A Note on Tuxedo Rental

I would imagine the start-up costs to be substantial. You'd need to have a variety of styles, sizes, and duplicates so if you get multiple orders of one size. You have to have a tailor to fix stuff people ruin.

While I'd imagine there is money to be made there, I don't think it's simple as buying a few tuxes and renting them out.

True, you can reuse a car or hotel for longer. That's why I referenced non-depreciated cost. Ignoring depreciation, these people are recouping their acquisition cost after only a few uses.

I checked online and the retail cost for the tuxedo I rented is $800, meaning it's probably safe to assume their wholesale cost is a good bit cheaper, say $600. They are recouping that after just three uses.

Even if each tuxedo only has ten uses (which is no doubt low as hell), that is a massive ROI. Overhead is low because most of these places operate out of a basic 800 sq ft box in a non-prime strip mall and employ just a couple of people at a time. If they are paying $600 for ten uses, that's $60 per use, which translates into a gross margin of 70% assuming $200 per rental. And again, ten uses is probably ridiculously low.

Moving down the income statement, we have already discussed real estate and labor costs. They probably do have some pretty heavy IT-related costs to keep track of all of their inventory. They will of course have heavy dry cleaning costs. I'm not sure what their distribution model is, but they either pay a lot in shipping, or they employ truck drivers which brings a whole new slew of costs into the equation.

That all said, any time you have a rental stream which pays your acquisition costs back in just a few days, that is pretty incredible.

I think you're misunderstanding overhead thing. Most of these places only rent the tuxedo, they don't own them. The tuxedo company will have a distribution center in which they use their own trucks for delivery to and from distribution center to shipping point.

For instance, Squires, which is one of the most popular in Louisiana, ships everything out of Shreveport.

You can buy an ill-fitting tux from JC Penny for $100

Agreed, but note I was referring to a "particular tuxedo required by the wedding party."

The local brick and mortar simply rents them from a national company that mails the correct size to them a week or so prior. The last wedding I was a groomsmen they sent the wrong size for one of the guys so they overnighter the right size.

I agree the prices are absurd. My wedding in 2009 the cost was $110 each groomsmen, not sure how they were so cheap but I purposefully got the least expensive rental and they looked just fine. Since then I've paid over $200 to rent one multiple times.

I'd say the cost to buy them is significantly lower $100-200. But the local shops just rent them from a national distributor.

quote:

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Which is why a gentleman owns his own formal wear, especially in Louisiana where Mardi Gras balls give you occasions to wear it every year.

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I rented tails for a buddy's wedding, thinking they may have been different from the set I own. They weren't.....

No, we need to stop allowing bridezillas to dictate that men in weddings wear someone else's clothing. It's not the effing junior prom. Why wouldn't quality dark suits be preferred to silly rented polyester blend formalwear?

You must be in sme baller weddings. I don't think I've ever paid $200 to rent a tux... $150 sure.

Tux prices are seasonal and this is a popular season for weddings, proms, etc. Rent one in early Jan and you can catch a deal.

I have a friend of a friend that runs a tux shop that maintains his own inventory in a warehouse behind his store (i.e. he doesn't rent them). He maintains a supply of 500 tuxes (i.e. 500 shirts, jackets, pairs of shoes, etc). He never come close to renting out all at once, but, he has to have different styles in many different sizes. Remember also that people may be shaped to where they need dramatically different sizes for various pieces of the tux.

He told me he pays at wholesale an average of $500 for a full tax (including accessories) and $100 for a pair of shoes. After every use, the tux gets dry cleaned and the shoes get cleaned and polished and sprayed to prevent nasty foot fungus. Plus, he has to do repairs and more involved cleaning from time to time, plus costs of pressing. He says he can average 50 rentals out of a tux and 80 rentals out of a pair of shoes. Plus he can sometimes resell them when he feels their rental life is over, but he says he doesn't get much from that.

So I think it's a business with a fairly high initial cost and then your replacement costs... plus it's a cyclical business.