Technology Changes Self-Serve Laundry Business

By Rick Barrett
Milwaukee Journal Sentinel.

Sean O’Byrne runs an executive search firm and a laundry.

While the businesses might seem like an odd pair, it makes sense for O’Byrne, whose family has been in the laundry business since the 1980s.

Also, a laundry is a fairly recession-proof business that offers about a 30 percent annual return on the investment, according to industry figures.

O’Byrne converted a former car wash in Milwaukee into a 2,400-square-foot self-serve laundry with more than 50 Speed Queen machines.

The Suds Your Duds laundry has a wireless control system that allows O’Byrne to monitor the machines’ usage and cash flow via the Internet.

He also can keep an eye on the premises with a video camera and his laptop computer.

“Generally speaking, the problems are small, like a coin jam or a water heater not firing … but every once in a while you’re going to get some knuckleheads who aren’t there for the right reasons,” O’Byrne said of running a laundry.

He is the type of owner that Speed Queen, based in Ripon, Wis., wants to attract: an experienced businessperson who pays attention to the day-to-day operations of the laundry, even if it’s not staffed much of the week and the business isn’t his primary occupation.

“You can’t just turn the lights on, go away and expect to make money,” said Dan Bowe, national sales manager for Speed Queen.
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The industry has changed a lot in recent years, with new laundry owners seeking multiple locations and energy-efficient equipment.

They’re also more apt to set up laundries with amenities such as coffee shops and lounge areas with comfortable seating and wireless Internet access.

Some laundries have reading programs and coloring contests for children. Much of what goes on is aimed at the typical customer: a woman in her 30s with two children.

A typical new laundry is 3,600 square feet, and some are nearly double that size. They’re big, clean, family-oriented facilities, Bowe said.

About a third of the new laundries don’t use coins, according to Speed Queen. Instead, the customer purchases a “smart card” to run the washers and dryers.

The cards help with customer loyalty, since they can be used any time, and they give the laundry owner flexibility in changing the machine prices.

“So if you want to encourage people to come during the week, you could lower the price a little, or you could raise it on weekends,” Bowe said.

The new machines can send a text message to customers when their wash and dry cycles have come to an end. Besides being far more energy-efficient, the new machines are bigger and can handle up to 10 loads of clothes at a time.

From an investor’s perspective, laundries are something like car washes, except they aren’t as weather-dependent.

“It’s not a sexy industry, but you can’t do laundry online. And it’s a necessity. Even in tough times, when other industries go down, we may go down a little bit. But it’s still going to be pretty stable,” Bowe said.

It can cost several hundred thousand dollars to get started with equipment and a leased building.

Speed Queen’s financial services division has made more than $1.4 billion in loans to laundry owners in the United States.

Nearly 95 percent of those 16,000 loans have resulted in successful businesses, according to the company.

Speed Queen doesn’t sell franchises. But it has morphed into financing laundries and helping the owners find locations, in addition to manufacturing the machines.

Some people are not well-suited for the business. Although a laundry can run largely unattended, it still requires regular oversight and some hands-on care.

“It’s not the primary occupation for two-thirds of our owners. But you need to manage it. You have to pay attention to it,” Bowe said.

It also helps to like people, said O’Byrne, who checks on his laundry after he leaves work at his executive recruiting firm and sometimes fixes a few things in the place.

“We get a lot of regular customers. I like to have conversations with them, to know their names. They’re very good people,” he said.

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