Business

Topics: Dry cleaning, Balance sheet, Washing machine Pages: 21 (4702 words) Published: June 28, 2013
CASE

1-5

THE

DAG GROUP

As they began their drive from Washington to Boston on a cold January day in 1991. Chris Hackett and Val Rayzman felt that time was running out. lt had been a year since they'd begun trying to build a chain of upscale drycleaners. They had become industry experts-the next day tlley were to give a presentation to a drycleaning.convention. But hadn't yet bought a single store and were running out of money. They had to do something soon: start or buy a store, or abandon their dryc\eaning pursuit altogether,

Background
Chris and VaJ were classmates in the MBA program at Harvard Business School. Val had spent four years as an investment banker in New York. and Chris had sold capital equipment in Cincinnati for his family's company. The two friends described how they came to be interested in the drycleaning industry. We were determined not to go back 10 our former careers, and the on-campus recl1liting choices seemed unsatisfactory. We both wanted to run our own busines~. but neither of us had any idea what to do after graduation. One fall evening. while batting around differenl business ideas, Val brought up drycleaning. "Look Chris, here is an industry that is fragmented, undifferentiated. has low entry barriers. and is something that people use aU the time. Why can't we do what others did to supermarkets, pizza parlors, and office supply stores?" The thought of transforming a sleepy industry with unappealing stores and poor service was Valery Rayzman. MBA '90, and Christopher J. Hackett, MBA '90, prepared tbis case under the supervision of Professor Amnr Bhide as the basis for class discussion. Copyright © 1992 by the President and Fellows of Harvard College. Harvard Business School Case 9·392-077.

,

143

144

Part I

Evaluating Opporlunity aM Developing the Business Concept

exciting. As a first step, we arranged to do a field study in service management [Il student research project) in the spring tenn with the goal of developing a plan to build a chain of drycleaning stores. We also fonned a partnership-the DAG Group. a loose acronym for DrycIeaning AcqUisition Group.

The DAG Field Study
We worked closely with two large. professionally managed chains in the Boston area. In addition to interviews and plant observations, one of the cleaners also shared the computer data on customers, which we analyzed for retention rates, buying habits, that sort of thing. We traveled the Eastern seaboard visiting drycleaning plants, industry shows, associations, suppliers, brokers. etc. Finally. we conducted several focus groups with business school students and their partners.

The Industry
Drycleaning stores, we found. are either "plant" stores or "dry" stores. Plant stores have their own drycIeaning and shirt laundry facilities (see Exhibits 1 and 2 and Appendix) or sometimes only drycIeaning facilities. Dry stores may be part of a chain serviced by a central plant or independently owned and operated, contracting to have their cleaning done. There are about 18,000 plant stores and 10,000 to 20.000 dry stores in the United States. About 95 percent of all outlets are single stores owned by a proprietor. Some owners of plant stores have opened dry stores in order to fill plant capacity, and then there are a few large chains. The largest chain belongs to the Johnson Group, a publicly traded British company, which operates 360 stores under 10 different trade names. The Johnson group bought DryClean USA, a franchising company with 184 slores, 82 of which are company owned. The next largest is Concord Custom Cleaners, which was purchased by II large drugstore chain and owns 180 stores from Illinois to Florida. Real spending remained constant throughout the 1980s. The International Fabricate Institute. the industry association, estimated the total U.S. drycleaning revenue in 1990 to be approximately $4 billion. And the number of establishments increased sharply in the 1980s; in some...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay on Business planning
  • Retailing and Sample Business Plan Essay
  • Business Entity Concept Essay
  • Laundry Shop- Business plan Essay
  • Business Plan Example Essay
  • Why Are Accurate Financial Statements Important for Outside Business Interests Essay
  • Business Plan for Small Business Essay
  • Business Plan Essay

Become a StudyMode Member

Sign Up - It's Free
Twitches Too 2007 1080p WEB-DL DD5 1 x264-NTb | Laura D'Arista Adam | natural Burma/ Chinese Jade (jadeite) hand carved jade pendant - See Video. 2