Mystery shopping launderette (Wash.me) from Me Group (LON:MEGP)

7th Jan by Paul Scott

43 comments 2774 reads

I split my time between Bournemouth and London, and our washing machine broke in London. As the black bags piled up to an impossible level, and I was having to "go commando" due to lack of smalls, the idea came to me to see if ME International (LON:MEGP) had any nearby launderette sites?

Luckily there was one such self-service launderette at the Texaco garage on City Road, London. The website says there are 750 Wash.Me (formerly called Revolution Laundry) in the UK, plus many in Europe (France is I think the home market). I found 671 sites by zooming out on its website location map -

It strikes me that MEGP could probably roll-out this format to many more UK sites.

MEGP used to be called Photo-Me, and mainly operates photo booths (for photo-ID), internationally. However, a research note from Cavendish (many thanks) shows how the laundry side of the group is now very important, and highest margin service in the group (47% EBITDA margin, versus 32% for photo booths), and is forecast to make 37% of total group EBITDA (the only figures available) in both FY 10/2023 and FY 10/2024. So it's significant, but rarely mentioned by investors.

I find MEGP shares attractive value, and made it one of my top 20 value/GARP share ideas for 2024 here. Although I'm nervous about the weak share price in the last 6 months - could I be about to run straight into my first profit warning of the year?! So far I've held back on buying any shares personally, but I'd like to own some, as I think it's a really interesting growth company, and shares look great value at the time of writing (PER 9.3x, dividend yield 5.6%, healthy balance sheet).

First some pictures, to show you what the City Road London site is like - it's a corner of the forecourt at a Texaco garage. So rent & overheads would obviously be low. It's open 24-hours, and is self-service, monitored by CCTV.

(You can see my friend Bryce carrying a bag of our washing in the red coat on the right!)

Zooming in a bit -

This corner of the Texaco garage has the main Co-Op shop on the left, then the yellow machine is Amazon…

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Paul Scott

8th Jan

Hi Rusty2,

Yes but the founder clearly wanted to take over MEGP, hence the offer - he didn't break the 30% rule by accident. I say that because I remember he had full financing lined up through a major bank, for the abortive takeover bid, but shareholders rejected it as being too low. But it was a wonderful bull signal for the shares, which were around 75p at the time, from memory, I remember we discussed it here at the time.

Regards, Paul.

Half of the £60 cost was for beer and McDonalds whilst we waited!

The laundry & drying cost £30, and that was for the equivalent of about 3 domestic machine loads (or more). So price was a little pricey, but not as bad as you suggest.

Customer Google reviews were generally positive for this site, although one person did complain it was expensive.

Rusty2

Did he, not what I heard, he only offered 75p, which was hardly a premium, maybe he had to line the finance up, just in case it got accepted?

If he was really serious, then why not offer a bid around 100p?

"I particularly like the ' you carry the big heavy bag of washing whilst I take the photo's ' wheeze :-)"

LOL yes indeed, that was my cunning plan! I did the packing, and made sure my bag was half the weight of Bryce's bag, with me explaining that seeing as he goes to the gym 3 times a week, he might as well utilise all that extra strength!!!

BnB

Well, I was comparing London, Leeds and Edinburgh with Bristol, Manchester and Glasgow but you take your pick!

None near me. London is the nearest about 100 miles away. I thought you were referring to the few in the east.

Places with lots of students, I would have thought would be good locations. Oxford, Cambridge etc.

Damian Cannon

Thanks for writing up your personal experience Paul. I've seen these machines in the wild but it's even better to see them in action. It's very odd that the app is only in French. Sûrement une erreur? But no I've downloaded the app and that's all you get.

Also it's a pity that the pizza machine wasn't working. These have clearly been an issue for ME International (LON:MEGP) as they were planning to scale up production significantly. Apparently they're doing well in France and I'd really like to try one out.

sharw

Paul - you need to do more than one for your mystery shop. How about this one at the side of a filling station:

that has no immediate residential catchment:

What would you do while waiting? In today's weather you would have to sit in the car with the engine running to keep warm - not very good for the environment!

There are quite a number of conventional launderettes not far from where I live (there is a large student population in flats/bedsits here). Most have 10 or more small machines (also £5.50) (what would you have done if the single City Rd. small machine had just been filled by someone else?). In most you can sit inside and one or two even have wifi. Some are attended - which is useful if you have a problem (say the machine fails to unlock at the end). Most have one or two large machines for duvets etc.

For those with a choice between the two I cannot see any advantage of Revolution.

StrawberryDreams

Enjoy the mystery shopper tales Paul and this one was especially fun with the photos and youtube video.The only time i've seen them in the wild was at the petrol station and neighbouring restaurant near to Stone Henge on the way to Devon/Cornwall, where i assume they get a lot of action.I think i recognised the name a couple of years ago as belonging to a UK listed company, but that was it really!Wish i had paid more attention now.

PitBullCH

9th Jan

Given the average Brit's ability at foreign languages, I rather doubt any sane company would put out a UK-based app only in French - gotta be a user issue ;-)

That's what I thought too. But I've downloaded the app and for the life of me I can't see a way to change the language. It's most peculiar.

I have changed it to English, there is a choice of about 8, but that only changes the words at the bottom of the page, not the instructions which stay in French.

10th Jan

Hi Indie,

Photo booths still have a place. My brother was helping my mother apply for a new passport. There was nowhere in the house with a bit of wall that was (a) plain, (b) large enough and (c) well-lit, so he took her down to the nearest Photo.me booth and had her photo emailed to him

That's a really good point actually, and I had the same experience. Despite living in a fairly big apartment with magnolia coloured walls, it was impossible to find a place where I could take a suitable photo for the passport application website. In the end I had to rig up a tripod and use the timer on my mobile, in the outside hallway, which only just worked. Such a faff, that using a local photo booth would have been a lot easier!

So I think you're right, that photo booths might well stay relevant for as long as photo ID is required. I think they might even be adapted for reading eyeballs, or whatever it's called?

20th Jan

Here's an interesting self-service machine I spotted in Malta. Everyone drinks bottled water, because the tap water has high mineral content and gives people kidney stones. Due to the large amount of plastic bottle waste, they have a recycling scheme. The shops have to charge about 60c extra for each bottle (glass and plastic), which is refunded via the machines below - you insert the bottles, and it then prints a money-off voucher which you can use on your next shop.

What a great idea! I wonder if this could be an opening for MEGP in other countries? I don't know who runs the scheme in Malta, or whose machines these are, but it would make sense for MEGP to offer similar machines, and finance them, in return for a commission on each bottle. They could do deals with lots of countries to manage such a scheme, and it could be lucrative, especially if bunched together with its existing laundry & pizza machines.

The scheme in Malta is run by https://bcrsmalta.mt/

The machines are supplied by https://www.envipco.com/

af20001

Also the booths issue a code that you can enter on the passport application, that links to the photo which makes it an easy process.

Paul, regarding the recycling of plastic bottles. The pioneer and 600lb gorilla in this scheme is a Norwegian company called Tomra. They have penetrated many European countries with their automated reverse vending machines. Scotland was planning to introduce such a scheme nationwide but then delayed the introduction. Perhaps the executive were too busy shopping for a new camper van ;-)

Tomra's kit is very sophisticated - it will sort recycled materials into categories as well as take deposits and is also implemented in the food industry for sorting of produce prior to packing. I think they've got the jump on MEGP!!

22nd Jan

The ME.group App has now been updated, and works in English for the UK wash.me sites, so all sorted! I've edited the article accordingly.

JollyBiologist

We first met one of these pizza machines a couple of years ago on a family cycling holiday in France. At the time, I had no idea it was a MEGP machine - we just had 3 very hungry small boys who had been cycling all day and needed food NOW and every other option was closed (I think it was a Sunday). I don't really like pizzas at the best of times, but as a cheap, convenient filler it was one of the best finds of the trip.

Stonethecrows

MEGPThanks Paul for showing us outdoor Laundrette experience in such detail! Here in Sweden where I live, every appartment block has free laundry and drying rooms located in the basements, and when one buys a house, the washing machines and dryers, along with the cooker and fridge is all left behind for the new owners. so there is no opening here for ME International (LON:MEGP) , but what i can say is that we do have a depoit on all plastic bottles and metal drinks cans of between 5 and 20p roughly. These can be fed in to a machine at any supermarket for recycling to get your deposit back for shopping. Its a great idea and works really smoothly. The UK should introduce this to stop litter and clogging up all those inadequately sized green boxes they force people to use for their recycling in some cities. Thanks also for the Saturday podcasts. I really love listening to them in the car. They are a great source of information and very entertaining :)

Mystery shopping launderette (Wash.me) from Me Group (LON:MEGP)

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Paul Scott

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