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Redefining the laundry business

(From Philippine Daily Inquirer)

Additional services, a keen knowledge of chemistry and marketing has propelled Suds to become a preferred franchise model

With an average of eight out of 10 customers returning to do repeat business, the laundry service franchise is gaining recognition as an enterprise built for the long term, notes Caloy Hanzyl Ang, founder and franchise director of Suds Laundry and Dry Clean Services.

“Once you have satisfied a customer through consistent service levels, he is likely to return again and again,” Ang notes. “He will leave only if he is dissatisfied enough to go through the trouble of testing another laundry service.”

Now serving a customer base of approximately 80,000 that returns week after week to the four company-owned stores and 14 franchises, Ang and wife Charmaine, Suds operations manager, have set plans to grow the laundry service into a nationwide brand. For now, the business which the couple started in Dasmariñas, Cavite, in 2003 to service the needs of professionals working in the nearby export industrial zones has branched out to Quezon City, Makati and Parañaque.

Considering that a typical Suds client, who works in an office, sends off five kilos of clothes a week for washing and pays P35 a kilo, franchisees have been attracted to the business.

Like the Angs, they are optimistic because their market of “time-challenged” young families that have both husband and wife in the work force is growing. Just about a decade ago, these early nesters would have most probably lived with either the man’s or the woman’s family and enjoyed having their laundry done by a family member, a household helper or a daily wage earner.

But with the proliferation of affordable condominium units sprouting all over Metro Manila and mid-income homes in the outskirts of the metropolis, they now can live on their own. As of mid-2012, a Jones Lang LaSalle study projected that 137,000 residential units from the P1.5 to P6 million price range would be coming up from 2012 up to 2016. Most of the occupants of these units would not have the time, energy, space or a combination of any two or three of the aforementioned for laundry.

Caloy recalls that he was also once himself a harried professional employed with Intel in Cavite as a reliability engineer. Still single at the time, he remembers the exact day he decided to get into the business of washing other people’s clothes. It was raining, he was on foot and in a hurry to get his duffel bag of 20 kilos of soiled clothes laundered in the neighborhood. He realized that the laundry service that would go through the trouble of picking up its clients’ weekly washing—and on top of that offer them reliability and professionalism—would easily outdo all existing mom-and-pop laundry shops.

Still single but already in a relationship with Charmaine, he hatched the nucleus of a business plan that night and convinced her to resign to run their store to be named Suds. They attended seminars on the business, borrowed from relatives and in a few months’ time, they had their first store.

They had a logo and interiors that made use of the fun color orange—not the usual blue. “We wanted it to be different. We hid the machines and put in air-conditioning. I sold my car and exchanged it for a multi-cab so I could pick up laundry after work.” Moreover, the pair found out through research that customers were particular about the smell of their clothes and the availability of parking. But even after they had opened and put in all improvements, they still did not earn enough to pay the rent.

They panicked and realized the urgency of marketing to their micro market. A combination of flyers, a promo offering a discount and a banner screaming out the special offer in conjunction with the onset of rainy season finally brought in the volume of customers they had targeted. They have since added a rewards system to loyal customers tracked by a proprietary computer program that is part of the POS (Point of Sales) machine in each Suds store.

They also focused on running the business more efficiently by “getting their chemistry right.” Among their first lessons in the subject was selecting a detergent with more active ingredients than fillers since it is the latter that gets the cleaning done. Their growing expertise in the area eventually brought them to the practice of using four different types of detergent—three of them liquid to be used for delicate, premium and regular-wear clothes. Powder is used only for bulky items that need heavy-duty cleaning such as seat covers and towels slathered with oil and lotion.

With the intensity of geeks challenged by a science problem, the Angs went into franchising in 2008 with the goal of finding a royalty program that would work for both franchisee and franchisor and push the business further forward. They developed the “ladderized” royalty system wherein no royalty is paid to Suds during the startup period and with royalty increasing as a franchisee’s revenues increase. Better yet, the royalty decreases once the franchisee gets past a revenue milestone.

“Our growth depends on the growth of our franchisees,” Caloy notes. The Angs have further redefined the laundry business by putting up a plant that specializes in dry cleaning and bulk items such as the scores of towels used by spas and beauty parlors. Suds encourages its franchisees to look for the institutional users in their area and to pass on the washing and dry cleaning to their main plant in exchange for a marketing fee. “This way, our franchisees earn from the business of both retail and commercial clients,” Caloy says.

He discourages the thinking that owning a franchise is like running a remote control car. He declares: “The involvement of the owner in any business is critical. Our advantage is that we have already set up and tested the systems they need to remain profitable and keep on growing.”