CTAS - CINTAS started out as an industrial laundry, providing and cleaning uniforms, shop towels, fender covers and entrance mats on a rental basis. Since all of the products were being leased, they had to be purchased up front. If all of the leasing fees were applied to the cost of the products it would take about 26 weeks of rental charges to pay for the items - uniforms about 32-34 weeks and other items closer to 12 weeks. This ultimately created a high margin business with a slow return on investment and a premium on keeping existing customers.
Initially, CINTAS expanded by opening new plants in new regions.
Ultimately, CINTAS expanded in two different manners. The first was by acquiring competitors and the second was adding new services that could be sold to the same cutomer base. That is how CINTAS got involved in First Aide services, Document destruction, Restroom services, etc.
One of the effects of the product diversification is that it costs less to expand the business in areas where the cost of multiple styles and sizes of uniforms doesn't have to be absorbed.
I hope this helps.
GLTA
Bob
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