Dry Cleaning Business: The New Bubble?

By: Venice Raymond
One successful model of dry cleaning business is the one belonging to Ken Langone. He founded Home Depot, and he also contributed to raising $50 million for another dry cleaning business, called Micell Technologies Inc.

The direct rival of Ken Langone, was Zoots, a firm located in Newton, Massachussetts. They also raised $50 million in private equity. A more modest investor, from Pleasanton, California, Payam Zamani, head of PurpleTie Inc., also had $8 million gathered from investors, such as Debi Coleman.

Such businesses appear all the time, and money are flowing from all the areas, like venture capitalists. A bubble resembling that of the dot-com seems to be underway.

Let�s take a look at the history of the dry cleaning business. This was quite fragmented, as the profits are not that big and the hours are long.

Changing the face of dry cleaning business was the goal of Micell Technologies, a company started in 1995. They intended to used liquid carbon dioxide to ensure a better cleaning. They transformed into a franchise and the first dry cleaning operation, called Hangers, opened for business in 1999, and the number increased up to 40.

The franchise may soon find a stop in expansion, as the technology used is expensive and the fee is not to be neglected, either.

Even if the price is big, owners of the business say that the expense will be covered and the reward will not fail to show. Some facts contribute to this claim, like the Wisconsin dry cleaning business that bought the Hangers franchise and knew a growth of 40% in sales.

Logistics and technology is where the businessmen focus their attention when it comes to such businesses.

Home pickup by truck was one ides of Zamani from PurpleTie. Orders could be placed by phone or online, and the rest was up to the dry cleaning company.

This was intended to reduce the costs of having dry cleaning machines everywhere. With the help of some UPS executives, Zamani put the new idea on wheels.

Even if the trucks were supposed to travel on crowded highways in San Francisco, Zamani still believed in making $10 million revenues in 2001.

On the other hand, Zoots registered $30 million in sales in one year, with expectation of double this figure, in 2001.

Zoots also practices home delivery, but it also has storefronts, where people can come and dry clean their stuff.

Zoots also innovated ways to draw in customers. They allowed customers to come after hours, when the store was close, enter the vestibule of the store, and, with a swipe of the credit card, to get their clean clothes from a locker, using a PIN.

Perchloroethylene is the name of the cleaning substance that is in use in the US for many years. But news about the substance being a carcinogen shook down the industry.

A lawsuit was ensued, but that was not the only problem. The problematic substance limited the profits of companies, especially those new in the industry.

On the other hand, people do not seek to work in such hazardous environments. Law wages are another disadvantage.

Innovations drive forward, and new substances will appear on the market to replace the dangerous one. An example is the technology promoted by Micell Technologies, with liquid carbon dioxide. Also, solvents that are made from petroleum gain in popularity.

The battle continues, and the future will show which ones will be the winners in the dry cleaning business.

Read more articles from Venice at www.articleclick.com. She is now a regular contributor to this online information resource.