CHICAGO — Whether it’s obvious or not, opportunities are beginning to blossom after the long dry spell experienced by the U.S. economy. Don’t let lamentations on the state of “today’s economy” fool you: Steve Kallenbach, director of market solutions at textile supplier ADI American Dawn, says that phrase more often than not keeps people from looking more closely at the economy to try to identify emerging opportunity.
In a recent Textile Rental Services Association (TRSA) webinar titled Untapped Market and Product Opportunities, Kallenbach expanded on his thoughts on the economy, and how commercial launderers can tap into the multitude of business opportunities in burgeoning industries in the coming years.
It can be tempting, he says, to look at unemployment rates to determine the health of the economy, but that can be misleading. If you’ve followed the gross domestic product (GDP) lately, you’ll notice that in 2014 it was back up to where it had been in 2005, before the recession hit—when things were steadily climbing upward.
“Right now, the economy is actually growing at that same speed,” says Kallenbach. “Our economic outlook is mostly clear and sunny.”
So where are the sweet spots that operators should be trying to locate and build on?
To find them, you’ll need to look at the growth related to the industries that commercial and industrial laundries serve. To better define the opportunities in various segments, Kallenbach lists four main areas of interest: industrial (manufacturing, automotive and food/pharmaceutical manufacturing), hospitality (lodging, hotels, spas and health clubs), food and beverage aka F&B (restaurants, catering, etc.), and healthcare (acute, non-acute, sub-acute).
GROWTH IN HOSPITALITY
Today’s vacationers aren’t as keen to book a trip far from home as they once were, says Kallenbach. Security issues overseas have Americans worried, and they’re opting for destinations within the States for their getaways.
“Whether you admit that to yourself or not, there are a lot of Americans who are not traveling overseas who would normally travel overseas,” he stresses.
The hospitality market is booming thanks in part to this trend, and the fact that foreign vacationers are still coming to the U.S. in droves. New-hotel construction is increasing rapidly in response to this demand.
“Right now, in America, there are 3,000 hotels actively being built before our eyes, and it’s really because of this vacationing boom,” says Kallenbach.
An influx of hotels translates into new chances to process hospitality products. But keep in mind that many hotels are upgrading linens in response to customers’ quality expectations, and the baseline for room linens, which was once T130 or T180, is now T200 and can go even higher.
Not too excited to dip your toes into the hospitality end of the pool? Kallenbach says there may be another way to capitalize on changes in the segment.
“If you are inclined not to rent hotel and motel sheets, don’t slight yourself. You still should be looking in that market for the sweet spots of F&B.” Specifically, look at the trend for hotels and restaurants to “co-brand”—think of a Starbucks within a Hilton, for example. Some of those restaurants may not be owned by the hotel they’re in, providing an opportunity for laundries to see what services they can provide.
In terms of toweling, be aware that there are four or five core dobby toweling products in that space that are favored by mid-tier and economic-tier hotels, according to Kallenbach, and they represent another opportunity for laundries. Microfiber has also found its way into the hospitality space, especially as it relates to restroom and room cleaning.
F&B SWEET SPOTS
The domestic vacation boom mentioned earlier will have big benefits in terms of the growth of the F&B segment, and Kallenbach says that according to the National Restaurant Association, dining out is becoming the norm for Americans. Hotel-hosted F&B has seen a growth of 40%, due in part to the co-branding between dining establishments and hotels.
Kallenbach says that converting paper products to linen in the F&B space represents a major “sweet spot,” since linen can be rented for about the same price as the cost of supplying paper napkins, and with much less of an environmental impact.
“It’s a great market for us to be chasing,” he adds.
Again, microfiber makes an appearance on the list of sweet spots, especially in terms of bar mops. Microfiber lasts longer, stays white, and tolerates bleach well, in addition to being a solution to the volatility of cotton.
“In front of a customer, it’s a much better experience,” Kallenbach says, adding that when cotton prices are high, “microfiber becomes much more of an opportunity.”
And if you’re willing to consider offering direct sale items, even more opportunity will open itself to you—if you’re open to it.
“And yet, I see a lot of our F&B operators don’t even do direct sales, because they think it might degrade their rental,” says Kallenbach. “It’s actually quite the opposite—it actually provides a cool solution for the customer because they’re already going somewhere else for this.”
If you’re already renting to an F&B establishment, that can give you the opportunity to make some direct sales, so you can “wedge yourself in,” he adds.
And don’t overlook how executive chef egos can help you win business. Kallenbach says making an executive chef feel important with one custom product can pay off in the end.
“Is it worth buying one person … a set of chef coats that might cost a little bit more money to get a $2,000 account? I think so.”
Some other products that have been getting attention in the F&B space are high-end table linens, such as the steakhouse napkin with a bistro stripe, which are now available in a variety of colors.
Check back Thursday for the conclusion, examining opportunities in healthcare!
If you missed Part 1, you can read it HERE.
Have a question or comment? E-mail our editor Matt Poe at [email protected].