Case Study: How Chris Mendez Used Technology to Save His Company

The Decision

In April 2005, two months after meeting Loeb, Mendez bought his first point-of-sale system with software customized for dry cleaners; by the end of the year, he had spent $56,000 on eight stations and a server. He began training one of his most trusted employees, Munic Datoo, to manage the new technology and, eventually, his new website. Three months later, he bought a new GMC truck, taking advantage once again of zero-percent financing; it was on the road serving customers by the end of the year.

He also launched a branding campaign, designing a logo, investing in more attractive poly bags, and getting logoed laundry bags to distribute to customers. By January 2006, the Clothes Dr.'s website was up, and within six months, Mendez had closed two more stores and bought another truck, which he was again able to finance for five years at zero percent. He's now doing direct-mail campaigns and offering $20 in free cleaning to anyone who registers for pickup and drop-off through his website. He also plans to sell gift cards through a local high school fundraiser.

The company now serves 80 Zip codes, is signing up about six new people a week on the Web, and is realizing a 15 percent revenue gain due solely to the new POS system, which prompts counter staff to enter additional charges for more complex jobs that include, say, garments with beading or silk. (Before the new computer system was in place, those "up charges" were often neglected.) Systemwide sales are approximately $21,000 a week, $3,000 of which is Web-based, and Mendez is now posting a modest profit--enough to carry out his current marketing plan without taking on more debt. He's also altered his compensation plan: He pays his truck drivers an 18 percent commission; Datoo earns a salary, plus 2 percent of all Web sales. "They want to see the business grow as much as I do," says Mendez. He's down to 18 employees from 21, and payroll expenses, once as high as 38 percent of revenue, are down to 28 percent.

Mendez is confident that his decision to change his business model was spot on. In fact, he recently invested in a 1,700-square-foot facility to run his trucks out of. Within five years, he'd like to have eight trucks and a drapery van serving 300 to 400 people per truck, with the majority of his best customers using Web-based pickup and delivery. But for now, he's satisfied with simpler pleasures. "This is the first time in 11 years that I've had people who work well together," he says. "Plus Merilyn and I can go out to dinner now and she doesn't have to pay."

The Experts Weigh In

Where's the vision?

Mendez needs to develop an institutionalized system for this business. The Internet is wonderful, but you have to understand the route business and I'm not so sure he does. You don't build up a route on the Web; you do it by knocking on doors. And the guy who drives the truck does not build the route; you need to hire salespeople to do that. Mendez's goal should be 300 pickups at $20 each a week to achieve $6,000 a week per route. But I don't know if he has the vision and the plan to get there.

Sid Tuchman
Former CEO
Tuchman Cleaners
San Francisco

Mind the message

You need to be careful about putting all your eggs in the Internet basket. Dry cleaning is about relationships. The Web is just one of the tools in your arsenal. Mendez has to convey the same message through his drivers, over the counter at the stores, on the phone. As long as all those touch points meld together, the business will be okay. The other thing about the Web is that if you want people to keep coming back, you've got to keep your site current, so Mendez will have to stay on top of all that new technology.

Nora Nealis
Executive Director
National Cleaners Association
New York City

Add more services

There's a load of potential pitfalls--the expense of operating the trucks, driver recruitment, keeping up with the software. Mendez needs to have a vision of five years from now. The plan should not just be getting out of debt but also adding other cleaning services or products to make his stops more profitable, such as drapery and carpet cleaning. He also needs to think about replacing himself as the manager so that he can experiment with the business while someone else makes the trains run on time.

Jim Mccann
CEO
1-800-Flowers
Carle Place, New York