Laundry man Yaakoub Hijazi is proving that there’s still money in low-tech service.
Yaakoub Hijazi quit college to save his late father’s faltering laundry business. Nine years later, he’s proven that’s there’s still good money
to be made in a low-tech service business.
“I didn’t want my father’s name to be tarnished,” says Yaakoub Hijazi, president of Paterson, New Jersey–based Star Laundry. When his father, Youssef, died in 2011, four months after being diagnosed with lung cancer, Hijazi was a 19-year-old student at Montclair State University. He soon learned that his dad’s $4 million (sales) commercial laundry and dry-cleaning business was on the brink of collapse. “When you go bankrupt, your name is destroyed,” he says.
So Hijazi, now 27, ditched school to rescue Star Laundry. “I threw my textbook out, which was a little overboard,” he says. “I told my mother there is no way I can go back.”
Since then, Hijazi, who is on this year’s Forbes 30 Under 30 in Manufacturing & Industry, has not only protected his father’s legacy; he’s built the business into a powerhouse in the tight-knit world of hotel launderers in New York. Today, Star Laundry cleans sheets and towels for more than 100 of the city’s roughly 800 hotels, including the Conrad New York and the W Times Square. Based on Forbes’ estimates, it handles as much as 40% of the laundry generated by the city’s hotels, bringing in some $70 million a year in revenue. Add in Hijazi’s other ventures, including real estate in New Jersey and linen manufacturing in Benin, Africa, and his group’s annual revenue is closer to $120 million.
Laundry is a cutthroat business, priced at 30 cents to 45 cents per pound in New York. Price cutting to gain market share is rampant. Stumbles abound. Prestige Industries, once Hijazi’s biggest competitor, filed for Chapter 11 bankruptcy in 2017, and its assets were subsequently bought by a private-equity firm that owns laundry firm PureTex Solutions. “The entire market is fighting over the same 200 hotels,” says Sang Cho, CEO of Prestige until 2012, who founded Cooperative Laundry in 2018. “We’ve heard some of our competitors bidding below 27 or 28 cents a pound, which is crazy.”
Hijazi, who owns 100% of Star, wooed customers by being personally on call starting at 3:30 a.m. and setting rates in the mid-to-upper range to attract hotels while maintaining profitability. “Our selling point is quality,” he says. “That’s why we have no salesmen.”
On a November visit to the Paterson headquarters, Hijazi showed off one of his four giant tunnel washers. The dirty linens arrive in 800-pound bins labeled “Star Laundry Baba Joe 1948–2011” for his dad. Next, 135-pound loads pass through modules that scour dirt with 180-degree water and brighten colors with hydrogen peroxide and six to 11 other chemicals. Separate compartments in the tunnel and computer coding allow multiple hotels’ linens to be washed at the same time.
Though Hijazi grew up 20 minutes from the plant, in Montclair Heights, he never intended to work there. “He didn’t even want me in it,” Hijazi says of his father, who came from Lebanon at 17 and opened restaurants, including Star Deli, before moving into the laundry business. He later moved that from Brooklyn to New Jersey, where labor costs were lower and union rules more lax.
When Hijazi took over, he got hit with a lot. “And when you’re 19 years old, people are not going to listen to what you say,” he recalls. The company faced a cash crunch, sewer liens, tax liens and fines from the federal Occupational Safety and Health Administration. Hijazi borrowed $300,000 to pay off everything, ditched the middling dry-cleaning business and hired an OSHA consultant to address the safety issues.
Calling on hotels, he used his youth as a selling point. He signed on the DoubleTree on Lexington in 2012, then talked his way into other hotels, including the Westin Times Square: “Hotels realized they were cutting costs and getting crap service.”
Don Fraser, a longtime hotel executive then running the Park Central and WestHouse hotels, hired Star in 2016 to handle their nearly 5 million pounds of laundry a year. “He was—I don’t want to say picky, but he was very selective [about] his hotels,” Fraser says. Though located in New Jersey, Hijazi focused on large and luxury hotels in Manhattan, where occupancy rates are high and steady. That helped insulate him from pricing pressures and let him create delivery-route efficiencies.
The long hours take a toll. Hijazi is in talks to sell Star Laundry. He declines to discuss details, but Forbes estimates the business could be worth at least $150 million. “The biggest fear,” he says, “is selling what my father started. It’s an emotional fear.”
“I TRUST MY DOCTOR WITH MY LIFE, BUT NOT MY DIRTY LAUNDRY.” —Ada Palmer