WSD’s Bryan Maxwell contributed to this article which was originally published in Planet Laundry Magazine and has been republished with their permission.
Founded in 1974, Western State Design today has grown to more than 75 employees, with locations throughout the West. The company’s corporate headquarters are based in Hayward, Calif. However, WSD also operates branch offices in Cerritos, Calif.; Portland, Ore.; Reno, Nev.; Phoenix; and Woodinville, Wash. And the staff at WSD includes a full complement of planners, design engineers, CAD systems operators, management and operations trainers, service technicians, and equipment supply personnel.
Western State Design is a licensed general contractor. The company’s operations include development, consulting, engineering, design, construction, equipment supply, managed services, financing and ongoing parts/service support.
With many shopping centers still housing older “laundromats,” the remodeling of these existing stores and the development of modern self-service laundries has become a major focus for WSD, according to the company. As self-service laundry operations continue to change, older and outdated stores are being replaced. New upscale laundries are being developed, which appeal to customers who want the benefits of a laundry that will enable them to wash all of their weekly laundry in an hour or less.
Western State Design’s Bryan Maxwell recently took some time to provide his perspective on the self-service laundry business in 2013, as well as to discuss an exciting new fundraising program his company recently launched:
What are the most pronounced trends you’re currently seeing in the industry, especially in your specific region of the country?
The western United States suffered greatly during the recession. The economic downturn in the West caused massive demographic shifts in many of our markets, due to large segments of the population leaving the area. For instance, it is estimated that 400,000 low-income workers left Maricopa County, Ariz., during the recession. As a result of these demographic changes, many store owners in these markets experienced severe revenue reductions of 30 percent to 40 percent.
To weather the storm, many laundry owners seized the opportunity to renegotiate record high leases. Some owners have reduced their cost-per-square-foot by as much as 50 percent. With more healthy fixed costs, these owners are in a much better financial position to participate in the recovery. The jobs in construction and other support services seem to be coming back. As the jobs return and the population is once again growing, store owners are seeing revenue growth for the first time in years.
In addition, increasing the revenue-per-square-foot continues to be a big trend with self-service laundries. Our clients are replacing smaller, less-energy-efficient equipment with larger, high-revenue-producing washers and dryers. Ten years ago, machines with 80-pound capacities and higher were rare, but now coin laundry customers demand them. We have many owners who have installed more than 10 80-pound washers per store. To match up with the larger washers, clients are vending larger detergent and bleach products as well. The reasoning is simple, larger equipment produces greater revenue and greater profits.
Lastly, store owners are redefining their customer performance expectations. New washers spin faster and dryers dry quicker. Now when consumers have a choice, they are choosing laundries that get them in and out quickly.
What are you most excited about for the second half of 2013 and beyond?
We think there are many reasons to be optimistic about the last half of 2013. The economy is recovering, customers are coming back into the laundries and the cost of upgrading existing laundries has never been better.
In addition to the overall economic recovery, we, at Western State Design, are really excited about our new fundraising campaign. The company has pledged to donate one dollar per pound of rated capacity for all Dexter Laundry coin-operated washers and dryers purchased from us through the end of the year to the Intrepid Fallen Heroes Fund, in honor of the sacrifices made by our United States armed forces veterans.
The Intrepid Fallen Heroes Fund is a leader in supporting the men and women of our armed forces and their families. Begun in 2000, the fund has provided nearly $150 million in support for the families of military personnel lost in service to our nation, and for severely wounded military personnel and veterans. And we’re extremely proud and honored to be partnered with them for this important campaign.
What are you most concerned about, business-wise?
Our biggest concerns are with the economic recovery, the future impact of government interference on business and the rise in the cost of utilities. We expect the economic recovery to continue and believe the demographic changes of the past few years ago are reversing. However, if these changes do not continue, it would present many challenges for our clients.
Secondly, we are concerned about government interference in our industry, such as state sales taxes on washer/dryer revenue or the impact of legislation like the Health Care Act.
Lastly, long-term rates of utilities will continue to increase. Many municipalities throughout the West have already approved yearly double-digit increases to the cost of water and sewer. As these costs increase, store owners must become more efficient and increase vend prices. For those clients that can’t do both, their future will be challenging.
What’s the biggest reason for laundry owners in the West to be optimistic?
There are many reasons for store owners to be optimistic. The economy is recovering. Job growth continues. Laundry customers are returning to the marketplace, and store owners have already made the adjustments necessary to weather the fiscal storm. Now, as business continues to improve, they are in a better position to take advantage of new opportunities.
Also, low-cost financing is readily available. A few years ago, financing was costly and very difficult to obtain. In fact, it was such a challenging issue that one of the educational topics of the 2011 Clean Show was how to obtain financing. Now that the economy is recovering, interest rates on financing equipment is at an all-time low. In most cases, financing is readily available and current interest rates are 30 percent to 50 percent lower than rates in 2011.
What are the keys to successful laundry ownership today?
In a macro sense, the key to successfully operating a laundry is to market better, take care of your customers better and operate as efficiently as possible. Industry studies indicate that 20 percent of coin laundry customers move from the area every year. Therefore, successful store owners market their businesses consistently to attract new customers. A store website, social media, direct mail and many other methods should be used consistently to attract new customers. Once the customer is in the store, successful stores have the right sizes and types of machines available and repairs are made quickly to the equipment. Some qualities have not changed for years, such as operating stores that are clean, bright and safe. Lastly, as utilities increase and other expenses continue to escalate, successful laundry owners continue to invest in their business to increase revenues and decrease expenses.