9 essential costs in commercial laundry

19442137_475836746083268_1201733967700342937_oThis is the second of a two-part article on utility costing. For questions, email editor@isitcleanph.com

On the last article, I tackled about the hidden costs in commercial laundry, such as re-wash and rejects, pilferage and leaks. Understanding these costs allows the business owner to put in measures to minimize or avoid these events.

Now, let me enumerate the “known costs” and the standard expenses that any laundry business will encounter. While these are essential and therefore difficult to avoid incurring, owners can implement smart tactics to manage them and maximize the bottomline for the business.

 

Labor 

The headcount of staff needed to operate a laundry varies. A luxury hotel in Makati once had a ratio of 1 laundry staff (whether outsourced or in-house) for every 10 rooms. There are also business models such as self-service laundry which are designed to be low-cost in labor.

In general, businesses (hotels, hospitals, and institutions) avoid hiring in-house and will prefer to outsource their laundry to a service provider.

 

Rent

Real estate is tricky if you don’t know how to make it work for you. Laundry shops must have the best and most strategic location, but rents can be too expensive in central business districts. One tactic employed by laundry shops today is to have a centralized plant (much like the commissary concept in F&B) where soiled linen from various receiving stations in different branches are compiled and washed.

 

Chemicals 

Commercial laundry requires a number of chemicals. By order of their application, these are: alkali or booster; detergent; bleach (chlorine or oxygen); and sour or neutralizer, and fabric condition.

 

Water 

For laundromats and self-service laundry shops, regular tap water is often enough to sustain operations. But commercial laundry operators are usually more discerning of the water quality (for instance, preferring soft water) for efficiency and to avoid damages to the linen. Better quality of water sometimes mean higher cost.

 

Depreciation and maintenance 

Machines depreciate in value over time and require regular maintenance. It is best to look for suppliers with good after-sales service. Remember: A machine that doesn’t run is a huge opportunity cost for the business.

 

Electricity 

Electricity powers the laundry shop’s machines and other appliances. Between the start of 2006 and end-2017 (nearly 12 years), electricity prices in the Philippines have gone up by 39% based on the Electricity Price Index. While seemingly high, this is lower than the Consumer Price Index (+54%) of the same period. The CPI is the basis of inflation figures.

 

Steam

Industrial laundry operations usually involve steam as a way to heat water (Hot water is the best kind of water to kill bacteria and remove most stains). Steam can be powered by LPG or electricity.

 

Packaging

Newly washed linen are packaged nicely in plastic or branded canvas bag, ready for delivery to the customer.

 

Logistics 

Delivery (and sometimes pick-up) of linen to the customer is a different animal. Logistics would involve vehicle, gas, and personnel who has a good sense of time, direction and record keeping.

READ NEXT: 7 signs to tell your laundry business is failing

Understanding costs is key to a laundry business’ survival. If you’re interested to learn more about training and advisory on costing (especially utility costing), email rhapolega@yahoo.com

Tagaytay is the new growth area for laundry. Before you invest, consider these 4 challenges first.

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Real estate development in Tagaytay City. Wikipedia image courtesy of Manilaspirit

Like many cities, Tagaytay is experiencing a boom in tourism and business activities, which is good news for the laundry industry.

With huge demand for hotel rooms, restaurant services, wedding caterers and other hospitality services, these businesses are relying on a growing number of laundry shops to wash and provide their daily linen and uniform requirements.

On top of these, the hundreds of units of condominiums and houses that mushroomed over the last decade means a large client base for retail laundry services.

But putting up a new laundry in Tagaytay can also be a challenging endeavor – especially if you have not considered some location-specific challenges.

Here are 4 of them:

Supply and Quality of Water

It is known within the industry of Tagaytay’s – and the greater Cavite’s – water supply challenges. Read an article here by the Business Mirror.

Some in Tagaytay also rely on hard water (deep well), which I mentioned in past articles are not the preferred kind of water for laundry as it requires more amount of chemicals to wash off dirt.

Cost of Electricity

Cost of electricity and LPG are the most expensive portion of laundry. In a place like Tagaytay where relative humidity is higher than Manila, clothes dry longer due to higher amount of water vapor in the air relative to water vapor in saturation. This means laundry shops in Tagaytay (and Baguio as well) need extra heat to dry clothes and therefore use up more power.

Technical Education

Laundry is an industry that heavily relies on innovation and technology. It requires constant education on new techniques and skills enhancement for owners and employees. Owners and employees have to maximize the very few laundry-specific seminars and training available in the area in Tagaytay – or travel to Manila to attend some.

Suppliers

The low number of suppliers of chemicals for laundry, kitchen sanitation and other cleaning services has kept prices a bit up north.

 

Despite these challenges, Tagaytay is still the new hotbed of opportunities for the laundry industry. Laundry operators, owners and employees need to find solutions, be smart and get the right partners.

If you’re thinking of building your own laundry shop in Tagaytay, ask and plan your next venture by reaching Romy Apolega at rhapolega@yahoo.com.

READ NEXT: 3 Common Headaches in Commercial Laundry

 

Featured image by Steven Rascoe