Case Study

What Works: Philadephia’s Wash Cycle Laundry Hires Vulnerable Residents

Objective: This case study highlights how Wash Cycle Laundry integrated vulnerable populations into its hiring strategy to grow a company that is both socially and environmentally responsible. Moreover, this case study looks at how Wash Cycle has utilized the strength of anchor institutions to expand its young company.

Geography: Philadelphia, Washington D.C., Austin

Major Participants: Wash Cycle Laundry, University of Pennsylvania, PhiladelphiaWorks, Gearing Up and a number of other local and community organizations.

Background: Before founding Wash Cycle Laundry, CEO Gabriel Mandujano worked in nonprofit and workforce development industries. From this experience, Mandujano learned how challenging it was to match hard-to-hire residents – those who have struggled with addiction, poverty or homelessness, or who have a history of incarceration – with viable, sustainable employment opportunities. While many agencies found their clients employment, little attention was paid to whether clients were placed with the “right” employer—places where hard-to-hire people would find success and stay for long periods of time. There must be a way, Mandujano thought, to create better jobs for this demographic, and jobs that would prove durable over time.

Realizing that changes could be implemented through the private sector, Mandujano launched his own enterprise, Wash Cycle Laundry. Why laundry? When Mandujano was considering various business alternatives, he was looking to launch a company in an industry where environmental sustainability was a competitive advantage versus simply a luxury differentiator. The Wash Cycle model, which uses bicyclists as its primary transportation mode, would save energy, water and transportation costs – three measures that are not just environmentally friendly but would also help the company’s bottom line. Moreover, laundry is a multi-billion dollar industry, which makes it viable even without tax credits or subsidies.

How it Works: Wash Cycle serves two important market segments: the everyday laundry consumer (think busy working professionals, families with young children and senior citizens) and institutional clients. Procuring with local anchor institutions opens the door to larger, longer-term contracts that provide the company with some certainty as it expands. To date, more than half of Wash Cycle’s revenue comes from universities, hospitals and nursing homes.

As the company expands, hiring vulnerable residents remains a priority. Research shows that entry level jobs can be a catalyst for upwardly mobile careers and many positions in the laundry industry are inherently entry level; they require little formal education or skill training. As part of its mission, Wash Cycle recruits vulnerable residents who may have struggled with addiction, who have histories of incarceration, who receive public benefits or who have a history of homelessness. To identify these workers, Wash Cycle partners with third-party nonprofit and community agencies, such as PhiladelphiaWorks and Gearing Up. The nonprofit agencies provide case management and soft-skill training and address employee management issues as they arise to ensure that clients will be successful once on the job.

Employees for Wash Cycle use bicycles that can carry up to 300 pounds of laundry. The bicycles pick up the laundry and bring it to a partner facility, where Wash Cycle staff clean the laundry.

Results for Local Economy: Wash Cycle has expanded from Philadelphia to a second location in Washington, D.C. and a third in Austin, Texas. In total, the company employs approximately 50 people,  of which, more than 50 percent are characterized as vulnerable residents. The company has intentionally hired a mix of hard-to-hire and traditional workers; doing so  ensures that working for the company does not result in a “vulnerable resident” identifier.

Employee wages vary, but all earn above what MIT estimates to be a living wage for a single adult ($10.10 per hour). The average Wash Cycle employee earns over $11 per hour on traditional contracts, and approximately $14 per hour on government contracts (which require a higher skill level. In each market it serves, Wash Cycle looks to benchmark its wages against the average wage for Temporary Assistance for Needy Families (TANF) recipients to ensure its wages are competitive for this demographic. To date, Wash Cycle is achieving a six-month employee retention rate of over 80 percent; double the average 40 to 50 percent TANF recipient retention rate.

With its demonstrated success to date, Wash Cycle Laundry hopes to be in 10 urban markets by 2017.

Remaining Challenges:  One of the largest challenges that Wash Cycle continues to face is the ability to “crack the institutional nut” in expanding the business’s accounts with local anchor institutions. Wash Cycle is privately financed by investors who expect their returns on a specific timeline, but many of the institutional clients Wash Cycle is targeting do not make procurement decisions on a similar timeline. A client may be interested in working with Wash Cycle, but the procurement process for laundry services may not allow for a change in vendors for several months or even several years. Though Wash Cycle keeps these relationships warm, it now targets anchors that are interested in and able to identify specific procurement opportunities that are actionable within the next six to 12 months.

Another challenge is related to perception: Wash Cycle has specifically designed its business model around a sustainable delivery system. Again, this decision was made not only to benefit the environment, but also to strengthen the company’s bottom line. Yet many potential clients see the use of bicycles and assume that Wash Cycle cannot be a credible contractor. Despite Wash Cycle’s large institutional clients and proven track record, this perception still exists.

Lessons Learned: In a recent interview, Manujando stressed the importance of building relationships with partners who really understand one another. The ability to lean on one another has been critical; Wash Cycle Laundry cannot – and does not want to – tackle workforce development issues on its own. Instead, the company has built a strong team of nonprofit partners which has created a streamlined service delivery system. Manujando suggests being very specific and intentional about with whom to partner and ensuring that those relationships work well.

Regarding anchor procurement (e.g., contracts with universities and hospitals), which offers significant opportunity for small businesses looking to expand and grow, Manujando notes the importance of finding an advocate within the institutions. The inner workings of the institution’s organizational chart may not be clear from the outside; having an advocate within can help the small business navigate this system and connect with the appropriate decision makers. Moreover, small businesses should avoid putting all their eggs in one anchor basket. Despite the anchor’s willingness and interest in procuring your company’s services, it could take many years to bring this to reality. When approaching anchors, Manujando said, “Plant a lot of seeds – you never know which will bloom.”
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