Putting Your Profits to Work

By Bob Nieman, CLA Member posted 10-02-2017 09:19

Some of Today’s Top Owners Discuss the Ways They’re Reinvesting in Their Growing Laundry Operations

As the story goes, a teenaged Warren Buffett partnered with one of his friends to buy a used pinball machine for $25 – which the high school buddies promptly installed in a local barbershop. Apparently, the game proved popular with the barber’s clientele, so the young entrepreneurs reinvested their profits to buy more pinball machines. In time, they had eight machines in several shops.

Eventually, they sold their gaming venture, and Buffett used his portion of the proceeds to buy stock and eventually launch another business. Of course, the rest is well-documented history.

Undoubtedly, Mr. Buffett recognized the value of reinvesting early on. And, as a laundry owner, reinvesting is crucial to your company’s continued success as well. For any business seeking growth, some form of reinvestment is necessary. It doesn’t have to be all of your profits, but a significant amount of resources, when targeted effectively, can dramatically improve your bottom line.

With this in mind, we asked a number of leading laundry owners how they’ve reinvested in their businesses. These operators were asked to consider investments other than new washers and dryers – that would have been too easy!

Jim Kennedy
Pronto Laundry
San Diego, Calif.

One investment that has paid off extremely well for us is a water purification and dispensing plant.

Many of our customers – probably from counties with poor water quality – are accustomed to cooking and drinking purified water. Our concept was to not only provide the highest quality purified water, but to do so in a way that visually communicates that high quality.

Instead of a big blue plastic vending machine (with who knows what level of system inside), our operation features a stainless steel-lined enclosure with stainless steel connections, chrome-covered filters and a large blue plastic water storage tank that’s tall as a person. This system is all behind glass, with a separate exterior dispenser.

There are other high-end laundries with water plants, serving this demographic – and I suspect they all would agree that the investment of more than $25,000 was more than worthwhile.

Dan Marrazzo
Laundry Depot
Morrisville, Pa.

Two of the most unsuspectingly positive investments I’ve made have been (1) the replacement of traditional fluorescent bulbs in all of our stores to LED fixtures, and (2) the addition of a “store library.”

The lights have reduced our energy costs from the obvious reduced usage of electric – and also provide much better lighting. Plus, there was a secondary savings in air conditioning load, as a result of the little to no heat created by the LED lights. The standard T-12 and T-8 bulbs produce a large heat load, which I have now eliminated.

Our library is based on the honor system. We have asked our customers for books and, as a result, we’ve filled our shelves with hundreds of books. Customer may read here or take a book with them – we don’t fret if they don’t bring them all back. Most of our customers, between 8 and 80, use this amenity and love it.

The lights enhance our utility bills, and the library enhances the minds of the future.

Ed Ellis
1 Clean Laundry
St. Cloud, Fla.

Our store is just over two years old, so it’s still relatively new. Since opening, we’ve invested in automatic doors. We also have credit/debit card and coin acceptance on all machines, and our Wash Alert Monitor informs customers of the status of their washers and dryers.

In April, we began outfitting our staff members in bright pink uniform shirts to help our customers identify our attendants in the store.

We’ve also begun to invest in online marketing, including Facebook and e-mail promotions to all of our wash-dry-fold customers. In addition, Square is giving us $350 in processing credit for customers who use Apple Pay.

Joram Wolanow
Wisdom Wash
Dallas, Texas

The best recent investments we’ve make in Wisdom Wash have been replacing all of our lighting with eight-foot LED tubes, scrapping our old linoleum tile flooring with porcelain tile and completely renovating our parking lot. Those are three key areas for any laundromat.

Ross Dodds
Wash On Western
Los Angeles, Calif.

I recently made two investments. The first may seem a bit silly – but I bought a bill counter. If your store isn’t a full card store – and ours is not – it can add up to a lot of time counting change machine bills and sorting them for bank deposits. As a result, that $500 investment is paying for itself very quickly.

The second investment was moving my point-of-sale, timekeeping, payroll and workers’ compensation all to one platform with Square. I already was making use of the iPad for my previous POS, so the switch was fairly easy. Again, we’re really talking about time here, so integrating my timekeeping and payroll will save me at least an hour per pay period. In addition, by integrating my workers’ comp with my payroll, I pay based off of actual payroll, versus an estimate and possibly a huge bill at end of year if my payroll increases higher than anticipated.

Victor Nichols
The Laundry Station
Bradley, Ill.

When I bought my recent laundromat, it was rundown and outdated. Perhaps the biggest improvement other than machines that started to bring customers back to the store – and something the other two laundries in town didn’t have – was air conditioning. I remember chocolate melting in the snack vending machine because it was so hot in the laundry. In fact, customers used to leave the entrance door propped open at night to let in the cool in; however, a big issue with that “solution” were all the bugs that would then come into the store. Honestly, it was a nightmare.

Installing an air conditioning system was best investment I could have made to this business. It took a while, but the word got around and customers have started to flock in. My revenue increased by $2,000 a month since putting in the new AC system.

Stephen Bean
Woodward Coin Laundry
Royal Oak, Mich.

There are a couple of investments I’ve made – and that other vended laundry owners should make – to boost sales.

The first one is posting signage indicating that our customers can wash and dry their vehicle’s floor mats while they are at the store. This saves the customers some time, and it provides us with added revenue that we likely wouldn’t receive otherwise.

Second, we’ve invested a large, programmable television monitor on which we sell advertising for other retail businesses within the neighborhood. These ads appear on a continuous loop, and the business owners pay us a monthly fee for their promotional spots. I think all laundry owners should get into the advertising business.

Paul Hansen
Su Nueva Lavanderia
Palos Heights, Ill.

We’ve always believed that, in order to be successful, a laundromat has to continually reinvest in the business. Typically, when store owners think about reinvestment, they immediately envision new equipment. Although having the latest washers and dryers is an important aspect of keeping a vended laundry up to date and certainly represents the “bread and butter” of the business, there are several other investments operators can make.

In today’s business climate, it’s absolutely essential to invest in your website and social media presence. We’ve been working with a company to keep our site on the cutting edge, ensuring it has all of the bells and whistles that search engines such as Google are looking for – in order to be as close to the top of the page as possible when potential customers are searching for a laundromat. This company also provides us with regular social media posts, which also enhances our SEO.

We’ve also added digital message boards above our card machines; these boards provide details about our pricing and store policies, and they also carry advertisements for our wash-dry-fold business and over-the-counter products. To add this to your store, all you need is an inexpensive television and a digital media player, and you’re good to go.

Lastly, and this isn’t necessarily a small investment, we’ve added an online pickup and delivery service to expand our wash-dry-fold business. Our customers now can place orders online or through our app to get their laundry picked up, processed and delivered.

Sam McKnight
Little Giant Laundry
New Haven, Conn.

Two recent investments immediately come to mind. The first is the installation of new energy-efficient LED lighting, which is expected to reduce my electric bill by about 30 percent. The installation was done through my local electric company’s small-business program.

The added benefit is improved lighting quality – not only in the store, but also in the parking area at night, which is an added bonus for customer safety and convenience.

The second investment was purchasing my own ATM. My previous arrangement with a vendor was a huge disappointment, as the machine was often “empty” – which led to some rather frustrated laundry customers. I made this decision more than a year ago, and having a working, reliable ATM has been great for my business. My customers now have confidence that our machine will be working when they need it.

David Heath
PJ’ Laundry
Bryan, Texas

Some of recent investments we’ve made in the business include ATMs, water machines, an ice vending machine, a coffee machine and gumball machines. These additions to the business were all to achieve an overall customer environment that’s superior to our competition.

Next, we plan to install automatic front doors to step it up another notch.

Mark Murray
Adrian Fabricare Center
Adrian, Mich.

My annual plan always includes new investments for each department of my business. One year, it may be a new automatic door; the next year, a redesign of the back room; and the year after, redecorating and replacing the lighting with LED bulbs.

The annual plan on a single sheet of paper, which is updated annually toward the end of year – and it definitely must include some “less-than-obvious projects.” This keeps us mentally fresh and on our game. When I can no longer come up with anything, it will be time to retire.

Duane King
LMARIES Laundromat
Bowling Green, Ohio

This year marks our 15th year in business. Although our latest investments in the laundry have been an ATM and a large dryer, those additions to our operation hardly seemed Earth-shattering to me.

I discussed the topic of investing in the business with my wife, Lisa, and she made a great point: “Our best investment has been our time in keeping the store clean and all of the machines functional.” I believe that statement best sums up the reason LMARIES has been so successful through the years.

Bo McKenzie
BBM Coin Laundry
Rome, Ga.

At my store, we’ve recently undergone several upgrades and improvements, all with an eye toward enhancing our customers’ laundry experience:

1. We painted the interior of the building.
2. We replaced old laundry cart wheels with larger, five-inch mega-caster wheels.
3. We added central heating and air conditioning.
4. We added a laundry bag vending machine.
5. We recoated the parking lot.
6. In the restroom, we’ve installed a metal door with a louvered insert featuring a safety door handle.
7. We’ve begun replacing older lighting with LED bulbs.
8. We added free Wi-Fi access.
9. When we opened in 2008, we started with a four-camera security system. We upgraded to an eight-camera system in 2012, and last summer, we upgraded again to a 16-camera system. Customers walk into the store and see all of the cameras inside and out, and they know they’re being watched.

Each of these upgrades have been noticed – and appreciated – by our customers.

John Henderson
Liberty Laundry
Broken Arrow, Okla.

I’ve had a couple of conversations with my equipment distributor recently, in which the subject of ROI came up. One of those conversations was about the return on investment of soft-mount vs. hard-mount washers. Soft-mounts cost less. Therefore, the ROI must be higher, right? But hard-mounts last longer and, in my opinion, give a more professional, commercial look to a laundromat. That’s also why I got rid of my toploaders. But wait… toploaders cost even less, so isn’t the ROI even better for toploaders?

In the other conversation, we were discussing the relatively high cost of some hybrid payment systems that allow both coins and credit card acceptance (which is how all three of my stores are equipped) and how there are some lower-cost alternatives. However, to my thinking, some of those lower-cost alternatives require more steps for the customer or seem less user-friendly. Some even require customers to install an app on their phone in order to utilize its functionality. So, is there really a better ROI in that instance, even though the cost may be less?

The point I’m trying to make is that looking at numbers alone isn’t always the best way to gauge buying decisions when looking for ways to improve your business. In fact, many times it may be impossible to measure the actual fiscal impact of the improvement.

How do you go about deciding where to spend those hard-earned dollars you feel you need to put back into the business?

Just like the crew of the fictional starship USS Enterprise, Liberty Laundry has a “prime directive” – only ours has nothing to do with the affairs of alien cultures. Our business’ prime directive states: “We make laundry easy!”

Therefore, most of our decisions about reinvesting in the business are driven by that and center on two areas: improving our systems and processes, or improving the customer experience – or both. Again, it may be difficult to measure the true impact of streamlining a process or making a cosmetic improvement.

For instance, we recently spent close to $10,000 to convert a hinged side door near the service counter at our oldest location to a single sliding door, making it easier for drop-off customers to bring their laundry to us. It’s difficult to measure ROI on something like that, but from the customer’s perspective, it sure makes life easier.

We have recently enrolled in our online payroll company’s “Human Capital Management Solution” (as they call it), which is an HR management system allowing us to improve our employee hiring practices, onboarding, training and document management. By becoming more consistent in our hiring and training methods, we hope to improve employee retention. More experienced employees will lead to a more consistent customer experience.

Other upgrades we’ve invested in over the last couple of years include: repairing street signs at two locations; repainting the interior and exterior of one store, and remodeling and upgrading the equipment in another; improving our wash-dry-fold process through an improved point-of-sale system at all locations; improving the “kids’ corner” in two stores; and improving Wi-Fi access and management at all three locations (see the September 2017 issue of PlanetLaundry for details).

The list goes on, but each improvement has been accompanied by a cost benefit analysis to determine how it will help make it easier for our customers to do their laundry. It’s as simple as that.

Jim Whitmore
Sunshine Express Laundry Center
Gloucester, Mass.

This summer, for the first time, I hired four part-time summer interns. These were all college-age young adults. The net result of this investment was a sizable dent in my small project list, which is almost always sacrificed for larger projects, as well as day-to-day tasks.

In addition, one of the interns is a recent graduate, certified as an early childhood education and ESL specialist. As a result, she spent a portion of her time working with my staff on their English speaking skills, which was a huge win-win. The other major undertaking was setting up earlier childhood literacy centers in each laundry location – modeled after the Too Small to Fail philosophy, which is part of the LaundryCares Foundation concept.

Michael Finkelstein
Associated Services Corp.
Baltimore, Md.

A simple investment for any laundry operator to make is an upgrade in lighting. If you’ve got old tubes, replace them with new, energy-efficient lights – T-8s, T-12s, LEDS… there are all sorts of lighting options. It’s an investment that will brighten up your store and save you money on your electric bill. In addition, the store will look cleaner and be more secure.

A second investment I’ve made has been in tankless water heating, which can be very cost-effective. When a washer is activated, the water will flow through heated coils and then directly into the washers, as opposed to having the water sitting in a storage tank, where it’s being heated every few hours – even in the middle of the night when no one is in the store.

The tankless units we’ve used have saved us a lot in heating our water. And our customers love them; I’ve not had one customer complain about not having enough hot water.

A third solid investment we make in our stores is in the flooring. You should be continually making sure that your floor is in good shape. Over time, vinyl tile can wear down. In many of our stores, we’ve replaced old VCT flooring with ceramic, porcelain or terrazzo floors, which hold up much better under heavy foot traffic. These types of flooring materials last longer and stay cleaner. The downside is that they’re more expensive than VCT flooring.

A fourth investment is in outdoor signage. Your sign should be contemporary-looking and well lit. If you’ve got an old, rundown sign in front of your store, people will just drive right by your laundry, because they’ll assume your facility is old and rundown on the inside, too. Even if you’ve just completed a major remodel, people driving by don’t know that. Spending money on quality exterior signage is a wise investment.

Lastly, doing something for your community is a great investment in your business. For example, I have opened my stores to local churches that wanted to do the wash for some of the seniors in the neighborhood or for people in their congregations.

I’ve also hosted a couple of LaundryCares free laundry events. We tied one of these events into a major remodel, which gave people a glimpse of how our newly revamped store was going to look. In addition, this event received some unexpected TV exposure, which was awesome.

Our other LaundryCares event was at a newly opened store in a much smaller town. The store had been open for about six months, and many people didn’t even know it was there. However, my landlord for that store, who owns a supermarket next door, posted information about this free laundry day on Facebook – and he even grilled hotdogs and hamburgers for people during the event. We ended up receiving a tremendous response, even doing the laundry for a number of people who had been devastated by a hurricane a year earlier. In fact, one woman, who had put all of her flood-damaged clothes in storage, came to our event – and we cleaned them all. It made us feel good, and it made the community feel good.

Daryl Johnson
Giant Wash Laundry
St. Ansgar, Iowa

Like all owners, we tend to look for the best ways to get each square foot of each store to produce enough revenue to make it worth the expense – whether it’s installing a snack vending machine, a soap machine or something else. Although those are the investments we look at first, there are several others where it’s harder to determine their value or how much they actually produce – less-tangible investments.

For example, within the last year or so, we’ve put automatic door locks on our restrooms. Most of our stores are unattended; however, they’re not card stores, so we can’t simply install a swipe on the restroom. As a result, we’ve invested in building an app that controls our restrooms. I have an iPad located on the walls, and customers have to go through a series of three or four simple questions. Once the questions are satisfactorily answered, the restroom door will open remotely. Of course, anyone can still get into the restroom, whether or not they’re a customer, but it’s a way of slowing some of that non-customer activity.

We’ve also invested in security and camera systems. They don’t produce an income, but I view it from the standpoint of potential losses as a result of theft or other inappropriate behavior. We’re using FBI- and CIA-quality cameras. They record both audio and video. We went above and beyond what most owners do for camera systems.

Another significant investment we’ve made in that last couple of years has been an investment in our best employees. In the self-service laundry industry, most owners will tend to have a large number of “average” employees, as well as smaller percentages of both exceptional staff members and very poorly performing individuals.

As a result of this fact, along with continually increasing labor costs, I streamlined my labor, taking only my four very best employees and created a janitorial company – turning those four attendants into janitorial staff. I gave them significant wage increases and an automobile allowance. They drive from store to store, maintaining and servicing all of the laundries, as far as cleaning and so on. I invested in my best employees to retain them and to save money in the long run.

Ken Barrett
Washin Coin Laundry
Anniston/Oxford, Ala.

Improving any business should always be ongoing. Sometimes you need to look at other businesses and operations to see what can be adapted to your own store.

A few of the items that have made a difference for me and my laundry business have been varied. One of the biggest has been Dave Ramsey’s “Financial Peace University.” For a $100 investment, my entire family attended a nine-week financial education course. Although our teenagers weren’t that impressed at the time, it really made me look hard at my personal and business expenses and direction, and it helped me set some goals. Although I’ll admit we didn’t attack the program to the “beans and rice” level, Dave’s debt-free teachings better prepared us handle situations as they came up. In fact, it’s amazing to see how far we’ve come in just a few years.

Earlier this year, I was talking with someone I know at a fire- and water-restoration company about how to handle smoke-damaged clothes. After some discussion, I asked if they would give us a try on a small load – and that has since turned into a solid source of revenue; I can’t say “steady,” as it varies month to month. Since then, I’ve approached another company in the area and have taken over their cleaning as well.

With this added business, proper storage was becoming an issue. So, I took a walk through a local department store that was closing and was able to buy 25 feet of double-sided shelving for $200. And I also got a great deal on some pallet racking for another project.

In addition, two of my stores recently received a restroom overhaul with new tiling, hand dryers, lighting and fixtures where needed. Although it’s difficult to see the ROI on this type of improvement, my customers’ response was immediate and positive.

Also, with regard to promotion, there is a local magazine that gets placed in all of the hotels and malls, and advertises several of the restaurants and other businesses in the area. About 14,000 copies of this publication are printed twice a year. Over the last few years, I’ve increased our ad in this magazine from a half-page to a full page. With a new baseball facility in the area, along with a NASCAR track and miles of mountain bike trails, this publication has been a beneficial advertise vehicle and good investment.

A smaller business investment has been new uniform T-shirts for the staff. In addition to these shirts, my employees have other shirts on which I’ve had the company logo added. In that case, I asked them to buy the shirts, and I reimbursed them. This allowed them to get shirts that were comfortable for them.

If you’re like me, you’ve got more business ideas than you do time needed to implement them. However, just keep working on that list, and you’ll continue to improve your store.


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