Dry Cleaners: Hidden Gold Mine or One Stain from Disaster?

At first glance, a dry cleaner looks like one of the simplest businesses in Australia.

Clean clothes.
Press shirts.
Collect payment.

But underneath the front counter lies a very different business.

A business built on trust.

Because customers don't hand over old clothes.

They hand over wedding dresses.

Designer suits.

Luxury garments.

And irreplaceable memories.

In this episode of Good Bad Business, Peter and Rod break down the Australian dry-cleaning industry using the MOAT framework:

Margin. Operation. Advantage. TAM.

We uncover:

• Why some dry cleaners generate surprisingly strong profits
• How pickup and delivery is changing the industry
• The hidden risks of damaged garments, customer claims, and reputation loss
• Why this is really a logistics and trust business, not a cleaning business
• The impact of remote work on long-term demand
• And whether a dry cleaner can realistically generate $1 million in revenue

You'll also hear why one ruined wedding dress can destroy years of goodwill, why convenience is becoming the industry's biggest moat, and why passive ownership is often a dangerous assumption.

Because in this business, the machine isn't the moat.

Trust is.

The question is:

Are dry cleaners one of Australia's most overlooked small businesses... or are they just one mistake away from disaster?

Listen now and find out.

Because we don't want you to get into a pickle. 🥒🎙️

If you’re thinking about buying a business,
 listen first.

If there’s a business you want us to break down,
 send it in.

And if you got value from this, share it with someone before they sign something they shouldn’t.

Because we don’t want you to get into a pickle.

Transcript

SPEAKER_00 0:09

Welcome to another episode of Good Bad Business. This week's episode are dry cleaners, the hidden gem, or is it slowly disappearing? And is that business slowly disappearing? And today I've got Rod once again, which is now our co-host. Welcome, Rod. Hey Peter, welcome, mate. Thanks for having me on. It's my pleasure, mate. So today we're talking about the dry cleaners and is it a particular industry that is still active? And we're going to break it down today. So I'm really looking forward to the latest episode. And not only is this episode proudly brought to you by our sponsor, which is Aventum Optium, it's also from Apickle. And we're the team that removes secured creditors from directors' home. So Rod, let's get into it. Sounds great. Interesting topic today, Peter. It is. It's definitely going to be a good one. I'm actually going to, I think we're both going to thoroughly enjoy this one because it is an industry that's been around for a long time. So is it still relevant? Let's find out. Imagine this. It's a Thursday afternoon and you have a wedding tomorrow. You pull out your suit out of your wardrobe, and there's a stain on the jacket. Your shirt is all wrinkled, and suddenly there's only one business that you care about a good old dry cleaner. And for decades, dry cleaning was one of Australia's most dependable small businesses. People wore suits, office workers commuted, wedding dresses needed preserving, and school uniforms needed cleaning. And life was predictable. But something changed. People stopped dressing formally because COVID happened, right? And work from home suddenly exploded. And suddenly Australia started asking, do we still need a dry cleaner? Because here's what's actually fascinated Australia's broader laundry and dry cleaning sector is worth approximately $2.5 billion. That's billion with a B. Yet the industry growth over the last five years has almost fallen flat. And at the same time, 72% of operators reported an increase in sales and average net profits of over 21%. So which storyline is true? Is this a quite profitable local business or a shrinking trade hiding operational headaches in the back room? And today, ladies and gentlemen, we're finding out. Welcome to Good Bad Business from A Pickle, the team that removes caveats from directors' homes. Each week we take an everyday business and analyze it using our moat framework M for margin, O for operation, A for advantage, and T for TAM, which stands for Total Addressable Market. And at the end, we'll answer two questions. Can this business generate a million bucks in the first year of revenue? And is it a good business, a bad business? Or if you're going to get one, are you going to get yourself into a pickle? Joining me today once again is Rod from Eventum Optium. Rod, welcome back.

SPEAKER_01 3:33

Thank you, Peter. I'm actually looking forward to this one. On the surface, it seems like a very, very simple business. But underneath, as we delve into it, there's a lot going on. So it's quite exciting to see. Uh I think a lot of people might be quite surprised at what comes out of this podcast, Peter.

SPEAKER_00 3:47

Absolutely. So audience, stay right to the very end, because this is going to be a cracker. So what's the origin story? So let's zoom out. Australia's dry canning industry, it's been around for generations. The industry publications actually date back to 1950. That's older than you, Rod. Geez, that is old. Finally, something that's actually older than you, mate. That's right. All those publications. There's no colour in those publications. Oh, I love it. Oh, finally, something in black and white. We're the dresses in black and white back then as well. That's what we really need to find out, I think, to today's podcast. But back then, there were businesses like Lawrence Dry Cleaners, dates back to 1939. Good old Lawrence, they're still around. I know. That's phenomenal. Me businesses look in the test of time like that, do they, Peter? I mean, look, we're in the restructuring space, Rod. And when you're in the insolvency sector, you tend not to see businesses that have been around.

SPEAKER_01 4:49

They say businesses don't last the first five years. And Lawrence from 1939, that's an amazing achievement.

SPEAKER_00 4:55

And that's why this particular episode actually fascinated me because the dry cleaners that are still around have been around for 80 odd years. We're in the insolvents in the restructuring space. So what are they doing right versus the businesses that we deal every day with? And what are they doing wrong? And so what lessons can we take out of today's podcast and actually implement a lot of those business models into the businesses that we deal with moving forward? So this is why this one really, really fascinated. It all it almost got the hairs standing up on the back of my back because obviously I don't have any in my head. So it's gonna be a good one.

SPEAKER_01 5:27

I was looking at this, I sort of uh coined it substance versus sexy. Um describe this business.

SPEAKER_00 5:33

We chatted about that, you know, before we jumped onto the podcast because we all crap on about AI this and AI that, and it's gonna take over the world. But it's the boring businesses that are still making money.

SPEAKER_01 5:45

Customer service, customer service, a product in need, and reliability and trust, all the old-fashioned values that you have stood the test of time as Lawrence Drycleaners test.

SPEAKER_00 5:55

Is that what we're missing with a lot of the businesses that we restructure? Are they too focused on the end result? Are they still focused chasing shiny objects? Which I know seems to be a big trend for a lot of business that we deal with. You're not focused, you're chasing shiny objects. Stick the basics. Are you a local business? Are you a national business? What is your product? Break down your products and focus on good old customer service.

SPEAKER_01 6:17

And business fundamentals. I think these days with the social media and uh access to technology, people see great stories, but they don't see the negative stories. And they look at a product, oh, I can make money here, they don't do the market analysis, they don't do the breakdown of break-even costs, profit loss, margin requirements, and all the boring but fundamentals get overlooked.

SPEAKER_00 6:36

Spoken like a true accountant, right? It always comes out, Peter. It always comes out, always get the best out of you. So not only Lawrence dates back to 1930, but Jeeves has operated since 1964. Wow. Yeah, and that's important. You know, they're there, they're reliable, they're dependable, and that's the whole point of these particular brands. They've been around for so long and they've gone through a couple of generations, and the families are still doing really well. And that's something that you and I talk about all the time, especially with your business with asset protection. It's the legacy. What is the legacy that you're going to leave within your business and within the assets in which you actually own? And that's important because dry cleaning isn't a fashion business, it's a trust business. And people just hand over a wedding dress, designer suits, luxury garments, expensive jackets. And the customers, they're not buying cleaning, they're buying risk removal.

SPEAKER_01 7:38

I think that's exactly why trust matters so much. I mean, one ruined garment, Peter, can destroy years and years of goodwill. We've heard the old story uh you do 10 good things and one bad thing, and the bad thing is one that everyone talks about. And unfortunately, in this industry, that's very sort of prevalent, and the trust and the goodwill and uh the reliability is huge. It might be boring, but it's what people are paying for and utilizing services for. Can you imagine if you stuff up a bridezilla's dress after she just got married? Not at all. Business destroying action if it uh because social media went viral.

SPEAKER_00 8:12

Thank God my wife dress come back perfect. Escape that one, Peter. The dry cleaner escaped that one. I would have got off on the hook on that one. So let's look at the business snapshot. Let's do a quick sidebar because most people think dry cleaners, it's just about cleaning a suit. And that's where they're wrong. Modern operators make money from wedding dresses, alterations, bedding and doomers, curtains, rugs, leather, corporate uniforms, and pickup and delivery. And the best operators, they aren't dry cleaners, they're garment care business. And one of the things that we always like to pinpoint in this podcast, and it seemed to be a bit of a trend, even with last week's episode, Rod, is that we just nailed down what the actual vision is of the actual business, which is a bit like sort of matcha that we spoke about last week. It's about the environment, that Japanese theme. If you can build something around that, you've got a scalable business. And with this particular sector, this business, I'll repeat it again, they're not in the dry cleaning business, they're in the garment care business.

SPEAKER_01 9:23

And I think most businesses, like we talked about Matcha last week, the vertical integration and cross-selling of a product, it's experience, it's a cross-selling, it's a whole package rather than just a product. And those that lie just on a mono product can often come undone. So people are buying the experience. And I think that's exactly with the dry clean business. It's it's increasingly, Peter, logistics business. Its biggest growth category, despite being a clean business, isn't cleaning. It's a convenience, it's a pickup, it's a delivery, it's the office partnerships, the locker systems they have. I feel that's where the industry is heading. And I know we talked uh prior to this, but my wife sends her donors and large items because it's inconvenient to do them at home. And uh obviously any prize positions such as suits for formals or weddings, it is one of those things where people are perfectly comfortable to pay a premium or pay a price for that convenience and for that service. And as you say, trust in this business is paramount because people are giving important objects, important items that they have to the service, and they're not willing to do it themselves because there could be a consequence of the reach out to the trusted partnership. And I think that convenience you see so many people picking up the dryer cleaning for the week, for weeks, shirts and suits, and it is very much all the delivery of services to the office now and the locker systems, it's such a broader product, Peters.

SPEAKER_00 10:36

I know our sector not only is the restructuring sector, but at the end of the day, when we break down what we do, it's about a turnaround. And a lot of the questions that we ask a lot of the businesses is that what other vertical integrations are there? So you might be a dry cleaner, but can you dry clean to the masses? Meaning, who are the hotels and things like that that are within your local area? Because there's a lot of donors that need to be dry cleaned every week. So are you able to pick up? And one of the interesting points that you just mentioned there was the pickup. It's not about going to the like-called residential home and picking up someone's laundry on a weekly or fortnightly basis. You want to be able to look at the masses because that's the consistency, that's the passive income, and that's the key in all of this. Yeah. Yeah. Before we continue, a quick word from today's sponsor, Eventumoptium. Business is tough enough, and you don't need to deal with debt on your own. Eventum optium is the Latin phrase for the best result. And that's exactly what their team is focused on delivering. The best result for business owners. Whether it's asset protection, creditor pressure, business turnaround, restructuring, or pre-insolvency advisory, their team works with directors to create practical solutions before the problem becomes a crisis. Because the best time to solve a business problem is before it becomes a pickle. To learn more, visit Eventum Optim. Now back to the episode.

SPEAKER_01 12:10

Thank you, Ben.

SPEAKER_00 12:11

Now let's uh nail down the review intelligence. And it's something that we've been doing a fair bit on this podcast. We want to look at reviews because the reviews actually paint a story in today's marketplace. So let's hear from some of the customers. The positive reviews sound like this looks good as new. Back the same day. Fantastic customer service saved my event. Now the negative reviews ruined multiple designer outfits. The jacket came back shrunk. They couldn't find my dress. Price wasn't clear. And a quick sidebar the whole business right there, that's the product. And as I mentioned before, the product isn't cleaning. The product is trust.

SPEAKER_01 12:59

That's exactly right, Peter. And one mistake can wipe out hundreds of future transactions. I mean, I keep saying to my wife that the dry cleaners must be shrinking my clothes because they're getting tighter and tighter. But unfortunately, she won't blame the can't blame the dry cleaner.

SPEAKER_00 13:12

Yeah, well, we need to blame your wife for feeding you, mate. That's just stop feeding you.

SPEAKER_01 13:17

Stop feeding me. She's too she's a good cook and I'm a good eater. So it's sort of a it's a bad combination.

SPEAKER_00 13:22

That's a great relationship. Uh she's a good cook and I'm a good eater.

SPEAKER_01 13:26

Oh, it's perfect. I always say when I first met her, I was a jockey, but no one believes me. That's probably a good segue, Peter, to go into the margin, if that's all right, mate. So let's talk the money side of things. So did a bit of research uh into here. So the industry data suggests the average net profit is around 21%. So it's a reasonable margin, but it's not a high margin business. Suits, dry cleaning sell for $30 to $40. Shirts between $7 and $10. And Duna's $50 to $60. So strong margins are possible, depending on the product range you've got there. I did a little bit of extra work because an average household spends $500 a year on dry cleaning and a professional household up over a thousand. So the numbers were quite surprising when you actually chip away. It's not what I would have first thought looking at the industry prior to this research. But if these margins, which are strong margins, which are possible, they're only possible if you maintain the volume. That's obviously a key thing in this business. And we'll go through the million dollar question later on, Peter. You can control labour, you avoid any claims and any refunds. And as you said, these business key things besides labour is rent. So keep your rent under control. Like any business, there's a lot of margin sort of pressures there that need to be adhered to.

SPEAKER_00 14:32

And that's the key, right? I mean, this isn't a high margin business, it's a throughput business. And unfortunately, staff, it can kill the profitability. Yeah. Big video kill the radio stars, staff kill the business. Yes, 100%. You're showing your age now, Robert. I was at the kitchen the other day and there was a young girl there, and I was just having a chat. And I said, Look, I didn't have my glasses on, and I've got my hands stretched out because I couldn't read my emails. And she's going, Why do you have your arm all the way out? And it's like, well, I can't, I've got my glasses and I can't see my emails. And she goes, Well, why don't you just get your glasses? And I go, Well, no, no, it's okay, I'll just stretch my arm out. I said, I need Inspector Gadget arms. And she looked at me, she says, Well, what who's Inspector Gadget? Oh no, no, yeah, yeah. So at that point I realised, yeah, he's getting old. He's getting old.

SPEAKER_01 15:20

I resemble that remark, Peter. Yes, yes, I know.

SPEAKER_00 15:23

Rod, what do you score the margin?

SPEAKER_01 15:26

I love traditional solid businesses, Peter. I'm gonna give it an eight out of ten, Peter.

SPEAKER_00 15:32

Eight out of ten for Rod. I don't like the margins in this business. I think the margins are just not high enough for me to be able to give it a high score. I'm gonna be at a three out of ten for margin. I feel that if the businesses have a strong enough vertical, as mentioning before, with the commercial element of the business and there is an enterprise layer, and I know that term gets thrown around a lot, especially with the world in AI, but enterprise can also be implemented with a standard local traditional old school business like dry cleaning. If they have an enterprise customer being the hoteliers, and they're able to increase the volume, which obviously therefore doesn't necessarily increase the margins, but they're able to increase their income. I probably would have given it a high score, but it's a three out of ten for me.

SPEAKER_01 16:25

But I think it's interesting, Peter, because with this moat how we assess businesses here, I think the margin can be assessed in two ways on the size of the margin, which is probably the main one. I've probably made my number more based on the consistency of the margin in this case. I think it's a very reliable margin business. And I guess that's probably a bit of a six of one, half a dozen of the other sort of way you assess the margin here. So that's probably the reason for my margin number. Agree to disagree. That's okay. You can be wrong every now and then, Peter.

SPEAKER_00 16:55

Yeah, yeah, I get it. I know my position in this podcast. Oh, for operation. This is where business gets a little bit harder. You've got intake, tagging, cleaning, spot treatment, pressing, quality control, delivery if you do have those enterprise customers. And a misstep, you lose trust.

SPEAKER_01 17:17

Yeah, absolutely. And there's chemical compliance, well, the sort of the environmental regulations, the staff, the staff training and retention, wage compliance. A lot of people would see this industry like uh I've I've often said um car washers and people see them as as passive investments, but this is not a passive investment, and I think a lot of people would be caught out if they bought this thinking that it was. This could unwind very, very easily. We talked about uh the Lawrences and the likes. This is a business that needs to be maintained, so definitely not a passive investment, Peter. No, no, no. What do you score it, Rod, for operation? Yeah, I think this is a very hard operating business. I'm probably gonna go around the six and a half mark, or maybe even a touch lower. Maybe I'll leave it at six and a half, but I think it's it's a tough operation business, this one.

SPEAKER_00 18:03

Yeah, six and a half out of ten. I agree with you. However, when it comes to intake and tagging and cleaning, a lot of that can actually be automated, the tagging, not necessarily the physical element of tagging, but like the barcoding and things. Yeah, so the systems can be automated. And I just feel that with a lot of these old traditional businesses, they haven't pivoted to the technology that's out there. I mean, I know when I get my suits and things like that dry clean, they're giving me a tag where they've written on it. Yeah. And then they get an elastic band and they put it around the actual coat hanger and they give me the tag. Now, if I lose the tag, I'm screwed. Yeah. Why isn't it a barcode? Barcodes have been around for eight years. Like I agree.

SPEAKER_01 18:50

That's half the quaintness and the sort of uh peculiarity of drug kit, which I think the old-fashioned people like.

SPEAKER_00 18:56

Agree, you can't scale it if you're writing things on a pen and paper. Like you're supposed to get the enterprise customers, they need to start using the technology that's out there. And like I said, barcading's been around for 50, 60 years. I couldn't agree more. Yeah, so for me, that alone, I'm gonna score it harsh because the operation is difficult, but I think they're making it more difficult than what it actually is. So it's another three for me, right? I'm not a good one.

SPEAKER_01 19:22

The dry cleaning industry is being cleaned up by Peter.

SPEAKER_00 19:27

You know, we love a good pun in on this podcast.

SPEAKER_01 19:30

Oh, we do.

SPEAKER_00 19:32

A for advantage. So let's break that one down. What is the moat? It's not the machine, it's not the chemicals, it's the trust. And I think trust has come up a lot in today's episode.

SPEAKER_01 19:44

Yeah, I mean, I'll probably even take that a little bit further, Peter. The moat sort of the trust, the reviews come back, the pickup routes. I mean, clearly uh location and where this is situated is very important. I think the office relationships, and you touched on that earlier, the scalability through corporates and uh higher margin clients, the convenience. I know for us, I was mentioning to you like we have a little village drive plant around the corner from us, and it's great. I think everyone, I mean, if we're being honest, everyone can replicate and buy the same equipment in this business, but not everyone can own the customer relationship, Peter. I think that's probably the key. What you and I talk about trust, why the businesses run that and that that relationship. I think it's even more important in a business which is probably easily anyone could could enter in and be a threat in this case. What's your score for advantage if that's the case?

SPEAKER_00 20:30

If you can easily replicate a rod is the loaded question.

SPEAKER_01 20:33

I feel like you and I on a little bit of tangent on this one, which is sort of unusual. Normally we're fairly aligned on. I'm probably gonna give it a five. I think the advantage is easy to replicate the machines and tools, but I think to replicate the client services, the history and the trust isn't as easy. I mean, would you if a a new one steps up right next door to you would you go to it versus someone who you used before? Probably not.

SPEAKER_00 20:54

Let's say five. Yeah. When we look at the moat strategy, the advantage is always a big one for me. Like, what is the advantage? So, therefore, what is the moat in respect to your business? And is it easily replicated? And this type of business is easily replicated. Yeah, so there's no real advantage unless they're implementing, which are a couple of the ones in the city, which actually has a cafe in the actual dry cleaning business. So therefore, you're going there, you're speaking to your favorite brewster, you're having your favorite coffee, you're doing your dry cleaning. So it becomes more of an experience rather than a traditional formatted business model, which is what it has been for the last sort of 80 years. And so if we're looking at different advantages and we're looking at different verticals, one, it could be the coffee shop within the dry cleaner, but then that also comes at an expense. So it means that you need a larger store format to be able to fit that in. So if the margins are not that high with the dry cleaning, are you going to make that up? With the coffee, maybe if you've got a lot of enterprise customers, well, then now you need a bigger loading bay at the back of your store. So there's a lot of working parts to all of this to be able to get a strong advantage within this business. So I just don't think it has an advantage. I can't see a physical moat or advantage around this business. So it's going to be another three-round. It's going to be another one.

SPEAKER_01 22:25

It's a three-day for you, Pete, today, isn't it?

SPEAKER_00 22:27

It's a three-day for me.

SPEAKER_01 22:28

Fair enough. Fair enough.

SPEAKER_00 22:30

Well, it's going to be a one, but I thought it won't be that harsh.

SPEAKER_01 22:33

Well, at the end of the day, I feel that a lot of those points are very valid. And do you see a lot of people racing out to buy a dryer cleaner? Not necessarily, but think it's a bit of a sleeping.

SPEAKER_00 22:41

There seems to be a lot of franchises or brands. I'm seeing similar brands pop up in and around the Sydney CBD. And so it's only a matter of time before one brand sort of scales that out. And I'm surprised the Lawrences of the world that have been around for the last 80 years actually haven't done that. Although they've got a lot of locations, but we're talking about their brand now because we're doing a deep dive on the actual industry. But why haven't they gone to a larger formatted store with a cafeteria, with the large loading bay, more enterprise customers, etc. etc.? I don't know. It's one of those things.

SPEAKER_01 23:15

We'll see how it plays out. They're not the biggest growth industry in the market, but it certainly is. Yeah. That's a good idea. Big way again to move on to TAM because TAM is always an interesting topic. I know you talk about the advantage of it, TAM I always like because it gives you what availability is in the product. So at face value, Peter, total market is around $2.5 billion, as you stated before. On paper, that sounds huge. Straight away you'd be going, great, let's get into dry cleaning. But let's zoom out a little bit on that one. And it's more a localized business as opposed to a national business. You just talked about franchising and growth and managing there, and it hasn't happened. And will it happen or is it something it can't happen? That's probably a good question and answers in here. But most dry cleaners are either CBD or their suburb by suburb. Really have that sort of chain. So is the real TAM, is it the business or is it the catchment area that you're based in, which in itself does reduce the total TAM available for you? So it's your office buildings and rent and labour. Obviously, chemicals and machines are another expense here, but rent and labour would be your two largest expense items in this business. And getting that right, you talked about vertical integration and you know layer of coffee shops and the like. You would have to do a lot of analysis before you commit to extra floor space in a business like this. You can't do that in the city. You can't get extra space, it doesn't exist. No, availability. So 21% margin, you know, you don't have a lot of room to move. That's right. Your delivery routes, and I guess the big one is probably your local trust network. I'll probably go five again, Peter. I think it's my view. I like stable businesses, well-run businesses that can stand the test of time. A lot of businesses you buy the product and they fade. And I do think there is a few opportunities here for the business to ban, Chris TAM, but at the same time, it's not huge, and we need to be aware of it's a niche business, not for everybody.

SPEAKER_00 24:59

I'm gonna score that TAM an eight out of ten. I'm finally off the threes. Jesus. The reason why to sort of break down my thought process in first principles is that the TAM is massive. It's $2.5 billion. It's a big TAM. Yep. The issue that a lot of these businesses have is that it's still the mum and dad operators. The franchises have been around for a little while. Obviously, the established businesses have been around for 80 odd years. Yep. I sort of refer it back to the hospitality industry with the franchises, where they might have a distribution hub and that's where you buy all of your stock from, your cakes, your coffee, and things like that, and then it'll go out to all the local franchisees. I think this particular industry would suit that model, whereas that you've got one industrial, yep. Rod, you're on fire time. Well suited. That's right. That'd be a good name, wouldn't it? It'd be a good name for a guy. There you go. We should start a franchise and call it.

SPEAKER_01 25:57

We should be a marketing mate, not we should be a marketing.

SPEAKER_00 26:00

This is why you and I drive our marketing teams absolutely bonkers because of the just the sheer pun and stupidity that we come up with. It's like, no, you can't use that. Yeah, we they do. They get they get punished with the puns. If a large franchise had multiple local locations across the country, and in each central locality, they had a large industrial distribution hub where they could go pick up the donors from the hotels and the offices, bring it back to the industrial warehouse, basically do what they got to do, get it all cleaned up, and then deliver it to the local stores for the participant to pick up. I think that seems like the logical next steps. I am noticing a lot of the red boxes around in the CBD where you just drop off clothes and it does go to a distribution hub. So I can already see that trend emerging. And so the smart operators are really going to take advantage of that TAM. So that's why I feel like I should give it an eight out of ten.

SPEAKER_01 26:58

Or ebidry cleaning. Yeah. I mean convenience these days is becoming the key, isn't it? So the pickups we talked about. That's an eight for me. Alright. So what's the scorecard? I've got you uh three for margin, eight for myself, operation uh three for you. We it's easy for three kids to keep saying three for Peter, and six and a half for operation for myself, a three for advantage Peter, for yourself, and five for me, and then the TAM, an eight for you. So you've broken your three shackle and a five. So a total for you of 17, and a total for me of putting four and a half, so 41.5.

SPEAKER_00 27:36

So marginally positive. Marginally positive, there you go. 41.5 out of 80.

SPEAKER_01 27:41

It just scraped. Compared to matcha, uh, which we had last week, it doesn't match it up. It's certainly a little bit lower. For number um in turnaround businesses, I've done a few uh car wash uh businesses of uh of recent times, Peter, and I think you and I spoke before this podcast that people see this as a passive investment, and I think they're wrong. I think it's uh as we say, it's a trust and a hardworking business. So yeah, just interesting to sort of see you know how this one goes. I think it's gonna stick, just not sure how long it's gonna stick. Yeah, agree. Quickly you move on to the one million first year test, uh Peter, if we can. So let's quickly run the maths. So assuming the average order is $40, is what the statistics seem to show to us. So to generate a million dollars revenue, you need around 80 transactions a day. Every day across the year. I guess there's some big locations that might sound easy, but to me it sounds like a lot. A lot of shirts, a lot of suits, a lot of trust.

SPEAKER_00 28:33

Peter, it can be done? Yeah, it can. Absolutely can be done, but not from average suburb counter. You need premium positioning, you need to pick up the deliveries, the corporate accounts, the bridal, the betting, the route density, that centralized industrial hub that I mentioned before. So the million dollar test, look, it is possible, but it's a hard slog unless you've got all those verticals that we spoke about today.

SPEAKER_01 28:59

I agree, I agree. So that probably brings us to the final verdict, uh, where we are now, mate. I would say it's not a dying business, despite, I mean, when you it was interesting, but my opinion on this business has changed since we've delved into this, but I don't believe it's a dying business, but it's also not a growth rocket either. And that's probably the key. It's not like the matcha, which could continue to grow and grow and grow. This is it's not a growth rocket, but it's stable, it's operationally demanding. You gave that a three very comfortably. So you said you could have gone less. It's highly dependent on execution. Correct.

SPEAKER_00 29:31

But if the population's growing, then these guys benefit, one would assume. Yeah, absolutely. Hence that distribution hub and the scalability, it's there because if population's increasing, well then they should receive the benefit. Yeah, absolutely. So the winners understand one thing, they're not cleaning clothes, they're removing risk. And if you build trust, you build convenience. And obviously, they build repeat customers. This can be a very good business. If you're thinking you're buying a passive investment, you're gonna get yourself into a pickle because it is a lot of hard labor. Yeah, so the good, bad business verdict strong operator, route density, pickup and delivery, corporate and premium garments, and that garment mix. Bad business, there's high rent, there's weak systems and no differentiation. The pickle risk, it's a passive ownership, there's poor quality control and reputational damage. It is a good business for the right operator, but it is a pickle for the wrong owner. So it's someone that really needs the experience in this sector and understands the importance of vertical integration.

SPEAKER_01 30:45

Couldn't agree more, Peter. The analysis after going into it, that's a very succinct way of describing it.

SPEAKER_00 30:51

Yeah, yeah. So if there's a business you'd like us to break down, send it in. And with this particular episode, I'd like to give a big thank you to Ricky Radd from RL Legal, one of our principal partners within the insolvency and lawyer sector. So thank you, Ricky, for suggesting this particular podcast. It's been a absolute crack at a breakdown. Yeah, well done. And so, like Ricky, if you have a particular suggestion, send it in because we don't want you to get into a pickle. And if you like the podcast, send it to a friend. It helps others find us. Rod, thank you again. Thank you, Peter, and have a lovely day, my friend.