Carpet and Upholstery Cleaners

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 7,000 firms in the US primarily clean rugs, carpets, and upholstered products, typically on-site at the customer’s premise. Residential customers account for 85% of sales, while commercial customers account for about 15% of sales. Firms may also offer damage restoration, janitorial and custodial, hard surface floor cleaning, water damage restoration, and auto detailing services.

Sensitivity to Economic Factors

Carpet and upholstery cleaning is a discretionary expense and a service that is easy to delay when finances are tight.

Industry Contraction

The carpet and upholstery cleaning industry has contracted over time, as has the size of the carpet market.

Industry size & Structure

The average carpet and upholstery cleaner operates out of a single location, employs about 5 workers, and generates about $670,000 annually.

    • The carpet and upholstery cleaning industry consists of about 7,000 firms that employ about 36,000 workers and generate about $4.7 billion annually.
    • The industry is fragmented; the top 50 companies account for about 23% of industry revenue.
    • Franchises account for about 19% of the industry. Major franchise operators include Stanley Steamer, Chem-Dry, and ServiceMaster.
    • Most firms operate within a limited geographical market; in an industry survey by Cleanfax, 95% of respondents serviced a 200-mile area.
    • Carpet and area rugs account for about 30% of the US flooring market, according to Floor Covering News.
                                  Industry Forecast
                                  Carpet and Upholstery Cleaners Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Jan 9, 2024 - Office Vacancy Up in Q4
                                  • Nearly 20% of office space in major US cities was not leased as of Q4 2023, with the continuing popularity of remote work and a long-standing oversupply contributing to higher vacancy rates, according to Moody’s Analytics data in the Wall Street Journal. The 19.6% vacancy in the fourth quarter of 2023 was slightly higher than the 18.8% a year ago and is the highest vacancy rate since 1979. The top three US cities with the highest office vacancy rates in Q4 were all in Texas: Houston, Dallas, and Austin. Some industry analysts think the higher vacancy rate could linger due to the continuing popularity of working from home. Office occupancy levels are a demand indicator for cleaning services.
                                  • Carpet and upholstery cleaners will have to monitor minimum wage changes, as 22 states increased their minimum wages in January 2024, according to USA Today. About half of the increases are automatic adjustments linked to inflation. States that raised their minimum wages in January 2024 include Hawaii ($14), Maryland ($15), Nebraska ($12), and Washington ($16.28). Several states are set to boost their minimum wage levels later this year, including Florida (up to $13 in September) and Nevada (up to $12 in July). According to the Economic Policy Institute, nearly 40 US cities and counties will increase their minimum wage rates above state levels at the start of the new year. The federal minimum wage is $7.25 an hour, and more than 20 states, primarily located in the South and the Midwest, use the federal minimum as their wage floor.
                                  • Sales for the US carpet and upholstery cleaners industry are projected to rise at a nearly 6% CAGR from 2022 to 2027, reflecting a recovery in spending on consumer services, a return to in-office work, and an ongoing focus on cleanliness post pandemic, according to a recent Inforum forecast. This rate is faster than the projected growth of the overall economy. The forecast follows solid industry growth during the pandemic in 2020 (3%), 2021 (13.1%), and 2022 (8.8%).
                                  • Inflation was the most important problem facing small business owners, according to 23% of owners in a survey by the National Federation of Independent Business (NFIB). The NFIB’s Small Business Optimism Index fell 0.1 points in November 2023 to 90.6, marking the 23rd consecutive month below the 49-year average of 98. According to NFIB Chief Economist Bill Dunkelberg, “Job openings on Main Street remain elevated as the economy saw a strong third quarter. However, even with the growing economy, small business owners have not seen a strong wave of workers to fill their open positions. Inflation also continues to be an issue among small businesses.” Small business owners are still encountering historically high job opening levels, with a seasonally adjusted 54% of owners reporting hiring or trying to hire in November. Over 60% of owners reported making capital outlays in the past six months, with 41% spending on new equipment, 23% acquiring vehicles, and 17% improving or expanding facilities.
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