Print back

An Investor’s Guide to Coin Laundries | Chapter 8

We are proud to bring you this comprehensive book, ‘Investor’s Guide to Coin Laundries‘, compiled by Jay MacDonald, Vice President, Distributor Sales for Alliance Laundry Systems.

Alliance Laundry Systems is the largest manufacturer of commercial laundry equipment in the world and has over 50 years of experience in helping investors just like you, get started in the coin laundry market. This book is a compilation of experiences, ideas and input from hundreds of successful coin laundry owners and distributors from all over the world.

Taking data and industry knowledge, it is a road map to help you succeed. At the end of it, you will have a general understanding of the industry and what it will take to operate a successful business.

invest-speed-queen-laundry

 

Chapter 8 : THE MIX THAT’S RIGHT FOR YOU: Understanding your Customer’s Equipment Needs


There is a delicate balance that needs to be made when deciding on the proper equipment mix for your coin laundry. If the equipment mix for your store isn’t just right, it can impact your profit potential as well as not meet the needs of your customers. With several considerations affecting the equipment mix, taking them all into consideration is equally important.

These include having enough equipment in your store to handle your busiest days with minimal customer waiting periods, having the right mix of machine capacities to attract customers in your demographics, and of course not buying more equipment than you and your store can support. This is also where your distributor partner will play a big role in guiding you through the equipment selection process.

How much equipment can you afford to purchase?

Your financing will play a big role in just how much and what kind of equipment you can purchase. This is why making sure you have a solid business plan in place is so important when looking for financing as discussed in a previous chapter. If you do not achieve the maximum amount of capital you need to purchase the equipment, you could be limited on what you actually can purchase.?

The cost of the equipment is not just for the machines. Other factors are the cost for things like freight and sales tax for the initial purchase, and installation costs. Many owners will wisely budget for a small inventory of spare parts and for preventive maintenance expense too. Just like with a vehicle or a house, taking care of your equipment can maximize its revenue producing life and that’s what it’s all about. It’s not uncommon for us to hear about pick up trucks running for 100,000 to 200,000 miles or for the washers and dryers we manufacture still running strong for 15 to 20 years. The common denominator is preventive maintenance.

The Coin Laundry Space

Space is a limited commodity and how you plan to use it will greatly affect your equipment. If you are planning on ancillary services like drop off, wash and fold, sitting areas, an internet café, etc., you are reducing the amount of space you have for coin laundry equipment. And within the store, you need adequate room for your customers to move from entrance to washer to dryer to folding to exit.

There are also the equipment specifications to consider. You’re going to want to consider the flooring requirements, the base mounting specifications, the sewer connections, water lines and sizes, maintenance access, air supply, venting, gas supply, voltage, amperage and phase requirements. All of this will play a role in your total initial expense and ultimately, what you purchase.

Demographics

In Chapter 6 we talked a lot about how to use demographics. When looking at the equipment you will again go back to your demographics to see who is living in the area you are serving. Are there young families? Are they working professionals? Is there a good deal of single family homes? All of these will play a role in equipment choice. For an area with a lot of single family homes rather than apartments and rental properties, a focus on larger capacity washers and tumblers might be a better way to go as that demographic tends to utilize coin laundry services for larger items like bedding and curtains. Working professionals spend a lot of time at their workplace and laundries offering a drop off service can be extremely attractive allowing these people to spend more of their limited free time with their families, even if they have a home style washer and dryer at home. If your customer base has a lot of senior citizens or students, the average amount of laundry they do every one to two weeks is smaller so having more smaller capacity washers is what they need and will seek out.

Does your potential customer base have an average or above average number of people per household? In many areas, the apartment may have extended family living together. These people may be doing over 200 hundred pounds of laundry with every trip. What they want and need is something they can’t get at home – that is large capacity washers that can handle up to 80 pounds of clothes in each cycle at an affordable price.

All coin laundries typically offer a variety of washer and dryer capacities to attract a variety of customer households. But determining the optimum amount of each capacity is an important discussion to have with your authorized distributor.

In addition to using the demographic information you have, start doing additional customer research. We suggest going right to the source: The CUSTOMER! Look at developing a consumer survey to find out what things are important to them. Some questions to consider include:

  • How important are “really” clean clothes to you?
  • When it comes to using a laundromat, what is important to you?
  • Do you prefer front load washers or top load washers?
  • How many loads of laundry would you say you do each trip to the laundromat?
  • When it comes to convenience, what would make the laundromat more convenient for you?
  • What water temperature do you use most? Hot? Cold? Warm?
  • How many loads would you say you wash in hot/cold/warm water?
  • What is your favorite thing about doing laundry in a laundromat?
  • What is your least favorite thing about doing laundry in a laundromat?
  • What would make you want to use the laundromat more to do your laundry?
  • If you owned the laundromat, what sort of services would you offer?

The best way to attract a customer is by providing them with what they want. While we know you can’t be everything to everybody, making sure you have the equipment in your store to meet their needs will go a long way in developing customer loyalty.

The Coin Laundry Association conducts end user surveys asking many of these questions to discover why people go to a particular coin laundry. A copy of this information can be obtained through the Coin Laundry Association or your product distributor. Historically, the number one factor is “having enough high capacity machines available when you need them”. It’s interesting that “price” did not even make the Top 5.

Water Usage and Energy Efficiency

All laundry owners want to “be green”. For some this means conserving our natural resources. For others, being green means saving money on utility expenses to add more “green” to the bottom line. To help control your costs and environmental impact, one way is through the equipment you choose. There is a lot of debate between top load versus front load washers, both with their own pros and cons. Depending on the washer, a front load washer can use as little as 1 gallon of water per pound of clothing, while the average top load washer uses around 2-3 gallons per pound. With rising energy costs, there has been a definite trend in this industry to use more frontload washers. However, many new and old stores alike still offer topload washers to satisfy their customers’ preferences. As a manufacturer, we are unique in that we manufacture the broadest product line in the industry including topload and front load washers in all of the capacities you need to meet customer preference and demand and to maximize your profitability.

Water is a critical part of the cleaning process along with chemical action (detergent) and mechanical action. With all washers, they leave the factory with a default water level setting. However, for your specific situation and customer, this setting may use more or less water than you need. As the leading manufacturer of commercial laundry equipment worldwide, we know this and have designed our models with flexibility in programming. Not all manufacturers give you this flexibility or if they do, it is limited. Some of our models offer up to 30 different water levels which allow you to find that specific balance to minimize your water usage and expense while meeting customer expectations.

The washers you choose will also affect the energy efficiency and operating cost of your dryers. Again, water is used during the cleaning process, and this water must be removed by the end of the process. In the washer, after the clothes have been cleaned they go into a spin cycle to remove some of the water before the clothes are placed in a dryer. The dryer uses a heat source (commonly natural gas) to evaporate any remaining water in the laundry load.

When meeting with your distributor, ask what options are available with washer extractor G-force. G-force refers to the spin speed of the washers in terms of gravity. The higher the G-force of a washer, the greater the amount of water removed from clothing, making them faster and easier to dry. Machines with an optional higher G-force will save you time and utility expense during the drying part of the laundry process. The initial cost is higher but depending on the customer traffic of your store, can deliver a payback with the first few years of operation. Your distributor can help you estimate this payback for your specific situation so that you can make an informed decision.

While most manufacturers list the G-force on their product specs, some still choose the traditional method of Revolutions Per Minute (RPM). To calculate the G-force on your own, it is rather easy. Below is a simple formula:
G-force = (RPM)2 x drum diameter in inches/70,396

In addition to the water used and the speed of water extraction, another costly expense that could affect your equipment mix is the use of hot water. According to one source, a consumer will choose to use the hot water wash cycle 34 percent of the time, opting for warm water wash cycles 53 percent of the time and cold wash cycles only 13 percent of the time.

To help control hot water costs, you will want to find out from your distributor what the average hot water use is per cycle. Once you’ve determined that, look for a water heating system with an ENERGY STAR® or similar efficiency type rating. Consider setting the hot setting at a lower temperature and encouraging the use of cold water washes. Many of our washer models give you the flexibility to charge less for a cold water wash and more for a hot water wash. This shares the benefit with your customers and everybody wins.

There is a lot that goes into making sure your coin laundry has all of the right equipment and it can often be an overwhelming process. This is where your distributor partner will play a large role in helping you determine what equipment you need and how much of what sizes and kinds. Helping you meet your projected income, keep costs under control and meet the needs of your customers can appear to be a daunting task and that is why all through this book we stress finding the right distributor to counsel you through this process.

Front Load Washers versus Top Load Washers – The Debate!

Doing laundry is a necessity of life. And with so many variables the coin laundry owner faces — utility costs, meeting customer’s needs, larger capacity or smaller capacity — determining which type of washers to buy is difficult. Having all available information on front load washers compared to top load washers can make determining your product mix easier. With this information you can learn which washer style will meet your business objectives while satisfying the needs of your customers.

The Cost Comparison
When faced with the decision of purchasing a higher-priced item, it’s not uncommon to look at what meets our needs. With washers, a front load washer can cost up to 43 percent more than a traditional top load washer. Addressing this price difference is often one of the biggest decisions you as a coin laundry owner could face. But keep in mind, you need to weigh which issues are important to you. If it’s lower utility costs, you can often re-coup the initial extra expense through the savings you’ll have in energy and water costs. However, if the cost of lots of front load washers is still too steep for you, there are top load washers on the market that offer water saving features.

Energy Issues
The Earth has limited resources, and as these resources become strained costs go up including gas, water and other utilities. With ever-increasing energy consumption and water standards, laundry manufacturers are continuously improving their equipment to meet them.

Generally, top load washers consume significantly more water than front load washers. Up to 55 percent more depending on the brand and model. It’s because of this difference in water and energy that you see more coin laundry owners being attracted to front load washers. As the standards continue to change, it will become harder for the conventional top load washer to meet the requirements without significant enhancements. And as those changes are made, it will make the cost benefit of a top load washer much less significant.

Is it Clean?
Like the proverbial chicken and egg, when experts are asked which machine gets clothing cleaner — the front load washer or the top load washer — the answer is debatable. Front load washers are thought to clean better, particularly on stains; they are also gentler on fabric than top load washers.

However, when you compare item-to-item, it will depend on what is being washed. While top load washers may be perceived to clean certain articles better than front load washers, one of the cleaning benefits to the front load washer is its lack of an agitator. Without the agitator, front load washers can clean bulkier items, like comforters, better.

Many front load washers offer higher spin speeds compared to a top load washer. The higher the spin speed, or G-force, the more water is removed and the less time that is required to dry.

Ultimately, however, the ability to clean clothing comes down to the perception of the person using the washer. If the user puts in the right type and amount of detergent and chemicals and is not over-filling the machine, at the end of the day, front load washer or top load washer, their clothing will get clean.

Ease of Use
Sure, a washer can be energy efficient and get clothing clean, but is it user-friendly? Can it handle human error?

On some level, all washers are forgiving. They offer optional features like prewash or longer wash times or extra rinse cycles for customers with heavily soiled loads. Some come with an automatic balancing system to keep the machine working during unbalanced loads, but what about other issues such as ergonomics and the forgotten sock?

This is where top load washers have the advantage. From an ergonomic perspective, it is easier to use as compared to a similar capacity front loading washer. There is no bending or stooping to load and unload a top load washer, creating less strain on the back and knees.

To make the front load washer more user friendly in this area, we manufacture optional bases and pedestals that raise the washer off the floor to a more user-friendly height. This also gives the appearance to the end customer of a larger capacity machine which can help you justify your vend pricing.

As for the forgotten sock, if you use a competitor’s front load washer you might be out of luck, especially if the washer has already finished filling with water. Once the front load washer has completed filling, many cannot be opened again until the cycle is complete. As a side note, many of our (Alliance Laundry Systems) washers now include a feature where your washer may be paused at the beginning of the cycle to allow the customer to add that forgotten sock. But with a top load washer, you simply lift the lid, throw the sock in, close it and the cycle continues.

A Future for Washers
Where your customers used to drive the demand, government regulations on energy and water usage now play a bigger role. There are some in the coin laundry industry that feel these new regulations will continue to push the market toward more water efficient washers. But our industry has always been conscious of energy costs as they are a significant percentage of the expense to run a laundry. Many studies have shown that on a price per pound basis, the energy costs of using a vended laundry compared to washing at home produce significant savings. One reason is that coin laundry customers tend to fully load the machines to get the best value for the vend price. And machines in a coin laundry are designed for energy conservation as a top concern. But again, your model selection should focus on what your potential customers want to use so that you keep them coming back to your store and that may include topload washers or smaller capacity frontload washers.

There are a lot more things to consider when selecting the equipment for your store and your distributor has the answers. Many of these differences are found in the flexibility you get from the various microprocessor controls. Make sure the models you select have the features that can not only help you succeed today, but give you the additional features to succeed in the future in the event that the competitive climate changes

jay-mcdonald-coin-laundryABOUT THE AUTHOR

JAY McDONALD has been active in the laundry industry for over 30 years. He is the Vice President, Distributor Sales for Alliance Laundry Systems, the largest manufacturer of commercial laundry equipment in the world. He also served on the board of directors for the Coin Laundry Association and received the Distinguished Service Award “in appreciation of his leadership in furthering the welfare and best interests of the coin laundry industry” in 2009.
PURCHASE THE FULL BOOK HERE.

As your equipment distributor — the most important partner and most valuable resource you will ever have — we encourage you to get in touch so that we can help guide you through the exciting and financially rewarding industry of coin laundry ownership.


CHAPTER 1. SHORT ANSWERS TO THE MOST COMMON QUESTIONS
CHAPTER 2. WHY COIN LAUNDRY
CHAPTER 3. THE HISTORY OF THE COIN LAUNDRY BUSINESS – LEARNING FROM THE PAST TO GROW INTO THE FUTURE
CHAPTER 4. THE ROLE OF THE DISTRIBUTOR
CHAPTER 5. THE POWER OF LEVERAGE
CHAPTER 6. DEMOGRAPHIC ANALYSIS : LOCATION
CHAPTER 7. LEASE NEGOTIATIONS
CHAPTER 8. UNDERSTANDING CUSTOMER’S NEEDS
CHAPTER 9. DESIGNING YOUR COIN LAUNDRY: WITH THE HELP OF YOUR DISTRIBUTOR
CHAPTER 10. CASH VERSUS SMART CARDS
CHAPTER 11. TO ATTEND OR NOT TO ATTEND, THAT IS THE QUESTION
CHAPTER 12. ADDITIONAL REVENUE OPPORTUNITIES