Apartment Laundries vs Coin-Ops

I have an article in the works regarding the apartment laundry industry, and how it compares with our coin-ops. My question to you: How do you perceive the apartment laundries in your area? Do you consider them real competition? Why or why not? Do any of you own apartments or routes as well as coin-ops? Please post or e-mail as much info as you can on the subject. I'd appreciate your name and location as well, for printing purposes.

We need to get this BB going. Feel free to argue, it makes for good reading :)

[Howard]

Well, the only thing good I hear about apartment laundry rooms is that they are good because they are close at hand. That is all. They are typically dark and dingy, machines are out of order, there are too few machines.....

[mwheels601]

I agree with Howard, the only good thing about apartment laundries is their location. They are typically top loader, and coin operated home style dryer equipped, and put in rooms with inadequate make up air.

[LEEHUSTON]

All I ever hear is that they are too small and people leave their cloths in too long. I never hear from the hundreds of people that use them everyday instead of my place. Convenience is king many times. These places are commpetition however, and I would consider them serious because of the number of apartment units near my laundry that have decent route laundries. I know that I lose dollars to them everyday. I think I would like to get some apartment routes. Coin-mech and a couple of other companies seem to make a killing in this business at our expense. If we can't get people into the store, take the store to them!

[Marianne]

When people who ordinarily use home or apartment laundries come to my laundromat because they need to wash comforters and such large items, I encourage them to bring a couple of days worth of smaller items too. I point out that in the same time they spend doing the comforters they could just as easily do a week's worth of regular laundry. If they show interest I point out that the water in the laundromat can be hotter than what is safe at home, that the dryers work much faster and that space for folding is readily available.

Here in Minnesota water is hard and full of iron. The laundromat softens and treats the water especially for use in washing machines. It costs more to get home or apartment water that clean and lots of it goes to waste. Laundry washed in a laundromat simply comes out cleaner because everything in the laundromat is tuned to just that single purpose.

Sometimes the pitch is effective.

[TKLaundry]

I have a number of apartment buildings very close by my laundromat and they all have laundry rooms, early on I had one of the people who lived in one of the buildings post a flyer for me, I don't know how long that stayed up but it did seem to bring in a few people. The thing that I hear about the apartment building laundry rooms time and time again is how the machines don't work, the water's not hot and theft is common. The only time that my customers tell me that they use the laundry rooms in their buildings is when they are stuck for time and my laundromat is closed.

Dave

[ndennis]

I have stayed in aprtments several times when in the US. They have only been short (2 or 3 week stays) and I have to say that I would not take a dead dog (that's if I could find one) into some of the on premise coin-ops.

One opl was a route and it was clean, all machines were working but a little on the cramped side. The operator had a pop machine and that really made things cosy. The stupid thing was that there were no seats if you did want to stay.

My Zac'z worth.

[Charlie]

Interesting Questions! I have entered the laundromat business as a direct result of the success of my laundries in my rental properties, opening my second laundromat this coming weekend. In 1990 I converted a hallway into a small laundry room in a 5-plex, with only one washer and dryer. This was based on a recommendation in a "Landlording" book. It cost me about $2500 to install and has routinely grossed $100 a month. I thought a 2 year payback was pretty good. In 1995, I purchased a 29 unit complex with a small laundry which was averaging $200 a month. I have replaced nearly all of the original equipment with a variety of used Maytag toploaders and stack dryers, added a payphone and a soap vendor, and have tweaked this laundry up to a gross of over $1500 per month, nearly all free and clear (about $150 a month for utilities). This room has 4 Maytag tops, 1 Neptune (just added), and 7 dryers (3 stacks and one standalone). My residents routinely complain about residents from surrounding apartment complexes coming over and using "our" laundromat. I commiserate appropriately, all the way to the bank. I'm planning to add a changer unit this month to see if I can tweak it even higher!

Apartment building laundromats have the same potential, if not more, as a full blown laundromat. However, like many laundromats, the owners and operators do not have a clue of the true potential. Look at the benefits - a fairly captive clientele who really doesn't want to go anywhere else, no rent to pay, no attendant to pay, no advertising required, etc. The key is to make these laundries as or even more attractive to your residents than the neighborhood laundromat.

I purchased another 18 unit building in 1996. The previous owner had closed the laundry due to vandalism and the fact that it only grossed $100 per month. I cleaned the room, painted it, enclosed the water tank, added lighting and a new vinyl floor, plus a payphone, and now average $1000 per month on 3 washers and 4 dryers (2 stacks). Total investment on equipment and upgrade was about $3,000 6 years ago. Utilities are about $100 per month. This is one of the best investments I have ever made.

While the comments I have read from other laundromat operators above are not unusual, the apartment housing industry is rapidly becoming aware of the benefits (read $$$) of a well run laundry room. In addition to The Journal, I also read several apartment industry rags. Ads from the major route players are consistent in these magazines and I have seen major articles on several occasions about improving laundry operations and the potential income. REITs and other professional management operators are under intense pressure from their owners and stockholders to maximize income, and they are highly intelligent managers who will not overlook obvious ways of improving their income.

Locally, I know of one major well run complex which has upgraded to not just one, but 4 excellent on-premises laundromats. There is a laundromat just 1/2 block away which the owner told me he may drop the lease on because its "too expensive". Of course, the fact that his equipment is nearly 40 years old, as are the floor and walls, the last coat of paint, and the last time he raised his prices, doesn't affect his perception of the economics of his store. However, I'd still like to take over the store, because I still think a good store could compete effectively. This owner has heavy competition and has not stepped up to compete against it.

Personally, I would convert an entire apartment into a laundromat in any complex with more than 25 units. Assuming the rent potential of $600 to $900, against a laundromat potential of $1500 or more, its an easy decision, but one most apartment managers won't consider, even if they have 50 or 100 units and much higher laundromat potential.

In regards to whether or not the route operators are competitors, I can only tell you that one here in Virginia has Brinks armoured cars doing its cash and coin pickups from the central office, several times a week. I don't know of any laundromat operators using Brinks.

Like most businesses, anything that produces income will be discovered and maximized. Of our local laundromats, the majority have very old equipment, are somewhat dingy, and the operators do not educate themselves about their business, especially by taking advantage of cooperative groups like the CLA. However, those that do, can maximize their capital investment. Smart apartment operators are rapidly learning of the benefits of a well run and well presented laundry, and will take full advantage of the potential. There will still always be a large percentage of apartment managers and owners, however, who will not, which is the good news for those of us (laundromat owners) who choose to aggresively offer their residents a better alternative.

As laundromat operators, it's important that we not leave our back doors open. We cannot assume that simply because we have a good location that we can get by with outdated equipment, poor lighting, ugly and unattractive interiors, and no amenities. By following what we hear at CLA training seminars, ie, good equipment, good lighting, good security, attractive and clean facilities, etc., we make it more difficult for smart apartment managers to take away our business, as well as new entrepreneurs to open competitive stores.

I've never forgotten a local rezoning hearing for a new bowling alley, where the old (and it showed) bowling alley manager complained that the rezoning should be denied because there wasn't enough business for two alleys. The new applicant agreed, but said that wasn't a reason to deny the rezoning. The new alley was built, and the old one closed six months later.

The bottom line is, yes, we are and can easily lose money to route operators, apartment laundromats, and other competitors moving in on "our" territory. However, we can also mount an effective defense by offering a superior choice at all times. In fact, we must do so if we wish to survive.

Charlie

[Trab]

Charlie,

Thanks for writing such a comprehensive analysis on apartment laundries. Your comments have helped me make a decision I was contemplating. I am going to go after the apartment laundry accounts that are close to my location. Like some of the respondents to this posting, I too have many apartment dwellers that come to my laundry instead of using their on premise laundry. The reasons are the usual ones, my equipment is newer and in good working order, safer environment, clean, and I provide ancillaries such as a coin machine, vending machines, and soap machine.

My questions are: what would you (or any one else reading this) suggest be the angle I could take to get apartment complexes to drop their current laundry equipment provider and go with me? I assume there is some sort of contract between the equipment provider and the apartment owners. Can you speak to what these contracts contain? Do they lock the apartments into a timeframe that even if they wanted to drop the equipment provider, they couldn’t? If I offer to install a coin machine, pay phone, soap machine etc…would that help? I am sure I’ll have more questions. Thanks again.

Trab

[Marianne]

Recently I have noticed quite a few of my new customers declaring that they aren't laundromat users or haven't been to a laundromat in many years. These people are mainly home owners, but some live in appartments or condos. If they only do laundry in their own appartment building, they can be fairly sure that they will only be sharing with people of like socioeconomic type.

There are no entrance requirements to my laundromat. My customers are of all ethnicities, colors, educational levels and economic backgrounds. And sometimes they are present in breathtaking, earsplitting abundance. This could be a deterrent to laundromat use by some of the 'tall white folks,' and a reason that they might want to stick to their own turf for washing clothes.

[Charlie]

Trab -
Route operations are serious businesses in and of themselves. The most competitive operators will usually offer to completely remodel a facility and pay a percentage of the gross, in return for a 5-7 year exclusive contract. Often they have a distributorship on Maytag or Speed Queen equipment, which gives them a competitive pricing edge (but irritates the heck out of me). Many are also CLA members!

What do you have to offer to compete? The bottom line is that you have to offer great service and followup, an improvement on the existing situation, and something that the owner perceives as increasing his bottom line.

[LEEHUSTON]

I have a few washers and dryers in hotels and truck stops and they are doing well. I have found that most feel the large route companies offer lousy service. I have given up to a 50% split and promised 48 hour service at a minimum and gotten some accounts that way. It is nice to make money with virtually no overhead!

[BKROSS]

Our new laundromat is directly across the street from a large apartment building which I own. There are two washers and two dryers, both with higher prices than in my 'mat. It boggles my mind that the tenants would use the bldg. laundry facilities rather than the 'mat. Four excuses come to mind (1) convenience; (2) laziness; (3) open 24 hrs.
(4) don't want to pay both rent and laundry fees to me. If I don't sell the building shortly, I'll have to devise a plan to turn around this annoying situation. Comments?