FORBES.COM38
MARCH 20 20“I didn’t want my father’s
name to be tarnished,” says Yaakoub Hijazi, pres-
ident of Paterson, New Jersey–based Star Laun-
dry. When his father, Youssef, died in 2011, four
months after being diagnosed with lung can-
cer, 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-clean-
ing 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 Laun-
dry cleans sheets and towels for more than 100 of
the city’s roughly 800 hotels, including the Con-
rad 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. Stum-
bles abound. Prestige Industries, once Hijazi’s big-
gest competitor, fi led for Chapter 11 bankruptcy in
2017, and its assets were subsequently bought by
a private-equity fi rm that owns laundry fi rm Pure-
Tex Solutions. “The entire market is fi ghting over
the same 200 hotels,” says Sang Cho, CEO of Pres-
tige until 2012, who founded Cooperative Laundry
in 2018. “We’ve heard some of our competitors bid-
ding below 27 or 28 cents a pound, which is crazy.”
Hijazi, who owns 100% of Star, wooed custom-
ers by being personally on call starting at 3:30 a.m.
and setting rates in the mid-to-upper range to at-tract hotels while maintaining profi tability. “Our
selling point is quality,” he says. “That’s why we
have no salesmen.”
On a November visit to the Paterson headquar-
ters, 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 bright-
en 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, be-
fore 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 go-
ing to listen to what you say,” he recalls. The com-
pany faced a cash crunch, sewer liens, tax liens
and fi nes from the federal Occupational Safe-
ty and Health Administration. Hijazi borrowed
$300,000 to pay off everything, ditched the mid-
dling 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, in-
cluding 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 Man-
hattan, where occupancy rates are high and steady.
That helped insulate him from pricing pressures
and let him create delivery-route effi ciencies.
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
CONTRARI
ANENTREPRENEURSStar Laundry Cont.PATRICK
WELSHFOR^FOR
B
ESFINAL THOUGHT“I TRUST MY DOCTOR WITH MY
LIFE, BUT NOT MY DIRTY LAUNDRY.”
—Ada PalmerHOW TO PLAY IT
by William BaldwinMuch in vogue are
businesses with
“moats”—the resis-
tance to competi-
tion that comes,
for example, from
technology or a
winner-take-all
network. But guess
what has been as
hot on Wall Street
as Alphabet?
Laundry. Cintas,
which rents and
cleans uniforms,
has seen its shares
climb 14-fold from
their recession
low 11 years ago.
Cintas is now
richly priced, with
an enterprise
value (debt plus
market value of
common, minus
cash) equal to 4.5
times revenue.
More aff ordable is
UniFirst, which is
in the same line of
work and has an
enterprise value
only two times rev-
enue. Sometimes
the mundane
makes you more
money than the
magnifi cent.
William Baldwin
is Forbes’ Invest-
ment Strategies
columnist.F