Janitorial Services

Industry Profile Report

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

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

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

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

Industry Profile Excerpts

Industry Overview

The 57,000 janitorial service providers in the US clean building interiors, windows, and the interiors of transportation equipment, such as aircrafts. Specialized services include disaster recovery, medical cleaning, and mold clean up. Some companies provide outdoor services, such as snow removal and lawn maintenance. Non-residential customers, such as those in institutional, office, and commercial buildings, account for 80% of industry revenue.

Immigration Laws

Most janitorial jobs do not require workers with English-speaking skills, and tend to attract both legal and illegal immigrants.

Green Cleaning

Growing concern with the environment and sustainability issues has led to increased demand for the use of eco-friendly cleaning products and methods.

Industry size & Structure

The average janitorial services provider operates out of a single location, employs about 17-18 workers, and generates $1 million annually.

    • The janitorial services industry consists of about 57,000 companies that employ over 1 million workers and generate about $59 billion annually.
    • The industry is highly fragmented; the top 50 firms account for 28% of industry sales.
    • The industry includes national and regional companies, franchises, and independent operators.
    • Large companies include divisions of ABM and ServiceMaster (Merry Maids).
    • Non-residential customers, such as those in institutional, office, and commercial buildings, account for 80% of industry revenue.
                                Industry Forecast
                                Janitorial Services Industry Growth
                                Source: Vertical IQ and Inforum

                                Coronavirus Update

                                Apr 1, 2022 - Office Occupancy Slow to Recover
                                • New COVID-19 cases caused by the Omicron variant fell as quickly as they rose, and many businesses made plans for white-collar workers to return to the office. However, the return to offices has been slow. During the first week of December 2021, about 40% of workers had returned to offices in the ten cities monitored by security firm Kastle Systems. By March 23, 2022, the percentage of workers in the office was still stuck at 40%. Hybrid working models are expected to be the new norm, with long-lasting impacts on office occupancy. “It’s hard to imagine, when you look at office workers who can do their jobs remotely, that those numbers are going to get above 60% to 65% nationwide,” said Brian Kropp, chief of human-resources research for advisory and research firm Gartner.
                                • Cleaning services providers saw continued demand growth in the fourth quarter of 2021, according to the Home Service Economic Report released in February 2022 by Jobber, a job tracking and customer management software firm. New cleaning work scheduled was up in Q4 2021, led by a 16% year-over-year increase in contract jobs. One-off jobs were up 2%. While new work scheduled was flat in Q4 compared to Q3, revenue enjoyed a slight upward trend, primarily due to inflation. Some janitorial firms are turning down new business and even canceling work for existing customers because they don’t have enough workers.
                                • As offices reopen, tech companies are introducing cleaning scheduling apps to help office managers gather bids from qualified cleaning firms. The Onedesk Office Cleaning Platform allows cleaning firms to do a virtual walkthrough of an office space and bid on the job without visiting the location. Carpet and upholstery cleaning firms may seek to become pre-vetted vendors for such apps.
                                • Janitorial and restoration firms added disinfecting services. Some use disinfecting fogs and mists that can be efficiently applied with no wiping. Such services could become long-term revenue streams if consumers come to expect commercial spaces to be regularly disinfected.
                                • Industry insiders suggest companies that offer coronavirus-related cleaning and disinfecting services check to ensure their insurance policies cover them in the event of a COVID-19-related claim by a customer or team member. Some cleaning and restoration companies performing COVID-19 decontamination services found their insurance doesn’t provide adequate coverage. Some insurance companies have created new biohazard coverage or added it to existing policies.
                                • Residential cleaning firms need to reassure customers that cleaning practices and equipment are safe to bring into their homes. Firms are encouraged to outline infection prevention in their proposals, assess their equipment performance, look professional, be transparent with clients, communicate cleaning protocols, and re-brand with language around infection prevention.
                                • Some janitorial firms that saw business drop off during the pandemic were able to keep operating and paying employees because of the Paycheck Protection Program (PPP) authorized under the CARES Act, which passed in March 2020. The PPP received additional funding through later stimulus packages passed in December 2020 and March 2021. The PPP was set to wind down on May 31, 2021, but the program ran out of money on May 11, 2021, and stopped accepting most new applications. However, in September 2021, the SBA announced several modifications to the COVID-19 Economic Injury Disaster Loans (EIDL) program, which may have helped some struggling janitorial firms. Changes to the EIDL include raising the loan cap from $500,000 to $2 million and expanding eligible expenses to include any normal operating expense and working capital. EIDL loan payments originally had to begin being repaid 18 months after origination; the changes extend repayment requirements to 24 months. The SBA stopped accepting EIDL applications on December 31, 2021 but continues to process applications filed before the deadline. In March 2022, the SBA announced it would extend the deferment period for COVID-19-related EIDL disaster loans to 30 months from the date the loan was first approved. Before the extension, some EIDL loans had a deferment period of 18 months or 24 months. As of March 27, 2022, the Small Business Administration had forgiven more than 85% of the $789 billion in PPP loans issued since the program was launched in 2020. About 87% of all PPP loan recipients have submitted forgiveness applications.
                                • Industry insiders suggest prices for some types of cleaning products and equipment may be rising due to higher prices for plastic resins. Cleaning supplies and equipment that could be affected by resin shortages and higher prices include trash liners and trash cans, plastic spray bottles and other cleaning product containers, and cleaning equipment encased in plastic housings. US producer prices for plastics materials and resins in February 2022 were 19% higher than they were a year earlier. Inflation may also increase janitorial firms’ costs for other inputs; producer prices for soap and cleaning compounds rose 11.4% year-over-year in February.
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