Laundry Services: Amenity or Revenue Source?
Published : Monday, March 28, 2011
by Maurice Kagan, President
As an owner and operator of apartment buildings and laundry routes, I know it can be confusing to know how to deal with laundry facilities and the attendant so-called income stream.
In this article, I hope to shed some light on the numerous misconceptions in the industry, from a landlord's perspective as well as from the route operator's perspective. I'll also address some of the new and innovative ways to deal with this 'old technology' industry.
The laundry services industry really hasn't evolved much in the past 20 years, primarily because landlords have never really treated laundry as an amenity for their tenants, or even a proper revenue stream, but rather as a 'piggy bank' for their children and grandchildren. But today, with large public and private landlords facing increased pressure to grow revenue, laundry services are finally being recognized as businesses in their own right.
Route operators in the old days were expected only to pay for a machine, install it, and service it. Most of the time, landlords never gave it another thought, once the contract was signed. Even today, there are plenty of landlords who have automatic renewals without a notice requirement - and these arrangements just go on and on.
But there are better options for landlords today: Landlords should be treating laundry facilities both as a revenue source (and a real business), and as an amenity for tenants - and let's not forget that these days, tenants are increasingly conscious of the cleanliness, efficiency and price-sensitivity of amenities such as laundry facilities.
Laundry 101 for Landlords
Basic laundry facility management should include the following:
Cleanliness: It's the duty of the landlord to keep laundry rooms clean for many reasons, but the biggest one is simple: Dirt begets dirt. When tenants see that the building management cares about the cleanliness of the facilities, they are less likely to treat them casually.
Good airflow: Clean air and proper airflow prevents mold and absolutely helps the drying process, which improves tenant satisfaction. Proper air intakes and proper exhausts are a must-have to ensure efficient use of utilities - which also reduces operating costs.
Consider converting to gas: The cost of gas-powered machines is significantly cheaper than hydro-powered machines. Sparkle and Enbridge conducted a 3-month study, using an independent research firm, to compare utility costs. Using 6 pairs of machines, half gas and half hydro, the results were astounding: There was a 40-cent-per-cycle savings using the gas dryers.
Front loaders vs top loaders: Landlords should have a mix of top and front loaders. Front loaders are only efficient when they use special soap and operate at factory settings. If either of these requirements aren't met, there are no real efficiencies.
Card vs. coin machines: 'Pocket change' is rapidly becoming obsolete. Excluding the costs of managing coin laundries, landlords are far better off having a card system in place. Vandalism falls significantly as there are no repositories to steal change from late at night - which means laundries can stay open all night, leading to increased usage and better tenant satisfaction. We've also found that revenue increases overall, as more tenants stay in the building to do their laundry rather than taking it to a laundromat where they can get change.
Credit cards: Credit cards can definitely be an improvement over coin machines, but in our experience tenants are often reluctant to use them because they fear their credit card numbers will be 'stolen'. Landlords should know that credit card companies require exceptionally secure sites before they allow operators to use their PIN pads. Based on this, I think it will be a while before the majority of tenants are sufficiently comfortable to use their credit cards for laundry services.
Internet-friendly systems: We think that this is the best option for landlords: Internet-based systems that allow landlords and management companies to track individual machines online, in real time.
Tracking machines online, in real time, delivers all kinds of benefits:
- You can identify non-working machines almost instantly, long before they are reported
- You can track individual tenant usage
- You can track usage by unit, which can help you identify which tenants may be using in-suite laundry. (It may surprise you to learn that in one instance we discovered that 75 out of 200 units were using in-suite laundry machines - thus increasing landlord risk while reducing revenue.)
- Pricing can change based on time of use, following hydro costs. So if hydro is more expensive during the day and cheaper at night, laundry costs can be adjusted accordingly - with the click of a button
It's all about improving the laundry experience
The better the laundry experience for tenants, the better the revenue stream for landlords - and the easier it is to attract and retain tenants in the long-term. Instead of simply continuing the old-fashioned status quo, it's time for landlords to think about transforming their laundry facilities.
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