Operators Optimistic Despite Inflationary Pressures

Posted September 23, 2022 at 12:14 pm

Robert W. Baird & Co. and TRSA recently released the results of the September 2022 (Third-Quarter 2022) Uniform & Linen Rental Survey. Both uniform and linen rental executives were optimistic about their growth prospects for the next 12 months, despite continuing inflationary pressures on their business.

Key uniform rental survey findings from the latest survey include:

  • Rental Revenue Trends. 36% of respondents beat their own revenue expectations for the quarter with 12% falling short. 24% spread narrowed but remains generally healthy.
  • Add/Stops. Employment-driven expansion at existing accounts (i.e., Add/Stop Diffusion Index) held in positive territory at 56.0, strengthening versus last quarter’s survey (51.6: index measures relative quarter-over-quarter change). Macro labor market trends also have generally showed strength.
  • No-Programmers. The no-programmer diffusion index improved to 56.3 (from a more neutral 50 last quarter), suggesting steady new account growth gains.
  • Growth Outlook. Industry consensus now sees roughly 5% organic growth over the next 12 months versus +5.9% previously. The price moderation issue is a factor. Respondents continue to highlight inflationary cost pressures, somewhat at odds with the moderating pricing contribution.

Key linen rental survey findings include:

  • Rental Revenue Trends. 46% of respondents cited rental revenue trends above expectations with 32% in-line. 21% falling short. Relative spread narrowed.
  • No-Programmers. No-programmer interest remained solidly positive at 57.1 and was similar to 57.9 from last quarter’s reading. The index has been in expansionary territory since dipping negative in 2020.
  • Growth Outlook. Forecasted 12-month revenue outlook improved to +6.7%, a new record as the highest rate of forecasted growth in our survey’s history (since December 2015 for this sector).

Click here to view the results of the survey. If you have questions or want to participate in a future survey, contact Baird Facility & Industrial Services Research Team executives Andrew Wittman at awittmann@rwbaird.com or Justin Hauke at jhauke@rwbaird.com.