Going Where the Customers Are

By Bob Nieman | Aug 05, 2011

In business, it typically pays to go where your potential customers are. And in the self-service laundry business, those prospective customers are very often living in apartment buildings with inadequate laundry facilities.

As a result, locating a laundromat near a number of apartments has long been considered a no-brainer.

However, Neil Lesher took this business philosophy one step further – building his new, 6,000-square-foot Megasuds Laundry directly inside a three-year-old apartment complex in the Bronx, N.Y.

“I have ground-level retail space in an apartment building,” said Lesher, who opened his laundry last December. “I’ve got 98 apartments above my head, so I have about 400 people who live directly above my store.

“The storefront was empty,” he added. “I’m the first person to occupy this space. There are other retailers here, including a deli, but I am basically the anchor tenant.”

According to Lesher, the apartment building does have a small laundry room as well.

“There are only a couple of washing machines and a couple of dryers in there,” he explained. “They look like what I have in my house. The laundry room is there because by law it has to be there.”

Lesher grew up in his family’s blueprints business.

“Our accounts were construction companies, engineering firms and private architectural firms,” Lesher said. “We were subcontractors for multi-national construction companies. That was my school of learning how to be a sole proprietor.”

In addition to working in the family business, Lesher owned a restaurant and bar in Arizona for six years. Upon selling it and returning to New York City, he ran a multi-unit ice cream franchise called Australian Homemade Premium Ice Cream & Chocolates.

“I was in charge of selling territories to potential franchisees and getting them up to speed before we opened up the doors,” he said.

And it was this varied business background that got him interested in the self-service laundry business in the first place.

“Every other business I either owned or ran was always a very labor-intensive environment,” he said. “I have always had 10, 15 or 20-plus employees. But, after doing a few years of due diligence, I thought that with a laundromat, I would be able to make a living without a lot of labor. After all, the customer supplies 95 percent of the labor, and to me that was quite appealing.

“I liked the fact that it’s a retail operation, not a wholesale scenario, where you have a lot of inventory that you’re concerned about moving,” he continued. “There’s no waste, no spoilage. You’re not throwing things out. You’re buying soap and fabric softener, and the shelf life of those products is quite long, while the turnover is quite rapid.”

Living in New York, selecting a location was going to be a major decision for Lesher.

“I did demographic reports on many ZIP codes within a lot of the boroughs,” he explained. “Obviously, all of the boroughs of New York are pretty saturated with laundromats, but this particular area is very densely populated; there are about 50,000 people within less than a mile. I like the area because of the demographics. It’s densely populated. It’s a working-class neighborhood. There are a lot of schools, a lot of kids and a lot of apartment buildings.”

The neighborhood is predominantly Hispanic and African-America, according to Lesher.

“It’s a very hard-working, family-oriented neighborhood,” he said. “There are some really wonderful people here.”

However, opening Megasuds Laundry took Lesher twice as long as he expected, due to the fact that he had to bring in all of his own utilities from the outside and he also had to navigate the minefield that is New York City bureaucracy.

“I don’t use any of the water from the apartment building,” he explained. “I brought in my own water service. I brought in my own natural gas. I brought in my own electric. Plus, you’re dealing with a utility company and the department of buildings, getting your permits in line, having the gas service turned on, having the electric come live, being able to get the right contractor in place to dig into the street and tap into the water main, having your water meter kick in. It’s all about timing.

“The store should have been done in six or seven months, but it took a year – just because of the utilities and the department of buildings with the backlog they have.”

The delays put a strain on Lesher’s timeframe and his budget. In the end the project cost him “more than $1 million, less than $2 million.”

To recoup his initial outlay, Lesher get the word out about his new laundry through a number of advertising vehicles, including direct mailings, flyers and coupons in some of the area’s Spanish-language newspapers. What’s more, Megasuds runs a number of in-house promotions, such offers for free soap and free fabric softener.

“The first week I was open, for five days, I offered free washes and free drys,” Lesher related. “Everything was free for a week. I had thousands of people in my store. At 6:30 in the morning, there was a line from my front door into the street – you’d think it was a rock concert.”

Another promotion that Megasuds Laundry continues to offer its customers may raise some eyebrows – the store’s 30-pound stack dryers currently vend for a nickel for eight 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.”

Lesher indicated that he would definitely keep the 30-pound stacks at nickel at least into the early fall.

Beyond his five-cent dryers and a novel location that’s on the ground floor of a bustling apartment complex, Lesher his tried to set himself apart from the competition in other ways as well.

“I do not believe in absentee management,” explained Lesher, who said there are three competing laundries in his marketplace. “I run my store, and I’m here seven days a week. I am the epitome of customer service. When people walk in, I walk over and introduce myself, ‘Hi, my name is Neil. I’m the owner of the store. How can I help you?’ Many other laundries are run absentee, and I just don’t believe in that business model.”

The store itself is “literally the Bloomingdale’s of Laundromats,” according to the owner. The T-shaped, card-operated laundry features white FRP walls and diamond-plate molding throughout, with stainless steel folding tables and seating units, and stone tile flooring.

In addition, Lesher has begun a residential wash-dry-fold route.

“I do pickup and delivery, so I go farther out into the Bronx,” said Lesher, who guarantees 24-hour delivery to his wash-dry-fold customers. “I go all over the borough. I pick up and deliver for 80 cents a pound. I have pickups and deliveries every day, and I have calls every day.

“There are a tremendous number of senior citizens, and they just don’t have the patience, the strength or the health to do their own laundry. But it’s not just seniors who are using my service – it’s everybody and anybody… working people who just don’t have the time.”

Megasuds also provides a drop-off drycleaning service.

To help service his growing customer base, Lesher has two attendants on duty at all times.

“A larger percentage of my clientele speak only Spanish, so I make sure that at least one employee on every shift is fluent in Spanish,” he noted.

And all of them are fluent in customer service.

“If you can’t smile, you can’t work here,” Lesher said. “I am an expert at customer service. I’m also an operations guy. I’m not the greatest mechanic in the world, but I have learned how to do a lot of mechanical things, which has saved me thousands of dollars in basic repair work.

“There is nothing I can’t do, from keeping the books to running the store, dealing with employees, handling payroll and defusing customer issues. That comes from operational experience. I’ve never owned a laundromat. I had no training. But, I’ll say this is what I want to do, and then I do it.”