Smooth Sailing

By Bob Nieman | May 13, 2009

Peter Fritz currently owns and operates four self-service laundries in St. Petersburg and St. Petersburg Beach, Fla. He’s been in the business for about 10 years.

How did you get involved in the coin laundry business?

I needed money for a bigger boat.

Seriously, I previously owned a tire service and alignment business in northern Maine for many years. I sold it and retired when I was still in my 20s. I thought I had enough money to live on and do what I wanted. But I had a small boat, and I really wanted a bigger one.

I also sold real estate for a number of years in Florida. However, I was used to my business in Maine, where customers came back every week or every six months. With real estate, they come back every five years.

My first laundromat was about three blocks from where I live, and I still own it today.

What are the keys to a successful coin laundry operation?

My keys to success and what I do might be different from what others do. However, it is a very simple business, and if you’ve got the right location, there’s no one thing in particular that you need to do.

Of course, you definitely need to find a location that requires a laundromat to be there in the first place. You can be the smartest marketing person in world, but if you’re not where people need to do laundry, you’re not going to make it. That need is the key to the whole business.

What are some of the hot-button issues in your particular marketplace?

Almost all of the laundromats in my market are self-service. Quite a few of them are open 24 hours. And very few are attended.

Unfortunately, the problem is that the homeless people in the area tend to make them a home – and they can cause a lot of damage. Because of this, only one of my stores is still open 24 hours a day.

If there’s a homeless person on your property, it’s almost impossible to get them for trespassing, because he has to be actually standing on your property when the police arrive. And the police have better things to do then run around looking for homeless people and answering your calls.

Plus, by the time the police get there, all the homeless person has to do is stand on the sidewalk and there’s nothing the police can do about it. They only give them a warning. They don’t arrest them. They don’t want to deal with them.

It’s warm down in Florida and a lot of the homeless end up down here.

Another issue that the operators around here face are the thieves with crowbars, who come in and attack your equipment in the middle of the night. Stringing isn’t really that big of a problem here. But, with a crowbar, they can do a lot of damage. They can ruin your machines.

I know most of the store owners around here. There’s always somebody trying to steal our money.

If there were a way to get rid of those two things, it would make business a lot easier.

What major trends are you noticing in your area?

I know that, in other places, everybody’s putting up 3,000-, 4,000- and 5,000-square-foot stores, as well as card systems and all that stuff. That’s not really happening here.

However, I have noticed one thing with some of the older laundromats that are in better locations. When they are gutted, painted and remodeled with new equipment – and it’s always coin, never card systems – often business will pop up.

If you talk to somebody in New York City or Chicago or some of those dense markets, they’re doing $200,000 or $300,000 a year. That just doesn’t happen here.

However, there are a lot of multi-store owners in this area – people who have three or four stores. You have to have multiple stores if you’re going to make it your business.

In your opinion, what are some of the greatest technological advancements the industry has seen since you’ve been in business?

A couple of small things are the display counters on the washers and dryers. The dryers today show the time remaining, while the washers – whatever you set them at – display the price. Before, every time you wanted to raise your vend prices, you had to get a bunch of stickers. Now you don’t have to do that anymore. Those two little things are very nice. It’s the simple things that make life easier for the customer. Those are the good ones.

Of course, card systems are obviously a big advancement. I have one card store. It’s a good store, but it’s in a neighborhood that most people wouldn’t want to drive into. So I installed a card system mainly for security reasons. With the card system, I don’t really worry about someone coming in with a crowbar, because there’s nothing there to take.

I think a lot of the customers would prefer coins. In fact, I’d probably have 20 percent more business if that were a coin store – but at least I sleep well at night.

And despite being an unattended store, the card system works well. I installed the simplest system I could find. It’s very easy to use.

What business philosophy guides your decisions?

I’ve never sat down and come up with a specific plan. But I always look at whether or not something is viable and economically feasible. Those are the two things I always ask when I’m looking at deals. And I’ve looked at a lot of laundromats. But whether buying a coin laundry or just a piece of equipment, I’m in this for the money. It’s always about return on investment.

What are vend prices like in your market?

They’re pretty good. Most of the operators around here aren’t in a big rush to give stuff away. Of course, some operators have tried $1 double loads in the middle of the night, things like that. One owner came in with 75 cents for toploaders and $1 for doubles. At that time, I was at $1.50 for my tops and $2 for my doubles. He did that for more than a year. Now, I think he’s at $1.25 for tops, and the rest of us are at $1.75.

I just don’t think that low pricing works at all. It gives you a little bit of a pop, but after you get people to come, they find out it’s not worth it to drive a farther distance for that type of pricing.

And that goes back to having the right location. If you have to sell your services for a third less than the average guy is doing, you’re in a bad location. That will not work over time. It will work for a short period of time.

Basically, I don’t see vend prices being that big of a problem in this market. But, of course, there are a couple of low-priced operators who just don’t understand it.

What about utilities?

I talk to owners in other parts of the country, and they make my water bill look like it’s free. Then I’ll talk to somebody else, and it makes me look like I’m paying double for water. As for gas, we all pay about the same.

At the end of the day, your utilities are what they are – and that should all be figured into your vend pricing. I don’t care what I pay because I’m reselling it. If I have to pay a certain price for a gallon of water, I’m going to resell it at the profit margin that I feel I need.

We all hate to see the bill come in every month, but the higher your water bill is, the more money you made.

When coin laundries fail, what’s the most common reason?

First of all, very few new stores have been built in my area, only three that I know of.

But it goes back to my original statement about demographics. If you fail, you didn’t have enough business.

Assuming the demographics are not the problem, a lack of re-investment in the business is probably the number-two reason. You can’t buy a laundromat and run it for 20 years and be done with it. Think of when you buy a car – it’s only good for so many years and then you’ve got to trade it in or fix it or do something.

I understand that if you buy a bunch of hard-mount machines, you’re not going to replace them every five years. But, in time, you should replace the panels on them or the graphics, just to keep things looking new. I’ve got some machines that are 20 years old, and they look like they’re brand new.

The other problem I see is that the demographics change. All of a sudden, all those little low-rent apartments are torn down and condos are being put up – then you’re in trouble. Nothing you can do about it.

What the biggest mistake you’ve made in this business?

I bought a store with horrible demographics and a bad location. It was run down, and I figured that I could renovate it. I brought in new equipment. I ran it for three years – and I sold it for barely what I had put into it. So I worked for free for three years.

What are your business goals for 2007?

The most recent store I bought still needs to be finished. I’ve got a bunch of new machines. I want to change out the windows and doors and install tile floors and air conditioning. I’ll try to complete that project this year.

What advice would you give to a new owner in your marketplace?

In my market, I would tell a new store owner that he’ll lose his shirt if he’s planning on building a new store.

As for someone buying an existing store, I would tell him to price so that he can make a profit, because he will need that money to reinvest in the future of the business. A lot of owners buy a laundromat and, whatever they make, that’s what they spend on living expenses.

Also, a lot of people buy laundromats and they finance too much of them. Then they try to use whatever is left for living expenses. If you buy a laundromat, you’re going to be faced with a bunch of bills within six months. So definitely have cash on hand.

If you’ve got assets, that’s one thing. For example, I bought looking to the future, not needing the money immediately. But if need the money right now, you really need to pay cash for it or not have much financing involved. There isn’t that much money in this business in this particular market.

Is this still a good business to get into in your area?

This is probably true for any market: 25 percent of the stores make 75 percent of the money. Most stores are not that great. A few of them are OK. But very few are really good.

Plus, the rent situation is a little high for what we’re making. And property taxes went up 50 percent to 60 percent on a lot of buildings.

Great locations are hard to find. It’s hit and miss.