Laundry Rooms: Tech, Compliance and Contracts

Some people own multi-million-dollar apartments, others on a more modest scale, but doing laundry in a communal laundry room is one activity that levels the playing field. That makes the choice of a laundry room vendor crucial to providing a space that meets the needs of the community while at the same time a much-needed revenue source.  In this episode Habitat Magazine's Carol Ott speaks to Automatic Industries president Denise Savino about user-friendly solutions for diverse demographics, laundry room legalities, technology, different types of laundry room contracts and the timing sequence of searching for a new vendor or negotiating with your current one.

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Transcript

Carol Ott: Welcome to Problem Solved, a conversation about challenges facing New York's co-op and condo board directors. I'm Carol Ott of Habitat Magazine, and with me today is Denise Savino, president of Automatic Industries. 

Some people own multimillion dollar apartments, others on a more modest scale, but doing laundry in a communal laundry room is one activity that cuts across economic lines.

Denise, you recently installed some modern machinery in large properties with an older demographic. Can you tell us the challenges you face there?

Denise Savino: Challenges, not so much challenges. Anything new is always a learning curve. We have the technology, it's just we have to select the right technology for the correct demographic. So even though we have a lot of apps and all sorts of neat technology, whereby folks can see what's available online before they go to laundry room we also need to keep the old fashioned or the more simplistic technology in place.

So that every demographic can use the machinery in a comfortable fashion. 

Carol Ott: I'm curious in, in your laundry room installations, is the demographic issue or maybe a language issue, does that come up when a board is deciding what type of machinery or what kind of company they wanna do business with?

Denise Savino: Yes. Those are two obstacles, not necessarily negative obstacles, but those are two things. We try and have signage in multiple languages and a lot of the co-ops are looking for a company that still has a significant back office staff. So if there are issues, they can call the good old fashioned way and get the customer service they need.

Carol Ott: So in the laundry room industry, certainly in New York it used to be that all the laundry room companies were locally owned. That's not the case. Your company is still locally owned, obviously. . What kind of issues does that present to clients and I guess also to your company ?

Denise Savino: I think when you're locally owned, you have a leg up. You're accessible distance wise, which is important. Some of these companies, and we all have the technology, they're able to see online what's out of order. But we feel you need the human component. You have to walk the room.

Sometimes it's as simple as unplugging a plug. But a computer can't wipe out a gasket or clean out a soap dish, you still need the human component. Some of the larger big box companies are outsourcing the customer service. You need people on the phones that can take the time out to explain the system and help somebody on the phone.

Carol Ott: Lemme ask you, I know another thing certainly in New York is that there seems to be more enforcement or more review of the legality of laundry rooms. Many buildings have operated their laundry room, ever since they morphed into a co-op, for instance, right? Or maybe a condo, but the room is not quote, a legal laundry room, which I think for most boards, that's a surprise, right? What's the change? Now suddenly, they're, I guess they always were illegal, but now it's more in somebody's mind 

Denise Savino: why, what happened? 

There may have been a series of events, not so much in the laundry industry.

I think it was related to an explosion in a restaurant a number of years ago where there was an illegal gas connection. From what I understand these laws have been on the books for decades. It's just the city's now begun to exercise the importance of legalizing a room, which is proper sprinklers hard pipe, and that sort of thing on the gas lines.

Carol Ott: Most of the laundry rooms, they use gas for the machines, is that correct? 

Denise Savino: Gas or electric. I believe any new property or any new building in 2024 is likely slated to be all electric from what I understand.

Carol Ott: I see. But the majority who still are running on older contracts may still have gas.

So how does that affect you? So some client calls you up and you go look at the facility today. Are you looking at the legality of the laundry room? Is that something different? 

Denise Savino: We're looking to educate people. A lot of this falls on the building. They may be required to put sprinkler systems in the compactor rooms.

So as long as we're on site and we're eye-spying the site, we're gonna say, you should probably really have sprinklers in here. We try and give them the guidance to legalize the rooms. 

Carol Ott: But is that an issue today? For instance, even in your contracts where you're gonna say, somebody's gonna take the risk if the room is not legal, and I assume it's not gonna be the laundry company.

Denise Savino: Again, we can't; in some applications, buildings need to amend their building C of O. And for that it would require an architect, an engineer, and that's somewhat not our responsibility, but our responsibility is to deliver the education to these buildings. The importance of legalizing the room because potentially if they're not to code, these rooms can be shut down. ConEd, or whoever the service provider is, they don't play around anymore.

It will shut gas service. 

Carol Ott: I see. I wanna ask you, I'm gonna switch your subject to contracts. Just briefly describe to me-- laundry room contracts, I assume come in different versions. What are those versions that are available today? 

Denise Savino: There's a boilerplate contract for the industry, and that could encompass a flat rate, a percentage, or a mix of the two.

But a lot of the contracts are customized depending upon what we negotiate with the building. So not every contract is boilerplate. 

Carol Ott: Just describe to me exactly what does a flat rate mean and what does a percentage mean? Flat rate is like you're renting the space or what is that?

Denise Savino: So we have a fixed rent on a monthly basis, like when you're renting an apartment. For example, you're paying a hundred dollars a month for the space for the next seven or eight years. A percentage would be a percentage of the receipts that the building takes in. For example, if we agree to pay 50%, we're paying $50 a month.

If the building produces a hundred dollars. 

Carol Ott: I see. And you had described to me earlier that, you had one client who negotiated with, or you negotiated with them a mixed contract. And how does that work and what, why did they want that? 

Denise Savino: I think especially in a seasonal building or a building where there's some ups and downs, maybe some snowbirds or something like that.

They want the benefits of the peak. If you have a building maybe in Long Beach where there's heavy usage during the summer months, they want their a hundred dollars and maybe 50% in excess of a certain number. So they're guaranteed their flat rate when things are status quo, but they could be assured additional money if business is good, or extra good. 

Carol Ott: I see. And that kind of contract negotiation, how does that work? Is it the board, is it the lawyer? Is it a managing agent? Who works with you? 

Denise Savino: All of the above. It's a good, it's a loaded question, but it really depends on the property. We've dealt with, all of the above. 

Carol Ott: Okay. And what would be your advice for boards ? If they at the moment their current laundry room contract is either up or coming up, and they're long, so it's a significant event.

What would be your advice as they look for either a new vendor or perhaps negotiate a new contract with their current vendor? 

Denise Savino: Like anything, I guess due diligence, talk to references, look at other existing facilities. It's okay to ask a vendor how many locations do you have in this neighborhood?

How accessible are your technicians? How quickly will you respond? They have every right to ask questions that are pertinent to service. 'Cause this industry is all about service. 

Carol Ott: And if they have a current contract, that needs to be renewed? What are the things that often you're asked to do that might be different from their current contract?

Denise Savino: Okay. Now would it be us , or is there another party involved? 

Carol Ott: No. Let's say you. You have a current contract and I assume it's you and all your other competitors. 

Denise Savino: It's usually a level playing field. We're all playing with the same ideas.

Usually, they want new equipment: new contract, new machinery. What's the latest energy efficiency? What's the best system? What's the newest and the greatest? Well a lot can change in seven or eight years and most ask for the latest in technology. 

Carol Ott: If they ask for the latest in technology, that means I assume the equipment has to change.

So from your, or from the vendor's point of view, that's an additional investment, yes. And so the terms, could one, expect the same terms in the contract? How do they change? I know it's a case by case basis, but --

Denise Savino: Right. It really depends what the co-op is after. Some want the amenity of a central facility.

They're not so much worried about the maximum dollar back to the building. Some are interested in the maximum dollar, so you have to negotiate based on what they're looking for. Usually we don't raise the price in a seven year or eight year period, so we have to factor in the inflationary rate.

Should we charge a little more for the washer and the dryer now? Nothing is, no price are staying fixed anymore. So these are things you have to look for. 

Carol Ott: I see. 

Denise Savino: And discuss and work out with the buildings. 

Carol Ott: And just gimme a sense of if you have a current client and their contract is up or is going to be up within the year. For that client, what would be your recommendation in terms of how far in advance should they be looking at the contract, reaching out, perhaps renegotiating it. What is the timeline there? 

Denise Savino: It really depends on the building, but if they wanna talk to other people and you know, the more people you talk to, the more educated you become. A lot of people start a year in advance or six months in advance of the contracts, and so then they can make the necessary decision.

Other contracts, maybe some of the big box providers have these automatic renewal provisions. So things they wanna start early so that they can properly notify people because they don't wanna get stuck if they're not happy with this service for another how many years. 

Carol Ott: Okay. Thank you very much.

I think this was really informative. Thank you. 

Denise Savino: We appreciate the opportunity. Thank you, Carol. Always a pleasure.