A stores potential percentage

[Duane]

I was thinking (my wife gets scared when I do this) but has anyone ever calculated a stores total potential then divide what a store is doing by the potential number to get a percentage?

Example

Washers and dryers only (no drop off, vending, etc.)

1 - 50# washer at $4.00 can run (1440 min in a day/ 25 min per cycle) 57 times per day for a total of $228 per day

4 - 35# washers at $3.50 can run 798 (57 cycles times 4 washers) for a total of $2793 per day.

Do all this for each washer, then add in 45% for drying to determine your stores potential for one year.

If a store has a potential of $1,500,000 per year and is doing $150,000 then it is doing 10% of its potential.

What would be a good % of potential?

Would you need to adjust for stores not open for 24 hours?

Has anyone ever done this before and do you think it would be a good tool when purchasing a store?

Just thinking.

[Howard]

It is called capacity. Manufacturers do it, service centers ot it, telemarketeers do it, saleman do it, etc.
It means zip unless you are actually at 80% use or better and still expanding.
In our business, cash flow is the standard measurement and will probably always remain so,

[ajay]

I"m sure you can build all types of models of measurement. But the real measure is what you take out of the machines. With that you have a real good idea of turns you're doing, in essence measuring usage. How do you measure throughout the week though, since a typical laundromat does as much on w/e as it does during the week. There are so many unknowns, so why not go what you do know. measure how you're doing by counting customers by the hour. figure out how much they're dropping in machines on average. then based on your capacity(floor space), you can determine how many you're servicing or number you could service by doing something different(i.e. adding attendant, w&F service, pick up service, drop off service, commercial accounts).

That's all I can think of Duane, sorry don't have too much experience with statstical analysis of the unknowns.

ajay

[Fred50]

I have seen several distributors show forecasts for stores based upon % of capacity - 25% is the most popular. I think this has a big BS factor in it! Why? Because if you extend your hours, it doesn't necessarily mean more business.
I think that turns in general are a better overall stat to use and certainly gross and net work well for me.

The big issue that has been discussed many times on this forum is that it is not always possible to lure new people in on your slower days/hours. I guess the answer is to do whatever you can to increase your business overall.

Hope that helps!

[Anonymous]

Mark, how are turns per day different than percent capacity? Both are an indication of how much the machines are being used. Distributors claim that the "average" is 20-25% capacity or roughly 5 turns per day - the figures work out the same way.

When you calculate % capacity you have to be careful, as a machine that takes 25 minutes to run does not have a 25 minute cycle time, that cycle time is more likely about 40 minutes under a best case scenario. You have to factor in the time it takes to load and unload it.

Actually I would think % capacity is a better number to use than turns per day, as you could hypothesize more turns per day than actual capacity would allow you to operate.

All these things are just mental mastrubation anyway, but they are fun ;)

[Fred50]

Kirby,

You got it. It's all just BS. You can forecast all that you want, but results are the only thing that really matters!

It is possible to overstate TPD by more than capacity, but I guess that I'm more partial to TPD because I can relate it to how many cycles are run more easily. Using % capacity, you get into sticky issues about the downtime between cycles, the length of a wash cycle (machine and sometimes user specific) and other stuff.

Bottom line: Only the bottom line counts, so do your projections based on ceiling tiles as a percentage of floor tiles if it makes you happy!

[Anonymous]

No, since there is more ceiling area than floor area one would have to do it as a percentage of floor tiles over ceiling tiles to come up with a number less than one :D


Either one of the ratios (TPD or % capacity) is a good starting point to see if a concept makes sense. BUT and its a big BUT, you cannot go with the theory that if you build it they will come. You have to look at the location and the competition and use good business sense.

[Matt600]

To put this another way:

Percentage Capacity = TPD divided by (HPD muliplied TPH)

Where HPD = Hours opened per day and where TPH is the number of turns per hour.

For example 5 turns per day assuming opened 15 hours and 1.5 turns per hour than % capacity would be 22 percent.

If you wanted to know what capacity you need to obtain for a
particular day than turns per day could be adjusted for that. For
example, if you thought that the business would obtain 25% of its business on Sunday than TPD(Sunday) would be TPD multiplied by 7 multiplied by 25% equaling 8.75. And % capacity on that day would be 39%.

Now I know that people here would intuitively know by walking in to a store (if done over a long period of time) what income a mat was doing or at least give them some idea what it was doing by the amount of trafic in the store. An inexperinced person like me would have no idea. I think the % capacity approach would give the inexperiened person a way to predict the income of a mat. For example in the above example one would expect 39% of the machines to be used (on average) when inspecting the mat on a Sunday.

I realise that the variation in use on a particular day may be that
great that one would have to inspect a mat over a long period of time to predict the income, however, I think it is another bit of
information (along with the book method and the water analysis method) to consider. I also think that thinking in terms of % capacity as opposed to turns per day is more useful in this situation even though you are looking at the same thing from a different angle.

On a related matter, in this country given the industry standard cost structure, 5 TPD would give a 23% return on investment after taking into account all costs including managemnet fees and compensating the owner for any other hours he/she puts into the business, depreciation, (only expense excluded would be interest on any borrowed funds) etc. Would that be the same in the US.



My two bobs worth
Matt

[pete f]

math MAtt600 acal joking.. you guys do have good beer down there.. Some time ago our friend HL posted about capacity in a real form, how it affected people movement thru his mat. I do not rememeber the numbers, maybe he can recap it if HE remembers the numbers? You can not run at 100% efficently, people would be cheek to cheek with no room to move. I have never done the math for capacity, I just watch the coin boxes.
This is where Duane and others have the knowldege of thier print outs, but miss out on that first hand experiance ever so many days emptying out washers and dryers and seeing which ones are fuller than others. That is how I measure capacity and judge how well machines are used.

[Matt600]

Pete f

Now there is a subject that I can comment on from plenty of experience, BEER. I come from Brisbane where they make the best beer in OZ namely XXXX (pronounced fourex, no it’s nothing to do with porno movies). Brewed right next door to where they play the greatest game of all i.e. Rugby League. 4 BPH multiplied by 3 HD equals 1 DGT. Where BPH is Beers per Hour and HD is Hours Drinking and DGT equals Damn Good Time.


Matt

[mike]

I think the floor tile to ceiling tile ratio is the best formula to go with.

By the way, Canadian beer is the best !

Australian beer APPEARS better because Australians can't hold their beer well, so it LOOKS like their having more fun.