By Jeff Gardner | Oct 28, 2011
This time, we’re going to cover a sub-segment of your drop-off laundry business – drop-off drycleaning.
There are three main reasons why you may want to consider offering this service. First of all, it will add convenience for your wash-dry-fold customers; you become their “one-stop shop.” Next, it enables you to increase your revenue without increasing your labor cost significantly. And, lastly, it strengthens the impression that your laundry is a high-quality operation.
Of course, you need to be in the proper market to launch such a service. If you’re in a rural area and all your wash-dry-fold business comes from construction workers and guys working on oil wells, drop-off drycleaning might not be the right fit for you. However, if most of your business is coming from single professionals and families, you may have an opportunity to create another revenue source.
The next question to ask yourself is whether or not you have enough space in your store to accommodate drop-off drycleaning.
Initially, you may need only about 50 square feet to devote to this service. However, as the business grows, you should plan for an additional 150 to 200 square feet for hanging racks or a small conveyor system. At my store, I’m currently using about 120 square feet.
Once you’ve decided that it’s going to work for you market-wise and space-wise, you need to interview drycleaners to find one that will do the quality of work that you want for this service.
After you choose a cleaner, it’s important to negotiate the work that you will be doing on your end, versus the work that they will do. There are several points within the professional cleaning process where you can do some of the work.
For example, some drycleaners will want you to just put a name in the bag, and they will do all of the work. However, perhaps the drycleaner you work with wants you to check in the order, count the items and put it on a slip. Or maybe you can take it to the next level and tag all of the individual garments.
Other forms of prep work you can do include unbuttoning all buttons on shirts and other garments. Also, be prepared to mark and identify any stains on the garments.
Some laundry owners even go so far as to separate out the loads – drycleaning versus shirt laundry, as well as identifying the different starch levels for the shirts. In such cases, the self-service laundry is delivering tagged, pre-sorted garments to the drycleaner; all the cleaner needs to do is stain-treat and process them.
Of course, any work you do you should be negotiated as part of your cost.
Another cost factor is whether or not you’re going to deliver and pick up the garments to the drycleaner, or if they’re going to pick it up and deliver it to you. Some drycleaners may already have a route in your area, so it may be convenient for them to stop by your store. Others might not. Those are cost considerations you should be thinking about.
Also, when negotiating your cost structure, remember that you are bearing the cost of collecting the money from the customer. Most drop-off drycleaning services allow customers to pay when you pick up their garments, which means that a percentage of those garments might not get picked up very quickly – and some of them may not get picked up at all. So, you’re going to be paying for the cleaning of those garments without ever getting that amount recouped. In addition, you’ll need to know your state law as it relates to how and when to dispose of those garments that don’t get picked up.
After you’ve got your deal established, whomever will be taking in the drop-off drycleaning bundles and serving the customers should spend a day or two at the drycleaning plant to learn the business – what drycleaning actually is, how shirts are cleaned and pressed, what types of garments can be drycleaned, and how they process the loads. All of those thing will be helpful in teaching your employees how to tag garments, what to tell customers when they request certain types of service, and just how to be more professional counter attendants.
Most drycleaners will return the garments to you bagged and ready to hand over to the customer. Of course, you should do a final inspection of these garments once you get them back.
Also, when handing garments back to a customer, have your employees look at the tag, count how many pieces are there and then count the hangers to make sure they’re all there. And then tell the customer, “OK, there are 14 pieces here.” You must acknowledge that, rather than merely saying, “Here’s your drycleaning.”
In the past, we’ve had customers say they were missing garments. But you can eliminate that when you acknowledge that the number of garments on the tag are equal to the number of garments in the bag.
What’s more, you will need to have discussions with your drycleaner about lost or damaged garments, and how that will be handled – because the reality is that sometimes garments do get lost or damaged during the drycleaning process.
The final aspect to cover is what you can expect to make on this new service. The numbers I’ve heard around the industry are as high as a 50-50 split for those laundry owners who are doing most of the prep work mentioned earlier.
Pricing can vary. Sometimes a drycleaner will give you a flat price per garment but will charge you wholesale – then you can make your own determination as to what price you feel you can charge, and sometimes that will be even higher than 50 percent. For example, when I’ve done delivery and pick up, I’ve set a higher price for that, and my margin was as high as 55 percent or 60 percent on some garments.
As a rule of thumb, you can expect a 30 percent to 50 percent gross profit margin. In other words, you still have all of your expenses to take out of that. What you net depends on several factors. For instance, if you’re holding inventory that customers don’t pick up, you have to find some way to get rid of that and you may have not made any money on it. Also, there is the cost of labor associated with processing drop-off drycleaning garments. And, if you accept credit cards, the percentage you’re paying out could be 3 percent or 4 percent.
When it comes down to it, you may be adding something as little as a 10 percent or 15 percent profit margin product into your mix. But, then again, depending on your price structure and how much work you’re doing, it could be as high as a 30 percent or 35 percent profit margin service.