Linen Supply 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 550 linen supply services companies in the US provide laundered items, such as table and bed linens; towels; diapers; and uniforms, gowns, or coats, on a rental or contract basis. Companies provide linen products and deliver cleaned and processed linens as replacements for soiled linens. Large firms may offer related products and services, such as washroom supplies or janitorial services. Firms may also process customer-owned linens. Large firms may manage on-premise laundries for customers or free-standing laundry cooperatives.

Capital-Intensive Operations

Industrial laundries are capital intensive, and the ongoing maintenance of machinery can be significant.

Government Regulation and Certifications

Linen supply service providers and industrial laundries are especially vulnerable to regulations that conserve water and protect the environment.

Industry size & Structure

The average linen supply service provider employs about 100 workers and generates $8-9 million annually.

    • The linen supply service industry consists of about 550 firms that employ 55,300 workers and generate $4.5 billion annually.
    • The industry is concentrated; the top 50 companies account for about 72% of industry revenue.
    • Large firms typically offer both uniform and linen supply and include Cintas, Aramark, Alsco, and AmeriPride.
    • Large firms with a focus on healthcare linen supply include Crothall Healthcare, Ecotex Healthcare, and Mission Linen Supply. Several large firms in this sector are family-owned.
    • Small firms typically operate within a limited geographical market.
                                  Industry Forecast
                                  Linen Supply Services Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Coronavirus Update

                                  Apr 1, 2022 - Uniform, Linen Rental Firms Optimistic About Revenue Growth
                                  • As many hotels experienced low occupancy rates due to COVID-19, some laundry industry professionals reported an uptick in hotels either temporarily or permanently outsourcing their in-house laundry operations, according to Textile Services Weekly. Amid low occupancy, hotels found that outsourcing laundry is a cost-effective and safe alternative to continuing to operate their in-house facilities. While some outsourcing is temporary, other hotels used the slowdown to put their laundry space to another use.
                                  • Uniform and linen rental firms continued to show signs of improved optimism in the first quarter of 2022, according to the latest Uniform & Linen Rental Survey by Robert W. Baird & Company and trade group TRSA. About 63% of the linen rental business survey respondents said their revenue in Q1 2022 was above expectations; 31% said their revenue met expectations. About 34% of uniform rental companies said their Q1 2022 revenue exceeded their expectations, and 53% said their revenue expectations were met. Uniform rental firms expect organic revenue to grow about 4.8% over the next 12 months; linen rental firms anticipate organic revenue growth of 6.3%.
                                  • The shortages of personal protective equipment (PPE) that occurred early in the COVID-19 pandemic may cause healthcare systems to include more reusable PPE, such as isolation gowns, in the future, according to TRSA. Some industry watchers believe agencies such as the Center for Medicare and Medicaid Services (CMS) and the CDC should require some reusable PPE to ensure adequate supplies even after the pandemic.
                                  • New COVID-19 cases caused by the Omicron variant fell as quickly as they rose, and diners are returning to restaurants. Sales at US food services and drinking places increased 2.5% in February compared to the prior month and were up 33% compared to February 2021. However, more than half of restaurants say it will be a year or more before business conditions return to normal, according to the National Restaurant Association’s (NRA) 2022 State of the Restaurant Industry report released in February.
                                  • The restaurant industry received a lifeline in March 2021 when President Biden signed the $1.9 trillion American Rescue Plan Act, which includes $28.6 billion in grant funding for restaurants and bars. Through the Restaurant Revitalization Fund (RRF), each restaurant location is eligible for up $5 million in grants based on pandemic-related lost revenue. No restaurant group can receive more than $10 million. The aid is limited to independent restaurants and chains with fewer than 20 locations. However, in late September 2021, the National Restaurant Association (NRA) sent a letter to Congressional leaders asking for additional funding for the RRF program. Two-thirds of eligible restaurants that applied for funding through the RRF did not receive any funds, according to the NRA. The NRA appealed to Congress again in January 2022 for additional RFF funding, citing further damage done to the industry due to the Omicron variant. However, hopes of fresh funding for RFF faded in March when it was not included in an appropriations bill to keep the federal government funded.
                                  • Some linen supply services 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 new applications. In September 2021, the SBA announced several modifications to the COVID-19 Economic Injury Disaster Loans (EIDL) program, which may have helped struggling dry cleaners. 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.
                                  • As the economy gradually improves, linen supply firms and some key customer industries report having problems recruiting and retaining adequate staffing. In interactions with member firms, linen service trade group TRSA says hiring and keeping employees is a significant challenge for linen and laundry firms. The hospitality industry is also having trouble ramping back up as overseas seasonal workers returned to their home countries during the pandemic and have not yet been able to return. About 90% of restaurant operators report that attracting and retaining employees is likely to be more difficult once the pandemic subsides than before it began. Linen service, hospitality, and restaurant workers who were laid off or furloughed during the pandemic may have found work in other industries that fared better, such as driving and warehouse work which got a boost from the rise in e-commerce.
                                  • The effects of the pandemic prompted an uptick in laundry business mergers and acquisitions (M&A) activity, according to industry insiders speaking to laundry trade group TRSA. Amid COVID-19 disruptions, labor shortages, higher costs, and supply chain issues, some small companies chose to sell rather than continue struggling, especially those serving the hard-hit restaurant and hospitality industries. Some large firms that cater to the healthcare or industrial uniform markets turned to M&A as a means to achieve growth during a challenging economic environment.
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