Is It Time to Retool?

By Randy Radtke posted 10-30-2017 12:26

Upgrading Your Vended Laundry Business Can Deliver a Quick ROI and a Growing Customer Base

[This is the first of a two-part series examining the key factors to consider when retooling a self-service laundry.]

It’s no secret that we all like new things… the latest and greatest. Don’t believe it? Watch as lines begin forming for the new iPhone. Or just think about how many times you have personally upgraded that perfectly good cell phone just to stay current.

The same concept holds true in other areas – the need to try that new restaurant down the block that just opened up, shop at the recently remodeled supermarket or download the latest frequent flyer app.

Retool_1.jpgBut somehow the vended laundry business can be slow to adopt a view that a retool can drive business – that upgraded equipment isn’t a giant drain, and that it can actually attract new customers and drive immediate ROI. Although the prospect of swapping out equipment can be scary, don’t fret – with the right process and partner, the upgrade can be smooth and ultimately pay dividends.

Improve the Customer Experience and Store Management

For Roy Narvaez, a multi-store owner based in Los Angeles, retooling his second store was pushed primarily by two factors. First, it was about giving his customers more flexibility to tailor wash cycles the way they want. The installed equipment was quite dated and only allowed basic selections. His approach, however, to serving his customers is anything but basic. Retooling the laundry made sense to truly set it apart from competitors.

Narvaez is quick to point out that a solid first step in planning to retool the laundry is looking at your competition. Just like the cell phone example above, find something new to offer customers that your competitors are not.

“You have got to get people in your store,” he said, adding that new offerings definitely give your business something to present to current and prospective customers. In his case, he saw the opportunity to separate the store through adding higher feature controls to give clients greater flexibility over their cycles.

A retool also creates an opportunity to take a fresh look at management. That’s exactly what drove the second factor for Narvaez. Like his customers, he wanted a higher level of control, which meant he would investigate his options in this arena during the pre-planning phase of his retool.

An Opportunity to Grow

Jim Rosenthal, North American sales manager for Speed Queen commercial laundry equipment, echoes Narvaez in saying owners must stay up to date and approach a retool as not just an expense that gives the store in nicer look, but as a true investment that will bring substantial returns.

“If you aren’t approaching a laundromat retool as a vehicle to bring in new customers and drive greater revenue and, ultimately, profitability, you are thinking about in the wrong way,” he said. “It’s about taking a look at your store and identifying how you grow your business with equipment upgrades, new technology and new offerings.”

That’s just the mindset that Nabor Hernandez had after he and his brother bought a dated vended laundry in Fort Stockton, Texas.

“The existing equipment was a mess,” he joked in sizing up the hodge podge of topload washers in a rainbow of colors, along with the number of out-of-order signs.

It only took a couple months in the business for the newcomers to decide that in order to move forward, they would have to take a step backward. They shut down the laundry and decided to regroup.

“We wanted to give it a completely new look,” said Hernandez, of sketching out a plan to not only replace almost all of the topload washers, but to swap out single-pocket dryers for a mix of 30- and 45-pound stack units to give customers something new to bring them back in. The traffic in just the couple of months they were open was… less than stellar. They knew they would upgrade the store when they got into the business, but that plan was expedited.

“People just weren’t coming in,” he said, adding that he couldn’t fault them, as the tired store didn’t present an image of quality, hadn’t seen an equipment upgrade in decades, and certainly wasn’t welcoming. Something new was in order.

Bill Kelson, director of vended laundry sales at TLC Tri-State Laundry Companies, based in Atlanta, has helped hundreds of stores refresh and upgrade equipment. He insists it’s important for owners to be grounded in the simple math of the business. Each customer is worth roughly $500 a year. If a store retools with upgraded capacity and high-featured equipment, they are better positioned to bring in new customers. Even with a conservative estimate of perhaps 10 new customers, he said that can mean about $5,000 of extra revenue each year.

In addition, new equipment also can justify a price increase without losing current customers. Therefore, extra revenue will be created with that price boost. In general, customers expect a jump in vend prices when they see that the owner has invested in new equipment; after all, the operator’s expenses have gone up.

Considerations Upfront

Retool_2.jpgSo, let’s say you take a look around your own laundry operation and see the same things Hernandez and Narvaez did. Where do you start?

“Store owners have to find the right distributor partner to ensure a smooth project from start to finish,” Rosenthal said. That includes someone with a solid track record of laundry retools, and a distributorship that offers a range of services – including equipment financing, installation, layout and design, as well as someone who can assist with sizing equipment and other systems.

“Now is the time to take a good look at your store’s efficiency, capacity, water heating system and layout,” Rosenthal added. “Often, the independent eye of a seasoned distributor, who has installed many stores, can bring a wealth of new ideas beyond just equipment to improve the operation.”

Think About Technology

As in Narvaez’s case, when approaching a retool, store owners should survey the technology available on the market. Just because your laundry has operated one way since you owned it, doesn’t mean it has to continue that way. He wanted to build in technology that helped him streamline management by giving greater access to operations.

“I like to go back and see which washers people are using,” he said, adding that without a higher featured control and networking, owners are left having to stand in the store and watch what equipment customers are using. With the advent of multi-level vend pricing (being able to charge more for hot and warm washes, versus cold-water washes), as well as time-of-day pricing operations, the data also would help him decide whether or not his pricing structure was working.

Owners also will want to take a look at payment solutions in planning for their retool. Review what competitors in your area are doing. Is your local laundromat market mainly coin-based, card-based or a mix of both payment options? How do you as an owner prefer to operate? Is it time to explore a mobile payment solution? Does integrating the payment system and control together simplify operations?

“Again, when owners retool, it’s the perfect time to look at how they want to manage their business,” Rosenthal said. “This industry has progressed to a point where the technology makes management far simpler than in the past. The important thing is to understand what the technology options are and to then match them to how you want to manage the business. If the store insights and data go unused, the owner has wasted money.”

Once an owner has decided on the systems he or she wants in place, it’s time to look at equipment capacity, store layout, and look and feel. We’ll examine those elements in the second part of this series.