If you hate taking out the trash, welcome to an exclusive club called Everyone. Trash removal is always a consideration when renting or buying a new home because we all produce it and need it picked up in one form or another. And since demand for trash removal is inelastic, the companies that provide these services typically offer steady, if unspectacular, revenue. But the waste removal industry has a few other advantages that separate it from typical consumer staples companies:
- Regulatory and Environmental Burden - Removing trash from your home is usually a simple task, but removing it from businesses and governments is another animal altogether. The waste disposal industry is highly regulated, with strict standards and high barriers to entry. Opening a new landfill is a multi-year process, so incumbents operate as an oligopoly with massive pricing power.
- Long-term Revenue Streams - Waste removal companies typically operate on long-term contracts, which lock in consistent revenue that doesn’t dip during economic slowdowns. Businesses typically book waste removal contracts between one and three years in length, although longer terms of five to seven years are common for larger businesses and municipalities. Contracts can be flat- or variable-rate, and often include stipulations for regulatory fees and fuel charges (which are becoming increasingly important as oil prices soar).
