We bought a laundromat. What happened next blew our minds :-)

In 2018 Laura and I bought a run-down laundromat in East Oakland and renamed it Family Laundry. What we initially saw as a “passive” (ha!) investment for the family quickly became our full-time jobs. With hard work, incredibly good luck, and an ungodly amount of debt, we turned this little jewel of a small business into the best-rated residential laundry delivery service in the East Bay (we’re now in San Francisco!).

In 2018 we had three employees. As of April 2022, we have 30 employees (most of whom walk to work), a fleet of delivery trucks, and two cleaning facilities in East Oakland. We’ve come a long way from our laundromat days, and we’re just getting started.

We run Family Laundry the way we think all companies should be run: we put employees first, we actively engage with the community we operate in, and we do our part to reduce our impact on the environment.

How we did in 2021 (figures rounded). Overall revenue grew 40% to $1.4 million, following a wild 80% growth in 2020 during the thick of Covid lockdowns. Our wash & fold delivery business grew 60% and topped $1 million for the first time, while retail (drop-off) sales were flat at around $400K. Average spending per delivery order was about $80, and gross margins were 34%. Operating income was -$100,000. We’re not yet profitable, but we’re getting there.

We had to put the breaks on online ads & marketing spending this year. As a business with relatively high fixed costs (think facilities, vehicles, repairs & maintenance, full-time employees, debt payments) and no external investors, there came a point last year where we had trouble just keeping up with our bills, never-mind splurging on more Google Ads.

Thankfully we were able to iron out our working capital issues thanks to a long-term loan from the Small Business Administration (SBA). As of this writing, we have a solid amount of financial cushion to help us continue investing in our operations and accelerate growth in the coming months.

Forecast: current year (2022) and beyond. Our aim this year is to continue building on the momentum in our delivery business (+60% last year). Marketing expenses were less than 2% of our revenue in 2021. By contrast, we are bumping ads + marketing spending 5x to about 10% of revenue this year. We’re also expanding to new Bay Area markets, including San Francisco and Silicon Valley. If the opportunities arise, we may acquire smaller high quality wash & fold laundry businesses (e.g. Launderbot acquisition in 2019).

We expect to hit sales of $2.2 million in 2022 and break even on a cash-flow basis.

We believe we can keep growing at least 50% annually through the following three to five years, reaching at least $5 million in sales by 2024 ( >$1 million EBITDA) and, with a little luck, $10 million by 2026.

Inflation is undoubtedly affecting our margins so far this year, and we may consider price increases to get us to our target gross margins of >40%.

We're operating at roughly 30% capacity, meaning we could - in theory - triple our current monthly production volume with our existing facilities in Oakland (and hire many more people in the neighborhood). We hope to identify and close on at least one new processing facility by the end of this year or early 2023.

We’re tackling a massive market. The market for residential laundry delivery is still in its infancy, but we think it could become several times larger than the Dry Cleaning and Coin Laundry markets combined. We’re not McKinsey consultants or economists, but we know from personal experience that a service like ours (or theirs, or theirs, or theirs, or theirs, or theirs) can be habit-forming. It’s hard to go back to spending hours washing and folding your laundry once you’ve experienced a service like Family Laundry.

The pandemic accelerated the home delivery market as a whole (groceries, takeout, alcohol, laundry, you name it), and we think it’s only a matter of time before many, if not most, US households outsource at least some of their household laundry cleaning chores to professionals like Family Laundry on a regular basis.

Let’s put this into context. Today already:

• 40% of American households outsource lawn care and gardening.

• 10% hired house cleaners in 2021.

• 23% ordered their groceries online at least once a month (2021).

If 10% of US households (12 million) outsourced their laundry (at an average cost of $300/month) to companies like ours, the market for laundry delivery in the US would be “worth” more than $40 billion annually. Compare this back-of-the-envelope estimate to the declining dry cleaning industry ($8 billion) or the coin laundry industry ($5 billion), and you’ll understand why we’re excited to be in this space.

IMPACT. Yes, we’re obsessed with perfectly done laundry, but what really gets us excited is using Family laundry as a vehicle for social and environmental change.

We create good service jobs. If we were to name our special sauce, it would be our employees. They are the reason our service is so highly-rated, and we do everything we can to provide them with competitive wages and stability. Including tips, starting salaries (as of May 2022):

Launderers & Folders: $18/hr

Drivers: $23.5/hr

Standard benefits:

• Accumulated paid time off (10 days vacation annually for FT)

• Health Insurance (80% pre-tax company contribution, optional)

• Paid breaks, lunch

• $300 professional development stipend (annual)

• End of year bonus

We’re minimizing the environmental impact of laundry. There’s nothing like owning a laundry business to witness firsthand how wasteful and polluting household laundry is in the aggregate (and we don't even offer dry cleaning). There's: the chemicals that go in, the vast amounts of water going down the drain, the natural gas used for hot water and dryers, the lint…Add to that fuel used for pickup and deliveries and argh….It’s an environmentalist's nightmare.

Fortunately, this is our business, and we can do something about it:

1. Our washing machines are efficient and high-extraction

We use top-of-the-line, high extraction machines that use 50% less water than conventional machines (our water bill was cut in half when we replaced our older machines) and reduce residual moisture to a minimum. That, in turn, means less gas is required to dry laundry.

2. We don’t use more stuff than we need

We've eliminated bleach, fragrances, liquid softeners, and softener sheets from our facilities while maintaining a very high standard of cleaning. Our view is that less junk in our customers’ laundry = less junk in nature. We only use premium free & clear detergents from Puretergent, and Ozonated water. No phosphates, phthalates, and other nasty chemicals ending in 'ates'….It’s a win for everyone, including our customers.

3. We source our detergents locally

We estimate that we’ve eliminated about 80% of our plastic waste - and significantly lowered our carbon footprint (no trucking detergent across the country) - by sourcing our detergents locally with Oakland-based Puretergent. Now, instead of throwing away hundreds of plastic jugs every month (most of which end up in landfills), we just refill them with Puretergent.

4. We recycle water

We go through a lot of water. Literally millions of gallons every year. Not only is it depressing seeing all that greywater go down the drain...it's super expensive!

We recently installed a commercial-grade water recycling plant at one of our facilities to see if we could reduce our water consumption even more. A few months in, the system has already reduced our overall water use by 20% (as of April 2022). Our aim is to keep another 1.5 million gallons of water, or more than 2 Olympic-sized pools, from going down the drain in 2022. Pretty cool.

5. Our delivery fleet is going electric in 2022.

We are currently replacing our fleet of gas-powered delivery vehicles with 100% electric cargo vans. We have 4 Ford E-Transit vans coming our way in the next few weeks, and can’t wait to get off our gas-guzzling ways.

See you next year!

:-)

David Macquart-Moulin

Laura Guevara