5 cent dryers??????????

[BMWHD3060]

What does everyone think about the New York Entrepreneur who spent between 1 & 2 Million Dollars to build his New Mat in an Apartment Building charging 5 cents to dry when he has a captive audience, & with his Low Low Prices he will most likely Never make a Profit. I thought Business Owners were in Business to make a "PROFIT".
I think he just built a 1.5 Million Dollar Charity Mat?
Less then a yr he will be out of business is my guess, unless he likes to keep feeding a Bleeding Business.

[Howard]

Hey don't be so hard on him, it might be the age old strategy of lose a little on each sale but make it up on volume :) Or maybe there is more to it.

[jh]

What does everyone think about the New York Entrepreneur who spent between 1 & 2 Million Dollars to build his New Mat in an Apartment Building charging 5 cents to dry when he has a captive audience, & with his Low Low Prices he will most likely Never make a Profit. I thought Business Owners were in Business to make a "PROFIT".
I think he just built a 1.5 Million Dollar Charity Mat?
Less then a yr he will be out of business is my guess, unless he likes to keep feeding a Bleeding Business.

It still makes sense if it is a limited time promotion for opening, or with washer prices higher than local competitors.

[Adamski]

What does everyone think about the New York Entrepreneur who spent between 1 & 2 Million Dollars to build his New Mat in an Apartment Building charging 5 cents to dry when he has a captive audience...

Mike,

What do you mean by "5 cents to dry"? Is it 5 cents per minute or 5 cents for 10 minutes or 5 cents for 30 minutes? Do the dryers actually take nickels? How does all this actually work?

[couvsuds]

Mike,

What do you mean by "5 cents to dry"? Is it 5 cents per minute or 5 cents for 10 minutes or 5 cents for 30 minutes? Do the dryers actually take nickels? How does all this actually work?

This guy's dryer promotion is 5 cents for 8 minutes.

“Nobody can tell me what to do,” said Lesher, whose laundry is open 7 a.m. to 2 a.m. Wednesday through Sunday, with the last wash at 9 p.m. on Monday and Tuesday. “It’s my own promotion. We live in a terrible economic time, and I’m trying to make a living from people who don’t make a living. In any business in any economy, the name of the game is volume, so I’m trying to generate as many turns as possible at a low price – and still generate a profit. It’s a challenge, yet I’m going to do it for as long as I can; then, I’m just going to have to raise it slowly, incrementally, but still on the low side.”

http://www.planetlaundry.com/store-operations/2011/going-where-customers-are

[mjwalsh]

This guy's dryer promotion is 5 cents for 8 minutes.

“Nobody can tell me what to do,” said Lesher, whose laundry is open 7 a.m. to 2 a.m. Wednesday through Sunday, with the last wash at 9 p.m. on Monday and Tuesday. “It’s my own promotion. We live in a terrible economic time, and I’m trying to make a living from people who don’t make a living. In any business in any economy, the name of the game is volume, so I’m trying to generate as many turns as possible at a low price – and still generate a profit. It’s a challenge, yet I’m going to do it for as long as I can; then, I’m just going to have to raise it slowly, incrementally, but still on the low side.”

http://www.planetlaundry.com/store-operations/2011/going-where-customers-are

It would be interesting as to what type of "choice of coin or coins" coin mech he is using. Could it be a specially interfaced more trouble free than a bill acceptor or a card reader Australian manufactured MicroCoin QLs like I have had on my internet kiosk for over 10 years now or is it another more affordable specially interfaced brand? They can be programmed for 12 different coins for a large number of countries' coinage. I'm sorry --- I just couldn't resist!

http://www.arinda.com.au/coinmech.asp

MJ

[Adamski]

This guy's dryer promotion is 5 cents for 8 minutes.

Nick,

At 5 cents per 8 minutes, I doubt he is even covering his natural gas cost let alone anything else. I suspect this promotion won't last very long.

[canon]

Not that i agree with it, but i guess it is the same as the guys that are doing free dries. What are the wash prices?

[Howard]

Don't let Larry hear this, but if your read the entire artical you will see it is a CARD STORE :)

This guy is doing stuff very cheaply, he does pickup and delivery WDF for 80 cents a pound. Heck I charge people double that and they have to bring it to me.

[Bluestreak]

In any business in any economy, the name of the game is volume, so I’m trying to generate as many turns as possible at a low price – and still generate a profit.



I thought the name of the game was profit, not volume.

[mjwalsh]

I thought the name of the game was profit, not volume.

Bluestreak,

I couldn't agree more.

A laundromat's net income after expenses is the one that we need to be focused on the most. That is why gross receipts taxes that they weren't able to stop in some states & provinces are more dangerous in my opinion to the viability of the business than if the government took it out of the net. For one thing, it usually would be a quite a bit larger sum (that way their tax dept can be extra mindless) than if the net was the basis. Simple Arithmetic. Who knows with the right kind of perfect storm combination of events such as a new mat springing up closeby or whatever --- you could potentially even end up "heaven forbid" with no net at all ---- but at least you would not be thrust into a net operating loss (nol) with its accompanying slightly increased tax complication. Ooopzy Doozy I forgot to mention also putting you closer to the "poor house". Hey--- the "poor house" is better than being "homeless"!

MJ

[jh]

While most of us count every quarter to figure out the best advertising idea. This guy just threw all the advertisement methods in his area. No doubt that he overspent on advertising. No doubt that he achieved his purpose. When he said his business model was to offer low pricing for higher volume, I felt lucky that he did not settle down in my area.

It will take some time to find out whether or not he will succeed. When I read the article, the first question I had was how he handled the dryer exhaust vents with 98 apartments above his store (5 floors above). I thought he somehow built the exhaust vents downward to the basement then to somewhere above-ground. However, I checked the building violations and found an interesting complaint - "EXHAUST HAS BEEN PLACED DIRECTLY IN FRONT OF CALLER'S APT;FUMES ARE ENTERING FROM THE LAUNDROMAT DIRECTLY INTO BEDROOM". And the city sent out a violation - "WORK DOES NOT CONFORM TO APPROVED CONST DOCS & OR APPROVED AMENDMENTSFOR ALT 2 JOB #200937273 OF WHICH PERMIT EXP 7-5-07 & APPLICANT IS REQUESTING A LETTER OF COMPLETION. NON-CONFORMITIES NOTED: (1) OBSERVED". Apparently, while free stuff has been given out here and there, this mat is not (legally) completed yet.

Well, I'm still wondering where the exhaust vents should be located. Is it possible to vent the exhaust air all the way to the roof of a six story building?

[ldm]

I thought the name of the game was profit, not volume.

Enough volume at a loss will not keep him in the game very long. Hope this is part of some temporary advertising strategy to get people's attention...if not, he may be in for a rude awakening. Les

[Howard]

I think it was George Wanamaker (sp?) who once said that 50% of his spending on adverising was a total waste, he just did not know which 50%.

[BMWHD3060]

Everyone needs to read the Full Story, he spent Between 1 & 2 Million Dollars to build. That money will take a Long Long Long time to get back with a "Very Low Profit Margin".
This is a 2 Million Dollar Charity Mat.
Invest 2 Million Dollars in the bank & make more money on interest then he ever will in this Mat.

[Howard]

Mike, your concept is correct but not sure about the math. Banks pay almost no interest these days. In fact, Bany of NY recently announced that they were going to charge depositors of over $50mm something like 0.15% for the right to park their money at the bank.

[mellofelow]

I don't get it... understand the concept of high volume with slim margin however, then you're at the mercy of utility rates. Should the event of resource commodity spike, the margin can turn negative in a blink of an eye.

:::sigh::: maybe I'm not smart enough for this line of business.

[BMWHD3060]

Mike, your concept is correct but not sure about the math. Banks pay almost no interest these days. In fact, Bany of NY recently announced that they were going to charge depositors of over $50mm something like 0.15% for the right to park their money at the bank.

Howard,
the only point I was trying to make is a small interest rate is better than a Loss.
There are plenty of ways to invest almost 2 million dollars & make more money then this Mat will ever make this owner.
If he said the buildout was between $300,000.00 to $800,000.00 it would still be quite a gamble.

[Howard]

I would not be so fast to write this guy off, we really don't have enough info to do that. We have no idea what he charges for his washers nor how many turns per day he is getting. Remember he is not giving free dry, he is charging 5 cents for 8 minutes. At current gas prices that is probably just about break-even, or close to it, on energy costs to run the dryer. That sure beats free dry and is a great value to customers. If he is able to get say 8 or more turns per day this could be a winning formula.

The point is we each run our businesses differently which is one reason chains don't generally do well in this business. He may have found a formula that works where he is. As others have already said it is net that matters not gross.

[jh]

"I’m trying to generate as many turns as possible at a low price – and still generate a profit. It’s a challenge, yet I’m going to do it for as long as I can; then, I’m just going to have to raise it slowly, incrementally, but still on the low side."

This owner's intention is very clear. These promotions will come to an end one day. He's trying to set his pricing slightly lower than all the surrounding competitors' all the time so that his store will stay on the top of the list for any laundry customer in the area. Just like the way he advertised, he attempts to throw all the good stuff together - big and clean environment, friendly employees, wide aisles, brand new and wide selection of machines, lower prices. The interesting thing to be found out is that who is going to survive longer - this monster or its small competitors.

Let me give you all some background info of New York City's laundromat machine pricing. Our normal vend price for a 20lb front loader is $1.75 or $2.00. This owner's price is set at $1.79. The charity price I have seen is $1.00 or $1.25. The normal dryer vend price is 25 cents for 8 minutes. The charity price is, of course, free, or in this case, 5 cents per 8 minutes.

[rogergood]

In my opinion, given his starting point, he will never be able to get out of the pricing trap in time. $1.79 for a 20lb does not nearly make up for 5cent dry at NYC DEP water rates. If this was done with a loan, his payment would be $13,000 per month. This story shows us what is wrong with this business. This guy is working 7 days a week to lose money thinking the customers will have a warm and fuzzy feeling for him and his business and that they will stick around at vend prices that allow him a proper return. This is just not the case.

[Adamski]

Guys,

I wonder how many parking spaces this 6,000 sf laundromat has. Or does everybody walk to the laundromat in N.Y.? I so cannot relate to that.

[Howard]

In that area you pretty much walk. Most people in the city do not own a car. If they do they are highly unlikely to give up a street parking stop to go to the laundry and then have no clue where they will be able to park when they get back. Its a very different world than where you live.

[STOUT]

What is the furthest a person will walk in NY to get their laundry done? Especially caring laundry to have it cleaned and dried?
There has to be a value set upon a persons time to do laundry.
I find it hard to believe that someone would walk, toting laundry, several blocks and pass other mats that are higher prices. They can not be that much higher or all the business would go to these charity mats.
Especially with all the congestion, crime, etc.
Heck any person would know that a person hauling laundry has to have some cash on them for an easy hold-up!

[MrMachine]

What is the furthest a person will walk in NY to get their laundry done? Especially caring laundry to have it cleaned and dried?
There has to be a value set upon a persons time to do laundry.
I find it hard to believe that someone would walk, toting laundry, several blocks and pass other mats that are higher prices. They can not be that much higher or all the business would go to these charity mats.
Especially with all the congestion, crime, etc.
Heck any person would know that a person hauling laundry has to have some cash on them for an easy hold-up!

I've seen people walk as much as 10 blocks. It's not hard because most people have their own shopping carts that can hold 40-50lbs of laundry.
Most people will walk no more than 5 blocks for their favorite mat though.
There are a LOT of potential customers in a 5 block area....thousands....

That 5 cent special is just that. A special. Wait a couple of months or so and he'll raise it up to market rates.
I'm surprised...They usually do that with a grand opening free dry special. I'm not sure why he just didn't do that instead.

[Howard]

People with carts will go far. I have even seen it here in NJ is some of the more urban towns, but they carry huge sacks on their backs or even balanced on the handle bars of their bikes. To many of these people the savings is worth it, especially since many are unemployeed. Heck in a week or two they save enough money to buy the Starbucks coffee you see them drinking as they wait for their wash :)

Cash, these people don't have to carry folding money nor those stupid heavy clunky metal dollar coins - they just take their ATM or credit card and get cash from the ATM and deposit on the card system.

[Adamski]

Guys,

It sounds like laundromats in New York City rarely, if ever, have a customer drive up with a pickup truck full of laundry that fills two 90# (formerly 80#) Huebsch washers. If most people arrive walking and pushing a shopping cart, it would seem that the largest washer needed in New York might be about 40#. Would you agree?

[rbh]

In the neighborhood where my mat is located, while its certainly not like NYC, I would say over half my customers walk to the mat with various forms of carts, etc. To answer your question Larry, I think you'd be surprised at just how much one of the large carts will hold....or at the number of families you see with two carts in two. Most of these foot traffic customers use my largest 60 lb machines. People in cities without cars seem to find a way to get things done!

[MrMachine]

Guys,

It sounds like laundromats in New York City rarely, if ever, have a customer drive up with a pickup truck full of laundry that fills two 90# (formerly 80#) Huebsch washers. If most people arrive walking and pushing a shopping cart, it would seem that the largest washer needed in New York might be about 40#. Would you agree?

Larry,

One of my stores is in a neighborhood that is very similar to Manhattan. Thousands of people in 27 story apt houses. The problem for mats like mine is this: competing with the laundry rooms in those apt houses.
Why would you want to put all your laundry in a shopping cart and lug it outside, walk 4-10 blocks in all kinds of weather when you could easily do it in your apt house laundry room?
Some of these laundry rooms are bigger than many Mats. I have thousands of people actually walking past my Mat every day, but I'm lucky to get a VERY small percentage of them.
That's why I was delighted when the apt houses began switching from coin-operated Wasco gen 4's, to card controlled LG home style washers. I got a nice, unexpected boost.

When they shut down a laundry room for repairs or construction, we get VERY busy, but then again, it's short-lived.
So the problem for Mats in NYC and other urban areas is not so much the Mat down the block (I compete with 4 mats within 3 blocks at that location), but it's the apt house laundry rooms that capture at least 90% of the population.

As you know, a 50lb washer rarely actually holds 50lbs of laundry.
If a customer fills her shopping cart up and puts another bag on top (which they often do), she will use one 50lb washer and maybe also 2 triples. She has to separate the colors.

http://www.amazon.com/Jumbo-Folding-Shopping-Cart-Double/dp/B002PS3E4E

The newer carts like that one now have a section on the back to put detergent bottles.

[MrMachine]

Another problem for Mats in NYC are the crushing rents.
A 2,000 sq/ft store will easily cost $8,000 bucks a month, yet the vend price for a double loader is only $2.00, if you're LUCKY ($2.00 is the price leader).
Rents in Manhattan are much higher than that!
Many Mats are still charging $1.75 and even $1.50, and they are all within walking distance.

Add to that, NYC water bills DOUBLING over the past 5 years, and you have a recipe for misery.

[CanCanCase]

...Invest 2 Million Dollars in the bank & make more money on interest then he ever will in this Mat.

Mike, your concept is correct but not sure about the math. Banks pay almost no interest these days. In fact, Bany of NY recently announced that they were going to charge depositors of over $50mm something like 0.15% for the right to park their money at the bank.
Howard,
the only point I was trying to make is a small interest rate is better than a Loss.
There are plenty of ways to invest almost 2 million dollars & make more money then this Mat will ever make this owner.
If he said the buildout was between $300,000.00 to $800,000.00 it would still be quite a gamble.
Don't forget the inflation... Didn't the 3-year cost of living index just go up something like 9%... that's 3% per year. If a bank is only paying .5% APY, there's 2.5% of your money vaporizing. For someone sitting on piles of cash, keeping it in a bank will lose value that outstrips any interest earned. Once in a while, the value lost to inflation/low interest might actually be more than the depreciation schedule of a commercial building with some good laundry equipment in it.

I don't get it... understand the concept of high volume with slim margin however, then you're at the mercy of utility rates. Should the event of resource commodity spike, the margin can turn negative in a blink of an eye....
Depending on the Utility Commission (and how often they meet) in a particular market, there's usually SOME warning time before rates go up. The guy implied that when necessary, he'll raise rates.

Just as we've all come to the conclusion that "free dry" might or might not work in some markets, without seeing this guy's books and watching the operations first-hand, I'm sure willing to give the benefit of the doubt... it looks just like a free-dry business model to me.

-Case

[Adamski]

Guys,

Now see ... I'm getting more street-smart about the ways of the big city dwellers. So folks push a cart full of laundry to the laundromat in all kinds of weather and that's just the way they do things there. I imagine they do their grocery shopping using the same cart as well. Other than doing weekly chores outside of the apartment, do people get out and walk places for entertainment or do they try to stay inside at night and watch TV?

[MrMachine]

Guys,

Now see ... I'm getting more street-smart about the ways of the big city dwellers. So folks push a cart full of laundry to the laundromat in all kinds of weather and that's just the way they do things there. I imagine they do their grocery shopping using the same cart as well. Other than doing weekly chores outside of the apartment, do people get out and walk places for entertainment or do they try to stay inside at night and watch TV?

Larry,

You got it. The weather is a bad thing.
If it's too hot or too cold, they won't come out much. If there's even just a small amount of snow on the sidewalks, they can't push their carts and business takes a nosedive.
If it's a snowstorm, business comes to a near standstill because they'll stay home from work and wash in their apt house. Too many snowstorms in NYC can put a mat owner right out of business!

And yes, they use those carts for all kinds of shopping.
People do come out at night more now than they used to because the crime rate here in NY is down now.

[Enilder]

Larry,

You got it. The weather is a bad thing.
If it's too hot or too cold, they won't come out much. If there's even just a small amount of snow on the sidewalks, they can't push their carts and business takes a nosedive.
If it's a snowstorm, business comes to a near standstill because they'll stay home from work and wash in their apt house. Too many snowstorms in NYC can put a mat owner right out of business!

And yes, they use those carts for all kinds of shopping.
People do come out at night more now than they used to because the crime rate here in NY is down now.

I don't know about you but the business has been more successful during summer for me at least because (I guess) people go through clothes a lot more often. On top of this, you got vending machines (sodas, water, etc) making money for you.

I didn't go through every single post but this sounds like a plan to draw people into the new mat. I've had a similar experience (not as dramatic as 5 cents dryers) but customer satisfaction during these times is more important than ever if you own a mat close-by.

[Howard]

I grew up in NYC and we used one of those carts to go to the supermarket. It was not too far though as we were at 82nd and West End Ave and if I recall Food City was at 80th and Broadway. So it was two short blocks and one long block away. Fortunately we did not have to use a laundromat or the dingy laundry rooms in the basement as my parents had a Philco frontload combo washer-dry. It was a washing machine that was also a gas dryer all in one drum. I used to love to put the Solvo table soap in and sit and watch the clothing go round and round.