Ancillary Profit Centers In Laundromats
Should you offer ancillary profit centers in your Laundromat?
Ancillary profit centers are any item or service you offer that is outside of the basic washers and dryers.
These centers could be soap sales, snacks, drinks, Drop Off Laundry Service, tanning, video games and many others.
As a business owner, you need to determine what other profit centers would work well in your store, what benefits your customers’ experience and is there truly a profit.
To determine your profit you need to include all of the costs from time spent ordering items to the power used by the equipment.
According to the Coin Laundry Association, 96% of the coin laundries in the United States offer some type of ancillary service
Extra Profit Centers: Statistics
The ancillary services above are ranked by the percentage of coin laundries that offer the service
Before adding any additonal product or service in your business ask the basic questions:
– Is this a want or need for my customers?
– What is the total cost to implement and maintain?
– Do I have the ability (manpower, space, time) to implement and maintain?
– Is there a way to outsource the product or service?
– Is this venturing too far out of my original business plan?
Many investors in Laundromats are looking for a business that requires a limited amount of time, inventory and headaches.
If this provided value for you please comment and share below.
Ken Barrett
800-792-1941 ext 2
Ken@WashinCoinLaundry.com
P.S. If you would like information on Blog system and how to use it in your business CLICK HERE
Transcript:
I just wanted to talk a little bit about ancillary profit centers. Our main business is laundry and a few of the different things that get sold to them; soap, bleaches and couple things like that but the basis of the business is self-serve laundry. Some Laundromats have taken to looking at what are the different ways to increase profits, use space better and stuff like that. Like anything, there’s a lot of thought that needs to be put into each of the different ideas. Is it good? What’s the real baseline cost to it? Sometimes you might try it out and think it’s working pretty good, but then when you really run it for a while and work on it, the numbers don’t quite make sense.
Normally, you’re going to have your soap dispensers, the small vending soaps. It’s just a mechanical box, you put the coins in, you push the slider in, you turn the screw and the box of soap drops out. Fairly reasonably priced, it’s a simple system, they go from a four slot to an eight slot. You might have some laundry bags in there, just a plastic bag if they don’t have a way to get stuff back home. That’s your base line, you’ll find that in every laundry. The next step is getting into more of a vending machine type, where you can sell some bigger soaps, a bigger variety of soaps. It might be something that you’re going to use for four or five loads of liquid soap as opposed to just a single box of powdered soap. That’s still just the basis of the industry.
The next sections from there are going to get into starting to have snack machines, drink machines, those sort of things. I’ve got a variety of stores, one of my stores doesn’t have anything more than a soap dispenser and that’s it. One of my other stores, I have a drink machine in there that’s supplied by a local soft drink company. They maintain it all, they look after it. They mail me a check once every three months that probably just covers the cost of the power to run it. It’s really not a profit center for me, it’s more of a convenience for customers, but at the same time, it’s not inconvenient for me. If there is a problem with the machine, I might get a refund slip and I’ll give them a refund for a dollar or whatever, so in that situation, I’m really losing money, but people think it is mine because it’s in there. Also, by the time I get a hold of the other company, it’s not worth the hassle. Might as well just mail a check out for $1.35 and keep my customers happy.
The other store I have, I have a snack vending machine and a drink machine. The drink machine, right now, I’m having problems with it, I need to get it replaced. So we’re just selling drinks over the counter from the attendants in a small fridge. The snack machine, I got a really good deal on it. It was used but it works great. The slots work on it and the coin mechanism and stuff. We keep it stocked up and full, it takes about an hour a week for one of my attendants to fill it up. I actually have somebody in early on Monday mornings to inventory the snack machine, fill it up, and make sure we’ve got all the stuff from the storage area into the working area of the store.
We’ve got a couple months worth of supply in the back, and we don’t want to have it all that out there. We have somebody that brings out enough to keep it in the main area of the drop off area, that way we have enough there without having too much. If something happens and I can’t get more supplies right away, I’ve got enough there to get through. If I just have a really bad month, I don’t have to worry about going in to buy stuff. It takes about an hour a week. There’s numbers to look at on that, there’s my time to go get the supplies, buy the supplies, restock the vending machines. To try and buy those then get it delivered, you’re really starting to add some costs onto it and you’d better be making pretty good volumes out of it to cover the costs. I buy mine at a local membership, big box warehouse type store. I go down there about once every three weeks, maybe once a month and load up this little VW to the top with everything I need for the store. There’s a few specialty items I do order and get them dropped off, but for the most part a lot of it comes from there.
The vending itself, as much as it seems like it’s making money, you really need to look at your situation. If, let’s say, out of your vending machine, you make a hundred dollars profit at the end of the month. And that’s counting in some of the losses you have for outdated snacks that you got to pull out because they’re past their due dates, etc. Out of that $100 dollars, if you’ve got an attendant that spends an hour a week on it, even at minimum wage, you can round that up to about $10 bucks an hour pretty quick. There’s $40 dollars gone. If you’ve got to spend two hours driving down to get the supplies and bringing them back and unloading them, depending on whether it’s just adding on to what you’re already doing or if it’s an additional trip, you’re down to $60 dollars profit here. If it’s a couple hours, what’s your time worth? Is it $30 bucks an hour? Then you broke even. Is it $20 bucks an hour? You made a bit of a profit. You really got to kind of look at those and go, where’s the difference between just having it there as a convenience for the customers and if you’re just doing it for that and you’re not worried about the profit, why not just contract it out to a vending company and have them come in and deal with it all? They can deal with the waste, the extras and the supplies.
It’s something you just need to weigh the options on. The numbers might look great up front, and if you’re just using an attendant who’s there anyways to keep it stocked and inventoried, then you don’t really have that cost. With myself, I’m busy enough with my attendants that I don’t want to leave it to somebody during the week, because they just don’t get to it, it’ll just empty out. It’s better to have it done at that same time every week. Bring somebody in for a few hours, get it all done. They focus on that and they’re not just trying to fit it in when they can.
Other laundries, they’ve taken it to the next level from that. They might have put in a tanning salon or gaming machines, just a bunch of different stuff like that. You get an old arcade game, which takes up the same amount of space as a washer. You really got to weigh that around, you want to have something for the kids to do. Question is though how many of those do you put in before you start wondering, ‘Am I making more money on laundry or on running the arcade games?’ Also, if the arcade game breaks, how long is it going to be before you can get it fixed? At the very least, get it out of the way. Nobody wants to keep coming in and seeing the ‘out of order sign’ on it. Kids start getting frustrated, because they were playing it and having a good time once a week, and now it’s been out of order for a month. Look at the different base stuff you have to provide. Your minimum is single load vending soaps. Everything else beyond that is another profit center, but is it really a profit center that’s going to make a profit?
Look at your time, your attendant’s time, if you need to bring in extra people. Is there any losses in waste? How much inventory do you have to have? If you’re looking to just have an unattended laundry, with somebody coming in once in a while, you don’t want to have inventory, that’s the idea is to have a non-inventoried business. Throw those around, see what works for you, but really, truly, weigh the cost of what it is and don’t forget your time. Your time is worth something too, and put a dollar figure to it. If you want to be $30 bucks an hour or $50 bucks an hour or $100 bucks an hour. Put a dollar figure to it and whenever you’re calculating stuff, whether it’s counting money, working on machines, just driving between stores. What is that dollar figure that you’re worth and at what point do you start paying somebody else to do it? Think about those ideas and I’ll talk to you later.
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