COVID-19 Impact Felt in Latest Uniform & Linen Rental Survey

Posted June 19, 2020 at 12:56 pm



Robert W. Baird & Co., in partnership with TRSA, recently released the results of the June 2020 (2Q20) Uniform & Linen Rental Survey. Baird also released a “flash survey” in April to take into account the effects of the COVID-19 pandemic that its first-quarter survey missed.

In the second-quarter survey, the key findings among uniform rental operators included:

  • Rental Revenue Trends: 70% of respondents fell short of internal revenue projections for the quarter with 15% meeting target. Fifteen-percent exceeded plan.
  • Add/Stops: Employment-driven expansion at existing accounts fell to 15.8 (diffusion index), its first negative (i.e., <50) reading since Sept. 2016 and the lowest absolute level since March 2009.
  • Pricing: Base pricing gains increased nearly 1% and the diffusion index held mostly stable at 47.4.
  • No-Programmers: New sales index fell to 36.8, from 56.5 last quarter. Like Add/Stops, this was the first negative print since 2016 and the lowest absolute print since Sept. 2009.
  • Growth Outlook: Positively, respondents see +1.4% growth over the next 12 months. Open response comments suggest outlook dependent upon economic reopenings and customer viability.

Key linen rental survey findings included:

  • Rental Revenue Trends: 89% of respondents cited rental revenue trends falling well below expectations in 2Q20 with 6% citing revenue near expectations.
  • New Account Pricing: 17% of respondents cited more-aggressive new-account pricing in 2Q20 while 22% saw less-aggressive pricing. The balance (61%) saw no change. As a result, the diffusion index pushed into positive territory at 52.8. Presumably, new accounts came with more cost to serve (e.g., personal protective equipment) needs.
  • Base Account Pricing: The average price increase on existing accounts undergoing price review in 2Q20 was +0.5%, dipping lower from last quarter’s +1.74%. Overall, 33% of respondents cited price increases with 50% reporting no material change. Only 17% saw contraction.
  • No-Programmers: No-programmer interest showed quarter-over-quarter deterioration and turned negative (36.1) for the first time since we began tracking this industry category in 2015.
  • Growth Outlook: Forecasted 12-month revenue is expected to decline 4.2% on average over the next 12 months, although close to 40% of respondents cited revenue decline expectations of greater than 10%.

To view the second-quarter survey results, click here. To review the results of April’s “flash survey,” click here. If you have any questions or comments on the survey, email Baird Senior Analyst Andrew Wittmann at awittmann@rwbaird.com or Senior Research Associate Justin Hauke at jhauke@rwbaird.com.

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