Mystery shopping launderette (Wash.me) from Me Group (LON:MEGP)
I split my time between Bournemouth and London, and our washing machine broke in London. As the black bags piled up to an impossible level, and I was having to "go commando" due to lack of smalls, the idea came to me to see if ME International (LON:MEGP) had any nearby launderette sites?
Luckily there was one such self-service launderette at the Texaco garage on City Road, London. The website says there are 750 Wash.Me (formerly called Revolution Laundry) in the UK, plus many in Europe (France is I think the home market). I found 671 sites by zooming out on its website location map -
It strikes me that MEGP could probably roll-out this format to many more UK sites.
MEGP used to be called Photo-Me, and mainly operates photo booths (for photo-ID), internationally. However, a research note from Cavendish (many thanks) shows how the laundry side of the group is now very important, and highest margin service in the group (47% EBITDA margin, versus 32% for photo booths), and is forecast to make 37% of total group EBITDA (the only figures available) in both FY 10/2023 and FY 10/2024. So it's significant, but rarely mentioned by investors.
I find MEGP shares attractive value, and made it one of my top 20 value/GARP share ideas for 2024 here. Although I'm nervous about the weak share price in the last 6 months - could I be about to run straight into my first profit warning of the year?! So far I've held back on buying any shares personally, but I'd like to own some, as I think it's a really interesting growth company, and shares look great value at the time of writing (PER 9.3x, dividend yield 5.6%, healthy balance sheet).
First some pictures, to show you what the City Road London site is like - it's a corner of the forecourt at a Texaco garage. So rent & overheads would obviously be low. It's open 24-hours, and is self-service, monitored by CCTV.
(You can see my friend Bryce carrying a bag of our washing in the red coat on the right!)
Zooming in a bit -
This corner of the Texaco garage has the main Co-Op shop on the left, then the yellow machine is Amazon lockers. Behind that (not visible) is a cashpoint machine. Next, to the right of that are the 3 Wash.me machines - a large dryer (20kg), then a large washer (20 kg), then a small washer (9kg). To the right of that is a yellow & black fresh pizza vending machine (not working sadly) also operated by MEGP. Then some fencing & a service area for machine maintenance, then the white machine on the far right is lockers for international post, branded "In Post". So as you can see, self-service machines of various types have been cleverly bunched together.
A closer look -
And finally - here (below) are the 3 Wash.me machines, which are controlled from a iPad sized touch pad and card payment device on the RHS below. All simple to use I found.
.
How did Wash.me work in practice?
Very well - both washers were not in use, so we could load up and start them immediately. Wash time was only about 30 minutes (although you can select other longer cycles), and the detergent is added automatically by the washing machine itself (no need to bring any with you). The clothes came out clean, no discernible difference to washing them at home.
You can input your mobile number, so it sends you a text 12 minutes before the wash or dry cycle is about to end.
You don't need to use the dryer, as stuff came out fairly well spun. So to save money, if in a car, things could be bagged up and dried at home (would be too heavy to carry it home on foot if more than a short walk).
Cost?
From memory, I think the small washer was £5.50, with the larger one about £11. The dryer was also about £11, for 45 minutes, which didn't quite fully dry everything, we had to air clothes a little longer once home. So with bus fares, we spent about £30. Or about £60 in total, if I also include the cost of 2 pints of Peroni at a nearby pub, and 2 MacDonalds meals for the pair of us!
Why use Wash.me?
Since the vast majority of UK households must have a machine at home, what's the point of launderettes? In our case, our home machine had broken, and we had a wait of several weeks for the new one. I asked another customer why he used it. He replied that his family are staying in London in a hotel, and the cost of laundry would be astronomical, so he used Wash.me instead, carrying the laundry there in a wheeled suitcase. So I'd say the main customers are likely to be people visiting an area for holidays or business, who don't have ready access to a washing machine/dryer.
The second type of customer is someone who wants to do a particularly large load. The 20kg machine holds loads, and I've heard they're popular with sports teams, to do all the kit in one go. Or as the sign on the machine suggests, it's good for duvets, curtains, cushions, sofa covers, etc.
The other advantage is that it's open 24 hours, and has a MacDonald's on the same site, so you can sit in the warm whilst you wait, with no worries because the machines cannot be tampered with once they are locked & running.
Any problems/ improvements?
Very poor (useless actually) mobile App. It's in French, and doesn't seem to be set up for use in the UK. Surely they can sort out a proper app, considering there are 750 sites in the UK?! A glaring omission.
EDIT 22/1/2024 - this seems to have been fixed! The App has been updated and is now in English, and I managed to register. It asks rather intrusive questions, including date if birth, but it let me continue leaving that field blank. I then received an email to authenticate my account in the usual way, and a £2 discount offer. End of edit.
Some clothing drops out onto the unfinished concrete floor as you're unloading. It needs a shelf to catch things.
If inconsiderate customers fail to return to the machines on time, then you can be waiting. This was only about 2 minutes for us, so I didn't need to remonstrate with the chap concerned.
Overall
Having tried the service, I can clearly see how the economics of this would be excellent. After the initial setup capex, this would just be a cash cow, with only small overheads. Vandalism could be a problem maybe, with it being open, and 24-hour. A nearby Lloyds Bank bore the brunt of New Year's Eve vandals -
Finally, I took a silly short video -
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43 comments
Here's an interesting self-service machine I spotted in Malta. Everyone drinks bottled water, because the tap water has high mineral content and gives people kidney stones. Due to the large amount of plastic bottle waste, they have a recycling scheme. The shops have to charge about 60c extra for each bottle (glass and plastic), which is refunded via the machines below - you insert the bottles, and it then prints a money-off voucher which you can use on your next shop.
What a great idea! I wonder if this could be an opening for MEGP in other countries? I don't know who runs the scheme in Malta, or whose machines these are, but it would make sense for MEGP to offer similar machines, and finance them, in return for a commission on each bottle. They could do deals with lots of countries to manage such a scheme, and it could be lucrative, especially if bunched together with its existing laundry & pizza machines.
The scheme in Malta is run by https://bcrsmalta.mt/
The machines are supplied by https://www.envipco.com/
Paul, regarding the recycling of plastic bottles. The pioneer and 600lb gorilla in this scheme is a Norwegian company called Tomra. They have penetrated many European countries with their automated reverse vending machines. Scotland was planning to introduce such a scheme nationwide but then delayed the introduction. Perhaps the executive were too busy shopping for a new camper van ;-)
Tomra's kit is very sophisticated - it will sort recycled materials into categories as well as take deposits and is also implemented in the food industry for sorting of produce prior to packing. I think they've got the jump on MEGP!!
MEGPThanks Paul for showing us outdoor Laundrette experience in such detail! Here in Sweden where I live, every appartment block has free laundry and drying rooms located in the basements, and when one buys a house, the washing machines and dryers, along with the cooker and fridge is all left behind for the new owners. so there is no opening here for ME International (LON:MEGP) , but what i can say is that we do have a depoit on all plastic bottles and metal drinks cans of between 5 and 20p roughly. These can be fed in to a machine at any supermarket for recycling to get your deposit back for shopping. Its a great idea and works really smoothly. The UK should introduce this to stop litter and clogging up all those inadequately sized green boxes they force people to use for their recycling in some cities. Thanks also for the Saturday podcasts. I really love listening to them in the car. They are a great source of information and very entertaining :)
Given the average Brit's ability at foreign languages, I rather doubt any sane company would put out a UK-based app only in French - gotta be a user issue ;-)
That's what I thought too. But I've downloaded the app and for the life of me I can't see a way to change the language. It's most peculiar.
I have changed it to English, there is a choice of about 8, but that only changes the words at the bottom of the page, not the instructions which stay in French.
The ME.group App has now been updated, and works in English for the UK wash.me sites, so all sorted! I've edited the article accordingly.
Enjoy the mystery shopper tales Paul and this one was especially fun with the photos and youtube video.The only time i've seen them in the wild was at the petrol station and neighbouring restaurant near to Stone Henge on the way to Devon/Cornwall, where i assume they get a lot of action.I think i recognised the name a couple of years ago as belonging to a UK listed company, but that was it really!Wish i had paid more attention now.
Paul - you need to do more than one for your mystery shop. How about this one at the side of a filling station:
that has no immediate residential catchment:
What would you do while waiting? In today's weather you would have to sit in the car with the engine running to keep warm - not very good for the environment!
There are quite a number of conventional launderettes not far from where I live (there is a large student population in flats/bedsits here). Most have 10 or more small machines (also £5.50) (what would you have done if the single City Rd. small machine had just been filled by someone else?). In most you can sit inside and one or two even have wifi. Some are attended - which is useful if you have a problem (say the machine fails to unlock at the end). Most have one or two large machines for duvets etc.
For those with a choice between the two I cannot see any advantage of Revolution.
Thanks for writing up your personal experience Paul. I've seen these machines in the wild but it's even better to see them in action. It's very odd that the app is only in French. Sûrement une erreur? But no I've downloaded the app and that's all you get.
Also it's a pity that the pizza machine wasn't working. These have clearly been an issue for ME International (LON:MEGP) as they were planning to scale up production significantly. Apparently they're doing well in France and I'd really like to try one out.
We first met one of these pizza machines a couple of years ago on a family cycling holiday in France. At the time, I had no idea it was a MEGP machine - we just had 3 very hungry small boys who had been cycling all day and needed food NOW and every other option was closed (I think it was a Sunday). I don't really like pizzas at the best of times, but as a cheap, convenient filler it was one of the best finds of the trip.
What that map says to me is that folk in the eastern half of the country have bigger houses! Compare the number of installations vs your best estimate of city populations. I make it that installed density is far higher in the west.
Yes less people and more space. I live where the 2 is on the map. Lincolnshire is even less densely populated.
Well, I was comparing London, Leeds and Edinburgh with Bristol, Manchester and Glasgow but you take your pick!
None near me. London is the nearest about 100 miles away. I thought you were referring to the few in the east.
Places with lots of students, I would have thought would be good locations. Oxford, Cambridge etc.
Just a personal perspective on the laundry services. As somebody who enjoys travelling around, I can categorically state that the biggest inconvenience is having to maintain nice clean clothes. For me, these outdoor machines have totally removed the hassle, and I will be glad when I can find them all around the world. They are a real godsend.
As a long-term holder of PhotoMe I’m a little sceptical on the pizza ovens, but the beauty of their business model is that they can test and repeat. I.e., failures are not too expensive, but successes can be potentially lucrative. Especially given the synergies that are involved when they are already operating an estate of machines anyway.
Good points, thanks.
Bryce and I both thought that the pizza machine would be so much better if (a) it had been working, lol, and (b) if the front of the machine had been transparent plastic - to actually see the pizza cooking, and how it works, would be quite exciting I think (yes, I need to get out more!)
Regards, Paul.
As long term holder of ME I found detailed comments very useful. It is so easy just to invest on financials etc and real feedback is very valuable.
Thanks for the update Paul,a very helpful insight for a share at the top of my watchlist.
Slightly concerned re the price disconnect against forward forecasts,looking at the chart looks like there maybe some further weakness to come maybe?,which of course could be a buying opportunity or a warning.
Also of note is the fact that one director is also the largest shareholder at 36%.I seem to recall similar situations and advice to be wary in such instances.Any thoughts greatfully recieved.
Hi he has tried to take it private previously, it might be rubbish but I met one of the top Schroder fund managers last year and we talked about this share he said its most likely a family member will take over as I think the founder is late seventies.
Schroders hold a large slug of these so I don't think it would be as easy to take private for buttons as happended with I Energizer.
Yes he is 77.
The takeover bid was just to comply with the rules "When this figure rose above 30% in January, Takeover Panel rules required Crasnianski to make an offer for the whole company"
Thanks for the replies guys,a brief scan this afternoon filled in the blanks re Crasnianski,and will make a mental note of the 30% takeover rule for further reference going forward.
Always good to see Schroders on the register,will watch the chart with a view to a starter position.
Hi Rusty2,
Yes but the founder clearly wanted to take over MEGP, hence the offer - he didn't break the 30% rule by accident. I say that because I remember he had full financing lined up through a major bank, for the abortive takeover bid, but shareholders rejected it as being too low. But it was a wonderful bull signal for the shares, which were around 75p at the time, from memory, I remember we discussed it here at the time.
Regards, Paul.
Did he, not what I heard, he only offered 75p, which was hardly a premium, maybe he had to line the finance up, just in case it got accepted?
If he was really serious, then why not offer a bid around 100p?
£60 for a load of washing sounds very expensive to me, you can buy a washing machine for around £300. Should be good profit margin if they have reasonable turnover. There is one about 7 miles away from me, I may give a try with some duvets. Seems a odd location in a village.
I think these should be located at supermarkets, it would ideal for people shopping.
I do hold ME International (LON:MEGP).
I've definitely seen them outside supermarkets.
Not in my area, only one is in a village. Near a large supermarket, would make a lot more sense, I bet many people don't even know about them.
I have a local laundry service, I will have to check the prices.
Hi Rusty2,
Half of the £60 cost was for beer and McDonalds whilst we waited!
The laundry & drying cost £30, and that was for the equivalent of about 3 domestic machine loads (or more). So price was a little pricey, but not as bad as you suggest.
Customer Google reviews were generally positive for this site, although one person did complain it was expensive.
Regards, Paul.
I cant fit double duvets into our domestic machine so have to go to the laundrette every other year. We still have an old fashioned one with old machines nearby.
Thanks for sharing that Paul. Just realised that I probably saw one of these Wash.Me set ups at a Motorway Services on the M6 in June. Thought it was an odd location but arguably perfect for lorry drivers(who can be away for a week or more), travellers of various sorts, people away from home for long periods. With all the facilities on site plenty of places for users to while away the time.
For getting sites there is a benefit to providers of catering and impulse services, fuel/charging facilities, etc as wash cycle dictates dwell time. Co-locating vending services/parcel lockers, etc seems a good idea too for more reasons to visit. Also works for servicing, security of kit and safety of users.
Remembering back to a time pre homeownership. That's when launderettes were a regular part of life for me. And as a student when not in Uni Halls. Still laugh at the memory of putting a red top in with the white shirts I bought for interviews!
ME International (LON:MEGP) I hold.
Great report Paul, thanks.
I generally agree with Sevenccc re locations. I think however that the launderette market is a bit larger as I recall my very first owned flat had such a small kitchen that there was no room for a washing machine even if I could afford to buy one. Every fortnight or so took me down to the launderette (yes, the one with the pub opposite) and there were a good many others customers of same ilk. Can’t be much different in commuter land now.
Interesting report, thanks Paul. I particularly like the ' you carry the big heavy bag of washing whilst I take the photo's ' wheeze :-)
"I particularly like the ' you carry the big heavy bag of washing whilst I take the photo's ' wheeze :-)"
LOL yes indeed, that was my cunning plan! I did the packing, and made sure my bag was half the weight of Bryce's bag, with me explaining that seeing as he goes to the gym 3 times a week, he might as well utilise all that extra strength!!!
Thanks for the scuttlebut Paul. As a shareholder in ME International (LON:MEGP) my observation is that their IT is a weak link and I would like them to improve in this area. As an aside, was the empty pizza machine one of theirs?
Hi BL!
Yes I think the pizza machine was part of MEGP's very small "Feed.me" division, which only constitutes about 3% of group EBITDA.
What I like about MEGP is that it's a long-standing expert in booths/kiosks, so it could probably turn its hand to all sorts of self-service things that we may not have even thought of yet. So much knowledge & experience in this area must be within the group. Also, bunching the machines together in one site could have obviously good economics if they can train their engineers to do routine maintenance & re-filling of several different types of machines at the same time.
It all looks pretty interesting to me. Although investors have been worrying for >20 years that the core photo booths business might suddenly become redundant due to iPhones being used instead. But it seems to have adapted & remained relevant.
Quite an interesting share I think.
Regards, Paul.
Photo booths still have a place. My brother was helping my mother apply for a new passport. There was nowhere in the house with a bit of wall that was (a) plain, (b) large enough and (c) well-lit, so he took her down to the nearest Photo.me booth and had her photo emailed to him - which he could then send to anyone or use for anything.
Hi Indie,
Photo booths still have a place. My brother was helping my mother apply for a new passport. There was nowhere in the house with a bit of wall that was (a) plain, (b) large enough and (c) well-lit, so he took her down to the nearest Photo.me booth and had her photo emailed to him
That's a really good point actually, and I had the same experience. Despite living in a fairly big apartment with magnolia coloured walls, it was impossible to find a place where I could take a suitable photo for the passport application website. In the end I had to rig up a tripod and use the timer on my mobile, in the outside hallway, which only just worked. Such a faff, that using a local photo booth would have been a lot easier!
So I think you're right, that photo booths might well stay relevant for as long as photo ID is required. I think they might even be adapted for reading eyeballs, or whatever it's called?
Regards, Paul.
Also the booths issue a code that you can enter on the passport application, that links to the photo which makes it an easy process.
I seem to remember an article that they are very popular in France which was the first expanded development country. Supermarket car parks were the key locations. Go for a big shop, probably a snack or meal at the cafe and then job done.
As for costs, yes of course that seems to be a high price, but you don't have to plumb this in, and the detergent is added, and the big items seem to be the key attractant.
Detergent is only about 10p. My washing machine uses about 1kw, so 30p in electric. So about 50p for a full wash.
Enjoyed that Paul. I’m guessing that you can only unlock the machine with your card details/the app - so no risk of anyone simply stealing your clothes once the cycle ends?
There could be a future element of cash flow here for ME International (LON:MEGP) , they could start charging users who haven’t returned within x. Minutes and could charge a nominal amount for every minute they are late. Tesla do similar at their super chargers, there is a small period of grace once you are fully charged but past that they charge £1 a minute, so people tend to return to their cars promptly. Might be pointless for them ME International (LON:MEGP) as their machines might not have that high traffic to them.
Getting feels of fines for late pick up at nurseries - late pick ups increased as now it was a service parents were paying for.
And if machines aren't available, I guess customers would not be happy/seek alternative. We had one open up very close to us & the Mrs was very excited about washing duvets etc.
Never dogger myself but I expect dog beds might be a good fit - guess they vary based on size of the dog so not sure if 20kg is big enough for all beds