Turns Per Day numbers (TPD)
I received an email from a perspective Laundromat owner who was having problems calculating and understanding the number of Turns per Day (TPD) and why this is an important metric in the Laundromat industry.
Turns Per Day is the average number of wash cycles performed per day. Whenever you hear the word "Turns" think of "Cycles" or how many times a washer has run. That is a pretty simple explanation but there is a lot more to the simple answer. Remember that the shortest repetitive cycle for a Laundromat is a week (or consecutive 7 days). Typically when people discuss TPD for a Laundromat, they are collectively referring to all of the washers in the Laundromat. Remember for the TPD data to be valid, the washer revenue figures must be based on a full week or multiples of full weeks. The TPD metric is very useful to compare how busy one Laundromat is vs. another Laundromat. It can also be used to compare the activity of one size washer vs. a different size washer within the same store.
How is TPD Calculated?
The easiest way to understand the TPD concept is to first see how the TPD is calculated. As stated before the shortest repetitive cycle for a Laundromat is one week so you need to collect the washer & dryer revenues for 1 week. The revenue needs to be separated by class (or size) of machines. (See the example below)
In this example the Laundromat grosses about $4,400 per week and there are 21 washers in this Laundromat, but as you can see a majority of the washers are triple loaders or greater. On a side note, the 71% washer revenue is higher than the standard 66%. This is an indication that the dryer vend prices are low or that the washer vend prices are higher then the industry standard. (Typically Laundromats have 1/3 of the revenue from the dryers and 2/3 from the washers.)
Now we determine the revenue for the Laundromat at 1 (one) TPD. In this case if every washer is run for 1 cycle there will be $93.00 in the washer money boxes. If we take the total washer revenue (for 1 week) which is $3,148 and divide that by $93.00 and we get the # of Turns per week. We then divide by 7 to get the TPD or ($3,148/93/7) = 4.84 TPD. This says that on average each washer is being operated over 4.8 times every day.
When calculating TPD you can forget about the dryer contribution. We are strictly looking at the washers and their activity. We have to assume that if someone washes in the Laundromat that they also are going to be using the dryers too. The dryer TPD are a non-factor. The washers TPD numbers have all the importance because they generate the most profit, are the largest revenue source and frankly the TPD washers numbers means something. The washer TDP numbers are useful in comparing to other stores and other sized washers; dryer don't.
Weekend vs Week Days
The washer revenue for Saturday & Sunday is $1,320 which turn out to be ($1,320/93/2) = 7.10 TPD. Conversely during the week the washer revenue is $1,828 or ($1,828/93/5) = 3.93 TPD. This confirms what we already know from observation that the Laundromat is much busier on the weekends vs the week days. Almost twice as busy. TPD numbers allows us to empirically analyze the data to them make intelligent decisions about the future of our business.
Comparing Different Washer Sizes
We can also analyze the data even further by looking at each size of washer to see which is the most popular size of washing machine. In the chart below we see the individual break-down by washer size.
In this example the most popular washer size is the 60 lbs. washer and the least popular is the 80 lbs. washer. This should not be too much of a surprise because the 80 lbs. washer can be intimidating with their huge size and high vend price. But in this example the 80 is still cranking out 4+ cycles per day and making a bunch of money for the owner. If we were to expand this Laundromat and were going to add some more washers, the logical size to add would be the 60 lbs. machines. Under an ideal situation all the washers should have the same TPD regardless of size of washer. Under a perfect situation the TPD figures should be exactly even for all washer sizes.
Please note that the store has a TPD figure of 4.84 which is all of the washer revenue divided by the washers at 1 turn and then divided by 7 to get the actual TPD. The "average" figure in the example is shown here as to how Not to calculate the store TPD. You cannot take all of the individual washer TPD and then average the TPD for the entire store. This does not take into account the different number of washers for different sized machines. To achieve the same answer as the 4.84 TPD you would need to perform a "weighted average" of the washers which is just more work to get to the same answer.
Hopefully this answers the perspectives customer's question. Next week we will discuss more aspects of TPD and % Utilization.
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