Angelenos might be hard-pressed to find a parking spot for less than $2. But if a new dry-cleaning franchise is successful, $1.99 might be all it costs to clean everything from a wedding dress to a goose down comforter.
That’s because the co-owners of 10 Planet Fitness Inc. franchises in Southern California are planning to develop 95 Zips dry cleaners in Los Angeles County over the next 15 years.
“Everybody asks the same questions: Why? How can you do it?” said Shawn Bishop, who has partnered with fellow Philadelphian Michael Rosefeldt and West Hollywood’s Joe Bernatowicz in the franchise operations.
Bishop, in Los Angeles to scour for potential Zips locations, added, “It’s just a change in the way everyone thinks.”
The development agreement with the trio represents the largest expansion yet for the Greenbelt, Md.-based dry-cleaning franchiser, which has more than 40 franchises on the East Coast. In California, the partners are negotiating for a site to open a debut location in Newport Beach by November. South Gate and Costa Mesa stores are planned to follow.
But an out-of-the-gate foray into a competitive local market flooded with mom-and-pop operators is not automatically guaranteed to clean up.
“They’re really going to have to have a good marketing program because the competition next to them isn’t going to give up,” said George Archibald, executive director of the California Cleaners Association, an industry group in Fallbrook. The partners will also not be the first entrepreneurs left starry-eyed by the business prospects of solvents and stains.
Panda Express co-founders Andrew and Peggy Cherng announced in 2010 they would expand beyond Asian food to open approximately 200 Tide Dry Cleaners throughout the United States, with many in California. Though some have opened in Las Vegas and Arizona, not a single California location has opened.
Stuart Williams, a spokesman for Tide, a Proctor & Gamble subsidiary, said the company was concentrating on other areas of the country first.
“Real estate is always a factor to consider for all retail concepts in all markets, and California typically takes longer to develop locations due to the demand and costs associated for great sites,” he said in an email. A spokeswoman for Panda Express declined to comment.
Securing the smaller 4,000-square-foot sites that Zips would use, however, might not be a problem for entrepreneurs who are familiar with the L.A. market.
“I believe opportunities in that size range will be plentiful for them,” said Scott Burns, an executive vice president in the West L.A. office of commercial real estate brokerage Jones Lang LaSalle Inc., adding that such locations were pursued less frequently.
Doable feat
To succeed, Bishop, Rosefeldt, and Bernatowicz estimate each location will have to clean 1,600 to 3,000 garments a day, a goal they said is doable by employing the same high-value, low-cost model they use in the world of fitness.
Like Planet Fitness, which offers $10-a-month memberships, Zips takes a similar no-frills approach: no delivery service, no alteration service until a store is 100 percent stabilized, no cashiers, and no off-site cleaning facility.
“There’s nothing different about what they both offer. It’s just for the price-savvy consumer,” Rosefeldt said. “They’re both phenomenal buys.”
Bishop added that economies of scale would help keep prices down, too.
“A franchise can get such buying power that the mom-and-pops can’t keep up and the bigger you get, the lower price point you can charge,” he said.
Covering costs
The foray into the L.A. market will not be cheap. In addition to real estate costs, the franchiser charges a $50,000 fee for each unit and the average location will require an investment of $850,000 to $1 million in equipment and build-out. To reach their goal of dominating the market with $1.99 dry cleaners, the partners would need to pony up more than $100 million. They say they have access to private funds to reach that goal, though they would not identify investors.
To cover costs of staffing, rent, insurance, and other associated costs, the Zips locations have to move through roughly 1,000 garments each day.
“It’s definitely feasible,” said Archibald, adding that another member of the cleaner association processes a similar number of garments. “They see something, that’s why they’re doing it.”
