Yaakoub Hijazi $150 Million Laundry & Dry Cleaning Business

Yaakoub Hijazi (Editorial Photo by Forbes Magazine)

The whole thing began when Yaakoub Hijazi, 19-year-old student at Montclair State University decided to drop out of school to take care of his late father’s business. His father, Youssef, had died in 2011, four months after being diagnosed with lung cancer. The death of father led him to realize that the $4 million (sales) commercial laundry and dry-cleaning business was on the brink of collapse and he was not going to have it, he said: “When you go bankrupt, your name is destroyed, I didn’t want my father’s name to be tarnished.”

He then ditched school in a bid to rescue and retain the honour of his father’s name and that of his father’s business, 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.”

Now Hijazi, who is on this year’s Forbes 30 Under 30 in Manufacturing & Industry, did not only protect his father’s legacy, but also built the business into a powerhouse. Star Laundry, his business now cleans sheets and towels for more than 100 of the city’s roughly 800 hotels in New York. It is believed based on estimates that the laundry handles as much as 40% of the laundry generated by the city’s hotels, bringing in some $70 million a year in revenue, all that plus Hijazi’s other ventures, which include real estate in New Jersey and linen manufacturing in Benin, Africa, and all these have his group’s annual revenue closer to $120 million.

In New York laundry is definitely a cutthroat business, and a straining one at that. 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.

Hijazi on his part got his clientele 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. He says: “Our selling point is quality, that’s why we have no salesmen.”

A visit to Paterson, New Jersey, headquarters, in November availed Hijazi the opportunity to show off one of his four giant tunnel washers. The whole process works with the dirty linens arriving 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 6 to 11 other chemicals. Separate compartments in the tunnel and computer coding allow multiple hotels’ linens to be washed at the same time.

When he thinks about everything, Hijazi says he had no idea he would be taking over the business as says: “He didn’t even want me in it.” His father 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 lax.

At the beginning Hijazi had it tough as he recalls that the company faced quite a few like a cash crunch, sewer liens, tax liens and also fines from the Federal Occupational Safety and Health administration which all resulted into him getting a $300,000 loan to pay. He, later on, he went to hire an OSHA consultant to address the safety issues. 

He signed on the DoubleTree on Lexington in 2012, then talked his way into other hotels, including the Westin Times Square by using his youth as his selling point: “Hotels realized they were cutting costs and getting crap service.”

“He was—I don’t want to say picky, but he was very selective [about] his hotels,” says Don Fraser, a longtime hotel executive then running the Park Central and WestHouse hotels, who hired Star in 2016 to handle their nearly 5 million pounds of laundry a year. This is because 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.

Currently Hijazi is in talks to sell Star Laundry which is estimated to be worth at least $150 million. “The biggest fear,” he says, “is selling what my father started. It’s an emotional fear.”