three years ago. Now it wants to open hundreds of franchised Tide Dry Cleaners
Bloomberg - BusinessWeek
September 3, 2010
By Lauren Coleman-Lochner
Procter & Gamble Co. is no longer content just to sell detergent to wash your clothes -
- it wants to dry clean them, too. The world’s largest consumer-products
company plans to roll out franchised Tide Dry Cleaners across the U.S. The strategy
could be a hit, says one franchising veteran. Andrew Cherng, founder of Panda
Restaurant Group Inc., which operates Panda Express Chinese fast-food outlets in
malls around the country, says he plans to open about 150 Tide-branded dry cleaners
over the next four years. “I wasn’t around when McDonald’s was
taking franchisees,” Cherng said in a telephone interview. “I’m not going to
miss this one.”
Cincinnati-based P&G wants to put itsbrands to work selling services as a way of
boosting U.S. revenue and increasing awareness around Tide and its other
products.P&G advanced 27 cents to $60.07 at 4 p.m.in New York Stock Exchange composite
trading. The shares have slumped about 1 percent this year. Three years ago the company launched Mr. Clean Car Wash; nine franchisees are now in business. In 2008, P&G opened three
test Tide dry cleaners in Kansas City. Having fine-tuned the concept, the company is now going national.
P&G is moving into services “that are virtually unbranded,” said Michael Stone,
head of The Beanstalk Group, a New York-based brand-consulting firm. “One
would think consumers would trust a Tide Dry Cleaners because they know P&G is
behind it,” he said. FutureWorks t he Tide and Mr. Clean concepts sprang
from P&G’s FutureWorks unit, which identifies and develops new businesses.
Nathan Estruth, who runs the division, said his staff must get “comfortable with
ambiguity” and accept that most projects “get shut down.”
P&G executives say not just any brand can be hitched to a service. They look for a
fragmented market where consumer expectations aren’t high. (Don’t expect
Pampers Day Care centers.) The company says its research showed that both cleaners
and car washes fit the bill.
P&G lacked franchising experience so it broke its decades- old practice of
promoting from within and recruited William Van Epps, who had managed
franchising at PepsiCo Inc. P&G set up a company called Agile Pursuit Franchising
Inc. and put Van Epps in charge. Van Epps’s team put a premium on
consumer convenience. Each dry cleaner features a double-lane drive-through and
lockers accessible for after-hours pickup. There are lollipops for kids and Iams biscuits -- yes, a P&G product -- for the family dog.
Eco-Conscious
The company hopes to lure eco-conscious consumers with proprietary technology
that doesn’t use the solvent perchloroethylene. P&G says its stores will
charge about the same to dry clean clothes as the industry average ($2.25 for a man’s
shirt; $11.50 for a woman’s dress). Opening a Tide dry cleaner costs a
franchisee about $950,000; a Mr. Clean Car Wash up to $5 million. Don Nix, a former accountant, operates a Mr. Clean Car Wash in Marietta, Georgia,
and plans to open a second one with a partner next year. People won’t necessarily
identify with “Don’s Car Wash,” he said. “The brand and the logo of Mr. Clean [has]
huge value for attracting new customers.” While franchising allows P&G to offload
much of the financial burden, P&G executives acknowledge the model carries
risks. Corporate parents and owneroperators don’t always agree; witness the
ongoing dispute between Yum! Brands Inc. and KFC franchisees over marketing
strategy. And dirty stores or poor service could hurt Tide, which the New Yorkbased
consulting firm Millward Brown ranks fifth globally as measured by value
derived purely from brand equity.
‘We’d Stop’ “If we did anything to damage that,” says
Chief Technology Officer Bruce Brown, “we’d stop.” Van Epps acknowledged that the risks keep him “up at night.” P&G, which declines to discuss sales
targets for its dry- cleaning strategy, argues the business is less of a departure than one
might think. In the company archives, alongside such treasures as 19th-century
wooden soap boxes and an early disposable diaper, is “The Washroom,” an
instruction manual P&G produced for commercial laundries back in 1927.
- it wants to dry clean them, too. The world’s largest consumer-products
company plans to roll out franchised Tide Dry Cleaners across the U.S. The strategy
could be a hit, says one franchising veteran. Andrew Cherng, founder of Panda
Restaurant Group Inc., which operates Panda Express Chinese fast-food outlets in
malls around the country, says he plans to open about 150 Tide-branded dry cleaners
over the next four years. “I wasn’t around when McDonald’s was
taking franchisees,” Cherng said in a telephone interview. “I’m not going to
miss this one.”
Cincinnati-based P&G wants to put itsbrands to work selling services as a way of
boosting U.S. revenue and increasing awareness around Tide and its other
products.P&G advanced 27 cents to $60.07 at 4 p.m.in New York Stock Exchange composite
trading. The shares have slumped about 1 percent this year. Three years ago the company launched Mr. Clean Car Wash; nine franchisees are now in business. In 2008, P&G opened three
test Tide dry cleaners in Kansas City. Having fine-tuned the concept, the company is now going national.
P&G is moving into services “that are virtually unbranded,” said Michael Stone,
head of The Beanstalk Group, a New York-based brand-consulting firm. “One
would think consumers would trust a Tide Dry Cleaners because they know P&G is
behind it,” he said. FutureWorks t he Tide and Mr. Clean concepts sprang
from P&G’s FutureWorks unit, which identifies and develops new businesses.
Nathan Estruth, who runs the division, said his staff must get “comfortable with
ambiguity” and accept that most projects “get shut down.”
P&G executives say not just any brand can be hitched to a service. They look for a
fragmented market where consumer expectations aren’t high. (Don’t expect
Pampers Day Care centers.) The company says its research showed that both cleaners
and car washes fit the bill.
P&G lacked franchising experience so it broke its decades- old practice of
promoting from within and recruited William Van Epps, who had managed
franchising at PepsiCo Inc. P&G set up a company called Agile Pursuit Franchising
Inc. and put Van Epps in charge. Van Epps’s team put a premium on
consumer convenience. Each dry cleaner features a double-lane drive-through and
lockers accessible for after-hours pickup. There are lollipops for kids and Iams biscuits -- yes, a P&G product -- for the family dog.
Eco-Conscious
The company hopes to lure eco-conscious consumers with proprietary technology
that doesn’t use the solvent perchloroethylene. P&G says its stores will
charge about the same to dry clean clothes as the industry average ($2.25 for a man’s
shirt; $11.50 for a woman’s dress). Opening a Tide dry cleaner costs a
franchisee about $950,000; a Mr. Clean Car Wash up to $5 million. Don Nix, a former accountant, operates a Mr. Clean Car Wash in Marietta, Georgia,
and plans to open a second one with a partner next year. People won’t necessarily
identify with “Don’s Car Wash,” he said. “The brand and the logo of Mr. Clean [has]
huge value for attracting new customers.” While franchising allows P&G to offload
much of the financial burden, P&G executives acknowledge the model carries
risks. Corporate parents and owneroperators don’t always agree; witness the
ongoing dispute between Yum! Brands Inc. and KFC franchisees over marketing
strategy. And dirty stores or poor service could hurt Tide, which the New Yorkbased
consulting firm Millward Brown ranks fifth globally as measured by value
derived purely from brand equity.
‘We’d Stop’ “If we did anything to damage that,” says
Chief Technology Officer Bruce Brown, “we’d stop.” Van Epps acknowledged that the risks keep him “up at night.” P&G, which declines to discuss sales
targets for its dry- cleaning strategy, argues the business is less of a departure than one
might think. In the company archives, alongside such treasures as 19th-century
wooden soap boxes and an early disposable diaper, is “The Washroom,” an
instruction manual P&G produced for commercial laundries back in 1927.
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