A Closer Look at the Operational Metrics and Key Data Laundromat Owners Should Monitor to Stay on Track for Success
In the February issue of PlanetLaundry, some of the most successful laundromat operators in the U.S. shared the key performance indicators they use to keep their businesses on track. In addition, a few of the top washer and dryer manufacturers discussed the ways in which today’s modern laundry equipment can provide data and metrics critical to running a profitable operation in 2022.
In March, we’ve shifted the focus slightly, asking some of the industry’s leading providers of payment systems, POS software and pickup-and-delivery solutions to weigh in on the crucial topic of KPIs for laundromat success:
Nick Chapleau
Starchup
Every business unit should have one “North Star” KPI metric to guide them. For an unattended laundry, it might be turns per store hour or the utilization rate of a store’s machines. For drop-off wash-dry-fold, it might be pounds or bags per labor hour.
Owners should be able tell from this one metric how their business is doing. Focus relentlessly on getting that metric where you want it to be, and monitor it weekly, if not daily.
Once you know your North Star, build a set of secondary KPIs to achieve greater insight into the various factors that affect your North Star metric. Wash-dry-fold inputs fall into two broad buckets: the pounds of dirty laundry coming in, and the labor to produce clean pounds going out.
Sales and marketing KPIs – such as the cost to acquire a new customer, marketing dollars spent per pound entered, and pounds per customer – drive the dirty pounds coming in. These KPIs are important for scale, but the denominator – the labor hours – is what determines whether your unit economics are profitable.
Your North Star KPI will help you to determine whether process tweaks, such as paying commissions to production staff and mixing up schedules, improve productivity. Individual employee and group KPIs, based on a particular task list, can help you to understand how team members are impacting your North Star. These KPIs may include pounds loaded and unloaded to washers and dryers, and pounds folded per hour – but you can create a KPI from just about any task that can be measured.
Good technology aggregates and displays data in ways that enable businesses to more efficiently measure and track KPIs. In laundry, a good point of sale and delivery management platform has robust reporting to monitor selected KPIs. Pounds and piece counts per day, employee productivity, and sales and marketing metrics (among others) should each be trackable within your software.
Best Practices for Store Owners: At Starchup, best practices include continuously tracking your pounds per labor hour over various periods of time to understand trends in that KPI. We recommend tracking employee production tasks, such as wash loading, dry loading and folding to better understand your team’s contribution to the metric. We also recommend utilizing the tools within your software to understand where new customer acquisition investments are best allocated and to automate time-intensive marketing tasks, such as email and SMS marketing, to drive greater volume.
Gregg Schantz
Setomatic Systems/SpyderWash
The most important stats in any laundromat are those that help you understand the current performance and anything that indicates where you can improve. The main KPI is turns per day, as this is the stat that is used most often when doing due diligence on a possible new laundromat location.
In analyzing your laundromat, understanding your gross numbers and how that is allocated between machines is a good place to start. For example, how much revenue is generated by machine size – 20 pounds, 30 pounds, 40 pounds, 60 pounds, 80 pounds, dryers and so on. This can tell you when it’s time to replace or add new machines, and where your funds should be allocated.
For example, if your revenue/turns per day are strong in your 80-pound washers and not as strong in your 40-pounders, perhaps you’ll want to install additional 80-pound washers, if space allows.
Your performance indicators should be reviewed on a monthly, quarterly and annual basis.
With rising utility costs, you need to analyze your vend prices to make sure you’re not eating away at your bottom line. For instance, after analyzing the cost of water, you might decide that toploaders don’t generate enough money to justify their water usage. If the vend price is $1.75 and the water usage costs you 93 cents per wash, that space might have a better ROI if you installed a frontload machine, where the vend price will be higher and the cost of utilities lower.
These indicators are important because they give you a road map of where and how to improve the business.
Technology has become critical in being able to monitor such stats as turns per day and usage by machine/machine type. The most effective way to monitor these metrics is through a modern, robust payment system.
Your system should be able to show you how much each machine is used (turns per day), as well as the type of payment used – coin, credit, debit or mobile wallet. All of these reports and data should be able to be viewed remotely from an internet-enabled device, and your system should automatically generate reports daily, weekly and/or monthly for maximum efficiency.
Best Practices for Store Owners: For today’s laundromat owner, this is a critical way to run the business. More advanced systems combine payments and complete management tools for the operator to use in order to maximize ROI and make more informed business decisions faster than ever before.
Matt Simmons
Curbside Laundries
Our primary source of income at our laundromat is our wash-dry-fold business. We gross more than $125,000 of WDF each month from a single location, and 75 percent of that business comes from pickup and delivery.
A vital KPI is how many new customers we bring in each month, which is the best indicator to how much the business is growing. Although each PUD customer spends about $70 per order, over the course of a year they will spend, on average, close to $600. The best way to project future earnings is to track how many new customers are coming on board. We average 73 new pickup-and-delivery customers a month. Business either goes up or down, and you always need to bring in new customers to grow your business.
It’s also important to track retention to see how often customers are coming back.
We track the health of our pickup-and-delivery business once a month. Using pickup-and-delivery software, we’re able to see our customer acquisition rate and route density all the way down to an individual zip code. Our strategy is to double down on the zip codes that are receptive to pickup and delivery. After all, why spend money in a zip code that isn’t working? By tracking our Google Ad performance down to individual zip codes, we’re able to get the high return on investment, versus just throwing marketing money at Google blindly.
By tracking new customer acquisition and customer retention, we realized that wash-dry-fold and pickup and delivery are not a get-rich-quick business. WDF customers are loyal and consistent. This part of the laundry business is all about building up a customer base and getting residual income. Many laundromat owners may be underwhelmed by their “grand opening,” because not everyone knows about it – but then they see their self-service business grow over time. Laundry pickup and delivery is the same – it takes time to grow, but then it becomes a sizeable and consistent source of income.
Best Practices for Store Owners: Pickup and delivery is data-driven. When selecting pickup-and-delivery software, make sure the reports are useful, provide the information you need to know and are easily accessible. Looking at your revenue is not good enough, you need to know what is working and what requires your attention.
Ricard Pryce
CleanCloud
Other than the traditional KPIs – such as sales/revenue and costs, which all businesses should monitoring – there also are metrics specific to laundromats. These include popular hours, subscription usage and overages, machine usage and maintenance tracking, staff productivity and overtime costs, staff order deletions and discounts given, and so on. Using today’s tools and sophisticated data can help owners better understand where their store’s may be underperforming.
It’s not a one-stat-fits-all solution. Some of our clients use the metrics page to track a conglomerate of KPIs on different timescales to understand not only the “snapshot” of their daily performance, but also the trends and correlations relating to fluctuating factors, such as seasonal and temporal trends like school/collage holidays, national holidays, end-of-the-month (before payday) dips in usage, and more.
Some performance indicators need to be monitored daily, such as order count and daily sales readings. Other metrics – like a physical internal audit of orders, to be reconciled with POS – should be monitored weekly or biweekly. Other indicators, such as profits or sales and revenues, need to be reviewed at multiple points to provide an overall picture of business performance.
For example, sales should be monitored daily, weekly, monthly, quarterly and annually. Any growth or downward trends then can be identified, and (in conjunction with other data available) the owner will be able to pinpoint exactly where the business is losing money or underperforming.
The introduction of today’s modern technology to the laundry space has given owners greater access to reporting within a wider range of areas. The tracking of orders electronically and building up a history of order and customer data allow algorithms to calculate multiple statistics and performance indicators, even allowing operators to compare between two different times in a business’ history. Today’s tech can track staff productivity and payroll by combining data from multiple features of the POS system – likewise with driver performance and productivity tracking, top-paying customers, top-used machines, machine maintenance tracking, and so much more.
Best Practices for Store Owners: When reviewing KPIs, it’s best to not leave any underperforming area of your business unaddressed. More often than not, when you see a downtrend in one of your metrics, it will have a domino effect in other areas if issues aren’t addressed immediately.
The only way to guarantee a high-performing laundromat is to never settle on what you think is satisfactory. All stats can be improved, and it’s the implementation of policies to achieve continual improvements that will help you to succeed.
Steve Marcionetti
Card Concepts Inc.
There are a number of sales-specific details that can be valuable to store owners beyond just a simple sales report. Operators should be constantly comparing data sets between similar time periods to determine what’s working and what’s not.
This data should be filterable by equipment type to further drill down results to help make educated changes in the business. Comparing sales totals on an hourly, daily, weekly and monthly basis will help owners make various decisions, such as:
- Should I be open 24 hours?
- Which machines are the most popular?
- Do I have enough of these machines?
- Is it time to raise vend prices?
Having an historical record of these critical KPIs allows for a cause-and-effect review, such as:
- How was my store affected by a new competitor opening up?
- How did my store perform after a recent vend price change?
There also are statistics regarding employee machine usage, work hours and scheduled tasks, which can help determine if staff members are fulfilling their obligations during their given shifts.
No doubt, without good data it’s difficult to make educated business decisions for the future.
For some data points, it might be prudent to be able to quickly review every day. Other data points might only be valuable to review monthly. The frequency will depend on what’s happening with that operator at that time. For instance, an owner might be looking to open another location and want to closely monitor exiting sales data to determine how to equip the new location. Meanwhile, other operators might be watching closely how marketing efforts are impacting business and comparing “before” and “after” sales data, based on in-store promotions or coupons.
The data required to ask and answer these questions is not available without technology. Today, important usage data is being pulled directly from the washers and dryers or from an integrated payment system. Almost all of the systems today offer remote access to enable store owners to review data from a mobile device or from their PCs.
Most of the latest-generation laundry equipment is equipped to offer retail customers cycle options, allowing them to modify and purchase “upgrades” to their cycle. Without the right technology, determining how many people are selecting these upgrades is nearly impossible. However, with the proper tools, operators can use this data to determine if the upgrade pricing is appropriate and then make adjustments as needed. Some of the products on the market also can monitor and report on employee and equipment activity. Overall, the systems now are much more holistic than they’ve ever been.
Best Practices for Store Owners: Owners should be running weekly sales comparisons over a four- to six-week period to see if there are any trends. If a vend price change has been implemented, running a turns report before and after the change will help determine if the same number of cycles are being purchased.
Depending on the retention capabilities of an operator’s system, he or she should make sure to have at least a monthly sales record on permanent file. If a store is experiencing persistent issues with a particular machine, the owner might be more focused on service reporting and using that data to help communicate with a service provider or the manufacturer. If leveraging employee activity reporting, owners should be retrieving this information weekly (or at least during employee reviews) to ensure that their staff members are performing as expected.
Pablo Marvel
Cents
The key metrics to watch when growing a laundry business should include:
- New customers vs. recurring customers, by month
- Average order value
- Pounds processed per day and per month
- Pounds processed per employee
- Delivery orders vs. WDF
- Self-service business vs. WDF
- Inventory sales
- Sales by payment method (cash vs. debit/credit)
These metrics address both the growth of the business, as well as employee performance, which can often be the most critical element of success.
Depending on your goals, it’s wise to have a minimum monthly review, broken down by week and by day. Alternatively, if you’re trying to achieve specific growth metrics, checking daily and weekly can help you optimize accordingly using promotions, commissions, tips and advertising.
With the right POS system and business manager, smart operators will use automation to their advantage to more efficiently monitor the health of their businesses through reporting. This can be done remotely with a quality cloud-based system. Additionally, using data to plan helps show incremental growth and, more importantly, will illuminate specific areas that require improvement.
Best Practices for Store Owners: Although the general health of the business can easily be managed and improved through reporting, using data to actively monitor employee performance can redefine the success of a business. Understanding how to incentivize employees and create goals and frameworks that enable their success will lead to outsized results for the laundromat owner. For example, actively monitoring how many pounds each employee is processing on a daily basis – and then attaching incentives, commissions and bonuses to that metric – has been incredibly successful for many owners across the country.
Ian Gollahon
Wash-Dry-Fold POS
In a wash-dry-fold operation, KPIs tracked are typically a function of scale. Operations processing more than 1,000 pounds per week are typically tracking KPIs that smaller operations don’t bother with.
Here’s my favorite example: If employees are processing wash-dry-fold orders with cards, coins or an app, a key metric to track on a per-order basis is your “machine start” amount. If an employee uses $40 worth of “machine start” to wash a $40 WDF order, you have a red flag. The employee might be using wrong-sized machines, or your pricing might be too low. However, it’s often discovered that some of the “machine start” money found its way into your employee’s pocket. Employees might not be able to pocket coins in a card or app-based system, but they can use their cards or an app to start machines for self-service customers in a “good tipper” or “friends and family” situation.
When you look at costs of wash-dry-fold as a percentage of WDF revenue, there are a few goals you should keep in mind:
- Machine starts should be less than 40 percent of your wash-dry-fold revenue.
- Supplies should be less than 10 percent of wash-dry-fold revenue. Requiring attendants to use properly measured amounts and buying soap and other supplies in bulk will help.
- Refunds, re-dos and other shrinkage should be less than 5 percent of wash-dry-fold revenue. As your wash-dry-fold operation grows, so does the importance of knowing your numbers.
If you track the same KPIs month-over-month, you can see trends and respond accordingly. If you’re tracking your monthly financial numbers with accounting software, this might be a good time to grab your non-financial KPIs, check for employee theft, and make sure your inventory is well-stocked.
Best Practices for Store Owners: If your current system is “a pile of carbon copies and some chicken scratch,” not everyone is going to respect that system. Customers and employees typically have more respect for computer-based systems (and so do other business owners who buy laundromats). Computerized systems prevent theft and identify/document growth. Metrics such as “top 10 customers” and “pounds processed” tell the success story of your business over time in a language that everyone can respect.
