Schuyler Y.'s first encounter with FlyCleaners, an on-demand laundry service, could not have gone worse.

After reading positive coverage of the service, Schuyler decided to try it out for himself. His laundry bag included a cashmere sweater from Theory, his favorite button-down, and seven other tops — all of it valued "north of $2,300."

Someone from FlyCleaners picked it up. But a few days later when his clothes were supposed to be returned, nothing came.

After a few frantic emails to FlyCleaners, Schuyler realized the service had lost all of his laundry. Worse, he had no chance at full reimbursement, as the website says the service is only responsible for $500 worth of clothing.

His verdict on Yelp: "DO NOT EVER USE THIS SERVICE. EVER."

(FlyCleaners tells us the situation was "eventually settled ... in a way that was satisfactory to this customer.")

Schuyler is not the only one who has had this experience. FlyCleaners has an overall rating of one and a half stars on its Yelp page, which is lined with scary reviews.

"HORRIBLE. they lost all my stuff!!!!! All my dry cleaning, gone," Arielle A. wrote in a Yelp review dating July 11, 2014.

And more recently: "Wow. where to start with this company? I am currently $500.00 + in the hole due to negligence, damaged laundry, missing items, not included the 40 + emails and HOURS waiting on them all to have them lose my items, return my laundry dirty, have my hang dry items go AWOL, then items that were "missing" be returned ruined," Briana A wrote in a Yelp review dating October 19, 2015.

New York's biggest laundry service in coverage area clearly has a problem with losing clothes.

Not surprisingly, this is turning into a problem for the business, too.

Faced with unhappy customers and rising competition, FlyCleaners responded last fall by firing five executives and bringing in a new chief operating officer. In the months since, the company says it has been making steady improvements, but it's far from perfect — and it will take a historic turnaround to bounce back from that 1.5-star rating.

flycleanersYouTube/Tech Crunch

Expanding too fast

FlyCleaners, which raised $2 million in 2013, launched in the beginning of 2014.

The company was one of the first in its field. (Although New Yorkers had some local options like Hamperville and Wash Club, FlyCleaners had a flashy app and a lot more funding.) In its first three months, FlyCleaners was growing its customer base by 20% each week, said CEO and founder David Salama.

FlyCleaners outsources its laundry and dry cleaning to different vendors and then delivers it back to customers upon completion. Faced with increasing demand, the company took on more vendors to help ease the load, and that's when its issues began.

Having so many vendors created a too many cooks in the kitchen problem. Things weren't being tracked and clothing was lost altogether or put in the wrong laundry bag. Some people reported their clothing was damaged or not cleaned properly.

"We didn't want to rely upon any individual too much and tried to distribute it as much as possible," Salama said. "I think that was a mistake."

At one point, the company was outsourcing its laundry to more than 12 vendors, Salama said.

“As time went on, I didn’t receive any complaints, but emails were sent to corporate offices saying ‘hey items are missing,'” Ramon Liranzo, a former FlyCleaners driver who worked there for five months in 2015, told Tech Insider. “It was mishandling. We would use different vendors for laundry and dry cleaning so it would always be a different location.”

laundryShutterstock

All the while, FlyCleaners has started facing more and more competition from other laundry services.

Chief among them is Cleanly, which launched in Manhattan in 2015 after raising $2.3 million. The service, which has an even more polished app, now covers nearly as much of New York City as FlyCleaners, and it has a sparkling four-star rating on Yelp.

Boomerang, another New York-based laundry service, started taking customers in March 2014 and has raised roughly $400,000 in funding. Right now, it only operates below 14th street in Manhattan, but it's managing an impressive five-star rating on Yelp.

And FlyCleaners had better hope that Washio — a popular on-demand laundry service app that currently serves residents in Los Angeles, San Francisco, Washington D.C., Boston, and Chicago — doesn't come to New York. That app has raised nearly $17 million in funding.

flycleaners truckYouTube/Tech Crunch

Rising competition and regular laundry mishaps had an effect on the business.

The number of customers and revenue being drawn in by FlyCleaners began to level off around May 2015, according to a former employee familiar with the matter who had worked at the company from its start.

“I couldn’t tell if there was a major event that caused revenue to be lost, but you’d have customers who would be loyal since the beginning doing an order every week and something would inevitably happen,” the former employee said. “The probability of something happening to any one customer was 100 percent over a given period of time.”

Getting 'new blood'

Late in 2014, FlyCleaners realized something had to change. So for the next six-to-nine months, FlyCleaners went through a complete management overhaul. The company brought in someone new to head customer services and a new COO. Overall, five executives were replaced.

"It's not a matter of poor management or people doing a poor job, per se, it's more ... getting some new blood to come in to pour over solutions and come fix the problems that are in place," Salama said.

FlyCleaners has been open about having had a management change and has assured Yelpers that the service is improving.

"We spent the summer overhauling our operations and customer services team and are working hard to make sure every order is absolutely perfect," Caitlin F, who identified as FlyCleaners' business manager, replied to a negative review on the FlyCleaners' Yelp page.

FlyCleanersYouTube/Tech Crunch

As this was going on, FlyCleaners reduced the number of vendors from more than 12 to six.

Notably, the company still has a less centralized model than some of its competitors.

When Washio launched in its first market, Los Angeles, it had six vendors for dry cleaning and laundry. “This was extremely problematic for us,” Jordan Metzner, co-founder and CEO of Washio, told TI. “Our first market wasn’t going to work at that scale, as soon as we launched in San Francisco in 2013, we moved into a single vendor model and changed LA to follow that.”

Cleanly outsources its laundry and dry cleaning to more than 10 vendors, but it has a fulfillment center that allows the company to keep track of everything being sent to the cleaners and ensure handling instructions are passed along, Tom Harari, co-founder and CEO of Cleanly, told TI.

FlyCleaners, on the other hand, only uses a distribution center for its dry cleaning and has drivers take laundry directly to the vendors. Some would say that leaves the service exposed to the biggest problem area.

“Any incident where clothes were missing or completely gone, it was always due to the laundry service,” said Maiya Colello Wilson, who worked as a FlyCleaner driver from August 2014 to August 2015.

What's in store

Kimberly Taylor red ink FlyCleanersKimberly TaylorThe red ink stains on Taylor's clothing.

Although FlyCleaners has fired executives and reduced its vendors to turn things around, there are still complaints coming in regularly about lost laundry, late deliveries, or damaged clothing. 

Brooklyn resident Kimberly Taylor was a regular user of FlyCleaners since it launched in 2014, but that ceased in January 2016 after roughly 75% of the 30 pounds of laundry she sent out came back covered in red ink.

Taylor immediately reached out to FlyCleaners, which said it would do an assessment of the clothing and get it back to her. To Taylor's initial glee, FlyCleaners emailed back saying they were able to fix the clothing.

"They said they fixed the clothing, [but] they didn't — two items went completely missing and a majority came back with the same spots," Taylor told TI.

Taylor spent the next month exchanging emails with several customer service reps before she was reimbursed for $260 — less than she says the clothes were worth.

Even more recently, a Yelp review dated January 28 gives the service one star. It begins: "DO NOT EVEN THINK ABOUT USING THESE GUYS!!!!"

flycleanersYouTube/Tech Crunch

Salama says give them time.

“We started seeing improvement by the fourth quarter of last year,” Salama said. “We’re seeing a 75% reduction in incidences, but that doesn’t mean we had an acceptable amount of incidences and doesnt mean the incidences we did have were any less painful then the past.”

Salama added that he still feels confident in the future, noting that FlyCleaners customers number in “the tens of thousands.”

Still, mistakes like this could lead even the most loyal of customers to scurry to the competition.

Cleanly's Harari said the company has witnessed double-digit growth each month, and the service plans to expand to other metro areas like Queens.

Boomerang may only operate in downtown Manhattan, but it says it is expanding rapidly through the city.

And Washio with its whopping $17 million in funding has plans to expand beyond its current five markets, CEO Metzner said.

But FlyCleaners is still in the game.

"We are proud of the improvements we've made," Salama said. "There are more things being worked on and more things people will start to see in the coming months."