Laundromats across the world are increasing their revenues by picking up and delivering laundry. What if you could outsource the pickup and delivery to ride sharing companies? Does that make sense? We explore the pros and cons of this business model.
Welcome to state of the laundry industry with Laundry ‘Matt’ episode 17. Does outsourcing driving to ride share companies, make sense? I’ve been hesitating to do this episode, because I like to focus on things that help improve your business. How do you make more money? But I just just have to make a public service announcement because I feel there’s a whole bunch of laundry owners who are getting burned and, and it’s really upsetting to see because if you’re a laundry owner, you know, you made the sacrifice to buy that laundromat. You you’re basically investing in your future. Your family’s sure you’re always on call . You know what ? If the, you know, there’s a water lake or anything like you’re always on call. We’re basically all in this together where we are trying to make a better future. And so I feel there’s a company out there who’s pedaling somewheres that just doesn’t work. In my opinion. And people are getting stuck in three year contracts with an idea that sounds good, but where the rubber hits the road, I’ve got a lot of questions and frankly, I just don’t believe it works. You know what brought this up? I saw a recent post on Facebook that said, I get that this company wants to market and other entities need money to pay the bills. But I’m so tired of every laundry related email that comes to my inbox is plastered with their name. It feels like everyone has sold out to them and somebody replied other people’s money known as private equity money is the easiest thing in the world to spend and waste. It will fade out and the length of time is only determined by fast. They burn the money. But I think the real core of this question is it feels like everyone has sold out to them because they’re blanking the market with a lot of money. And is the information that’s getting propagated? Is it helpful to the industry? And I don’t believe it is, you know, it reminds me of when I was a team teenager and I was heading off to, with a family to Las Vegas, my parents owned a self-serve car wash . They like businesses with no inventory like laundromats and car washes. We stopped by a car wash on the way to Las Vegas and the owner of that car wash came out and he is bragging to my dad. You know, I use the hand soap that they sell at the casinos and it is dirt cheap. It’s so cheap and I’m saving so much money using this hand soap. And my dad goes, you know , I didn’t know you could use that for cars. That’s great. Congratulations on saving, you know , money. And he thought that’s very interesting. And he goes ahead proceeds to wash his car, that zoos a trooper that later we wound up using for pickup and delivery at super SU . So he is washing that car and the dirt just streaked. It did not clean the car afterwards. I ne you know, my dad’s very cool and collect and I never seen him so upset at the owner. Bottom line is the car wash . Didn’t clean the car and people are stopping. They’re washing their car. He sees people stopping and they’re probably one time customers. He goes, you are ruining their reputation of selfer car washes for everybody. You’re hurting the industry. When people come to your car wash , they’re not gonna say, oh, it’s this self-served car wash . That’s bad. They’re gonna say self-served car washes are bad. They don’t. And every single customer that comes through here is another customer. You are burning the bridge with, and they’re gonna stop using self-serve car washes. And the guy wound up refunding my dad, but that didn’t fix it. You know, I’ve got a lot of respect for, so like 99% of our competition, especially the laundry guys, because they are trying to solve a problem. There’s been a lot of innovation because of competition and competition is good. But when people come out there and they raised money from investors who know nothing about laundry, and they say, Hey, Uber or DoorDash works for pickup and delivery. It solves a problem. And they get tens of millions of dollars in financing, you know, good on them. But does it work when a laundry owner, especially when they’re thinking about getting into pickup and delivery, they’re thinking if I don’t have to worry about the driver or a vehicle, that sounds terrific. That solves a problem. What they don’t realize is they’re getting a solution that in my opinion, just doesn’t work. And now they’re stuck in a three year contract. And when that laundry owner realizes that the solution they are stuck with for three years and they’re paying the lease on and they’re paying them for the equipment and they’re burning their opportunity. And after three years they realize this just doesn’t work. They’re not gonna say DoorDash or Uber doesn’t work. They’re gonna say that pickup indeed delivery doesn’t work. And they’re burning the industry, just like that car near Las Vegas. A lot of times when experienced laundry operators, talk to these salespeople who are pitching this concept, they burn it down in a second because they go over the math and they clearly see it doesn’t work. And then they say, oh, but you don’t need to do that. But it’s a UNSU . It’s the susceptible people new to pick up and delivery who fall for, because they don’t know the question to ask. And they’re the ones getting burned for them. They get pushed heavy and hard on pickup and delivery through ride sharing , but the people know better than they back off. They are pre upon people who don’t know any better. So I wanna just provide a public service announcement, provide the information so you can make an informed decision. Whether you go with our software or another software, that’s fine. That’s cool. But what I don’t want people to do is invest in a solution that just doesn’t math out. We’ve shared, you know, week after week and will continue doing so of clients of ours who have said things like pick up and delivery has changed my life. So I’m very passionate about this. This has changed families, you know, revenues and income. It’s life changing if you do it right. So I just want everybody to have that opportunity and I want to make sure people don’t go down the wrong path. Let’s take a look at
Pickup and delivery from the laundry owner’s point of view and outsourcing it to a ride sharing program. Now for us, the average order size for pickup and delivery is 40 pounds. And we gross about $70. Most places, the radius for pickup and delivery is about 15 miles. So let’s take half of that. And so your average is about seven half miles. That means you’re gonna be paying $30 in pick up and delivery fees on each order. So are you willing to take a $30 loss on a $70 order? Meaning you’re doing 40 pounds for $40. Now I don’t know about you, but at least in California, you cannot make money doing it . $1 per pound. I know from a mathematical point of view, no owner out there is willing to take a $30 loss on each order. And the reason why it doesn’t work out is the route density with ride sharing program is one, the route density is one. You cannot make money picking up and do delivering an order to one customer. The reason it works is because you’re able to fill up your van and you could create an efficient and optimized route using software. All right , so now you’re not willing to take the $30 loss is the customer willing to pay $30 more? And again, the answer’s no way I don’t believe a customer’s willing to pay a hundred dollars for 40 pounds. And if they are well, then you should just raise your price and do the pickup and deliver yourself and pocket the difference. Paying another company, $30 for picking up and delivering the laundry is equivalent to giving away over 40% of the gross revenue. That’s insane. You cannot give another company 40% and make money. It , it just doesn’t work. The second part is what is the reaction from the customer? Remember when you’re outsourcing to another company, it’s your reputation on the line? And if Uber or DoorDash does not a very good job that reflects upon your company and you can’t just blame the ride sharing company, because your customer’s gonna be like, well, why did you send them out to me in the first place over here is one of many, many stories from somebody using one of these ride sharing programs. And let me go ahead and read it. So just got my order of pizza and the dude, the driver was clearly drunk, inate art of our pizzas. What the heck now could you imagine if you’re just rolling the dice and you’re hoping a good driver shows up and you know, I’m sure most of them are good, but not all of them . And you’ve got no control. So imagine they show up and deliver the laundry or pick it up. They’re willing to eat their French fries on the way they’re willing to eat the pizza on the way, say , what are they gonna do when they’re not making a whole lot of money? And they get some really nice clothes. You better hope they don’t take the clothes. And yes, a sales company will tell you, oh, don’t worry. It’s protected with insurance. And you could get the money from one of these ride sharing programs, if any clothes disappear. But is that really accurate? If you lose the customer because of the driver, you’re losing five to $600 or maybe more of annual gross revenue. Each one of these customers spends hundreds of dollars on pickup and delivery, and you’re gonna roll the D and have your company represented by some stranger. Are they dressed professionally? And are they happy? Some of these software salespeople will say that they’ve negotiated $2 per mile with these ride sharing programs. Now, if you’re an actual driver and you’re getting $2 per mile, what does that even mean? First? It means you drive all the way to the customer’s location. Then you have to go up the stairs and pick up the laundry, and then you make multiple trips up and down, finally load up your vehicle, and then you start making $2 per mile. So how do actual drivers respond when they find out that they’re getting paid $2 per mile, this is from an actual driver saying $2 a mile. Am I right? I still took it because I was doing laundry. And wow. I feel like a loser. No tip $2 for 20 minutes of my time. Now that’s interesting. They mentioned no tip. See, people are very used to leaving tip for tips for food, but they know when they pick up something, that’s not food, it’s less likely they’re gonna get a tip, which means it’s more like that. You’re gonna get an inexperienced driver who doesn’t know any better, picks something up that is not food. And somebody said, shame on you for taking that order because nobody wants to work for that cheap. So the drivers are not even fans of this. And another part is the drivers. There is a physical requirement to be able to, to de liver and pick up laundry. So somebody said, I broke my back and I cannot regularly do my job anymore. I could only drive. So I’ve been doing door dash for two years and , and enjoying it until Walmart’s orders started, basically, they’re complaining about they can’t lift all the orders and going upstairs. Laundry could weigh too . You know, we’re talking about like 40 pounds and you know, many of these orders could be hundreds of pounds going up and downstairs and not every driver is capable of doing it. And so that is gonna lead to very upset drivers. And they’re gonna take that out on your customers. This is an , an actual post from somebody who said, I literally got an order to pick up a customer’s laundry and take it to the laundrymat . And the response was quite interesting, says if the laundry was already done and bagged and going back to the customer, sure. Why not? But taking in dirty laundry that’s nasty. And then another person said, but I’m not taking someone’s dirty stuff anywhere and smell at my car and somebody else, another driver posted, what if it had roaches? Could you imagine? So even these drivers who work for these driving companies are not too excited about picking up dirty laundry. And again, do you want somebody not happy? Who doesn’t know the drill, picking up laundry and interfacing with your customer, most of your pickup and delivery customer, the only interaction they have is with your driver. They reflect your company. And do you want these people who are scared of roaches and dirty laundry? Do you want them picking up clothes from your customers? So besides the physical requirements, the reactions from customers, the reactions from the drivers themselves, at the end of the day, in order to have a successful route, you need to have a higher route density. And I remember watching a coin lottery association webinar with four very successful pick and delivery operators. And they all said one thing in common, you can’t dip your toe in the water. If you want to get into pickup and delivery, you just have to do this. And what’s happening is people who want to tip their toe in the water are basically getting in my opinion, bamboozled and told what they want to be told. But when you’re lose , when you’re paying over 40% of the order, and that’s going straight towards another company and you’re losing money on every single order, it’s kind of hard to grow your business in that fashion. So I don’t think an owner’s willing to take a $30 loss. And I don’t think a customer’s willing to pay a $30 more. And I don’t think you want your company represented by somebody who doesn’t wanna be there. So for those three reasons, I highly recommend, if you do pick up and delivery, do it. If you don’t wanna do it, don’t do it, but don’t do it halfway because it could one ruin the reputation of your laundromat. And two, you could get into to a long term agreement and get burned by pickup and delivery. So I’d rather you wait for the right opportunity and wait for the right timing and do it right than to do it wrong. We have a proven model at curbside laundries. You’re not just buying software, you’re not buying laundry theory. We’re actually doing it. We’re grossing over a hundred thousand dollars a month in wash and fold from a single location. And we’re gonna surpass $130,000 in wash and fold just this month. We’ve helped hundreds of our clients achieve success and it does take time, but we’ve got a proven roadmap . If you like to learn more about the curve upside laundries, pick up and delivery solution, go to curbside laundries.com. Thanks again for tuning in, and please subscribe to our YouTube channel or podcasts and give us a like , thank you.