By Bernie Cahiles-Magkilat
At first glance, it seems that a laundry shop business would cater to the mid and upper classes, but a closer look at its operation would reveal it is more geared for those in depressed and densely-populated urban areas. In an area where water can be scarce and space is limited for clothes to hang dry, a laundry shop nearby is a heaven-sent solution.
This is what RYAN M. LIM realized when together with his siblings and cousins, they put up Save5 self-service laundry in the Binondo area. Save5 provides savings to every family on 5 variables: money, electricity, water, effort and time.
“Our mission is simple; it’s embedded in our name. We want every family to SAVE on 5 things; Money, Electricity, Water, Effort and most importantly, Time. By reducing time and effort for laundry, we provide more quality time for the family,” says Ryan, who leads with his siblings and cousins in this venture.
The company vision is to put Save5 Self-Service Laundromat in every corner and every community across the Philippines. With this vision, Save5 continued to grow from 1 store in May 2016 in Tondo to 45 stores in 9 cities in Metro Manila in just 3 years.
“We are looking forward to reaching out to more Filipinos, providing families quick, professional and dependable laundry service. We want to elevate the standards for the laundry industry and build SAVE5 as the most preferred and trusted brand in the laundry industry,” says Ryan.
Originally, the group’s first laundry shop was to service the catering business of his brother in Balut, Tondo, near the Smokey Mountain area. Together with his siblings and cousins, who grew up in Tondo, they pooled an initial investment of ₱1.8 million for the first venture.
“We were not thinking to cater to the needs of the people in Tondo,” recalls Ryan.
But kins are so familiar with the area where they used to bike around as kids and saw how the people of Tondo handwash their clothes in an environment where water can be scarce and not enough space to hang their clothes dry.
They thought that instead of spending their day off washing clothes, these people should use their free day to relax and rest with the family. With that they have to offer a laundry service where people in the area can realize savings in money, electricity, time, water, and effort. Thus, the Save5 brand was born in 2016.
The first commercial Save5 self-service laundry service opened for the people of Tondo in May 2016. It was not a full-service laundromat, rather a self-service laundry that allows customers to wash and dry their clothes.
Save5 offers ₱65 fee per 8 kilos or ₱8 a kilo. Customers can also buy their supply of detergents inside the shop at parity prices with the supermarkets.
On opening day, 60 to 70-year old customers would tell them how they have been of big help to them as the facility eases a big household chore among families in the area.
“As the rainy months of June and July came, more people flocked to us to wash their clothes as there is no place in their homes to dry their clothes,” recalls Ryan.
“We feel good about it and we enjoy our efforts that we keep on opening new outlets,” says the Ateneo de Manila University educated young CEO.
The market response was overwhelmingly unexpected. They ran out of spaces for people as long queues extended outside the laundry shop.
The situation forced them to open another outlet nearby, just 500 meters away from the first commercial branch. But instead of the expected reduction in the number of customers at its first commercial outlet, customers continue to grow.
Ryan could not believe how people in a depressed area can shift quickly to automated washing machines from the manual labor.
“We did not expect this quick shift from handwashing to automation,” he gasps. He, however, rationalized that people in a depressed area need to shift to faster and easier laundry system because they have to save time and effort because they need to work on a daily basis.
“With the amount of clothing they use, they really need help to ease the burden of handwashing,” he adds. Save5 has to educate these people especially on the delicate fabrics.
With the automated washing machines, it is easier now to manage household laundry. Laundrywomen or labanderas, who used to wash clothes of different households, have now found less laborious jobs such as sales clerks or venture into small businesses. “They have upgraded themselves to better and lighter workloads,” says Ryan.
The business was so robust that Save5 earned ₱7 million from May to December 2016 alone.
“We just kept on opening new outlets,” says Ryan, who finished Bachelor of Science in Management Information Systems.
The young group was just content with 5 outlets at first, but Save5 has now 45 outlets in 9 cities in Metro Manila in just three years. Of these outlets, 40 are company-owned and 5 are franchises.
The young Save5 entrepreneurs are under the tutelage of the Francorp Philippines, who prepared their franchising package. The turnkey franchise requires ₱1.8 million in investments, including 7 washers and driers with quick activation in 3-4 weeks.
The cost per machine, which is imported from the US, is ₱175,000 to ₱180,000 so the washing machines in one outlet already costs ₱1.2 million plus construction cost of ₱400,000 and ₱188,000 franchise fee. The return on investment is also expected in one and half years to two years.
“If, unfortunately, the business location would turn to be a flop, you still have the machines to sell or move to another location,” he adds.
Their reliable and heavy-duty machines can last for several years. They have also ready parts to service and they have maintenance people to address problems of their franchises.
Each outlet, which would operate 7 to 10 pm, has 2-3 staff. Save5 staff receives regular salaries aside commissions.
“This is a simple job. Actually, they can fold clothes while watching TV,” he adds.
While other laundry shops are concentrating in the condos or near schools, Save5 would like to focus on the needs of the people in depressed communities.
When they started their competitors are full-service laundromats where customers have to wait for 2-3 days to get their clothes back.
At Save5, a customer would be able to wash in 34 minutes and bring their clothes home to dry. If a customer wants to use the drier, he would spend another 30 minutes for additional fee.
“It is very economical,” he adds.
Now, Save5 has added other services like folding the clothes and loading them. They have also partner with SWOSH, the biggest chain of motorcycle riders to pick up clothes and deliver to the nearest Save5 outlet for washing.
With a robust business, Save5 is targeting to establish 300 outlets in 10 years with the bulk still in the Metro Manila area.
Ryan believes there is still enough room for further expansion.
There are an estimated 4,000 laundry shops in the Philippines but studies showed that neighboring countries such as Malaysia has more laundry shops competing against each other.
One big challenge among its applicants is location. Laundromats have sprouted but these are mostly garage type and mom and pop store models with not much focus for future expansion. Save5 is in for the long haul.
Aside from their competitive pricing, Ryan said they tried to make their outlets look presentable, neat and clean. Being the pioneer in self-service laundry, they are trying to offer professionalized service.
“Sales are increasing as we have more branches,” adds Ryan noting that gross sales grew 45 percent last year. He expressed hope to repeat the performance this year as all 45 shops are doing well.
Their card operated system is also fool proof and provides easy audit and tracking of expenses.
“We teach our franchises how to run the business,” says Ryan. “If there are no customers then there is no water consumption, so they cannot lose.” Save5 has already established the laundry economics including the number of loads, kilos and washes to achieve a targeted ROI that they share with its franchises.
Ryan said they are keen on granting franchises outside of Metro Manila. Their franchisees are mostly retirees and seafarers, who like to start their own business.
Aside from franchising, Save5 offers to build, set-up and sell an entire laundry shop. That could be cheaper but Save5 does not provide guidance and marketing assistance anymore unlike a franchise arrangement where the owners can partake in different marketing promos. Save5 is also into the distribution of washing machines.
Last year, they raffled off two motorcycles and other home appliances. They also partner with soap manufacturers, which provide free detergents for the first few customers during the opening of a new outlet.
“We try to make it fun for our customers because we would like them to come back to us,” says Ryan noting that the “suki” system works best in this kind of business.
“I realized that I grew up in Tondo so I am really happy that we are able to help alleviate their workload at home,” says Ryan, who grew up in Gagalangin, Tondo. Although his parents have a textile shop in Divisoria and he went to a Chinese school in Binondo, Ryan said they were not raised like rich kids so he can empathize with his neighbors.
“It feels good to be of help to the community through our laundry shop.”
“There are so many enlightening stories so we’re encouraged to open more outlets,” he adds. With higher wages, it is no longer viable also to hire housemaids. With that, more people now resort to washing their own clothes at the laundry shops.
“Save5 is not just a business but a big help to the people in the barangay. We feel good about it and we enjoy our efforts that we keep on opening new outlets, help the masses and make money along the way,” says Ryan.
One thing that Ryan discovered is that Save5 users, no matter how poor they may be, are meticulous when it comes to taking care of their clothing. According to Ryan, their customers buy the best detergent as they always want their newly washed clothes to be perfectly clean, smell clean, and fresh.
“It is so surprising that they don’t scrimp when it comes to washing their clothes,” says Ryan.
Save5 also hires their staff from the neighborhood. They have 100 staff so far and those working at the laundry are mostly not college graduates.
For Save5, they have high efficiency washing machines. They are using inverter machines to save on water and the environment.
One challenge is the high volume sachets of detergents that customers use. “We want to get rid of these sachets because of their environment impact,” adds the 40-year old executive.
The other challenge is the cutthroat competition. But Save5 has been able to overcome this because even if other brands offer cheaper rate because customers still prefer their professionalism.
Ryan also makes sure they are very hands on and running their business professionally. Even the laundry staff wears uniforms. They have a good communication flow in the country. “It’s very corporate,” he adds.
“Coming from Tondo with Chinese parents, we we’re really trained to look after a business and grow it,” he adds.
As a family business, the brothers and siblings settle issues through votes where the majority wins. “We respect each other’s decision because we have our own voice in the group,” adds Ryan.
Ryan said that having your own business enables you to be your own boss, but this does not mean you can be complacent.
“In our case, we run the business on a daily basis, design it, visit each store, and grow it,” adds Ryan, who looks up to Mark Zuckerberg for revolutionizing IT in the same way that he revolutionized the laundry shops by putting up outlets just 300 meters away from each other in a densely populated urban area.
Aside from hardwork, Ryan said they are lucky because they came in at the right time. Had they come in 10 years earlier, they could have been too early with no patronage.
“Timing in business is important,” adds Ryan but stressed that the work ethics instilled by their parents sustain them all these years.
“We just want to help one community at a time because we want
to help ease their daily chores,” says Ryan pointing to their tagline “Pagaanin ang Buhay”.
Their slogan may sound cheesy, but “Every time we talk to customers, we found out again and again that this is really true. This is life changing for most of them.”
“We did not even increase price since we started operation three years ago. It is not because we don’t want to take advantage to grow the business nor it is because there is competition, but because we are into public service and the masses are our market and we are from Gagalangin, Tondo, which is part of our growing up,” concludes Ryan.