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March 12, 2013
HK 2013 Sales Extravaganza
Turn Per day
Fun Stuff
HK Weekly Parts Specials

   

Featured Article


% Utilization

vs.

Turns Per Day

 

 

 

   

Washers & Customer   

    

 

 

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HK offers the quick 5 minute Newsletter to inform our customers and prospective customers of up-coming events, industry news and HK Special Promotions.  HK will only send out these Newsletters when we have something important to say.  We truly respect your time.
HK 2013 Sales Extravaganza - (4-17-2013)
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HK again is having our "mini Clean show" in the Ethan Allan Inn in Danbury, Connecticut.  This has proven to be a terrific event what keeps on growing year after year.  Come and se what all the excitement is about.  Save the date of Wednesday, April 17th
% Utilization vs. Turns Per Day numbers (TPD)

 

Salesmen - Laundromat Revenue Projections are the "black art" of salesmanship.  As salesmen, we want to be successful.  We thrive on helping customers. We want to make sales and to portray a potential Laundromat site in the best po ssible light.  We truly want that store to be a huge success and to help our customers to become successful.  We want this for several different reasons. Salesmen are generally optimistic people so our outlook on life is generally more enthusiastic and positive.  Salesmen are guys who think the glass is 2/3 full when it is actually is only full.  We want to help people and we want our customers to be successful.  You are only successful when customers are buying.  By our nature, a Salesman will show a Laundromat site in the best possible light.

 

Bad Apples - But there are always some salesmen in any industry who will knowingly "fudge the numbers" so they can make a quick sale.  These un-scrupulous salesmen are only around for the short time and seem to bounce from industry to industry.  (Note to self - ask the Salesman how long they have be serving the Laundry industry.)  As a potential buyer, you can be better prepared if you can understand on how to generate Laundromat Revenue figures. The old maxim is "Buyer Beware".  This newsletter is to point out some of the problems with "revenue projection numbers" and pitfalls of the simplistic approach to generating the numbers.

 

2 Ways to Calculate Revenue - There are 2 methods for estimating a Laundromat 's revenue: 1.) is % Utilization and the other 2.) is Turns per Day (TPD). Both methods have their advantages and dis-advantages.   % Utilization is a very simple method for trying to gauge a Laundromat's Gross revenue. % Utilization is favored by some equipment salesman for its ease of use and shear simplicity.  (Note to self - anything simplistic should raise suspicions.)  To determine a Laundromats % Utilization you calculate the revenue as if every washer & dryer is used constantly for a full week. % Utilization is the percentage of maximum capacity that a Laundromat can generate in revenue during a week. (Remember a week is the shortest interval in a Laundromat.)

% Utilization figures

% Ultilties 16 vs 24    

For Example - Let's use the sample Laundromat I had last week. In this case the washer revenue at 1 Turn was $93.00.  If we assume the dryer revenue is 1/2 of the washer revenue, then the store revenue at 1 turn will be $139.50 / one turn.  If the store is open 16 hours a day, the maximum revenue would be (16 * 139.50) or $2,232 per day or $15,624 per week. This is a huge and very un-realistic number, but it is the absolute maximum revenue that this store can generate.  % Utilization figures are percentages from this maximum weekly revenue number.  The higher the percentage the higher the revenue. 

 

Problems with % Utilization - In the above chart we can see that when the numbers are calculated on a 16 hour day that we get a completely different set of figures than when we use a 24 hour day. In addition if the Laundromat is open from 6 AM to 10 PM, this is 16 hours of operation, right?  But how many hours of operation can the washers really run?  Doesn't a load of clothes need to dry?  So really a 16 hour day yields only 15-1/2 hours of washer operation. The last hour of the day is required to dry the clothes.

 

Cycles Per Hour - Now can you really get 2 wash load per hour?  I have watch customers and the average is closer to 1-1/2 cycle per hour.  A 30 minute wash cycle and approximately 15 minutes of un-loading and re-loading the washer.  By the time you load the clothes in the washer, get some change, place soap in the soap box, and start the washer; you have lost about 10-15 minutes of "washer cycle time".  So instead of 32 washer cycles in a 16 hour day we now really only have about 23-1/4 wash cycles per day. This is a huge difference on how you generate the numbers and this knocks the % Utilization figures all over the map.

 % Utilization vs. Hours of Operation    
  
% Utilities vs store hrs 

Turns Per Day - Now if we look at Turns Per Day (TPD) we eliminate the washer cycle time and the # of washes possible per day.  TPD is based on the simple "assumption" of how many times every washer in the Laundromat is operated.  TPD is by no means the "silver bullet" of revenue projections, but in my mind is eliminates several variables and is a far better way to determine Laundromat revenue projections.  I feel that Turns Per Day is the only way to try to calculate Laundromat Revenue projections.  

 

Revenue Projections - Laundromat revenue projections are a guess at best. Unfortunately there is no empirical formula that says given a population of X with Y number of renters and this level of visibility & street appeal and Z amount of traffic count with this level of competition and that level of management of operations that we will get a specific dollar figure of revenue. There is no such formula, and probable never will be. But we can use common sense and judge relative difference between existing Laundromats and their prospective locations.  We can look at the competitive Laundromats in the area to judge their volume.  We can use demographics and look at the % of renters.  The more you research the numbers and the location, the more confident you will become with your "gut feeling".  As I have said in my Laundromats 101 write-up on my website, you want to find the very "Best" Laundromat location. I f you have the "Best" location, the store will be a success, the only question is only how much of a success.  If you have a poor location, the store will certainly fail.  Cruel words, but true.

New Resource section on website

Resource Page  

  

It is HK's goal is to have a timely, informative, and educational content on our website at www.HKLaundry.com   HK has just released the soft openning of our new "Resource Section" on our Website. The "Resource Section" includes:

The Resource Section will be an active and dynamic section of the website where we will continue to update and post "How To..." Videos and Videos on all aspects of the Laundromat operations.  Please visit the new Resource Section at http://www.hklaundry.com/resources.php and let me know what you think.

 

Fun Stuff ...
 Best Blonde Joke   
  
HK Parts Specials:
 HTT30 Fans

 

Fan for Huebsch / SQ 30 lbs. Stack Dryers

List Price $ 119.53

HK Special Pricing $ 65.00 

 

  F200166300 

   

Dran Valve for Huebsch / Speed Queen Washers

List Price $ 175.23

HK Special Pricing $ 97.00

 

Call Anthony at 1-800-229-4572

 or email anthony@hklaundry.com

to take advantage of these

Weekly Parts Specials.

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HK is a family run business that has been providing "Un-Compromising Quality since 1967".  That is 46 years of trust, respect, and loyalty to our customers.  HK Newsletters is our forum to help educate our customers on important topics in the Laundry Industry.  HK is committed to educating newbies and veterans alike.  Please let us know how we are doing and (obviously) if there is any topic or subject you would like to know more about, please email me at karl@hklaundry.com.
  
Best Regards,

 

Karl Hinrichs

HK Laundry Equipment Inc.  Facebook