Linen King Boosts Hospital Laundry Service Business

Linen King Boosts Hospital Laundry Service Business

KIRBY_NEWS_PICS_WEBSITE_LKTULSA - Hospital laundry services have proven a double-digit growth area for The Linen King.

 

After charting about a 30-percent jump in sales last year to just under $15 million, that Tulsa commercial cleaning company expects a 33-percent increase this year to about $20 million, driven both by organic growth and acquisition.

“We’re looking at a couple of potential acquisitions right now,” said CEO and founder Leonard McCullough. “We expect to have one complete in the next 12 months.”

 

With its fifth regional plant added in January, the 300-employee company will boost its Tulsa headquarters space about 33 percent this week with a move to 1521 W. 36th Pl. That location provides about 4,000 square feet of office plus 5,000 square feet of warehouse space.

 

“In our 13-year history, this will be the first time we will have offices exactly the way we wanted them,” McCullough said. “Our corporate employees are pretty excited about it.”

 

Although his firm handles more than 50 million pounds of linen annually – 20 million of that at the Midwest City plant alone – McCullough said excess capacity at his cleaners allows him to target 15- to 20-percent annual organic growth above possible acquisitions. The regional spread of Linen King’s five Midwestern plants – which focus on a 150-mile geographic radius, but can handle an area up to double that – allows the plants to back up each other should the situation require it. A fleet averaging more than six trucks per plant accentuates that capacity.

 

“In our existing markets, there’s a ton of room for growth,” he said. “We have one or two worthy competitors in each market, but no more than that.”

 

While it also serves the hospitality and the uniform/dust-control cleaning segments, Linen King’s business strategy focuses on securing long-term hospital laundry contracts – often by first acquiring their in-house laundry services. The company added three of its plants that way.

 

“Some hospitals 15 to 20 years ago started building them off campus, maybe a mile or two away,” he said, noting a economic period when health care providers pursued a diversified business platform to provide revenue stability.

 

“It proved not to be very good business model,” said McCullough, who founded the company with his father, L.K. McCullough, and Kevin Jordan. “It was not their core competency. Plus the idea of doing laundry for competitors proved not to be a very good idea.”

 

With many such providers now going the other direction, McCullough said this trend opened a door for Linen King’s expansion.

 

“We’ve found a lot of these hospitals really willing to offload that asset as long as you’re willing to partner with them and be really willing to do good laundry,’ he said. “That is something we continue to look for across the country, hospitals that may be interested in getting out of the laundry business.”

 

Such contracts not only prove three to five years in duration, but include a lot of revenue-producing work.

 

“That has served us very well, especially through the recession,” he said of Linen King’s health care focus. “We have had double-digit growth every year of our existence. It has proven to be a very good sector to be in.

 

“You have to be really patient,” McCullough added, noting the length of existing contracts. “You have to court the customer. You have to explain to them that this is going to be a long-term relationship and we view them as a partner, not a customer.”

 

Linen King’s five plants

 

Midwest City, Okla.

Springdale, Ark.

Conway, Ark.

Columbia, Mo.

Wichita, Kan.