered to hear all things wash-dry-fold and pickup and delivery. This is clearly the hottest topic in laundry today. In fact, it seems like everyone with a washer and a vehicle wants a piece of the action.
No doubt, the challenge for many store owners going forward will be the ability to carefully analyze their businesses and then decide to what extent they should incorporate these popular and growing industry segments into their current operations.
In addition, for existing stores I think the biggest challenge in 2024 will be the increase in wages for W-2 employees. At the state level and in many cities, there seems to be a constant drumbeat to continually increase minimum wages and paid time off for employees. Assuming you pay above than the minimum wage, this effort still puts pressure on everyone to raise wages accordingly. Of course, the direct result has to be an increase in vend prices – so don’t be afraid to do it.
Kevin Butorac
Triad Laundry Equipment
Copley, Ohio
Looking ahead to 2024, interest rates will continue to be a hot topic. This has a ripple effect across all industries that I think we’ve yet to fully see. I think we will see the cost of equipment and accessories continue to rise in 2024. Also, with high interest rates, owners will have to juggle this, in addition to the inflated equipment and accessory costs.
It will be interesting to see how store owners react to this environment. Will retools and new builds be delayed? Will owners keep equipment longer than they normally do and make investments in less capital-intensive store improvements?
I also think wash-dry-fold services will remain popular with owners in 2024. As consumers continue to desire on-demand services, I feel this will be a strong market for quite some time. Of course, this means that the upcoming year will offer greater opportunities for owners who already offer WDF services to expand their reach through all of the new and continuously improving channels – including integration with pickup-and-delivery services, apps, software, and so on.
On the flip side, economic stability and increasing costs will continue to be strong concerns. I believe this may hinder operators from retooling and investing in ways they have in previous years. With interest rates at an all-time high and overall inflated prices of rent/real estate, materials, and equipment, we may see a decrease in the number of new stores being built.
With that said, I think this could be an ideal opportunity for existing operators to fine-tune their operations and prevent potential competitors from entering their markets down the road when costs begin to stabilize.
Personally, what are you most excited about heading into the coming year? I’m excited to see the advancements in technology continue to emerge into 2024. Between new features in equipment and improvements in store operations, I think these factors will continue to become more operator-friendly. Looking back five years or so, so much of today’s technology didn’t even exist. It’s amazing to see all of the advancements that have been made in a relatively short period, thus making laundry day a more pleasant experience for both the customer and operator.
Aubrey Pollesch
Director of Wascomat Sales
Laundrylux
Inwood, N.Y.
First, there is a growing interest in diversifying revenue streams within the laundromat industry. Specifically, there is increased attention on adding small commercial accounts and offering services like wash-dry-fold and pickup and delivery as ancillary sources of income for laundromat owners.
On the cost front, increased utility costs have become a concern, impacting some markets more than others. This rise in operational expenses is prompting investors to reevaluate their equipment and invest in the most efficient options available.
Financial markets and interest rates have been a source of uncertainty, potentially affecting the financing and investment decisions of laundromat owners, which could, in turn, influence their expansion and capital allocation plans.
Additionally, the laundromat industry has seen some consolidation, with manufacturers and distributors making strategic moves. These changes could have implications for supply chains, pricing structures, and competition dynamics. The entrance of new players in ancillary services, finance, and technology further shapes the industry landscape. Laundromat owners have more options than ever to explore.
In terms of equipment trends, the shift toward larger machines and away from toploaders and small washers continues. Laundromat owners should consider these trends when upgrading their equipment to remain competitive. As competition intensifies, there is a growing emphasis on differentiating from competitors. This can involve innovative services, enhancing the customer experience, or adopting sustainability initiatives to stand out in the market. There also has been a trend toward larger “destination” laundromats located in more commercial/business locations, versus smaller neighborhood laundromats.
In 2024, the laundromat industry is poised for a wave of exciting new opportunities that can reshape the business landscape. One of the foremost opportunities lies in the continuous evolution of consumer preferences. Laundromat owners can target a more diverse customer base by offering convenient services – such as locker systems and pickup and delivery, along with the increasingly mainstream option of wash-dry-fold services. This adaptability to changing preferences can expand the customer base and boost revenue.
The laundromat industry will see a continued emphasis on technology integration. We are seeing growing adoption of app-based payment systems as customers are getting used to paying for everyday purchases with their phones, along with leveraging rewards programs. Store owners can leverage data from machines, payment systems, apps, and point-of-sale systems to establish a more connected and data-driven approach to their businesses. This data-driven strategy empowers store owners to make informed decisions, drive new customer acquisition, and enhance customer retention – ultimately increasing spending at their stores.
Artificial intelligence technology is another promising opportunity. AI can streamline various aspects of laundromat operations, from marketing to day-to-day processes, making businesses more efficient and effective.
In 2024, there will be more ways than ever for laundromat owners to network and connect. Whether it’s through in-person events, industry conferences, or virtual platforms, the opportunities to collaborate with industry experts, fellow store owners, manufacturers, and distributors are abundant. These connections can lead to valuable partnerships, shared insights, and innovative solutions to common challenges.
As the laundromat industry adapts to these opportunities, it’s likely to witness significant growth and innovation, benefitting both business owners and customers alike.
No doubt, as laundromat owners gear up for the coming year, it’s essential to be well-prepared for potential pain points and headwinds that could affect the industry in 2024. While laundromats provide essential services, they are not immune to the broader economic and legislative landscape. Laundromat owners should keep an eye on potential shifts in economic policies and be prepared to adapt their strategies accordingly. The continued rise in interest rates can impact borrowing costs and affect the overall financial health of the business – especially for those with variable interest rate loans.
The laundry industry is increasingly subject to legislative and environmental regulations that can impact operations and profitability. Owners should be aware of potential threats, such as microplastic legislation, which could impact the use of microfiber filters and detergents. Additionally, the growing movement to ban natural gas in some regions can lead to changes in heating systems. The ongoing debate surrounding minimum wage increases also may result in higher labor costs.
Laundromat owners can mitigate these challenges by staying informed, keeping a close watch on legislative developments, and adopting sustainable practices to reduce environmental impact. It’s also essential to maintain a financial buffer to withstand economic uncertainties and potentially higher interest rates. During periods of rate fluctuation, it’s been advantageous to leverage fixed interest rates to help offset potential changes that could negatively impact monthly payments and store cash flow.
Personally, what are you most excited about heading into the coming year? As we look toward 2024, I can’t help but feel a sense of enthusiasm for what lies ahead. The laundry industry is experiencing a continuous stream of innovative ideas, technologies, and business models that are revolutionizing the way we operate laundromats and serve customers. It’s an inspiring time for individuals looking to embark on a new business venture, and I’m thrilled to be a part of an industry that fosters and supports entrepreneurial spirit while serving local communities. Laundromats continue to play a vital role in neighborhoods, providing essential services and bringing people together.
Over the last decade-plus, I’ve witnessed the laundry industry evolve – particularly when it comes to diversity and gender inclusivity. As a woman in this industry, I’m particularly excited about the newfound focus and opportunities for women. It’s an honor to be part of initiatives that promote women’s leadership and participation in the industry.
I’m currently involved in leading a women’s initiative at Laundrylux, as well as participating in CLA’s Women’s Laundry Network. It’s incredibly motivating to see so many remarkable women recognized for their contributions and achievements in the industry. Whether it’s as entrepreneurs or leaders within provider organizations, women are increasingly finding a welcoming and empowering environment in the laundry industry. The possibilities are endless, and the momentum is building for women to excel and make their mark in every aspect of the business.
Craig Dakauskas
Senior Vice President, North America-Commercial
Alliance Laundry Systems
Ripon, Wis.
We’ve seen incredible expansion into wash-dry-fold services by many owners. Offering this service brings in an additional revenue stream and expands a store’s coverage. Moreover, more store owners adding this service increases the visibility of laundromats, thus helping build the positive image of our business.
Overall, rising utility rates and interest rates are clearly top of mind in every industry, and laundromats are no different. I think you’ll see that continue into 2024. What this means is that owners and new investors need to focus on efficiency and obtaining the highest return on investment on any equipment purchases. They also should conduct a thorough review of these expenses against their revenues to identify if increasing vend prices is necessary.
For owners seeking to expand locations or retool existing stores, interest rates look to be challenging into early 2024. There’s reason to be optimistic that we could see some rate cuts later in the year; however, in the short term, there will be challenges.
Personally, what are you most excited about heading into the coming year? I’m excited about the current health of the laundromat industry. It has never been stronger.
Alex Harris
Vice President, New Project Initiatives-Northeast
Professional Laundry Systems, LLC
Commack, N.Y.
During 2023, there have been some significant happenings in the industry that have greatly affected store owners. One of the biggest is the increase in minimum wages across the country and how it has impacted the bottom line. Labor costs and utility rates have skyrocketed, which have created a ripple effect on machine pricing in most stores. Many laundromat owners have experienced increases of 50 percent to 75 percent.
Of course, without making the necessary vend price adjustments, it’s impossible to achieve the profits necessary to succeed. Inevitably, those hefty expenses will be being passed off to the laundromat customer.
Additionally, rising interest rates have deterred many owners from retooling their laundromats.
I’m also seeing a new ownership model of large, multi-store operators emerge – grouping neighborhood laundromats and, thus, maintaining their own locked-in market.
In 2024, I believe there will be new opportunities for owners, which will include manufacturers refreshing their lines of equipment with the latest economical features to help increase profits – along with new app-based programs to incorporate shared labor for delivery services, and the development of enhanced point-of-sale systems offering more control of inventories, data bases, costs, and accountability.
I think one of the biggest challenges next year will be maintaining a quality team of employees. The demands on wages have reduced the employment pool of laundromat workers. As a result, store owners may need to become more creative to attract good employees and maintain a loyal work environment with limited turnover.
Alex Jekowsky
Cents
New York City
The rise in data utilization and marketing are two extremely hot-button topics that have been talked about in 2023 more than any other time in our industry, and for good reason. Operators have never been more driven to reach many different kinds of customers (self-service, drop-off, delivery, commercial, etc.), and ensuring that they can optimize their existing business while reaching new customers is critical.
However, to run effective marketing, operators are reliant on data to understand how to reach their customers effectively. This has led to a rise in the digitization of laundry operations and has given operators unprecedented access to the health and performance of their stores and customer bases.
In addition, the macroeconomic environment is impacting every business owner, but our industry is uniquely positioned to take advantage of market dislocation. When there’s a higher barrier to get into the industry, it presents an opportunity to increase the amount of high-caliber investors and operators who want to open and grow their businesses by going all in on investing in high-quality equipment, in-store experience, technology, and more.
At Cents, we believe we’re experiencing a true renaissance of the laundry industry today. Coming out of the pandemic and now a bear market with historically high interest rates and inflation, store owners have shown incredible resilience to not just stay alive, but also to grow and scale.
Coming out of 2023, small-business owners have begun to rapidly embrace new technology – a study in the restaurant space indicated that 92 percent of locations are likely to increase spending on new technology in the next 12 months. In our industry, this means a rise in retools to take advantage of the new technology for equipment, as well as business management and payment solutions that enable an operator to make more money with less risk, capital, and time required.
One of the biggest opportunities to take advantage of in the coming year is generating recurring revenue. We’ve seen rapid growth in commercial laundry services and partnerships with residential buildings to provide laundry as an amenity to tenants. Additionally, laundromats are able to offer subscriptions and memberships to their regular customers in exchange for discounted rates. This is a tried and true model in almost every other industry.
The other trend we’re seeing is partnerships and bundled offerings with value-add businesses like drycleaning, tailors, home cleaners, and other related services. This will create more incentives for your customers to come to you by saving them the time and effort needed to find these elsewhere.
In addition to offering more services within the walls of a laundromat, we also expect partnerships with ancillary services to become utilized. Businesses such as tailors, drycleaners, and even home cleaning services make for a great match with weekly laundry services. Whether operators use their stores as a hubs for these services, or simply get revenue through partnerships, this will be more widely adopted. We’ve seen this as a great revenue driver – but an even better marketing tool.
With more services being offered, it’s inevitable that operators will need to add or increase labor to meet the given demands. Finding and retaining reliable staff can be a challenge, especially in an industry with high turnover rates. With this said, the importance of managing staff efficiently and adopting technology that enhances the employee experience will be key to maintaining quality service. At Cents, we’ve seen our stores experience a more than 40 percent increase in tip rates, faster order completion times, higher online ratings, etc. – all largely due to employees having an easier time succeeding through the technology in their store.
As we’ve seen in other sectors of the economy, inflation and changes in consumer spending habits are indicators of economic uncertainty. These changes can significantly affect laundromat operations. Inflation can lead to increased costs for utilities, supplies, and maintenance, while economic downturns may alter customer spending patterns. Although this may not directly hinder growth, it’s something to consider and protect against as the U.S. economy has proven to be more volatile than in previous years.
Personally, what are you most excited about heading into the coming year? I’m most excited about the evolution of our industry; from the operator, distributor, vendor, etc., a rising tide is lifting all boats. The average operator today is becoming more ambitious and willing to invest in his or her community and facility than in years past. Our entire industry is seeing the massive opportunity for growth.
Dennis Diaz
Spynr Inc.
New York City
This past year has brought some incredible advancements in technology and sustainability that are revolutionizing the industry. No longer just a gimmick, smart technology from manufacturers is actually improving efficiency. Picture machines that send alerts at the end of cycles, offer convenient payment options, and even predict and prevent maintenance issues. This game-changing innovation means that store owners can now embrace the Internet of Things and invest in smart systems to enhance customer satisfaction and streamline operations. Imagine a laundromat with self-diagnosing and self-fixing machines, or being able to manage energy consumption from your phone. It’s not just a distant future, it’s happening now.
Let’s zoom out and take a look at the big picture for businesses. We’ve all been experiencing a rollercoaster ride with the economy. Inflation has been hitting us hard, utility rates have been unpredictable, and interest rates have been all over the place. For laundromat owners, these factors have a direct impact on operational costs, pricing strategies, and the feasibility of expanding or upgrading. The key to success is having a strong marketing strategy to keep customers engaged, a well-managed budget to handle unexpected expenses, and an environmentally friendly approach to counterbalance utility price increases.
Next year is looking bright with opportunities, especially for those ready to think outside the laundromat box. We’re not just talking about the same old laundromat routine. It’s time to think outside the box and explore new service lines. Imagine offering subscription-based laundry services or creating a mobile app that allows customers to schedule pickups, drop-offs, and even choose their wash cycles and detergents. And don’t forget about specialized fabric care services for those items that need a little extra love and attention. Plus, laundromats are becoming more than just a place to do laundry – they’re evolving into socially responsible community hubs. Join the trend and be part of the movement with organizations like the LaundryCares Foundation. The possibilities are endless.
However, running a laundromat is not all sunshine and rainbows. There are some challenges to be aware of. Labor shortages can cause problems, and inflation impacts customers who use our laundry services. On top of that, regulations are always changing, and it can be difficult to keep up. But there’s also good news. CLA recently scored a huge win for our industry with regard to proposed microfiber legislation in California. As store owners, you need to be flexible and ready to face these challenges swiftly and head-on.
Personally, what are you most excited about heading into the coming year? I’m jazzed about the potential for laundromats to become community cornerstones. Think about it – a place where clothes get clean, sure, but also where people can connect, maybe grab a coffee, attend a workshop, or even read a book in a built-in library. It’s about creating spaces that wash away the drudgery of laundry day and replace it with a vibrant, shared experience.
Here’s to a 2024 where laundromats are less about the spin cycle and more about the social cycle.
