CLA Member of the Year

By Bob Nieman, CLA Member posted 11 days ago

  
An Interview with Chicago Multi-Store Owner Paul Hansen

Paul Hansen is a third-generation laundry owner who owns six vended laundries in Chicago. He also currently serves as the president of the Illinois Coin Laundry Association.

This past June, at the Clean Show in Las Vegas, Hansen was named the Coin Laundry Association’s Member of the Year.

How did you first get involved with the Coin Laundry Association?

When I was just out of college, someone asked me to be on the Board of Directors of the CLA’s Illinois affiliate. I did that for a while. However, over the years, I kind of fell away from it.

Then, about five years ago, the Illinois CLA’s president at the time, Karl Keefer, asked me if I wanted to be on the ILCLA Board again. I did, and after a while, I eventually took over as president of the group, once Karl decided to step away from that role. He and I both felt it was important to maintain a strong state association, and I’m honored to serve as its current president – especially with all of the issues that are hitting the laundry industry in Chicago, as well as throughout the state, these days.

Of course, I’ve also been involved with the national CLA since I’ve been a vended laundry owner. I go to the Clean Show. I went to the Excellence in Laundry Conference last year, and I hope to go again next year. I use the association’s online forum daily. I’ve used many of the reports and other products that the CLA makes available to members. And, of course, I’m a regular reader of PlanetLaundry magazine.

You literally grew up in the laundromat business. What was that like?

That’s true. I’m a third-generation laundry owner. In fact, for the first eight months of my life, I lived in an apartment on Chicago’s south side that was located above a laundromat my grandfather, Al Voll, owned. In addition, two of my uncles were in the laundry business in Chicago for a while, and then in the 1970s, they moved to Florida and went into business down there.

And, of course, my dad, Chuck Hansen, also got into the business in the late 1970s and was a very successful and innovative operator in the Chicago market for years. So, I kind of grew up in the business.

When it was time to choose your own career path, what attracted you to the laundry business?

I had gotten into the business right out of college for a while. However, at the time, it really wasn’t a good fit for me. I was busy earning my master’s degree, and I ended up working in the accounting field for a number of years.

But, throughout that time, I still had that entrepreneurial spirit – I always wanted to have my own business. Then, in 1999, I had an opportunity to buy a small store. My wife, Jennifer, and I discussed it, and I told her that I really wanted to do this full time. So, we did – and our business has grown from there. We currently own six vended laundries in Chicago.

What business lessons did you learn from your father and grandfather?

I definitely learned the importance of having a clean, bright-looking laundromat and of offering a great customer experience.

Plus, my dad was an innovator. He would take small-format stores, which weren’t well-maintained or sometimes even attended, and he would turn them into successful, larger-format operations. He had almost an obsession with cleanliness – constantly repairing things, constantly upgrading, constantly experimenting with new innovations. I try to do that as well; I’m always looking for something different that people haven’t seen before that will make the experience a little better for my customers.

In what ways are you a different kind of laundry operator from your father?

I’m different just by virtue of the fact that this is a different era. My father didn’t go to college, and he wasn’t much of a “numbers guy.” By contrast, I’ve got an accounting background, so I’m a little bit more analytical.

I tend to look at things a bit differently. My dad went more from his gut with regard to selecting store locations and so on – and his gut was always right. However, for me, I have to put it to paper, actually write it out. What do I have to do? How much do I have to make? What’s the cost going to be? I’m a little more analytical that way.

What are the keys to success in today’s self-service laundry industry?

Today, you really have to have a laser focus on the bottom line, because the margins have shrunk so much. In the past, especially in my dad’s era, the margins were so large that owners could afford a little bit of waste – not that it was a good thing, but it wasn’t a disaster. Now, you’ve got to really hone in on that bottom line and look for every area in which you can save a few dollars in order to make a profit.

Clearly, that involves maintaining your equipment, as well as constantly upgrading it to have the most modern machines available so that you can squeeze down your utility usage. That is a major key to success.

My utilities represent from 18 percent to 22 percent of my gross revenue, depending on the location. I’ve got a couple of locations that I’ve recently reequipped with the most modern equipment, so that’s helped quite a bit. I’ve also got an older store that’s a bit less efficient with regard to utility usage.

How has the laundry business changed over the years?

I can only speak to the Chicago market. And, in the city, there are a lot fewer stores. Several laundromats have closed up.

When I first got into this business full time again in about 2000, there was a boom going on with a couple of laundry chains building several stores – Spin Cycle was a nationwide chain and Bubbleland was a local chain.

However, those concepts eventually fell apart, and those stores were sold off. Unfortunately, many of the people who bought the stores didn’t fully understand what was involved with running a laundry business. As a result, those stores deteriorated as margins shrunk, and the stores went downhill fast.

I’m close friends with [PlanetLaundry columnist] Wally Makowsky, who knows the history of the Chicago laundry market better than anyone. And he tells me that 30 years ago there were close to 600 laundromats in the city, and now we’re just under 300. So, we’ve seen that change quite a bit.

Another change would be an increase in professionalism among the newer operators who are entering the industry. Also, technology obviously has changed quite a bit over the years. For example, some of the more forward-thinking owners have installed alternative payment systems at their stores. What’s more, there’s a lot more advertising and marketing of laundry businesses, with many owners using social media to promote their operations.

Can you take me through your typical workday?

First thing in the morning, while still at home, I’ll look over the stores’ numbers from the day before, read the CLA’s online forum, and check on anything else that’s going on with my business.

I typically leave the house by 8:30 or 9:00 in the morning. I’ll spend about an hour or so at the office, paying bills and catching up on any other administrative tasks. Then, I visit the different locations. I try to visit all of the stores at least two or three times per week, so I’m usually at a couple of them every day. I’m usually home by about 5:00, but throughout the evening, I’m constantly checking my stores’ cameras and researching other aspects of my business.

You’ve already mentioned your involvement with the Illinois Coin Laundry Association. Why is it so important to you to give back to the industry in that way?

A little bit of it is selfishness, in an attempt to help my own business in the process. But, as part of the bigger picture, I hope to help change the industry a little bit and get store owners to talk to each other and actually work together for the common good.

We have issues that impact all of us – such as a recent water tax in Chicago. When trying to deal with such issues, I think it’s important for us to operate as a team. A large block of laundry operators is much more powerful than a single individual owner.

I want to see the entire industry do well. Of course, I don’t want to see competition right next to me, but it’s always heartening to see good people, who have invested their time and money, succeed.

You’ve also gotten involved in giving back to the communities you serve by hosting free laundry events this past year.

Yes, we’ve done three of them so far – working in conjunction with the CLA’s LaundryCares Foundation and The Laundry Project, which is based in Florida. I plan to host two free laundry days per year – one in the spring and one in the fall.

It’s great to meet and talk with the people who come in to do their laundry. Most of them have very positive things to say about our business. Of course, it helps us from a business standpoint, because it brings in people who perhaps hadn’t been to our location before.

But it’s just nice to give back. For instance, we held a free laundry event this year at a store that my dad built in 1978, and which I bought in 2000. So, my family has been doing business in that neighborhood for nearly 40 years. It’s in a rather distressed African-American neighborhood on the south side that’s been hit hard economically.

So, it was really nice to be able to host that type of event for the community. People came in and told me they remembered me filling the vending machines when I was a kid, or that their mother used to do laundry there for years. It’s important to me to give back that way to people who really need it.

Free laundry days also give us a chance to visit with some of our local politicians who attend these events. We let them know that the customers they see at the store are some of the people who need to use the facility. And, if the local lawmakers keep hitting us with additional fees and taxes, those customers are the people who eventually will have to pay the price. So, that’s another way in which such events can be helpful.

What are some of the hot-button issues for laundry owners as we head into 2018?

In the Chicago market, the margins are going to continue to shrink. We’ve got another big property tax increase coming down the line. Our minimum wage is on its way to $13 an hour – we’re currently at $11, and next June, it will jump to $12.

In addition, the city had doubled water rates about four years ago – a 100 percent increase – and this last fall it decided to toss a 30 percent tax on top of that, which will be phased in. We have our first water tax this year at 7.5 percent, and we’re going to have a 15 percent tax next year.

Those are definitely issues that need to be addressed – whether that’s through adjusting staffing levels, the number of wash cycles or vend pricing. However, raising prices is difficult in certain neighborhoods because the people just can’t afford it. Those are some key issues that are really going to hit us hard, and we need to work on them.

I know the Illinois CLA has been monitoring these issues very closely.

Yes, we’ve been working with the city for some time now to try to get a break on water costs, especially given the uniqueness of our clientele, which typically is concentrated at the lower end of the income spectrum. We’ve met with quite a few local politicians who have expressed a willingness to put forth an ordinance that might provide some relief. So, we’re cautiously optimistic that we’ll get something done.

Of course, it’s a costly endeavor to hire consultants and lobbyists, which are required in these situations. And it’s been difficult to raise the funds needed to go forward with this type of legislative fight. It’s hard to get many of the store owners to make that small investment to help fund these efforts.

Despite that, we’ve been moving forward and meeting a lot of local lawmakers, making important contacts. We’ve got our name out there; they now know who we are and that we represent an important industry to many of their constituents.

What are some of the major trends you’ve seen taking hold in the industry?

Nationwide, I’m seeing more professionals entering the industry and more professionalism in general within today’s laundry operations.

Also, larger-format stores are definitely becoming more common. A 5,000-square-foot laundry used to be a “super store,” but now I’m seeing laundries that are in the 8,000- to 10,000-square-foot range. It’s amazing to me.

In addition, I’m seeing more and more owners offering alternative payment systems, beyond card systems. That’s been a big trend, giving customers payment options. I’ve also seen more dollar-coin-only stores.

Overall, the trend is just bigger and more modern – with some owners trying to turn their stores into community centers, offering different events. If you make the experience nice, that’s always a positive trend.

Another popular trend has been an increased willingness among store owners to retool their laundries. And you’ve recently done some upgrading at your stores, right?

Yes, we’ve retooled two stores. It’s great to be in a position to be able to do it, because it’s extremely expensive. However, the newer equipment can save quite a bit in utility costs.

In my area, there are quite a few rebates available. We were able to get rebates on the high-extract washers we installed, because the machines require less dry time and, in turn, less natural gas – so the local gas company gave us a rebate for that upgrade.

Also, upgrades in LED technology have gotten to the price point where it’s quite affordable, again especially with rebates from the electric utility.

We also added ozone to one of our stores. We were able to get a huge rebate from our local utility, which helped us put it in. However, ozone is very difficult to market to the typical laundry customer. Also, I can’t really upcharge for it; there’s really no efficient way to do so. And, even if I could upcharge, I don’t think my customers would be open to it, because it’s difficult to impart the value of it.

Then again, ozone makes cold-water washing more efficient, and we’ve let our customers know this. As a result, we’ve seen hot water usage at that store decrease quite a bit, compared to the other locations.

Moreover, ozone has been good for our commercial accounts and our pickup-and-delivery service. We can use cold water for those loads and don’t necessarily have to separate whites and darks. That makes a big difference.

Do you have a philosophy that guides your business decisions?

I guess it would simply be to keep moving forward. I don’t want to sit back and rest on my laurels. I want to constantly move forward, expand and grow – whether that’s adding new locations or just retooling and changing things around a little bit.

When a laundry business fails, what’s the most common reason for that failure?

I think some people buy stores not fully realizing what they’re getting into, that they’re actually buying a job. People who think you can just collect the money and leave don’t understand the costs involved or that they need to keep upgrading and improving the business.

As I mentioned earlier, there were several stores in Chicago that were sold about 15 years ago – and many of those owners didn’t put a dime into them since then, and now we’re seeing those laundromats close down. They’re starting to fall apart. They’re dirty and poorly run. Stores will eventually reach a point where you simply can’t afford to retool.

Another reason for failure is overpaying for a store. I’ve seen people buy stores at high price points that don’t leave any room for any necessary upgrades.

Personally, what mistakes have you made in this business?

I’ve tried a few promotions that have failed. I tried a loyalty system that ended up not bringing in any new customers at all; basically, it just served as a de facto discount to the customers I already had, which clearly wasn’t my original intent.

However, knock on wood, I’ve haven’t made any major mistakes yet.

What’s one piece of technology that you couldn’t live without?

Right now, it’s got to be my iPad Pro. With this thing, I can log into my stores and see the cameras. I also can log into the card system to see how and what the stores are doing. I can monitor my drop-off laundry pickup service. I can keep track of everything. Plus, I can respond to Yelp, Google and Facebook reviews immediately. It’s really become something I can’t do without.

What do you like to do for fun?

I like to fish. That’s been my passion for the last several years. I really enjoy it. We’ve got a house on a lake in Michigan, and I fish there a lot. I also go on a couple of fishing trips a year. I’ll head out to the Detroit River in the spring for walleye, and I go ice fishing in the winter in Green Bay. Plus, I’ll fish anywhere else I can get to for a day or two.

What are your business goals for 2018?

I’d like to retool another store. I’d also like to open another store, if I could find the right location, which has been a little elusive up to this point.

In addition, I’ve started an online pickup and delivery service, so I’m hoping to continue to grow that in the coming year. We’re just focusing on a local area, but it’s been a nice addition to the overall business. We’ve got the capacity, so why not use it?

Who do you turn to for advice?

I’ve got a few people I confide in. As I mentioned, Wally is a good friend of mine, and we have lunch every couple of weeks. We talk regularly, and he’s been a great resource, especially as we’ve recently ramped up our in-house drop-off business. He’s been very helpful.

Also, Jeff Gardner, the Laundry Doctor, from Minnesota has been a great resource. In fact, he was kind enough to let me and couple of my key staff members come up there and spend the day shadowing his employees to see how they operate. He’s been a wonderful information resource for both our drop-off laundry business and our pickup-and-delivery business.

Furthermore, I’ve got a dear friend of mine who’s not in the laundry industry but who was very successful in the corporate world, and he is great for bouncing ideas off of. He’s been very helpful.

And, of course, my wife has always been an amazing resource of great ideas for how to improve the business.

What does the future hold for the laundromat industry?

In the future, you’re going to see more multi-store operators. You’re going to see larger stores. You’re going to see better-equipped, better-run stores.

At least in Chicago, you’re going to see fewer stores, and the ones that remain are going to have to step up and make sure they can service all of the customers out there. In Chicago and perhaps other large urban markets, I think you’re going to see laundry deserts in low-income areas, because those stores simply can’t charge enough to operate efficiently to make a profit. In those neighborhoods, there might be only one or two large stores serving those communities.

What advice would you give someone looking to get into the vended laundry business?

Do your research before buying a store. Get involved. Talk to other laundry owners. Go to some affiliate meetings. Get on your local CLA affiliate’s mailing list so that you know what’s going on and what the key issues are in your marketplace. Visit the CLA’s online forum. Know what you’re getting into. Understand that the laundromat business isn’t a 100 percent absentee business. Understand that you can’t just buy a store, collect the money and leave it. There’s a lot more to it. Know that you’re buying a job.

What has been the most gratifying aspect of your life in the laundry business?

The laundry business has afforded me a nice lifestyle. I’ve been able to raise my kids; I’ve got two of them in college now. It’s also been gratifying after all these years to have laundries that I feel are the culmination of everything my dad and I both learned about how to run a self-service laundry – and we’ve turned these stores into what I consider are some of the best laundromats in the city, and probably some of the best in the country. That’s been extremely gratifying.
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