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

                                  Coronavirus Update

                                  Nov 17, 2021 - Restaurant Association Urges Cities to Support Outdoor Dining
                                  • As many hotels experienced low occupancy rates due to COVID-19, some laundry industry professionals have reported an uptick in hotels being interested in 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.
                                  • The uniform and linen rental industry continued to show signs of improvement in the third quarter 2021, according to the latest Uniform & Linen Rental Survey by Robert W. Baird & Company and trade group TRSA. More than half of survey respondents in the linen rental business said their revenue in Q3 2021 was above expectations, marking a record high since the onset of the pandemic. Nearly two-thirds of uniform rental companies said their Q3 2021 revenue met expectations. The index measuring uniform rental firms’ customer employment growth was down more than 10 points from the prior quarter but remained in expansionary territory. Uniform rental firms expect organic revenue to grow about 5.6% over the next 12 months (compared to expected growth of 4.2% in the Q2 2021 survey); linen rental firms anticipate organic revenue growth of 5.9% (compared to 5.5% in the Q2 survey).
                                  • Business size has had an effect on how laundry services serving the healthcare industry have been affected by the pandemic, according to the 2020 Healthcare Benchmarking Report by the TRSA and the American Reusable Textile Association (ARTA). High-volume laundries have seen about 35% more business opportunities during the pandemic, but customers tended to have more robust pandemic-related requirements. Smaller laundry firms have been nimbler during the pandemic and were better able to pivot into new market offerings. Nearly 100% of survey respondents reported an uptick in customer requests for reusable PPE; three-quarters of those surveyed said they expect to continue to expand specific offerings in the disaster preparedness segment.
                                  • 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.
                                  • Vaccine distribution gave restaurants hope that business will improve as indoor dining returned. However, the rapid spread of the Delta variant of the coronavirus may complicate restaurants’ return to business-as-usual, which could reduce restaurant demand for linen services. In October, the National Restaurant Association (NRA) sent a letter to the US Conference of Mayors urging them to continue to support restaurants’ efforts to offer outdoor dining, which has been a key revenue source for the industry during the pandemic. According to NRA research released in October, 68% of full-service restaurants report 20% of their sales comes from outdoor dining. The NRA suggests cities support outdoor dining by expanding outdoor dining allowances, streamlining permitting processes, and funding more outdoor dining infrastructure.
                                  • The restaurant industry received a lifeline in March 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.
                                  • Linen supply services firms that saw business drop off during the pandemic may have sought relief via the reauthorization of the Paycheck Protection Program (PPP). The PPP was revived with the December passage of the $900 billion COVID-19 Economic Stimulus Relief Act. The legislation included $300 billion in funding for Small Business Administration (SBA) loans. The December round of PPP let eligible borrowers get a second draw loan. It also simplified loan forgiveness for loans under $150,000 and makes forgiven loans tax deductible. In March 2021, President Biden signed the $1.9 trillion American Rescue Plan Act which included an additional $7.25 billion for PPP. The PPP was set to wind down on May 31, but the program ran out of money on May 11, 2021 and stopped accepting most new applications, according to The New York Times. However, in September 2021, the SBA announced several modifications to the COVID-19 Economic Injury Disaster Loans (EIDL) program which could help linen supply firms that are still struggling. 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.
                                  • As the economy gradually improves, linen supply firms and some of their key customer industries report having problems with recruiting and retaining adequate staffing. In direct interactions with member firms, linen service trade group TRSA says hiring and keeping employees is a major 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 ecommerce. Other workers may not be able to return due to childcare or other family obligations. Some business groups suggested federal supplemental unemployment benefits created a disincentive for workers returning to work. The benefits ended on August 6, 2021 in the 24 states that hadn’t ended them already.
                                  • On September 9, the Biden Administration announced that businesses with more than 100 employees will have to require their workers to be vaccinated or be subject to at least weekly COVID-19 testing and masking requirements, according to The Wall Street Journal. The requirements will be implemented through a temporary standard issued by the Labor Department’s Occupational Safety and Health Administration (OSHA). The temporary standard went into effect on November 5 and compels affected companies to require their employees to be vaccinated by January 4 or face testing and masking protocols. On November 6 the 5th US Circuit Court of Appeals temporarily blocked the OHSA rule due to potential “grave statutory and constitutional issues.” More than two dozen states, business groups, individual businesses, labor unions, and religious organizations have sued to block the OSHA rule. Due to lawsuits in several circuit courts, federal law requires them to be consolidated and heard in a single court chosen by lottery. In mid-November the lottery was held and the case is to be heard in the 6th Circuit Court of Appeals. The case is likely to ultimately end up before the Supreme Court. Despite the pushback in the courts, many companies are expected to comply with the OSHA rule to keep workers and customers safe, according to NPR. Of more than 850 linen supply firms in the US, about 400 have more than 100 employees, according to the US Census Bureau.
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