The Four Most Prominent Story Lines Impacting Owners in 2021
If this were a typical year, we’d likely be using these pages to recap a successful Clean Show.
However, 2021 – much like its predecessor – was anything but typical. Early on, it became apparent that Clean ’21 would become Clean ’22, as the lingering pandemic pushed the industry’s showcase event into the following year.
Not that this year was uneventful. From rising natural gas prices to the continued coin supply disruption to ongoing COVID-19 protocols, laundromat owners faced a slew of important issues in 2021.
However, at PlanetLaundry, we felt that four specific story lines topped them all with regard to their overall impact on today’s laundromat owners.
Help Wanted: The Labor Crisis
Although the labor pool was tightening even before 2020, the pandemic definitely compounded an already-bad situation – during a time when our economy is hungry for recovery.
“So many segments of business in North America are primed for a strong comeback but have been compromised due to an unavailable workforce,” said Joel Jorgensen, vice president of sales for Girbau North America. “In laundry segments specifically, many of our growth opportunities are in new, more premium services ‘spurred on’ and discovered by new customers and demographic groups during 2020.”
These opportunities, according to Jorgensen, include full-service wash-dry-fold, pickup and delivery, and commercial contract work – all demanding labor, equipment and mostly unskilled hourly workers.
“This worker segment is challenging to find, hire and retain at sustainable wages,” he added. “It’s a sad testament when ‘no-show’ interviews and ‘ghosting’ the first work day become the norm.”
“I’m no longer a laundromat operator, I’m a job interviewer,” half-joked Mike Gregory, who owns two laundromats in the Denver area. “If you can even get people to fill out an application, the interviews are now filled with no-shows, or they’re late. Plus, even training shifts are 50/50 no-shows.
“The only thing I was able to do was increase pay. I already paid $14 an hour, but I’ve begun starting employees at $15 an hour now. And I have one staffer who makes more than $20 per hour.”
Bryan Donegan, who just opened Laundry 24 in Evans Mills, N.Y., in May explained that the labor crisis has severely impacted his new business.
“I’m not lacking interest from workers,” he corrected. “I’m lacking interest from quality workers. I have no issue paying more than the minimum wage to those who actually work and don’t have their noses stuck in their phones or their eyes on a clock.”
Donegan has reacted to this hurdle by “making it happen.” No matter the time of day or night, he explained that he’s at the store to pick up whatever slack there may be, due to the lack of a full employee schedule.
“I also have taken on an unorthodox approach to how I hire,” he said. “I stopped advertising for employees. I want people who are hungry and who want to work. I’ve had better results by hiring those who inquire on their own.”
Alex Harris of Professional Laundry Systems in Deer Park, N.Y., noted that the increases in the minimum wage across the country have created opportunities for laundromat employees to seek more favorable jobs elsewhere.
“Looking ahead, we should start to create a model similar to the fast-food chains, offering additional perks to attract new employment opportunities to our laundromat workforce,” he said.
“The labor crisis of the past year has been particularly challenging for our company, as it has been for most laundromat owners as well,” explained Craig Dakauskas, senior vice president of North America Commercial for Alliance Laundry Systems. “In the laundromat world, it’s meant owners often are covering shifts for attendants and taking on wash-dry-fold duties just to get orders out the door.
“Unfortunately, there doesn’t seem to be much relief in sight in the near future.,” he continued. “Laundromat owners need to understand the competitive landscape of staffing. Thus, it’s important to do all they can to provide incentives and flexibility to attract and retain the best employees.”
For Luke Williford of The Wash House Laundromats chain in North Carolina, it’s all about connecting with the employees.
“We have worked extremely hard to stay in close connection with all of our more than 60 team members to make sure we are serving them well,” he said “We even hired a customer service manager who handles all training and onboarding of new staff, as well as being a big part of our retention by staying connected with our staff.
“We’ve increased wages, and since we missed our company Christmas party in 2020 due to COVID-19, we held a mid-year party, team-building and appreciation day in June – where we trained, thanked and gave a hug and bonus to every staff member.”
At Texas-based laundry delivery service The Folde, the demand for labor is variable, which creates variable staffing needs.
“We have a strong base of orders that we know will be in production every day,” explained the company’s Mark Vlaskamp. “We staff our full-time W2 workers to fill this demand. However, increases in demand come at a moment’s notice.”
To help fill this demand during a time when labor is expensive and the hiring process is time-consuming, The Folde has opted to work with on-demand labor temp agencies.
“I strongly believe these on-demand labor marketplaces are the future of traditional blue collar labor,” Vlaskamp continued. “Instead of workers searching for blue collar jobs, we’re finding more workers are searching for blue collar gigs. They want a one- or two-day commitment with the freedom to walk away when the gig is done. They’re looking for a side hustle, not a career and the restrictions that come with it.
“Instead of fighting this, we’re leaning into it. Simplify the product, make onboarding easier and get really good at training temps. If this is the new world of blue collar labor, there’s no need to fight it. Instead, let’s make it a win-win for us and the workers looking for side hustles.”
Ross Dodds, co-owner of Wash on Western in Los Angeles, sees the labor issue becoming a “dead horse” topic.
“It’s getting worse, and it’s affecting everyone,” he explained. “We are making huge adjustments that, in the past, we had been able to implement much more slowly – such as increasing prices very aggressively across the board… and all at once! We’ve seen labor go up $2 to $3 per hour to try to stay competitive, and we are about to go up another $1 to $2 for some of our basic entry hires, which is substantial.”
“From all reports, this appears to be a national, all-industries-wide problem,” explained Art Jaeger, who owns Santa Clarita Laundry in Santa Clarita, Calif. “We are now making our plans assuming this may be the new way of job life going forward.”
At Jaeger’s business, work schedules are being prepared with more built-in flexibility. The production loads are being monitored not to take on more business than the team can handle while still maintaining the company’s standards for customer service and return times. And prices have been increased to reflect the added cost of compensation, including bonuses and overtime that have arisen from this worker shortage.
“I’ve never seen such a tight labor market in the 53 years I’ve been operating businesses,” said Larry Adamski, who owns Muskegon Laundromat in Muskegon, Mich. “Our employee turnover increased dramatically in early 2020, and by mid-2021, I had increased our starting wage by 20 percent to attract new employees.
“Despite the wage increase, most candidates came with so much baggage that they were either unteachable or intolerable. And so it went, time and time again, as we struggled to maintain our standard hours of operation. My only encouragement was knowing that some local big-box retailers were hiring employees that were even worse than some I had hired.”
Of course, labor is not going to just show up when we flip the calendar page into the new year, cautioned Matthew Conn, global marketing director, commercial laundry product development and marketing at Whirlpool Corp. But he was optimistic.
“I don’t think it will continue to be as big of a problem over time,” Conn predicted. “It’s just going to take time to work itself out.”
In High Demand: Supply Chain Woes
On top of the labor crisis, 2021 has served up a perfect storm of supply chain disruptions, logistics issues and chip/technology shortages – all against the backdrop of high demand for laundry equipment.
Beyond everything else, the pandemic has exposed the frailty of our global production, supply and delivery channels. And, within the laundromat industry, demand for equipment has outstripped supply in many marketplaces.
“I will not go so far as to say that the huge demand for laundry equipment was spurred on by the supply chain challenge,” Jorgensen said. “I feel this huge demand for equipment is more likely a result of delays to plans and market uncertainty through 2020, that now has spurred into more of a ‘feeding frenzy’ for upgrades, expansion and to capitalize on new business opportunity and market demand.”
“The signals we’re seeing certainly don’t predict an end to these challenges in the year ahead,” Dakauskas said.
As a result, Alliance Laundry Systems has “focused on counseling customers on the opportunity costs of waiting for the perfect option,” as opposed to taking delivery of an available machine.
“Our commitment to open communication with our distributors and end-user customers is our greatest asset in navigating the uncertainty of these current challenges,” Dakauskas noted.
“Getting our hands on microchips is no different for us than anyone else,” explained Conn, with regard to Maytag/Whirlpool production. “We do our best to make sure we get the parts we need to be able to build machines, as well as having service parts available for our customers.”
Conn was quick to salute his company’s frontline workers.
“The people at our facility during this time period have stepped up like I’ve never seen,” he marveled. “The work they’ve done has been remarkable. To keep building in the face of so much uncertainty and managing the supply outages is remarkable. On some days, we’ll think we have parts – and then, all of sudden, a supplier may not come through, and we’ve got to scramble.”
On the transportation side, Conn pointed to the current difficulty in obtaining a sufficient number of vehicles.
“The drivers aren’t on the roads as readily,” he said. “You may get a 20 percent bump in demand, but you’ve still got the same number of trucks on the road. You can’t just flip a switch and add extra drivers to get products delivered to laundromats. So, the trucking shortage has been key and impacts laundries directly.”
Jaeger noted that the recent popularity of laundromats as solid business investments has played a role in equipment delays.
“Being designated an ‘essential’ business has made our industry more attractive to investors and developers,” Jaeger suggested. “Aside from the difficulties and stoppages to production lines attributable to COVID-19, it also has increased the demand for stores, particularly from developers, that has led to longer lead times and delivery schedules. I believe that some manufacturers and distributors have attempted to take advantage of investor demand – thus, diverting equipment to outfit company-owned stores, franchise operations or speculative development.”
New owner Bryan Donegan experienced the supply chain woes first-hand while trying to get his laundromat built.
“The greatly increased demand for laundry equipment, spurred on by the current supply chain challenges, impacted my business somewhat significantly in 2021,” Donegan explained. “Construction for my project began in November 2020 – so I felt the supply chain issues from the beginning. During my construction phase, everything had to be planned and executed according to my deliveries – and I had to be ready to receive my equipment, which was going through some delays.”
During his first week in business, Donegan’s store was a cash-only operation, due to microchip/electronics delays that affected some of the features on his new equipment.
In April, Gregory considered ordering six 80-pound washers, and was told it would take a minimum of six months, with no set delivery date.
“Spending $100,000 with no delivery date made me reconsider,” he said.
Dodds noted that he and his husband and business partner, Russel Pinkard, have resorted to a two-part remodel/retool strategy for their more recent laundry projects, due to the long delays for equipment.
“I have named it ‘Lipsticking the Pig,’ while we wait up to eight months for equipment,” he explained. “Many of the opportunities to purchase are in great need of a complete remodel and retool. We come in and replace the ceiling tiles, paint the ceiling rails, replace all lights to LED panels, paint the walls to our colors, rip out the old tile, replace vending machines, repair and clean up all existing machines, and remove any toploaders. We also upgrade restrooms and sink areas, and add air conditioning or swamp coolers. Then, we have to stop and let it run as is, because the new equipment is not here. And we’re seeing those delays get longer and longer as of late.”
At The Folde, the current supply chain issues and price increases have led the company to more closely examine its operations and look for ways to trim any fat.
“In good market conditions, it’s easy to justify all the bells and whistles,” Vlaskamp said. “However, we’re not there right now. These tough market conditions bring the unnecessary bells and whistles to the forefront. We’re consolidating the products and services we offer, while making sure we’re not causing any additional labor or supplies to go into the process.”
For example, The Folde has eliminated options for hangers and the poly-wrap that goes along with it. In addition, it has minimized detergent options and similarly condensed its bag size offerings. And, according to Vlaskamp, these tweaks have combined to help decrease the number of payroll hours per order, and eliminated approximately 10 inventory SKUs that are no longer needed to be kept in inventory.
“We adapted to the equipment shortage by placing orders much further in advance than we typically would,” Williford explained. “We forecasted our needs and placed orders as soon as we had leases signed, and even a few before our RE purchases, acquisitions or leases had been agreed upon.
“In a few locations, we decided to run the existing equipment. We acquired several locations with existing equipment that was in good shape and met our capacity needs. In the past, we would have liquidated all of it and replaced it. However, due to demand and supply chain issues, we decided to run this equipment, and it’s all worked out well.”
Despite the current challenges, A C Power Co., headquartered in Ivyland, Pa., is doubling down on its distribution operation.
“We’ve managed the increased demand by doing the same as our customers, reinvesting in our business,” said Matthew Gibbs, president of A C Power. “We’ve recently added new vehicles, tools and procedures to expedite our installations and service. We’re also in the process of adding new technology and software to our operations to further streamline our scheduling, shipping and inventory control. We didn’t want our employees to have to sacrifice time with their families, so we’ve found ways to accomplish more in shorter windows by comprehensively planning projects and working more efficiently.
“As we approach 2022, I don’t think that feeling of heightened demand will relent until manufacturers are able to catch up with production.”
Understanding that this is the case requires an approach that relies heavily on forward planning, a strong and honest relationship with your distributor, and an even greater reliance on maintenance and equipment appearance than ever before, according to Jaeger.
“We also have incorporated the ‘domino effect’ into our planning – carefully laying out a full and complete plan for incorporating new equipment when it arrives on the true delivery date, prompt installation, plans for the equipment being replaced, vend pricing and a marketing plan for success.”
[The second part of this feature article will appear next week.]
