🍟6/26/2023 – The First Nationwide Laundry Franchise
SPONSORED DEEP DIVE
A Laundry Empire In The Making
Alex Smereczniak and Dan D’Aquisto met in 6th grade, where they were middle school students in Red Wing, Minnesota. The pair have been best friends ever since, and are now co-founders of both 2ULaundry, and LaundroLab.
2ULaundry, the first business the duo founded back in 2015, is a laundry service where they pick up your clothes, wash and dry them, and return them the next day. That business has grown steadily and now operates in 7 cities, with plans to expand to 20 more over the next 18 months (they also recently acquired a major competitor in Houston).
LaundroLab, which was founded in 2020 and came about to solve a pain point for 2U, has been franchising since 2021. Less than 2 years into their franchising efforts, they’ve awarded 108 franchise licenses between 29 LaundroLab franchise owners, and nabbed a $20M investment from Level 5 Capital just a few months ago to fuel national expansion.
Together, 2ULaundry and LaundroLab present an enticing tech-enabled franchise opportunity in the old, but multi-billion dollar laundry industry. The result for franchise owners should be far better results than your traditional coin laundromat.
Alex Smereczniak attended college at Wake Forest, while Dan D’Aquisto stayed in state for his college degree in Minnesota.
During his time at Wake, Smereczniak started working for an on-campus laundry delivery service called Wake Wash. He’d eventually acquire that business with a few friends, and during his time at Wake tried expanding to other campuses.
The expansion plans never panned out, so Alex and his partners sold the business to ambitious underclassmen looking to make a buck, the same way Alex got into the business in the first place.
While that proved to be the end of Alex’s time with Wake Wash, it wouldn’t be his last venture in the laundry world.
Following graduation, Alex took a job at Ernst & Young as a financial services consultant in Charlotte, meanwhile Dan D’aquisto was working in Minneapolis for a local startup.
The pair of best friends were ambitious 23 year olds, and although they lived in different cities, would call each other often and swap startup ideas when they weren’t working. Realizing the energy they had, and how unfulfilled they felt in their careers, one thing led to another, and ultimately Dan moved to Charlotte to co-found and launch 2ULaundry.
2ULaundry’s Scrappy Beginnings
In 2015, the tech economy was booming. Silicon Valley investors were funding tech startups right and left, with a particular affinity for the “Uber for X” business model.
Legitimately hundreds of Uber for X startups were funded for just about every service imaginable. Only a tiny percentage found some form of success though – such as Uber for dog walking (Wag), Uber for alcohol delivery (Drizly), and Uber for grocery shopping (Instacart).
99% of these startups failed, and as is normally the case, in retrospect many of the business ideas were doomed from the start:
- Heal – Uber for doctors
- Shortcut – Uber for haircuts
- JetMe – Uber for private jets
- Plowz – Uber for snow plows
One failure I noticed particularly was Washio, which aspired to be uber for laundry and dry cleaning, and raised $16.2M from 2013-2016, before shutting down.
2ULaundry is effectively a Washio competitor, but Alex and Dan opted for a slower, more controlled approach, after seeing early success with 2U.
They weren’t venture funded, so 2U literally began with Alex and Dan driving around Charlotte in a jeep, picking up clothes, washing them, and dropping them off.
The original premise was that millennials with above-average paying jobs (consultants, investment bankers, etc.) would pay extra for laundry due to the convenience. While they found that to be true, an epiphany moment was when they got a call from a mother who was using 2ULaundry’s service. She was calling simply to say thank you, as between raising multiple kids and other activities, laundry was an arduous task that strained her time and even her relationship with her husband.
Alex and Dan would find that the average family spends ~36 hours/week doing laundry, and 2U was the solution to get that time back. They’d eventually get accepted into Techstars Atlanta, a renowned accelerator that elevated their business, enabled them to raise a $2.5M investment round, and granted them access to mentors.
There are 2 kinds of problems a startup faces – losing problems, and winning problems.
Losing problems are as you’d expect them to be – a product or service with no product-market fit, poor economics, poor leadership, etc.
Winning problems however are problems that come about because of success and customer traction. 2U was facing winning problems, as their service model was at a point where scaling became difficult.
Unlike the defunct Uber-for-Laundry competitors, 2U always took a different approach to their business model. First, they focused on tier 2 and tier 3 markets, rather than jump into an expensive market like LA, NYC, or SF. This gave them time to hone in on their model in a more inexpensive city, where their competition was certainly not operating yet.
Secondly, rather than contract with dozens of delivery drivers who washed and dried clothes (i.e. similar to the Doordash or UberEats model for food delivery), 2ULaundry hired W2 employees who worked full-time with them. Then they partnered with underutilized laundromats, which guaranteed washer/dryer service in off-peak hours (typical laundromats do the bulk of their revenue on the weekend). They essentially vertically integrated the entire pickup/delivery process, which allowed them to provide efficient, static routing versus being on-demand order takers.
It also enabled Alex and Dan to pay their employees a fair wage, and have a dependable service that could logistically pick up & deliver clothes in the with quality control at the forefront.
But as their customer base in each city (Charlotte and Atlanta primarily) grew, they had to partner with more laundromats, which was proving to affect their quality and ability to scale having to deal with stubborn and stodgy old school business owners. They found the average laundromat to be dirty, dingy, coin-operated only, and didn’t allow them to scale.
This gave them the idea: we need to build our own laundromats.
LaundroLab is Born
The original LaundroLab (which was actually called “The Laundry Room”), wasn’t meant to be a franchise. The thought was if they could break even on the business, while providing dedicated and modern washer/dryers to their 2U business, then it’d be a net positive.
But the location blew away their expectations, as the revenue from all the customers that came in to do their weekly laundry was enough to be cash-flow positive. This was during covid 2020 nonetheless, when laundromats were deemed an essential business and thus never had to close.
Given the success, the pair took a deep look at the laundromat industry generally – and what they found was an ancient industry full of complacent mom & pop competitors.
The majority of laundromat customers are working class people, and the laundromats at their disposal are typically coin operated, and not exactly the cleanest or most enjoyable places to be.
Not to mention, it’s a time-intensive task as many have to stick around for the duration of washing & drying to make sure their clothes don’t get stolen.
LaundroLab provides a far higher quality experience, with the right touch of modernity.
Each LaundroLab is clean, bright, and manned by a friendly employee at all times. Customers can use coins to pay, while also having the option to use mobile phones or credit cards.
For slightly more money, customers can pay the manager to switch their clothes in between washing/drying, so that the customer can go grocery shopping or do other tasks during this time.
In the event a customer sticks around, LaundroLab doubles as a near community center that can entertain entire families. Each facility has wifi, vending machines, a few arcade games, and even a play area for children.
Relative to your typical laundromat, LaundroLab is providing a better customer experience by orders of magnitude. It’s clean, provides modern machinery and payment options, offers more convenience, and has a customer-centric focus in areas that typically aren’t used to such modern facilities.
In my call with co-founder Dan D’aquisto, he referenced multiple times the goal for LaundroLab is to be known as the “Chick-fil-A of laundromats”, a tagline that shows they’re focused on customer service as much as providing a great product.
Level 5 Capital
Since franchising in 2021, they’ve had near immediate success. Though it’s a more expensive buildout in the ~$1.7M range, the franchise shows great cash flow in their FDD, with the original location cashflowing $250,000 in EBITDA last year.
The best part is, franchisees also will be the dedicated partner of 2ULaundry, meaning exclusive revenue that no other laundromat can offer.
Given this opportunity, I wasn’t surprised to learn that LaundroLab has sold franchises to sophisticated multi-unit operators who come from legacy brands like McDonald’s and Planet Fitness.
More than that, it made sense when Dan told me of their investment from Level 5 Capital, the franchise focused PE Fund that exclusively invests in large footprint consumer businesses. Their track record is impressive, as L5 has grown Corepower Yoga and other franchises to nine-figure valuations, thanks to their capital, real estate, and operating expertise.
LaundroLab can now utilize Level 5’s expertise, as the $20M investment brings the total raised by Alex and Dan to $30.4M.
The two have come a long way since driving around Charlotte in a jeep when they launched 2ULaundry.
They’ve outlasted what is now a graveyard of laundry and uber-for-x startups. And with LaundroLab, they’re not only building an attractive 4-wall business in each city they enter, as they’re also building out the supply side for their 2ULaundry business.
LaundroLab looks to be the missing ingredient to building a national laundry delivery service, and in the process of doing that, franchisees can benefit from this upside with what’s simply a superior laundromat relative to the status quo.
If you want to learn more about LaundroLab, reach out to them here: https://www.laundrolabfranchise.com/.
And if you don’t want to do laundry anymore, signup for 2ULaundry here: https://www.2ulaundry.com/
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