This laundry doesn't fold in a recession
This Laundry Doesn't Fold in a Recession
October 18, 2010
In the fall of 2008, as a financial crisis was driving banks to the brink, Sang Cho was taking the locks off a commercial laundry in Paterson he'd just purchased in a major expansion of his family's business: supplying clean sheetes and towels for Manhatan luxury hotels like the Trump Soho.
The financial strength and operational track record of Prestige Hospitality Service, which Cho and his parents built from a dry cleaner to a full-service commercial laundry, enabled the company to keep growing amid a deep recession.
Founded in 1996 with one Manhattan facility that did dry cleaning for hotels, Prestige already had a relationship with lender Eastern Funding when Cho joined the family business in 2006.
Cho, 28, said Eastern Funding President Michael Fanger had worked with his family to finance their first major expansion, the 2005 purchase of a commercial laundry on Long Island, N.Y.
"At the time, we had a good reputation in the hotel dry cleaning business," Cho said. "So it was a very natural launching pad for us to get into the hotel linen business."
In March of 2008, another acquisition opportunity came along: a Paterson commercial laundry that had filed for Chapter 11 and shut down. Along with Eastern Funding, Prestige obtained financing from Sun National Bank and from the New Jersey Economic Development Authority and acquired the Paterson facility, and another one in the Bronx, N.Y.
By early 2009 Cho was rehiring Paterson workers who'd been laid off by the plant's previous owners. Today, the Paterson plant employs 150 of Prestige's 350 workers in New York and New Jersey.
"We had the business knowledge to be a bankruptcy buyer, and that is not something the average laundry owner knows how to do," Cho said. He had already assembled a new professional team—accountants, lawyers, bankers—to position Prestige for expansion.
Cho is a graduate of Drew University, and a former Marine who served in Iraq. Now, he runs a company that washes and dries more than 250,000 pounds of laundry a day; the company's 38 trucks collect and deliver linens each day at 85 hotels in the metropolitan area.
He plans to grow by providing services to hotels that run in-house-laundries. "For a flat monthly fee, they can call us to repair their machines, and they can buy what they need through us—we can buy laundry supplies cheaper than they can."
Fanger said he mentioned Cho as he put the family company on the expansion track. "The major advice I gave his was to have a strong balance sheet, so you can survive through all kinds of business cycles and have more control over your business."
From the beginning, Cho said, "We decided that even though we were a small compnay, we should spend money on our infrastructure and get our financial statements done the right way, so that in three of four years, we'd be able to borrow money. We didn't realize we were going to do this during the worst recession since the Great Depression, but we were ready for it."
From NJ Biz