Century-old American Rug Laundry outgrows its historic Minneapolis site, expands to Golden Valley

Century-old American Rug Laundry on East Lake Street is having a sale this week.

That's not big news from Sam and Farzan Navab, immigrant entrepreneurs and longtime owners of Navab Brothers rug sales, laundering and repair.

However, this also is the Navabs' first step in financing the move, likely in September, of the historic Lake Street laundry operation into a modern Golden Valley building that is 50% larger. The Navabs are investing about $1.5 million in debt and equity to buy, refurbish and equip the building to handle the growth that is starting to swamp the less-efficient, two-floor Lake Street laundry.

The antiquated facility on E. Lake, into which the Navabs invested a few hundred thousand bucks for a new roof, windows and repairs in 2014, is going to the dogs, in a way. The Navabs, who have owned American Laundry for two decades, love dogs.

"They pee on rugs," quipped Sam Navab, 65, pointing to pictures of customers' dogs on the "Guilty Dogs Wall of Shame."

"Dogs are our best friends."

The Navabs, who sponsor an annual guilty dog contest that draws hundreds of entries, say dog urine often prompts customers to call American Rug for a pickup or bring in the rug, just as their parents and grandparents did.

The Navabs will keep their rug intake and pickup operation on E. Lake, and continue to offer repair and some other functions. They also will expand the Lake Street showroom. They also likely will open a "dog wash" and coffee shop for customers and neighbors.

"People seem to like to visit here," said Far Navab, 62. "The building and old rugs seem to conjure up a lot of memories."

The Navabs were Iranian immigrant students in the 1970s. They left careers in art and restaurant management, respectively, in the 1980s to start a tiny rug repair and hand-cleaning operation in south Minneapolis with $30,000 in savings.

They took a risk when, in 1999, they bought the American Rug building and business on Lake Street, near the Mississippi River, from a retiring owner for nearly $2 million.

"It was a huge bite for us," Sam Navab recalled. "The owner made it work for us by giving us a contract for deed [with payments they could handle]. American Rug had a good reputation. But there was a lack of confidence by the staff to handle expensive rugs.

Five of the seven workers the Navabs inherited on E. Lake are still at American Rug. It now employs 15 of Navab Brothers' 22 full-time employees.

Over the last three decades, the Navabs' operation, including their main showroom in St. Louis Park that opened in 2001, has grown faster than the industry average to reach $5 million in annual sales. About 60% of revenue comes from service: laundry and repair, which tends to transcend even high-end rug sales as a means to deepen relationships with customers.

The brothers are concerned that the move of the laundry this fall to the new facility, with exception of hand-washing and repair, will be perceived as a closing of the historic Lake Street business.

Avia Albacete, who oversees business operations for the Navabs, said customers will continue to drop off at Lake Street about 70% of the rugs that get washed and repaired by American Rug.

American Rug has about 20,000 clients whose transactions are tracked through a proprietary software system at the Lake Street operation.

"They displayed their true business acumen during the Great Recession" of 2007-2009, Baack told me last year. "While some fine rug retailers were closing due to competition from Home Depot and other stores like it, they continued to improve their business model and prosper."

The Navabs source some handmade rugs from Pakistan, India and Iran for sale. They also own Legacy Looms, a rug and carpet design business, at International Market Square.

New rugs range from several hundred to thousands of dollars.

The brothers particularly enjoy seeing rugs they have sold or laundered passed from the homes of parents to children. Many of those customers hail from Minneapolis and St. Paul.

"We're going to stay here and serve the community," said Tiba Navab, Sam's daughter, who works with him from the Lake Street facility.