The Four Most Prominent Story Lines Impacting Owners in 2021
[This is the second of a two-part feature article. You can read Part 1 here.]
In addition to the labor crisis and the supply chain issue, here are two additional story lines we felt had the greatest impact on today’s laundromat owners.
Not Your Grandfather’s Business: Industry Consolidation
Industry consolidation is not new to the laundromat industry. However, a marked increase in the number of laundry franchises, an emphasis on manufactured-owned stores and the continued shift in the distribution model all garnered headlines in 2021.
In fact, The Wash House considered franchising its operation and attaching its proprietary payment system to the franchise, according to co-owner Luke Williford. However, in the end, the family-owned chain decided against franchising its model, in favor of continuing to grow corporately.
“I wish everyone well in this great industry,” Williford said. “The great thing about this business is that you can be successful a million different ways, as long as you invest both your time and resources wisely and ultimately care about your staff and customers.
“I think the growth of laundry franchises will be a slow process, and it all hinges on the franchisees’ success. That is what has to be the focus of the franchisors. And they have to have a proprietary differentiator that sets them apart to justify the franchise fees to scale nationally.
“We will continue to see them grow, and more franchise models will pop up, but I don’t believe they will take over the industry.”
As for manufacturer-owned stores, Alex Harris of Professional Laundry Systems sees this trend as a mistake.
“Manufacturers know how to build equipment and industry products,” he said. “They do not know the local codes, the physical demographics, local community needs and, most of all, the importance of being a local community member. Additionally, aftermarket support and service-related issues that a distributor would normally handle has now become extinct. In such cases, the former personal touch that an individual store owner once projected has gone to a corporate structure.”
Long-time owner Art Jaeger also shared his thoughts on the evolution of the laundromat business model.
“This is no longer your grandfather’s business,” he stated. The 1,000-square-foot, mom-and-pop neighborhood laundry is going the way of the soda shop and hardware store. Recently, this magazine heralded the arrival of the ‘mega-laundry,’ which takes mega-bucks to build. Adding to this is the re-entry of distributor-owned stores and the 2020s attempt to reinvent the laundry franchise format that failed in the past.
“There exists inherent difficulties in scaling this industry to meet major investor requirements. When investors call for three or four new laundries to be opened each month because that’s what the business plan calls for, is every one of these stores being built in first-rate locations? When you add middle management, a home office staff and take fees off the top, can you still meet earning expectations? Do independent operators want to be involved with companies that are, essentially, in competition with them? We’ll see.”
“Quite simply, the growth of the franchise model we saw in 2021 will continue in years ahead – and is important,” Alliance Laundry Systems’ Craig Dakauskas countered. “The result is a better customer experience, which benefits all store owners through our industry being seen in a more favorable light. Reinvestment is a necessary component to business operations.
“In terms of the changing distribution model, I can speak only for Alliance Laundry Systems – and, yes, we were quite active in acquiring equipment distributors in 2021. I believe our goal of partnering with excellent people and strong businesses in exciting markets helps improve customer service in all areas.”
Whirlpool’s Matt Conn said he believes varying business models all have the ability to delivery for the industry.
“It will be interesting to see how they all materialize and what kind of traction they get in that space,” he said. “These things are always shifting and changing – and laundromat owners need to adapt to make sure they’re keeping their business models fresh and serving the consumer. On our end, we have make sure that we’re meeting the needs of the industry as well.”
“It’s happening,” Joel Jorgensen, vice president of sales for Girbau North America, stated matter-of-factly, with regard to the industry’s current evolution. “Only time will tell if these can be successful models and market approaches. Recent history shows vended laundry consolidation has had its challenges, even with experienced franchise executives with very deep pockets.”
A Game-Changer: The Growth of Pickup and Delivery
With the rapid growth of such services as DoorDash and Uber Eats, the popularity of app-based, on-demand services has skyrocketed, Harris pointed out.
“These programs in our industry are becoming so powerful – incorporating wash-dry-fold service from point of sale right into scheduling a pickup or delivery, start to finish,” Harris said. “This is a game-changer.
“The best part for laundromat owners is the fact they can use outside services to deliver, reducing overhead,” he added. “These on-demand services will fill income gaps in the laundromat industry. Future stores are going to continue to grow and offer more services to their customers through a virtual setting with powerful technology.”
Technology certainly is a key component to the increases in pickup-and-delivery services. Adding the service introduces complexities into the business that can be smoothed by all-in-one systems that combine all elements of the laundry business. Over the last year, improved access and adoption of such systems drove the proliferation of the services among laundromat owners.
Some of the cutting-edge players leading the charge in the pickup-and-delivery laundry space include such companies as Cents, CleanCloud, Curbside Laundries, Hamperapp Technologies, HappyNest, Starchup and Wash-Dry-Fold POS. And that list is growing.
“This trend will only gather momentum in the years ahead,” Dakauskas said. “Convenience is the name of the game – we can have literally any restaurant meal delivered to our doorstep and online orders shipped next day. Expect to see our business meet a growing appetite for greater convenience through continued growth of pickup and delivery, as well as other offerings geared toward elevating the service level to the customer – making their lives easier.”
Jorgensen, however, clarified that he feels the growth of PUD services in 2021 was not strictly a function of the new tech firms entering the industry.
“I would attribute some of the growth to technology,” he said. “However, pickup and delivery, advanced POS systems and segment growth have been around for some time now. Necessity spurs change and growth. Many stores made the shift to curbside and PUD routes in 2020, learned that it worked, and learned how to be successful in expanding business volume and profitability.”
Store owner Bryan Donegan agreed.
“I think the growth is partly due to the fact that society is less social these days, and also partly due to the current global health crisis,” he explained. “Much like we saw happen with the food industry throughout the pandemic, people don’t want to be around others as much as they used to. People have the mindset that they can either take the time to go to laundromat and expose themselves to everything and everyone there – or they can have it picked up and delivered, and have it all taken care of for them… with less risks or exposures, and without having to utilize any of their time. People want the simplest, least-intrusive method of accomplishing their tasks.
“I see this trend becoming more of a standard for the industry, especially if we find ourselves going through additional waves of the pandemic. It’s out with the milkman – and in with the laundry man!”
“I remember being told pickup and delivery was a phase,” recalled Mark Vlaskamp of The Folde. “This is proving untrue. And the laundromat owners who laughed us out of the room five or six years ago are now launching their own delivery programs.
“Double-utilization through laundry delivery service turns absentee laundromats into high-touch warehouses and production facilities,” he added. “At The Folde, we average more than 25 turns per day, while the average distributor sells laundromats with three turns per day as the goal for new stores. Our machines are spinning 24/7 with no slack capacity, while the payments on the equipment and the facility remain the same.”
Williford stressed the importance of the human touch with regard to pickup-and-delivery success.
“PUD is a logistics business that is done well by many operators around the country – the most successful being hands-on operators,” he said. “PUD has been attempted to be scaled nationally for a long time. I think many of the brightest minds are working on ways to scale PUD and will continue to improve those operations. However, the human element still remains the toughest and least-talked-about factor in pickup and delivery. We can’t remove the human element. Technology is fantastic, but staff members are – and always will be – the greatest asset to any business, especially a successful PUD operation.”
New Blood in the Industry
So, what does 2022 hold for the laundry business?
Batting Practice: “Our expectation is that these trends will continue well into 2022,” Vlaskamp predicted. “It’s likely things will continue to get worse before they get better. Once you concede that, what good does dwelling on it do? We’re using the down markets as batting practice. Let’s get lean, reinvent our processes and reconsider every step in the operation to find room for improvement. Those who find ways to thrive during the downturn are going to be well-positioned when the clouds clear.”
Multi-Dimensional: “The historically one-dimensional and passive ‘self-service’ laundry segment has matured to realize there are many opportunities to fill available capacity,” Jorgensen stated. “The general public, most of whom did not consider themselves laundromat customers, realized over the past 16 months that they very well may be laundry and textile-care-service customers. Now, the segment and market are finding each other. The multi-dimensional ‘laundry service center’ will continue to expand thanks to market demand.”
Fresh Eyes: “Personally, we continue to buy anything that comes along that makes sense, and are growing as fast as we can during these times,” said California operator Ross Dodds. “A lot of opportunities are opening up, as many realize this business is more hands-on than they wanted – especially right now with the world changing every month… and sometimes faster.
“This year has seen a lot of good come out of it for the laundry industry, as well as some complications. I think the pandemic and the ‘essential business’ designation put a spotlight on laundromats that has never been brighter, which is leading to new blood in the industry – with fresh eyes, perspective and visions of a better laundry industry.”
