Speaking at a session on setting successful business models, Narayanan Raghavan, CEO, Rent-A-Towel shared nuggets of wisdom about designing a sustainable business plan, the future of rental linen, choosing sustainable equipment, and an important tip for new entrepreneurs.
Sustainable business models
Processes, technologies and business ideas must come together in terms of running efficient laundry plants for a venture to be profitable. Everyone talks about sustainability, but we must also know how to run a sustainable business. Any business that we do, whether it’s small or big, has to be recession-proof. So the money needs to come in from the business, irrespective of the loads that are coming into the laundry.
New business models have to be brought into the industry, and it is our responsibility to go and educate customers and move them towards newer business models. This should always be a win-win situation for both the service provider and the customer.
Concept of rental linen
We started off linen rental as a concept in the Middle-East in 2015 to ask hotels, why do you want linen inventory to be kept in the hotel and struggle with the laundry process, whether you have an in-house laundry or you work with a commercial laundry service provider?
We came up with a model where the service provider comes in, brings his own linen, processes it after each use and provides it to you on a daily basis at a high level of hygiene and cleanliness that is required.
At the end of the day, it is the service provider’s linen that is going to be used by the hoteliers. As a service provider, we will be doubly careful in terms of where we are processing used linen and what is the cost of processing, how do we reduce the cost of processing in the laundry, and how do we use laundry aggregators in our business so that our unit cost of production is lowered, and our customer gets the benefit out of it.
This business model is the way forward for hoteliers and the healthcare industry. I’m sure many players will come and test this model in India as well, since there is a lot more opportunity to try it out in every state. Wherever you have a laundry business, you should try out these models and make sure that your process is efficient enough and you have trained resources on the floor so that your production cost is low and at the same time, your profitability is maintained.
Choice of linen
Linen used in the hospitality industry needs to be analysed according to the textile used. Is it durable? Is there any shrinkage? These need to be tested before they can be procured at the bulk level. Technical checks are necessary.
Nowadays, everybody knows what thread count is being used for bedsheets, duvet covers and towels, and how many loops; there is a ratio in place. Everything needs to be taken into consideration.
I have a question; can anyone guess what is the acceptable level of the ground to pile ratio for towels? What are we using? It is a 1:6 ratio which is the acceptable and standard level. But the ground level means the pile, the length of the loop should be 6. If it is 1 mm, it means it is 6 mm. Bedsheets need a thread count of 300-400 per square inch.
Similarly for towels, ground to pile ratio is more important. If the loops are less, the ratio is less than 1:6 which means you have a shorter pile which will not last long. And if the towel piles are more than 5, then there would be breakage soon. All this needs to be taken into consideration.
One also needs to understand the components of detergents, as also of the softener and sanitising agent.
In India, we still use the conventional method. There is only wash and one rinse; this is still possible, but depends upon the degree of soiling. If there is a lot of soiling, we have to have a high rinse once more. By the final rinse, the alkalinity, which has increased to 12-14 will have to come down to 6.5; this is most important. Otherwise, whether it is a hotel laundry or an institutional laundry, when you do the calendaring, the scaling part will be there and will turn yellowish, if the rinse is not properly done.
Sustainability has social, economical and environmental components. In the environmental part, we have to reduce energy consumption also. Earlier, there were steam machines available, but nowadays, gas machines are also available. Propane gas, CNG or natural gas itself can all be used.
When steam machines are used, it takes about 15-20 minutes to heat up and the same amount of time to cool down. When the cycle is completed, it again takes some time to cool. But when gas heaters and ironers are used, heating and cooling are faster; they also consume less energy.
Passing on lessons
My advice to budding entrepreneurs who want to get into the laundry business is that they need to get their hands dirty from day one. You need to know what your production cost at the laundry is. If you don’t know this, you can never make any money out of it.
All business owners should know what they are doing and how they can profit from Day 1. They have to be fully conversant with the technology and processes, but they should also know the commercials of running the business. Only if you are familiar with all three angles can you become a profitable laundry business owner.