In recent years, wash-dry-fold services have emerged from the shadows… and taken their rightful place at the forefront of the self-service laundry industry.
As society becomes more and more starved for time – and as markets for traditional coin laundry services grow increasingly competitive – the drop-off laundry business have been a consistent bright spot for many successful laundry owners.
Today, for many, the question no longer is: Do you offer a wash-dry-fold service? Rather, it is: Do you offer a professional, first-class drop-off laundry service?
And, more and more, that answer is a resounding, “Yes!”
“I always see wash-dry-fold services listed as an ancillary service for the coin laundry business,” said Rich Heller, who owns a Spin Cycle store in Tempe, Ariz. “I don’t look at it as an ancillary business at all. I look at it as just as important as my coin laundry business. To me, my vending machines are an ancillary business.
“I take the attitude that I’m not a coin laundry owner – I’m a professional launderer,” he added. “To be professional, you have to look professional and you have to do things professionally. And anyone who is not being professional with their wash-dry-fold is losing out on a huge market segment of this business.”
If you’re looking to fine-tune your own drop-off laundry service and dial up your business’s professionalism with regard to wash-dry-fold, there are five areas you need to focus on: (1) computerization, (2) packaging, (3) employee compensation, (4) marketing and advertising, and (5) pricing.
It’s 2008! Get a Computer!
Although it can be done, it’s probably not the best idea to try to run your drop-off laundry business without the help of a computer. And if you’re truly serious about this segment of your operation, forget about the pen-and-paper method and get wired.
“Anytime you start doing more than $2,000 to $3,000 a month in wash-dry-fold business, or 2,000 to 3,000 pounds of laundry per month, I recommend that you buy a point-of-sale computer system,” suggested Jeff Gardner of Rainbow Laundromat Inc. in St. Paul, Minn. “It simplifies the process so much. It helps you keep track of it. It helps you keep track of when the customers are coming in – and let’s you know that you’ve lost a customer. A POS system will tell you if you haven’t seen a drop-off laundry customer in a few months.
“This gives you the opportunity to pick up the phone and say, ‘Hey, did we do something wrong? Can I offer you a free service to get you to come back? What can I do to keep your business?’”
When you’re just getting started in the wash-dry-fold business, you can easily keep track of your customers. In fact, in the beginning, you’ll probably know them all by name. But when you reach that magical point of 2,000 to 3,000 pounds per month (or, hopefully, more), if you’re not using a computer POS system, crucial information will slip through the cracks.
Plus, to run a professional drop-off laundry business, it’s important to keep track of which machines are being used. After all, you’re going to wash particular orders a certain way and then you’re going to dry them a certain way.
“With a POS system, we can print out a ticket for each washer and then transfer those to the dryers, so we always have a ticket with that person’s name and order number on it, attached to the piece of equipment that’s being used,” Gardner explained.
The Final Presentation
“The packaging is the first thing the customer is going to see when they get their laundry back,” Heller said. “They’re not going to see if that stain is out of their shirt. They’re going to see if it’s packaged neatly and easy to carry.”
When you’re packaging the final product to return to a customer, think of what they are going to do with it when they get it home. When you consider how they’re going to undo that package and what they’re going to do with it, you start thinking about organizing it in a way so that they have to do as little as possible.
“Are they going to want the underwear on the bottom and the socks on the top?” Gardner asked. “No. They’re going to want the underwear and the socks in the same area, next to white T-shirts, because, more than likely, that customer is going to be putting all of those items in a drawer, and they might be putting their underwear and their socks on the same drawer. So that’s how you should present the bag.”
To make the final product look best, always start with the largest items on the bottom – the sheet set, the towels, the jeans, the pants and so on. Those are the items that are going to “build” the bottom of the bag, so that it will have a good, solid form to it.
What you present to the customer is, in fact, the first impression that they’re going to get of your wash-dry-fold product. They don’t see what they bought until you hand it to them.
Therefore, it’s also not a good idea to hand them their clean, nicely folded clothes back to them… in a garbage bag.
“A black garbage bag is the worst thing you can use,” Gardner said. “Even a white one is terrible, and I don’t care for clear garbage bags either. A garbage bag is a garbage bag is a garbage bag.”
If you return someone’s garments to them in a garbage bag, at least subliminally, you’re sending out two very clear messages to your drop-off laundry customers – neither of them positive.
Whether it’s your intention or not, you’re telling your customers that their clothes aren’t good enough to go into anything better than a garbage bag, even when they’re clean.
The other message you’re sending is that you’re not proud enough of your work to present it in a nice, professional-looking package.
“If you’re just doing wash-dry-fold as a part time thing and you’re going to take whatever customers you can get and don’t really care about building that end of your business, that’s your prerogative,” Gardner stated. “But you’re doing a disservice to our industry.
“However, if you are serious about the drop-off business, then be proud enough to take your business seriously. Produce professional-looking packaging, and put out a product that you’re proud of.”
“We shrink-wrap everything with foodservice wrap,” Heller explained. “When we didn’t do that, everything would come undone on the ride home. The shrink-wrap keeps it all together. I can’t imagine being more frustrated as a customer than to have 50 pounds of laundry nice and neat in a bag, and then hit a couple of potholes and have clothes everywhere.”
Paying Your W-D-F Staff
Your employees’ wages will be a constant cost, and one to which you should give careful consideration. Your attendants are the keys to a profitable wash-dry-fold service. They will be your representatives to the customers, and they will be doing the work. If you want that work done right, and consistent with your own philosophies, you must first train your attendants carefully and properly, and then compensate them appropriately.
In all likelihood, you will find yourself paying more than the minimum wage. However, without qualified, motivated employees, your wash-dry-fold service has little chance of thriving.
One of the biggest mistakes many laundry owners make after they begin to take their wash-dry-fold business more seriously is to refuse to see their store attendants as true laundry-care professionals.
“When you get into the wash-dry-fold business, you really need to be looking at the same caliber of employee as our counterparts in the drycleaning industry,” Gardner noted. “You’re not going to see the $6- and $7-an-hour employee. Not that you can’t bring in an employee at $6 or $7, but then you need to make sure that they are incentivized.”
Some coin laundry owners compensate their wash-dry-fold employees by giving them a commission incentive based on the volume of laundry they complete.
This system has its benefits:
• You are only paying more to those who do more.
• You will have a written record of those who are performing more efficiently and those who aren’t.
• You may find that your attendants will solicit business for you because they know they will reap a portion of the rewards.
At Gardner’s store, he has set a base level of wash-dry-fold sales that he expects to reach each month. Once that level is achieved, all of his employees share 10 percent of the revenue from drop-off laundry business.
“If we don’t get to our goal, nobody gets a bonus,” Gardner said. “But, after we get there, everybody gets a bonus, and it continues to grow. It doesn’t start at zero. Once we get to that level, everybody starts at $100. And it grows as a percentage after that.”
Some laundry owners find it effective to offer their attendants a flat incentive for wash-dry-fold business, where everyone shares a percentage of the business from the first dollar every month.
“I’m a firm believer in compensating good employees better than they could get at any other job,” Heller said. “To me, it makes more sense to pay a good employee $1 or $1.50 more an hour that they could get at McDonald’s to keep them, rather than to pay minimum wage and have to keep retraining people all the time.”
Heller also has implemented a wash-dry-fold bonus system, based on store performance and the number of hours each attendant works. Basically, if an attendant works a “full week,” which at Heller’s laundry is 30 hours, that person receives a full share of the bonus. If someone works less than 30 hours, that individual gets a half-share.
“Each employee, based on hours, is paid the same percentage,” Heller said. “It’s too difficult to figure out who did what weights and how many people did washes and drys, so we pay everybody equally, based on hours.
“As the store does better, their bonus percentage goes up,” he added. “Hopefully, that encourages our attendants to go up to those younger college kids who come in here and say, ‘Hey, we can do your laundry right here for you.’ I don’t think they’d do that if there wasn’t an incentive for them.”
Don’t Keep It a Secret
It has been proven time and again that every five to six years, the equivalent of your entire marketplace will have moved from the area. Those laundry owners who claim that they have been at the same location for 20 years and, therefore, don’t need to advertise because everyone knows about them are either naïve or lazy – or both.
In addition, advertising your wash-dry-fold service is important because your traditional coin laundry customers are not the same people who are likely to take advantage of your drop-off laundry service.
Much like the wash-dry-fold service itself, consistency and repetition are the keys to successful advertising, as well as backing up your advertised claims. Word-of-mouth advertising will be positive only if you deliver what you have promised. For example, if you advertise "clothes back in an hour," be sure the work is completed in 60 minutes or less.
When you ask potential customers to try your wash-dry-fold service, you are asking them to change the way they’ve always handled their laundering – be it at home by themselves or through another wash-dry-fold service. To break such an ingrained habit, you have to give them a good reason to do so.
“The first key is to plaster your building with signage,” Gardner suggested. “I not only have signage on my windows and my road sign, but I also have an A-frame sign. On the exterior of my building, there are three opportunities for customers to know that there is an alternative way to do their laundry.
“In the store, it’s absolutely critical that you have a wash-dry-fold menu, just like in a restaurant. Talk about your prices and your product.”
You also need to make sure that your counter area, where you’re presenting the finished product is appealing and not in disarray. It should be organized. The bags should all be uniformly folded or packaged and labeled. Of course, your employees should be looking and acting professionally.
And when they’re folding the drop-off orders, Gardner suggests allowing customers to view that process.
“The one thing that every person hates is folding,” he said. “That’s really the business we’re in. Anybody can load their home washer and transfer it to the dryer and unload it. But then you have the pile, the thing that nobody wants to dig through. Every customer in your laundry is thinking that. And when they see your attendants folding clothes, that’s your closing, that’s your marketing.”
As for outside advertising, coupons are always effective, as well as advertising a special feature of your service, such as same-day service. Direct mail pieces, flyers and local newspaper inserts are all cost-effective vehicles to get the word out.
Kent Wales, a laundry owner in Spokane, Wash., bundles his customers socks and underwear in customized, self-adhesive bands emblazoned with his store’s logo and contact information.
“All of a sudden, I’ve got my name, address, phone number and brand recognition in their underwear drawer.”
When you advertise your wash-dry-fold business, it’s always helpful to offer something of value.
“It can’t be a percentage, because people don’t understand the value of that,” Gardner explained. “When you hand out a coupon, it has to be a dollar amount – and it has to be a significant amount – $5, $10, even $15, if you’re in the right marketplace. Potential customers can look at that offer and feel like they’ve got a $5 bill or a $10 bill in their hands. People won’t stop to pick up a $1 bill, but they’ll still stop to pick up a $5 bill.”
Gardner also suggested getting involved with community and getting to know the other business owners in your market to open up cross-promotion opportunities.
“I’m involved in business networking groups,” Wales said. “Anytime someone asks me for a donation, I give away wash-dry-fold services. It costs me virtually nothing. And even though I’m getting maybe 50 percent to 75 percent redemption on those, when someone comes in and tries it, they love it. I may not get them back every week, but I’ve educated one more consumer.”
Lastly, as you get more serious about your drop-off laundry business, you’re going to need the ability to accept credit cards.
“The most important piece of marketing isn’t really marketing – it’s just making sure that you take credit cards,” Heller said. “All of that advertising and marketing are going to do you no good if you’re not taking credit cards. Since we started accepting credit cards in 2005, we have doubled our wash-dry-fold business. Nobody carries cash anymore, especially college kids.”
Pricing Your Product
The vast majority of laundry owners who are currently operating thriving wash-dry-fold services charge their customers by the pound.
Charging by the pound seems to be the easiest system to use not only from the owner’s standpoint, but from the customer’s as well. There is no guessing – and no argument – as to what constitutes a “full” load, a “big” load, a “small” load and so on. The customer will have a clear idea in advance just how much it will cost to have his laundry washed at your store.
With a per-pound cost, the owner has the best opportunity to provide a completely professional service. He can do this because he has determined all of his costs and figured out, pound for pound, what he should charge to cover those expenses and make a profit.
“To determine wash-dry-fold pricing, you really need to figure out exactly what it costs you to do that laundry,” Gardner explained. “Anyone who seriously wants to do this as a profitable business should not start out by simply looking at what all of the other laundries in the area charge.”
Many laundry operators who offer wash-dry-fold services report that, in addition to per-pound pricing, setting a minimum is a crucial element to the pricing structure. This can be either a poundage rate or a flat-rate minimum, and it can be determined by adding all fixed costs, and then deciding what is needed to cover those costs.
When figuring what you should charge, remember to include all costs and to add in a reasonable profit.
“The thing that some laundry owners fail to think about when they price their wash-dry-fold service is that their labor is a real cost,” Gardner said. “Most people think that they’ve got their attendants there and are paying them anyway, so the labor doesn’t count. They think, if they’re selling their service for 55 cents a pound, that 55 cents a pound is profit.
“When you’re at less than $2,000 in drop-off business a month, that might be a fallacy that you can live with,” he added. “But when you go over $2,000 a month, your employees are not going to be taking care of your self-service customers – and those coin customers are going to suffer.”
So the cost of wash-dry-fold labor does indeed count. A good attendant can produce about 33 pounds of finished wash-dry-fold product an hour, according to Gardner’s research. Therefore, based on a price structure of $1 a pound, an attendant can generate $33 an hour of revenue, if that’s the only thing she’s doing.
If you’re paying your attendant $7 to $9 an hour plus an incentive, Gardner estimated that approximately 30 percent of that revenue earned is going toward labor, including workers’ compensation insurance, FICA, Medicare and all of the other costs of that employee.
“Next, I figure that it costs me about 7 percent in supplies, which includes soap, the order tickets I write up, credit card processing, etc.,” he said. “Another 10 percent goes to utility costs, equipment maintenance costs, equipment wear and tear. Of course, this can vary. I use a longer wash cycle, while some laundry owners might be able to get away with 7 percent.”
Also, a portion of your insurance premiums will apply toward the wash-dry-fold service, particularly the prorated amount of your Bailee coverage. Bailee, which covers another person’s property that is lost or damaged while in your temporary possession, will be necessary for you to have written into your policy, if you plan to institute a wash-dry-fold service.
Next, Gardner figures the space he dedicates to his wash-dry-fold operation into the equation. “I allocate a certain amount of rent,” he said. “I could be using that space for something else. It’s a fixed cost, but I like to allocate 5 percent, just to know that this area is paying for itself.”
That comes to about 52 percent, or 52 cents, of that $1 per pound. And that’s before doing a dime of advertising and marketing, which will (or at least should) be an ongoing cost for this type of operation.
“As a result, somewhere around 60 cents to 70 cents a pound should be a real dollar amount cost to do wash-dry-fold,” Gardner said. If you’re serious about processing drop-off laundry, that’s your real cost.
“And if you’re not willing to make 40 percent on that business, in my mind, you shouldn’t be in business,” added Gardner, whose goal each month is $4,000 in drop-off business. “In fact, you should be looking at making 50 percent, 60 percent or even 70 percent on top of that cost.”
After doing all of the necessary math, then it’s OK to take a look at your competitors’ pricing, just to make sure the figures you arrived at – and that work for your particular business and comfort level – are in the ballpark for your specific marketplace.
“We look at our competition, and we position ourselves there,” said Heller, who charges $1.03 per pound for drop-off laundry. “We’re going by the national average and putting ourselves either above or below that number. In Phoenix, the average price is about 85 cents per pound.”
“I do a competitive analysis,” Wales admitted. “I’ve got a ballpark idea of what my profit margin is, and I just make sure I’m making an adequate profit.”
Typically, wash-dry-fold drop-off prices range from 60 cents to $1.25 or more per pound. And, according to the most recent CLA industry survey figures, the average wash-dry-fold price per pound is 90 cents.
If you don’t price for profit from the beginning, you will hinder your chances for success. It is usually difficult to enter the marketplace very low, and then attempt to raise your prices after the fact.
Of course, much like in the coin laundry business, the wash-dry-fold marketplace is getting more crowded each year – with nearly two-thirds of all coin laundries in the U.S. already offering some sort of wash-dry-fold service to their customers.
However, this segment of the industry has more than enough room for operators who pay strict attention to offering quality customer service and providing a top-notch finished product, while at the same time monitoring their own bottom lines.
(For more specifics on the finer points of running a wash-dry-fold service, check out the CLA’s new Drop-Off Laundry training program. For details, visit coinlaundry.org/store.)
Handling Damaged, Lost or Unclaimed Garments
Once you start to handle serious wash-dry-fold volume you will, from time to time, damage or lose a few items. It’s inevitable. Most wash-dry-fold services also experience their share of unclaimed items.
Please note that different states have different laws regarding the disposition of unclaimed garments. Due to specific wording, each state’s law varies to a certain degree. Most states require a notice be given if you plan to dispose of one’s unclaimed garments. For details on the specific unclaimed garment laws in your state, visit the website for the Non-Affiliated Drycleaners Alliance at: http://members.aol.com/nadagroup.
W-D-F 101: A Primer for Drop-Off Laundry Newcomers
One of the primary advantages to a wash-dry-fold service is that it attracts a broader customer base. And, of course, more customers mean more profits. By embracing the concept of "one-stop shopping," you too can convert your coin laundry into more of a full-service laundry operation.
Low start-up costs associated with a wash-dry-fold service are a major advantage. Obviously, you’ve already made the major investments in your store’s location and equipment. In fact, you may be closer to starting up a wash-dry-fold service than you think. You already have nearly everything you need in your store right now. Your additional costs will be in the training of your attendants, along with some of the following:
• A desk, counter, shelves, etc.
• A scale (if you will be charging by the pound).
• General supplies: Soap; bleach; softeners; a general spotter; packaging bags, paper and/or film; receipts and invoices; hangers; safety pins; and so on.
• Optional items: A cash register, a computer system, an incentive pay program for attendants.
If you are already running an attended operation, another advantage of offering wash-dry-fold is that you will upgrade your employees’ productivity. You may have to compensate them at a higher rate, but the increased productivity is likely to cover that cost.
If you currently own an unattended coin laundry, consider the benefits to adding an employee for wash-dry-fold work:
• There is the well-documented benefit of decreased vandalism in attended stores.
• Numerous surveys indicate that customers feel safer and more comfortable in attended stores.
• Your laundry’s appearance is likely to improve with an employee there to keep everything clean and in order.
In many cases, a wash-dry-fold service can be the perfect solution for making more efficient use of your self-service laundry equipment. However, there are a few problems that can come up with such an operation. Here are some potential hurdles to consider:
• You will need additional space for bundles of dirty clothes, as well as for the finished loads. However, you probably don’t need as much space as you may think. In most cases, simply using your current space more efficiently and creatively will do the trick.
One space-saving strategy is to ask for payment in advance. This is possible once you have established that you provide a consistently high-quality service. Customers tend to pick up their laundry more promptly if it has already been paid for, thus cutting down on the storage space required.
• If you will be keeping clothing overnight (and you will), reevaluate your laundry’s security measures. You may find it necessary to enhance your security by adding locks, installing an alarm, implementing surveillance cameras and so on.
• Some laundry owners have discovered that, after initially starting a wash-dry-fold service mainly to keep one attendant busy, others soon need to be hired to handle the increased workload.
If the purpose of adding a wash-dry-fold service is only to serve as an ancillary profit center – and you don’t want to add to your staff – consider raising your drop-off prices to a level that will stem some of that growth. In most cases, you will lose some volume, but the higher price will keep your profits from dipping too severely, if at all.
• Above all, you need to be serious about it. These are other people’s garments. You and your staff need to treat them as something valuable. Act like you’re in the business of cleaning garments.
Make sure you give your attendants all of the tools they need to work with. You shouldn’t go into wash-dry-fold haphazardly. You ought to have a plan – the image you want to project. You ought to know what you want your end result to be. Otherwise, you’re going to be pulled in too many directions.
And give it time. It takes approximately twice as long to build up a good wash-dry-fold operation as it does to build up a successful self-service business.
Above all, have a plan. How are you going to track wash-dry-fold? How are you going to compensate your employees? Be very clear about the service you’re providing and have those things thought out ahead of time. There is a vast difference between minor adjustments and making it up as you go along.
Links:
[1] http://members.aol.com/nadagroup