From a one-man couture garment-cleaning operation on 2nd Avenue in Manhattan to a multimillion-dollar organization headquartered in Hackensack, Hallak Cleaners has taken a family two generations to build.
Joseph Hallak emigrated from France to settle in Paterson and became a one-seventh sweat-equity partner of a dry cleaner in East Orange. Then, in the mid-1950s, the U.S. Federal Highway Administration thought the dry cleaner’s neighborhood would be better utilized as Route 280. With the small sum he received from eminent domain, Hallak went across the Hudson to open a niche cleaner for high-end garments in 1956.
Hallak’s son, John-Claude Hallak, calls the eminent domain money “a life-changing blessing.”
The father ran Hallak Cleaners like a mom-and-pop shop for years. He worked six days a week, doing everything from greeting the customers to cleaning couture and high-end garments to doing the books. But when his two sons entered the business in the early 1980s, they saw opportunities for growth and wanted to modernize their father’s traditional business.
“It was that old cliché of ‘Do you want to work in your business or on your business?’” John-Claude Hallak said. “It can be difficult for a small business owner like my father to invest in computers and hire specialists for marketing or HR because they’ve always done those functions themselves. Why pay someone else? We had to convince him that we could only do so much and that, if we wanted to grow the business, we’d have to make a real transition to division of labor.”
It took the founder a while to understand that, just because you aren’t helping a customer or working on a garment, you can still be productively working. Joseph Hallak, who passed away in 1992, did come around about leveraging more technology and doing more office work.
But the brothers have kept many of the fundamentals their father put into place.
“One of the values (our father taught), which are still carried out today, is to have a tremendous amount of respect for the people who work for you,” John-Claude Hallak said. “He recognized he could only succeed on their shoulders, not the other way around. I know small business owners who view their employees with borderline contempt, which is a shame.”
Hallak told a story about a man who worked for his father 40 years ago. His father learned that his young employee was struggling with addiction to heroin. Instead of dismissing the employee, Hallak’s father personally drove the young man to a methadone clinic every morning for treatment. The young man eventually recovered and, for 20 years afterward, would visit Hallak’s father from time to time to thank him.
“My father valued people that way and we try to carry that legacy forward,” Hallak said.
Hallak’s father also taught them a unique perspective on accepting customer criticism.
“He said, ‘When a customer kisses you and tells you how great your work is, you thank them. But when a customer tells you what is wrong with your work, you thank them, hug them and thank them again. That person is taking time out of their day to help you be better and fine-tune your company.’ They are like an unpaid board of directors.
“Most people don’t take the time to do that. For every 20 complaints, 19 people will just walk away.”
By combining old-school values with modern management, the brothers have grown the business 16-fold, to earn $8 million in revenue last year. But they did not initially plan to join the family business more than 35 years ago.
Joseph Hallak Jr. left Seton Hall University, where he was pursing an accounting degree, to work for his dad. John-Claude Hallak had completed graduate school at Rutgers University and was pursing a career in mergers and acquisitions when his father and brother approached him about working in the family business.
“At that point, you are facing key life choices,” he said. “You have to accept the fact that it isn’t important to you to be in a merger and acquisition deal that’s going to give you a $60 million bonus. You are going to have job security and a comfortable life, but you are not going to be sailing a 320-foot yacht.”
Hallak agreed to join his father and brother on two conditions.
The first was they had to set up a larger facility outside of Manhattan. The small location in Manhattan was not going to generate enough business to give all three of them the opportunity to earn a good living. The second condition was that they would bring in computers to automate the business.
While the men of the family reached an agreement, the matriarch was not thrilled.
“In 1982, I joined the company over the objections of my mother,” Hallak said. “She was really against it for two reasons. The first was that I was the first person in the family to finish college and go to grad school. (My parents) had visions of me being a high-powered, Fortune 100 executive. That was their dream. Her second concern was that she saw too many families torn apart by being in business together.
“We knew families in which the brothers stopped speaking or the father didn’t talk to the son. She was concerned that our family would be adversely impacted by the business together.”
Hallak says the family’s ability to do business together without rift exists because the partners have very different skill sets and responsibilities within the company.
Joseph Hallak Jr. is a production expert and John-Claude Hallak handles marketing, IT and administration.
But clear roles isn’t always enough to keep the peace.
“My brother and I are equal partners and, as the business grew, there were some decisions that would overlap our areas of expertise, like packaging,” Hallak said. “That’s a concern of both production and marketing.
“When my father was alive, we had his swing vote. But, we haven’t had my father’s vote for 26 years, so my brother and I have had to learn how to compromise. When you have a family business without a majority shareholder, it creates the possibility for gridlock that could slow progress in the business.”
Avoiding gridlock between brothers hasn’t been the only challenge the Hallaks have navigated their way around.
As the world becomes a more casual place, the dry cleaning industry has seen somewhat of a decline. While Hallak’s high-end niche is still strong, he and his brother felt that diversification of the business was important.
As a result, they opened Bergen Linens across the street from their Hackensack headquarters three years ago.
“We were a little naïve about how similar the linen business actually is to what we do,” Hallak said. “It’s a much different business, especially on the rental side. The learning curve was longer than we expected and it took a couple of years to get the important nuances of the business under our belt. But there is tremendous growth opportunity in the linens business.
“We were able to take Bergen Linens to a level in three years that it took us 30 years to get Hallak Cleaners to.”
Here’s how, he explained.
“The accounts are substantial, unlike the individual clients in the dry cleaning business,” he said. “If we sign one boutique hotel with 130 rooms, that client can be worth $300,000 per year. On the flip side, you are dealing with much lower prices, and can be negotiating on the penny in some cases.”
Despite the challenges and growing pains of running a family business, Hallak doesn’t consider an exit as an option.
“The only difference between a partnership and a family partnership is that if you have an acrimonious breakup with a non-family partner, or you want to cash out and do something else, you never have to see that non-family partner again,” Hallak said. “But you don’t have that luxury with family. Can’t have slash and burn mentality. Family forces you to have more pride and more civility in what you are doing in the business.”
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