Even in a recession, laundromats keep expanding, cleaning up for their owners and patrons
Even in a recession, laundromats keep expanding, cleaning up for their owners and patrons
New York, NY, October 18th 2010
After getting laid off from his job as a floor broker at the New York Stock Exchange two years ago, Marc Safir was ready for a clean break.
He spent a year researching and planning and, in July, he opened Wonder Wash, a 4,300-square-foot, floor-to-ceiling-tiled laundromat filled with 52 washers and 64 dryers across the street from the Melrose Houses in the Bronx.
While Safir used to go to work dressed in suits, he now wears jeans and faded T-shirts, a better uniform for sweeping floors, folding laundry and cleaning toilets.
"I get on my knees and scrub," said Safir, 49, of Westchester. "I am a believer in this business."
He's not alone.
At a time when many city industries are struggling under the weight of the recession, new laundromats are opening, lending is up and business failures have been relatively few.
"On balance, it's very stable," said Michael Fanger, president of Eastern Funding, a midtown-based lender that specializes in extending credit to laundries, dry cleaners and groceries. "People have to keep doing their laundry."
Eastern Funding supplied loans to 80 New York-area coin-laundry operators last year, amounting to $17 million. It expects loans to laundromats to be up 10% to 15% this year.
Yet Eastern's loans to local dry cleaners and groceries have fallen sharply compared with 2006 and 2007.
This year, Metropolitan Laundry Machinery of South Richmond Hill, Queens, will supply machines to about 25 new laundromats, about the same number as last year.
"This business is as recession-proof as they come," said Marc Katzman, Metropolitan's vice president.
How long New York's coin laundry machines can keep spinning in a weak economic environment remains to be seen.
Some owners said cash-strapped customers are taking longer between washes, pushing sales down about 6% this year. Rising utility costs have eaten away at what used to be robust profits. And the market - there are 2,533 laundries licensed by the city - is getting crowded, longtime owners said.
But for now, entrepreneurs ranging from laid-off corporate execs to investors looking for side businesses are opening facilities. And the industry continues to draw immigrants who see the business as relatively simple to master and a bridge to financial stability.
Aftab Mannan, 48, who came to New York from Bangladesh and now lives in Jamaica Estates, Queens, opened his first coin-operated laundry 16 years ago in Ozone Park, Queens. He just opened a fifth store with 131 washers and dryers in Richmond Hills, Queens.
Revenues from his A&R Laundromats and Cleaners have grown 10% annually even during the dark days of the recession.
His shops provide income like a regular paycheck, he said. "Once you are established, it continues. That's nice."
Over the last decade, Mannan has advised 15 to 20 Bangladeshi immigrants who've opened their own laundries.
"Laundromats are still doing better than other businesses," said Mannan, although he added, "You must have a good location and study the community."
M.K. Ko, 54, who was born in South Korea, opened his first Clean City store 11 years ago. He now has five in the New York area and hopes to have 10 stores in the next three to four years.
While Ko, of Englewood Cliffs, N.J., concedes business is not as profitable as five years ago, "It's holding steady," he said.
The coin laundry business, which took off after World War II after the introduction of the first automatic front-loading washing machine in 1937, has gone through a radical transformation in New York over the last decade.
Small, seedy laundries have given way to brightly lit, large, security-monitored stores measuring between 3,000- and 6,000-square-feet. Flat-screen TVs and stores open 24/7 are the norm.
With new facilities featuring 120 whirring washing machines and dryers, there's rarely a wait. New machines are typically activated by reloadable plastic cards, meaning collecting coins and bending over to plunk them into the coin slide are no longer required.
The spiffed-up laundries have attracted new customers, including families who may own machines but prefer laundromats.
"It's been a positive change for New York," Fanger said.
The trailblazer of the city's superstores was Clean Rite, a Rego Park, Queens, chain that now has 35 shops in the city. Clean Rite built its first big laundry in 1996 in Springfield Gardens, Queens.
Despite the growth, success doesn't come easy, said Alex Weiss, CEO of Laundry Capital, which owns Clean Rite.
"Many people have the perception that this is an absentee business. That's not accurate," Weiss said. "A successful operator makes this into a full-time effort." He added: "Returns are not what they were 10 years ago."
On Morris Avenue in the Bronx, standing in his new Wonder Wash store, Safir said he's worked hard to build ties to the community. He has six employees, has held a fund-raiser for a nearby church and offered discounts to workers at Lincoln Hospital, which is near his shop.
Customers said they were happy Wonder Wash had come to the neighborhood.
"It's always clean," said Dominique Casiano, a 22-year-old laid-off embroiderer who was folding her clothes. "The owner cares about his property."
Sales are less than expected, Safir said, but he's hopeful they'll pick up. He'd like to own three to five laundromats in three years.
"Once you are up and running and you can show people returns, it should be very easy to raise money," he said. "No one is making a return in the stock market anymore."
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Think you could own a laundromat? Keeping it squeaky clean isn't easy.
Washers. Dryers. Detergent. No waiting to get paid. How hard could running a laundromat be?
Not as easy as some people might expect.
The cash requirements are high. Securing retail space in a densely populated area is critical. Making the right choices on contractors, equipment and staff are also key.
"It's all about putting a good infrastructure in place," said Marc Safir, a newcomer to the business who just opened Wonder Wash, a laundromat in the South Bronx.
To build a superstore today requires an investment ranging from $400,000 to $1 million for construction and equipment.
Lenders generally require a down payment equal to one-third of the cost of the store.
"A lot of times families pool their resources," said Michael Fanger, president of Eastern Funding, a finance company that specializes in the coin laundry business.
Interest rates for Eastern Funding's loans range from 7% to 9%, higher than the rates charged by banks these days. Eastern lends to entrepreneurs who may have been turned down by traditional lenders because they lack a track record in the business or don't have excellent credit scores.
Experts advised spending a lot of time researching a proposed location.
Also, "because of the size of the investment, you need a long-term lease," said Marc Katzman, vice president of Metropolitan Laundry Machinery, a commercial laundry supplier that assists customers on site selection.
From www.nydailynews.com