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From laundry to beauty salons: Mr Jeff’s exponential franchising growth

© Mr Jeff

Mr Jeff, the startup opening 100 new laundries a month, has entered the beauty market with price-competitive on-demand services

Mr Jeff's expansion seems unstoppable. The dry cleaning and laundry service mobile app was launched in Valencia in 2015 and expanded its operations to Madrid and Barcelona the same year. The company now has a staff of over 220 people and has opened 1,000 franchises. It also diversified into a multi-service proposition with its beauty and wellbeing offshoot, BeautyJeff, in June this year and is expanding globally at a rapid rate.

“There’s a high rate of returning customers, proving that this sector has great potential," Aaron Rodriguez, CMO of Mr Jeff. said of the beauty business. "People are used to going to beauty saloons twice a month, on average 23 times in a year.” The strategy intends to include new services within the same Mr Jeff app to facilitate and encourage the booking of transversal services within the same platform.

Mr Jeff’s business model has evolved quickly. Initially, users booked their laundry service through the mobile app, whereupon a dedicated driver came to collect the garments and returned them cleaned and ironed within 48 hours. Later, a network of franchises offered self-service laundries. This online-offline business model is monetized through monthly subscriptions and a service fee per order of around 20%. The first year of operations saw company growth of 30% month on month – market traction that allowed the Mr Jeff to focus on international expansion.

Backed by €2m funding from angel investors and entrepreneurs such as Kim Jung-ju, investor and founder of South Korea's largest gaming company Nexon; Jeroen Merchiers, AirBnb's MD for Europe, the Middle East and Africa; and Albert Armengol, co-founder of Doctorialia, Mr Jeff launched a new operation in Mexico in 2017. The aim of this was to test a scalable model that would be replicated across Latin American countries. The strategy was to have a 20% margin on each service so that profitability could be attained within the first seven months of operation in Mexico and then in any other Latin American country. Low operational costs in the region allow greater scalability and returns compared with Spain.

International expansion

Mr Jeff’s founding team is composed of Eloi Gómez Cal (CEO), Rubén Muñoz Trapote (COO) and Adrian Lorenzo Alonso (CTO) – all aged under 30 and each with a few years of professional experience. They found themselves faced with operational challenges at the startup as soon as orders started ballooning.

They decided to franchise Mr Jeff to reinforce expansion while maintaining low operational costs. This seemed to be the best way to build a network of laundries across cities with good logistics. "It allowed us to set operational guidelines for each store," said Gómez. "If we had chosen to work with any laundry already in the market, we would have struggled to change their way of working… This way, we could establish our brand presence and have control over processes."

According to the company, opening a Mr Jeff franchise in Latin America costs between €30,000 and €40,000, with a return on investment within the first 18 to 24 months of activity and margins between 15% and 20%. In Spain, the cost of opening a franchise can reach €50,000.

Mr Jeff's launch in Mexico evolved into a network of 80 established franchises and by the end of 2017 the company opened 10 new points of sale in Colombia and three in Peru.

"One euro in Europe is like 10 in Latin America," said Eloi. "We did not expect much in Spain, but we were sure that Mr Jeff would work in Brazil and Indonesia. We had to study the number of laundries in each market, check if there were large chains in the sector, and buy them."

At the end of 2018, Mr Jeff announced the acquisition of Lava é Leva, the biggest laundry chain in Brazil with over 350 points of sale – securing for the company one of the biggest markets in Latin America. In the months since, the company has closed a US$12m Series A round for a total amount of US$15.5m funding to date.

“Our good results have been crucial to gain trust from investors,"said Gómez. "We have proven that our business model works through the franchise network. Mr Jeff has been validated in a strategic sector, giving us the opportunity to replicate the model in fragmented industries.”

From expansion to diversification

Throughout 2019, Mr Jeff has expanded into Panama, Ecuador, Turkey and Egypt. The company has also received more than 60 applications to open franchises in the Philippines, where it started to operate with a first franchisee in June. Since then, the expansion into Asia has grown exponentially, with Singapore joining the list in July and with Vietnam, Thailand, Indonesia and Hong Kong due in the coming months.

“We have observed that this platform is very useful for young people and entrepreneurs with very tight agendas," said the company’s Director of Expansion Luis Eduardo. "It saves them a lot of time, which they can dedicate to other activities.” 

The biggest step of 2019 has been the launch in June of BeautyJeff. This concept offers on-demand beauty and wellness services with the idea of replicating the same model used for laundries through a network of franchisees who can also opt to become investors. The initial investment required to open a BeautyJeff franchise is roughly the same as a Mr Jeff laundry franchise: US$30,000 to US$40,000.

Mr Jeff's beauty services are estimated to be 30% cheaper than premium beauty saloons, with the added advantage that customers do not need to reserve an appointment and can benefit from a real-time, on-demand beauty treatment.

“We use technology to make life easier," said Rodriguez. "We want to offer daily beauty services as an accessible service that doesn’t mean low-cost. We are accessible because our customers perceive us as value-for-money.”

From laundry to beauty, Mr Jeff’s is freeing people's time and aiming to establish its presence with over 3,000 franchisees across 30 countries by the end of 2019.

 

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Edited by Matt Stanley

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