Karl Hinrichs from HK Laundry Equipment has extensive experience from a Laundromat operator's perspective and as a long time, established commercial laundry equipment distributor.
With over 30 years of experience in both fields Karl truly is a "Laundry Expert". Below is an Archive of his newsletters that express his thoughts and opinions on the Commercial and Coin Laundry industry.
This study was published on October 2014 and was added as a supplement in the Planet Laundry magazine. Do you want more money and more profit for your Laundromat? Do you want more cash paying customers in your store? If so, read on and put to good use the knowledge gain from below. The Coin Laundry Association (CLA) performed a study where they interview potential customers to get their opinions on what factors would they use in deciding which Laundromat to patronize.
Digital signs are everywhere. They are in our donut shops, our restaurants and any place where someone is trying to promote or educate the public. We see Digital Signs (DS) in McDonalds, Dunkin Donuts, airports, movie theaters, bill boards, taxi cabs, our schools and while pumping gas. Digital Signs are everywhere and so do they have a place in Laundromats?
Last month, I told you to $hi# of get off the pot. Either fix up the store and run it properly or sell the business and move to Florida. Since no one call me up offering their Laundromat for sale, I can only assume that you are all planning to fix up your stores. Good for you. Actually this is an Excellent decision. We all know that the Laundromat business is a great business - but it has to be run like a real business.
Have you ever been driving along in your car and seen an accident happen right in front of you. You probably you were driving along minding your own business when you saw 2 cars on a collision course. You have the time and perspective to recognize that there is going to be an accident, even before it actually happened. Time seems to slow down and you saw the two cars on an intersecting course and there was nothing you could do but witness the event. And all you wanted to do is yell at the 2 drivers to watch out ! Bang !!!
Every other year (on the odd year) the laundry industry holds a huge convention titled "Clean". This year Clean 2015 is being held in Atlanta, Georgia from Thursday April 16th thru Sunday the 19th.
On the CLA on-line forum someone asked which is a better installation Steel bases or Concrete? All of the comments were Pro Steel bases, but I respectfully disagree. Steel bases are a good method of installing hard mount washers. They work well and are super easy to install, but they are not the best possible installation because they don't deal with water leaks. When washers on steel bases have a leak, the water hits the floor and thus creates a slip & fall hazard. With a concrete slab the water is directed someplace other than the floor.
Last newsletter we learned about the fire triangle where we need Heat, Fuel and Oxidizer to create and maintain fire. We discussed where contaminants in the linen (such as spa oils, motor oils or car wash waxy rags) can significantly lower the oxidizing temperature of the linen causing a dryer fire to occur at much lower temperatures. We will discuss the physics of combustion and what we can do to prevent it from happening in our dryers.
Each year, hundreds of fires occur in Coin Laundromats, most of which were found to have started in dryers, but also a significant number occurred under counters or in laundry carts. These fires often occur long after the clothes has stopped in the dryer. Spontaneous Combustion can occur anywhere from coin Laundromats to huge tunnel power laundries. This article looks at the chemistry and physics of spontaneous combustion and how to prevent fires in Coin Laundromats.
To be Proactive or Reactive; that is the question. Proactive - (Preventative Maintenance): Schedule maintenance on your time, Schedule Maintenance for slow times of the week, Replace less expensive parts (before major repairs), Increase the useful life of your equipment, Have all the equipment running for the weekends, Create a better public image with fewer machines down.
How do you increase the value of your Laundromat? How do you increase the selling price of your Laundromat? Easy, increase your profits and increase your multiplier.
If we are basing the value of a Laundromat on its Profitability, then how do we actually determine a number? To say 3-4 times the annual profit of a store is the answer; but how do we determine the profit of the Laundromat? Do we go with the tax returns of the current owner? These numbers are probably understated in value. The current owner may say that they lost some of the quarters between the money boxes and the bank.
How much is your Laundromat Worth? There are several ways to value your Laundromat. There is the salvage value based on just the value of the used laundry equipment in your store. There is the replacement value which is based on re-building your entire Laundromat from scratch. The most common method used for any Laundromat that is making money, is based on the profitability of your Laundromat.
What should you do when you have an insurance loss? My 11 top tasks to perform after a major loss. 1.) Make the store Safe, 2.) Photograph everything, 3.) Remove all of the damaged stuff, 4.) Dry it out (if wet), 5.) Document all of the damaged items, and 6 other tasks to do when you have a loss.
Insurance is designed for the "business killing" event that would normally bankrupt a business. These are the catastrophic events that insurance will give your Laundromat a second chance. If insurance is designed for the business-killing catastrophic loss, small claims should be covered with a much smaller reserve fund. Insurance by design and price structure is not designed for the nuisance vandalism or single pocket dryer fire.
What is the HK Sales Extravaganza? The HK Extravaganza is a distributor equipment show that brings together all of our major venders with laundry equipment all under one roof. This event is a mini-Trade show or a very localized Clean Show, but without the travel to New Orleans. HK puts on the Sales Extravaganza each year to showcase our preferred venders and to being everyone together in one place to build on networking and the benefits of shared experiences.
FREE Washers. Imagine replacing all of your washers in your Laundromat for FREE. Sounds too good to be true? Nobody gives away hundreds of thousands of dollars worth of laundry equipment away for FREE. Well...ok it's not FREE, But imagine if water & sewer savings paid for your new washer loan payment each month. Still sounds like it is too good to be true. I would be thinking, what is the catch? Nothing is for FREE. Right?
I started my 5 minute HK Newsletters back in October of 2012. To date I have archived over 50 newsletters. I have compiled a list of topics as a quick resource guide. Below I have broken down the articles by general category to make it easier to search and pull up topics of interest. This is hopefully the start of an index of archives newsletters. Enjoy.
The RPZ valve is mandated for most Laundromats in our area. If you have an old Laundromat that has been operating since 1967 (like our Briarcliff Laundromat) then you probable do not have an RPZ valve in your store. Be aware that once you file for a building permit for any kind of renovation, you will be required to submit plans and install some type of back flow protection device.
Crooks are lazy. The reason I know this is because if the crooks were not lazy they would have jobs. Thieves are looking for the easy pickings. They are creatures of opportunity. The Laundromat owner needs to be well aware that there are people who would survive by robbing and stealing other people's property and money.
I have been basking in the glory of a very successful Laundromat renovation in my Briarcliff Laundromat. My team of employees and professionals worked well together and busted their butts to overhaul the entire Laundromat in less than 2 weeks. The Laundromat has been re-tooled and re-vitalized. Since the renovation, I have had occasion to stop by and ask the customers their thoughts and opinion of the renovation. I was waiting for rave reviews but instead I have noticed consistent comments with 2 themes: 1.) Where is the customer sink? and 2.) When did you increase the washer prices?
...When I opened the lint compartment of one of the dryers, I found it packed with lint. I knew from that point on that the majority of the service issues were related to maintenance issues in the Laundromat. (Or lack of maintenance.) This customer lacked any type of Preventative Maintenance (P/M) program. We found many dryers that had ripped and torn lint screens, which was allowing lint to out-of-balance the dryer fans blades and clog the dryer exhaust ducts with lint. We also went behind the dryers and found a nice layer of lint covering all of the dryers and covering dryer motor air vents.
The Laundromat was closed for 11-1/2 days and we lost only 1 weekend of revenue. HK corrected 2 long standing problems; the rotting common wall and the partially clogged drain line. The first of these put us in compliance with the landlord and the second will reduce our maintenance issues at the Laundromat. The new Huebsch washers should reduce our water & sewer bill by 50% or an estimated $26,000 a year savings (we will be able to confirm this with the next water department billing cycle). We have also have increased our big washers from 3 - 50 lbs. capacity to 5 - 60 lbs. capacity machines. We have doubled our large washer capacity and have a net overall increase of 30% in total washing capacity.
How do I get rid of perfectly good operating washers and how do I control where they don't end up as competition to my Laundromat? When I placed my order for the new Huebsch washers, I realized I had 19 old washers that were in good operating condition, so what do I do with the old equipment? I have strong environmental concerns and it just drives me crazy to throw out perfectly good operating machines. I have feelings that these washers have to have "some value" to someone. Why pay for perfectly good operating washers to go to the junk yard when someone might be able to use the machines. Part of me strongly believes in Re-use and Recycle whenever possible. Our earth has limited resources and wit is my belief that we cannot exist without this concept.
When is it time to replace your laundry equipment? This is an interesting question and I have some observations as to when store owners should replace their laundry equipment. Replacing laundry equipment is a very expensive proposition. There is the huge cost of the equipment itself, the installation of the equipment and then modifying the Laundromat to operate with the new equipment.
In the last 20 years Laundromats have been discovering a better way to drain the washing machines; by using a Drainage Basin. The Drain Basin is nothing more than a small bathtub with a drain at the bottom which allows washer waste water to enter the basin before it goes down the drain. So what is the big deal about the Drainage Basins?
My crew went up on the Laundromat roof and noticed that the landlord had recently replaced the roof with a brand new EDPM (rubber) roof. As soon as I heard "new roof", I had the guys stop the work, leave the job and I then contacted the landlord. (The last thing I wanted to do (after finally negotiating a brand new 10 year lease,) was to piss-off the landlord and be in violation of my lease.) So I call the landlord and asked for the name of the roofing company. I then contacted the roofing company and scheduled a date for them to cut 2 holes in the roof and to seal the duct work once it was installed.
I have always found that renovations go a lot easier, and have fewer problems, if you spend the time and break down the renovation into small manageable tasks. What I do is mentally perform each task of the Laundromat renovation in my head and then write it down. For the first day, I will envision removing all of the washers and placing them outside and cleaning the work space. Next day, I envision jack hammering the concrete slab and so on and so forth through the entire project. This may be tedious work, but it is far better to invest the time now rather than have all lots of expensive labor standing around waiting, while you to try to figure out what's next.
I have spent the last 2-3 weeks planning out this Laundromat renovation and determining the "scope of work". This is not a simple replace the washers and run project. There is considerable work to be performed. We have an issue with this 40 year old Laundromat with a damp environment behind the washers where we need to fix the washer wall and even go into our neighbor's store to secure his wall and make everything "right".
Here I am at my computer just back from a 2 week vacation, trying to get up to speed on my myriad of projects and what lands on my desk but a huge water bill for a Laundromat I own in Briarcliff Manor, NY. I have just produced a 6 installment newsletter about how to increase your vend prices for your Laundromat and now I have a 41% increase in my water rates. 41% Ouch. How can this be...?
This week we conclude How to Perform your Price Increase. We initially calculate the current utilities as a percentage of our gross. As you can see from our example this store currently have utilities at 32% of gross. That means we are only working with 68% of each dollar to cover all of our overhead (rather than the ideal 75-80%). This is not very good economic situation and we need to correct this. If I can increase my vend price and be within 25% of my competitors prices, then I will raise my prices and track my revenue closely for the next 2 months. It takes approximately 2 months for the "market" to balance itself out. A couple of weeks to lose customers and then a couple more weeks to have most of them return. I use a minimum of an 8 weeks timeline to be safe and to be able to see a real trend in your Laundromat.
My first task is to visit all of my competitors and make accurate records of their different sized washers & dryers. I record all of the vend prices including the "Special Prices" and "Extra Feature" prices for all of the laundry equipment. If I meet the owner of the store, then I will offer to buy him a cup of coffee. I will explain that I am in the process of raising my vend prices to offset the increases in utility costs. Hopefully this opens up a conversation to discuss the Laundromat business.
Utility costs are the real variable cost in operating a Laundromat. All of the major expenses are increasing at a small measured amount, except utilities. Utilitiy costs are ever increasing all of the time and sometime in very unpredicitable amounts. An all Front Load Laundromat you should have Utilities as a Percentage of Gross Revenue at the 20-25% range. If utility cost go too far above this, the profitability of the entire Laundromat is in jeopardy.
In preparing to increase vend prices; we need information before we can make intelligent business decisions. You need to know what your competition is doing. I suggest visiting all of your competitors at least once a year and recording their current vend prices and making notes of the strengths and weakness's of their store. (SWOT = Strengths, Weaknesses, Opportunities & Threats.) Once you know the how your Laundromat compares to your competitors you will be in a better position to evaluate your own business as a "price leader", a "price follower" or something in between. .
How are laundromats doing with the utility costs over time? Are we losing ground? Is the Laundromat vend pricing keeping up with the increased cost of Natural Gas? How are the vend prices of Laundromats comparing to Inflation and Natural Gas cost over the last 10 years.
Laundromat expenses are increasing all the time. The four largest expenses in operating a Laundromat are; Labor, Lease, Note and Utilities. Labor expenses have been pretty stable and probable equal to or have fallen behind when compared to inflation. Lease expenses are composed of base rent, property taxes and the common area charges. Lease expenses are compounded expenses where the increases are on top of last years increases. Lease expenses (especially if they include property taxes) Never go down. Note payments, on the other hand, are the cost of equipment loans (or acquiring the business) and are usually the same month to month.
The real exciting work appears to be in the area of Hybrid laundry card systems. The Hybrid Laundry Card systems are a universal payment system that accept quarters, credit cards and loyalty cards. Both ESD and CCI have added significant features to their Hybrid Card Systems, while SpyderWash and WashCard seem to have remained pretty much un-changed. The Standard Easy Pay central pay system also was exhibiting and they were going to rolling out a mobile interface in the near future.
How Washington is making the Top-Loader washer Extinct - The Department of Energy (DOE) has been on a steady push since the late 1980's to increase the energy efficiency of all of our household and commercial products. These efficiency standards are for clothes washers to furnaces from dishwashers to microwaves. The DOE estimates that they have reduced the energy usage in average commercial washing machine by 70% from the energy dinosaurs of the early 1990's. (DOE classifies Commercial washers as less than 29 lbs. capacity.)
In any industry there are the Good & the Bad characters. In the Vended Laundry markets there are good distributors and unfortunately also bad distributors. Good distributors are characterized by a long history in the industry. Some of the characteristics of a Good Distributor are: -Bricks & Mortar Company (real location with employees and parts & service dept,) -Long Time Established Company (minimum of 5-10 Years in the Industry), -Company Standard of Ethics (ask about the companies reputation),
Clean 2013 - The biennial event call "Clean" will have more than 10,000 attendees and over 400 exhibitors showing off their wares. Clean is a unique convention, because it brings together several Laundry sub-industries into the same huge exhibition hall. You can be walking down the convention aisle and pass a small top-load washing machine (used in apartment buildings) and then bump into a huge tunnel washer that continuously produce 10,000 lbs. of clean laundry per hour. In addition to the equipment you have payment system, card systems, parts suppliers, computer systems, linen providers, bill changers and bill breakers, drain troughs, conveyors, bulkhead manufacturers and many more vendors. Once every other year all of these organizations come together in the event call "Clean".
The advantages of having a variety of extra revenue streams in your Laundromat is simple; additional revenue and profit. By keeping your "Cash Carrying" customers in your Laundromat, you can get more revenue from the same number of customers. If your customers go across the street to the CVS to purchase a big jug of detergent, you know that they will walk out of CVS with something else in their cart. Some impulsive, spontaneous purchase. Why give that additional revenue to CVS (or to any other business)? Your customers are going to spend their money, so offer them good products and choices in your Laundromat rather than having them go across the street.
Owning a Small Business is a terrific journey with tough choices every day. Many new businesses focus on only one goal - survival. Yet in the early phase of a new business is when you establish the values that will guide your company through growth to success. It's all too easy to compromise your principles to get that first huge WD&F deal, to obtain financing, to hire key people or delay a promised payment, but in the end those decisions can also create the cancer that destroys your business.
Now is the ideal time to really inspect your Laundromat and see how the store has faired through the winter. Now is the time to be totally objective and now is the time to really take a hard look at your Laundromat and see what needs to be cleaned-up and updated. As store owners, we can become complacent about the appearance of our Laundromats and a Spring Cleaning is a good annual excersie.
The HK Extravaganza is a distributor equipment show that brings together all of our major venders with laundry equipment all under one roof. This event is a mini-Trade show or a very localized Clean Show, but without the travel to New Orleans. HK puts on the Sales Extravaganza each year to showcase our preferred venders and to being everyone together in one place to build on networking and the benefits of shared experiences.
One of our customers called to see what we could do about his under performing dryers. His Laundromat customers were having to waiting for dryers and the time required to dry a load of clothes was taking too long. HK came in and diagnosised the problem to be too few dryers along with venting and make-up air issues. This is a classic case study on how to get the best performance from your limited dryer space.
The Solid Mount washers are washers that do Not have any springs or shock absorbers. The Solid Mount (or hard mount) washers are bolted to the concrete floor, concrete slab or to a steel base which is then mount to the concrete floor. Solid Mount washers account for a majority of the larger washers (above 25 lbs.). Soft mount washers are gaining popularity and are the less expensive 18-22 lbs. Front Load washers currently available in the market.
There are 2 methods for guessimating the revenue for Laundromats. % Utilization and Turns Per Day are the 2 common methods used in the industry. % Utilization is very simplistic and favored by some salesman. HK favors the Turns Per Day method becuase is eliminates several variables and allows for less over inflation of revenue.
Turns Per Day is the average number of wash cycles performed per day. Whenever you hear the word Turns per Day think of the number of Cycles per day or how many times a washer has run. That is a pretty simple explanation but there is a lot more to the simple answer. This newsletter goes into How to Calculate and use the TPD numbers.
What are the 5 Most Important Numbers when Evaluating a Laundromat? Karl Hinrichs with 33 years experience in the Vended Laundry Industry explains his choices for the 5 most important numbers when looking at and evaluating Laundromats.
You need a team of professionals to guide you through the challenges of operating your Laundromat, (or frankly any business). Your Professional Tool box needs to include professionals who can guide you through the obstacles of operating and running your own business. These professionals are there to help you achieve your financial goals with the least amount of hassle and litigation.
There are many different ways to heat hot water and many different types of Hot water heaters and efficiencies. Depending upon the age of your heater and who specified your water heating system will determine the type and the efficiency of your water heating system. Every dollar spent in heating hot water is an expense against the profit of the Laundromat. I always try to specify the most efficient water heating system possible. Every dollar save on energy costs, is a dollar saved.
This article discusses how to properly size the water heating system for your Laundromat. The newsletter goes through calculating the amount of Hot Water required if the 100% of the washers are in use and then adjusting this figure with a "factor". The article also calculates the require amount of water in a storage tank and looks and a real life example.
This article discusses the differences between the "Instantaneous Water Heaters" and the Storage Tank Water Heating systems when used in Laundromats. In Laundromats during very busy times there can be an instantaneous demand for 100 gallons of Hot water. In determining which system to go with you also need to determine the incoming water temperature, degrees in rise and flow rate required to adequately fill the washers in a reasonable amount of time.
A Laundromats owners decision to Face-Lift the appearence of his Laundormats creates a nicer, cleaner environment. The Bonus to the face-Lift is that business has increrased in a very competitive market.
In this follow up article we review the traget areas that we want coverage on. We also discuss the system considerations (resoultion, number of cameras and the size of the hard drive and how long the recording time will be before the video is over written). Then we discssed the installation of the video surveillance system.
Video Surveillance systems are inexpensive and should be a part of every business. Surveillance systems and keep an eye on your business better than any employee every could. There are 4 main target areas that you want to record. 1.) An Overview of the entire Laundromat, 2.) Bill Changers or Card VTMs, 3.) Mug shots of everyone entering your Laundromat and 4.) employees and the emplyee areas.
DVRs and Video Surveillance are terrific tools to monitor your business and assist you in identifying Laundromat Losses.
The Coin laundry Association presents the annual state of the industry and shows that Laundromats are healthy and rebounding with the economy.
What is the Fiscal Cliff and how will it affect the average American? How does this affect Laundromat owners?
Networking of Laundromat Owners and the annual Dinner for the NECLA.
What Wow's a Laundromat customer? Can Laundromat customers be wow'ed? What makes a customer to choose your Laundromat?
Huebsch has produced a High Speed Extract Vended Washing machines in 20-80 lbs. sizes. This highlights the features of this washer.
Hurricane Sandy has reminded us that we all need to think about disaster planning. This article is about disaster planning for your Laundromats.
Water Costs are the fastest growing utility cost in Laundromats.
This article discuss utilities in Laundromats and how the new hidden "got-you" is getting new Gas service for new construction.