What’s Your Number?

By Jeff Gardner, CLA Member posted 06-29-2018 10:36

  
Knowing How Much Finished Laundry Your Staff Can Produce is Vital to the Health of Your Wash-Dry-Fold Business

Several months ago in this column, I discussed the Japanese principle of Kaizen, which is a philosophy that embraces constant and continual improvement in all things.

Of course, in that article, I applied Kaizen to the laundry business, especially toward ways of becoming more efficient with regard to wash-dry-fold and the labor involved.

This month, I’d like to take that discussion of labor and employee efficiency a step further because – when it comes to wash-dry-fold orders – labor is the true cost of doing this type of full-service laundry. It’s not the cost of doing the washing. It’s not the cost of doing the drying. It’s not the cost of the chemicals. Ultimately, when we do wash-dry-fold, the ancillary costs are minor.

Unfortunately, many of us with attended laundromats overlook the fact that the labor – which we’re already paying to be in our stores to greet and take care of our self-service laundry customers – isn’t free for the wash-dry-fold segment of our business. We often forget that, when these employees are actually processing wash-dry-fold orders, there’s a real cost to us.

And, once a business grows to the point where the owner needs to hire an employee who is dedicated solely to producing finished wash-dry-fold orders, that operator can experience an immediate type of sticker shock.

Whether you’re using an attendant who is already on your staff to clean the store and take care of your self-service customers or you’ve hired an employee who is dedicated specifically to your wash-dry-fold operation, what is the real cost of this labor? And how do you factor that into determining how much you should be charging for your wash-dry-fold service?

To find out, you need to answer some questions about your specific attendants: How many pounds of finished wash-dry-fold laundry per hour can an attendant produce? How much revenue per hour (or per shift) can an employee create, if focused strictly on wash-dry-fold?

These are valid questions to ask – and more than worthwhile to figure out.

The first thing I would recommend is timing your attendants and getting them involved with and excited about the process. In a way, this is sort of a Kaizen approach to assessing the ultimate question of what to charge for your wash-dry-fold service. Discovering just how quickly your employees can really do the work – whether they’re distracted by self-service customer issues or dedicated strictly to handling wash-dry-fold orders – is a great starting point.

At my store, for example, with just one attendant on duty, our goal was 130 pounds of processed wash-dry-fold during an eight-hour shift. In my mind, I was paying for the attendant to do that work, and where I was priced with my wash-dry-fold, that attendant then became a free employee at that point.

Is 130 pounds realistic, if you’re a busy store? Absolutely. However, once again, this needs to be an exercise that you conduct internally for yourself and your employees to figure out what your own specific numbers are.

Let’s say you have an employee dedicated to doing only wash-dry-fold orders. Then, what should that production number be? This is one that truly can be all over the board. I’ve heard and seen, even within my own operation, a lot of variance as far as the number goes.

For example, let’s say you have a brand new employee folding a 45-pound dryer full of just towels, which equals approximately 30 pounds of dry towels. And let’s say it took her 35 minutes to fold those towels.

Now, a more experienced employee can probably do the same job in approximately 10 minutes.

There will be large variations in the time is takes – all based on technique, understanding how the finished product should look, and how the employee thinks about what he or she is doing.

So, if I were pricing a commercial account that required us to process only towels, and I knew my team could produce a dryer load of finished towels every 10 to 15 minutes, my pricing would be a lot different than if my employees were producing at a rate of 30 minutes per dryer load.

Let’s assume you’re paying an attendant $12 an hour. What is your labor percentage rate if that employee can fold 60 pounds of towels in one hour? What if he or she can produce three times that amount in an hour? It becomes a completely different equation.

As a result, not only does this information impact your wash-dry-fold pricing, but it also can affect how you pay your employees. You can grade and rate your employees based on how much finished wash-dry-fold laundry they can produce.

Of course, towels are simple to fold. They are consistent and a great way to judge your employees’ skills. However, the next step is to test them with more difficult processing challenges.

For instance, time them on standard wash-dry-fold orders, and then time them on perhaps the most difficult garments of all to process – children’s clothes.

Knowing all of those production numbers and understanding what your team can produce in all of those different circumstances will give you the ability to determine what your labor percentage should be for your wash-dry-fold operation.

For my business, we aim for a total labor percentage of 32 percent. Actually, the base production percentage we try to reach is somewhere between 25 percent and 28 percent. Then, we add in management costs and benefits, and that gets us up to the 32 percent figure we shoot for, with regard to our overall labor cost for producing wash-dry-fold and commercial laundry.

If I know my production rates, and I know I can keep my production costs at 32 percent, I can begin to figure out where I need to be priced. Therefore, if my production costs go up (such as the cost of labor, the cost of benefits, or the cost of management) and I’m unable to produce more product with the same period of time, I then need to start thinking about the price I’m charging my wash-dry-fold and commercial clients.

Knowing and understanding this information is now more important than ever, because almost all of us in the laundry industry today are facing two major issues.

The first issue is the availability of labor, as well as the quality of that labor and the ability of those workers to produce wash-dry-fold orders. Will we be able to attract and retain quality individuals who can produce at the rates we need them to?

The second issue is the fact that nearly every municipality in the country is discussing – if not strongly considering – the creation of higher wages and additional employee benefits, thus impacting the cost structures of our business.

Clearly, those two external factors and how they affect your business should be top of mind when you’re evaluating the prices you charge your customers for the wash-dry-fold products you deliver. And this makes knowing your production numbers just that much more crucial.
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