By Steven Gould | Apr 02, 2012
Jeryl Knechel operates laundromats in Pennsylvania. He also is the treasurer of the Delaware Valley Coin Laundry Association. He recently took some time to talk with PlanetLaundry about his 19 years in the coin laundry business and his thoughts on the industry.
How did you get involved in the self-service laundry industry?
My background is that of a dairy farmer. I grew up on the farm and was involved in the dairy business for a number of years. I was the oldest and had been running the farm, then my younger brother came along and he started to take on more of the responsibilities. So I decided it was time for a “change of life” and began looking for another source of income.
As a family, we had always been involved with rental apartments and residential real estate. Most of these rental properties had washers and dryers, and being a hands-on kind of guy, I was the one who had taken care of them. Therefore, I decided to explore the laundromat business and have machines working for me, instead of employees. That inspired my move into the coin laundry business. I've been in the business 19 years now and own three stores.
What really spurred my interest came from knowing the laundry rooms and equipment in our rental properties. We started with one existing store, and I will tell you it was a hard start.
What attracted you to this business?
Basically, it came from my knowledge of the equipment at the rental properties. I was quite handy in maintaining the equipment, and I really thought it was something I could do and do well. It was something I had been connected with in a small way for quite some time.
What are the keys to a successful self-service laundry business?
I think the biggest key is having a clean store. We live in a rural area, and you just don't have the volume of people you do in the city. So, in a rural area, it is even more important to have a clean and pleasant store. Unfortunately, in our area, stores have a bad reputation for being filthy and being places where people kind of just hang out. So, we really tried to change the image, and I think we did.
Another key is to have updated and efficient equipment to help control your utility costs. Also, I don't have a service man; I'm the service man, and I don't want to spend all of my time at the store fixing equipment.
A final factor is offering machines that are easy for customers to understand. If the machines are confusing for the customer to use, it’s going to be very difficult for a self-service laundry to survive.
What are some of the hot-button issues for laundry owners in your area?
Our biggest issue would be utilities. The costs just keep on crawling up and up. It used to be said that the gas and electric were your expensive ones, but we're seeing in our area that water and sewer are a bigger percentage of the costs than electric or gas – and that’s another reason to upgrade to more efficient machines.
I've seen extreme savings with that kind of investment, and I think the entire industry is moving in that direction. By using more efficient machines you're using less water and energy. Some of the older machines had two wash cycles and three rinse cycles – that’s five full cycles of water for one load of laundry. Each time you fill it and rinse it, it goes into a high-speed spin cycle and that spin cycle is when you create your biggest demand on electricity.
So, if you don't have to spin that often, it's obviously a utility cost savings. With equipment upgrades, I’ve seen a lot of savings on my utility bills, and that has been important to me.
What major trends are you noticing in the industry, especially in your marketplace?
Owners are really focusing on utility costs. We are trying to do anything and everything to really try to hammer them down.
What’s the biggest concern you hear from other laundry owners in your area?
In general, their investment is growing; they're trying to update their stores and install better equipment. They're continually looking at the bottom line. They're very sensitive to improving that bottom line.
Do you have a business philosophy that guides your decisions?
My philosophy is that the customer is always right, even when they're not. I try to keep that first in my thoughts. I try to educate people in the store and make them aware of what benefits we offer.
For example, a large percentage of my business comes from people who bring in their comforters and quilts once or twice a year. These items tend to take a long time to dry because they tend to ball up, and then the heat is unable to penetrate that ball. I try to teach my customers that – if they wash a pair of sneakers with the comforter or throw a couple of tennis balls in the dryer with it – this will prevent their comforters and quilts from balling up, and then these items will dry much more quickly.
So, part of my philosophy is to try to give something back to the customers I already have. After all, there are a lot of benefits to retaining your current customers.
Specific to your market, what are your thoughts on vend pricing?
The first thing I will tell you is that I don't pride myself on being the lowest priced guy in town. I try to have later model equipment so that I can provide well-functioning and efficient machines for my customers – and that comes with a price tag.
However, I do pride myself on stay on the cutting edge and running a clean store with easy-to-understand equipment so that my customers will want to come back. You can’t just be the cheap guy, because this will affect your bottom line and you simply won't last long.
I feel good about the support we get from the laundry industry and the Coin Laundry Association. The industry leaders encourage us and show us how to increase our vend prices as our costs go up. You may lose a few customers due to higher prices, but you'll definitely gain others because you have a good store.
Do you do a lot of marketing and advertising?
We don't do much, but we try to take care of our current customers. We'll give them laundry bags with our name on them, and we set up distribution times when they can come in and receive free soap.
As for reaching out to new customers, we are listed with the CLA’s website, and we also have our own site. I have found that to be a huge benefit. Also, we are currently running a promotion in one of our stores in which I recently installed 10 new frontload washers. To encourage customers to use the frontload machines instead of the toploaders they are accustomed to, we are charging only $1 to use the new machines. This has been very effective, and customers are gravitating to the new frontloaders. When the promotion is over, the vend price will go to where it should be, and by then people will be comfortable using the new machines.
In your experience, when a coin laundry fails, what is the most common reason for that failure?
It’s when circumstances – be it utilities or lease terms, or both – cause the bottom line to change to the point where a store is no longer profitable. A big benefit for us is that we own the property for our stores, so I'm not in a shopping center paying rent. In fact, I’m the landlord in some shopping centers – but I'm not a paying tenant.
When you are in a shopping center paying monthly rent and also paying for equipment loans, utilities, trash pickup and, in a lot of cases, labor as well, there just isn't much left at the end of the month in some cases. And, in those instances, some laundry owners may get discouraged. When this occurs, the equipment doesn't get maintained, the store isn't kept as clean as it should be, and things can quickly spiral downward.
Personally, what’s the biggest mistake you’ve ever made in this business?
My biggest mistake was not being educated enough in the coin laundry business.
Currently, I'm the treasurer of the Delaware Valley Coin Laundry Association. I got involved because I have a passion to give back to the industry that has been so good to me. When I was looking for my first store, I found one about eight miles away. This store had taken a few steps backwards. The owner had passed away and his widow was simply out of her league when it came to running it.
The bank and I had some concerns about the financial numbers being presented. There was no Internet back then, and the information wasn't as readily available as it is today. I didn't know where to turn and I struggled with it for a while. Her realtor and accountant claimed the numbers were accurate, and since the bank couldn't prove otherwise, I went for it. But, after a few weeks, I realized that the money just wasn't there. When you buy a business based on the income it generates and it's not there, that's a big problem.
So, we did everything we could on the cosmetic side to improve things without making a big investment in equipment upgrades. At the end of the first year, everything came in at about 60 percent of what they said it was.
We later found out that there was a second store in New Jersey, where taxes are higher than in Pennsylvania. Apparently, they were funneling money from the New Jersey store to the Pennsylvania store to lower their taxes. I proved this to myself by comparing utility costs and invoices.
After that first year, we began making improvements, and that store is still with us today. But that was the biggest mistake I've made and, of course, I take full responsibility.
Today, the industry has a lot more information available through the CLA, which is a very responsive and helpful organization. The CLA teaches laundry owners and prospective owners how to do things properly – things such as how to negotiate a lease and how to not sign one that you may not be able to afford, or how to investigate a market’s demographics and to not start a laundry business in a poor geographic location. There is so much more information and so many more resources available today through the CLA that simply weren’t readily attainable 19 years ago.
What are your top business goals for 2012?
Simply to continue what we are doing.
What advice would you give a new owner just getting into this business?
It's interesting that we are talking about that now, because my son is looking to buy a store. This particular store is very rundown, and it's located in a shopping center. The lease terms are extremely important – that’s the biggest factor that could drag him down.
Once you have a lease, you are locked into those terms. Unlike an office, a laundromat can't just pick up and leave. You have a lot of internal costs with utility hookups and equipment installation. I know several laundromat owners who are suffering due to the long-term leases they have locked themselves into. So, I would advise a new owner to focus hard on his or her lease.
In your marketplace, is the coin laundry business still a good business to get into?
It is a good business if you are able to negotiate or renegotiate a favorable lease, or you own the property and can have more control. So, yes, it is a good business, but the lease or the building are going to be key to your survival.