We are committed to providing you with information you can use. As a courtesy to you, below is our informative description of things you should know before investing in a coin laundry business.

Table of Contents

Who needs a Laundromat

Location is vital

Basic Necessities

Laundry Equipment  (Washers and Dryers)

Advantages of a Laundromat

Economic Analysis of a Store

What your equipment dealer should provide

A properly run and maintained Laundromat will draw customers because it will be providing the superior place to wash laundry. Your Laundromat should provide ease of operation, convenience, quicker washing time, better quality wash (results that can not be duplicated at home), safety and security.

A good Laundromat can have advantages over your home/apartment type Laundry. The number one advantage is the fact that you can have a number of Washers so your customer can do the whole weeks wash at one time. Another advantage is the choice of different sized and types of commercial washers. You probably will want some Top Load washers for customers who have a need for small sized loads and those needing a gentle cycle. You should have the majority of your Washers in the Front Load type because they are much cheaper to run, they will last much longer, and are going to give your customers a much better wash then what they will get at home. Front Load Washers use significantly less water than the Top Load Washer which will save you money.

With the emergence of the working woman, many homes (62% to be exact) have become 2 paycheck families. The most precious commodity for the working family is time. One of the reasons that the fast food chains have grown so rapidly in the 1970's and 80's is because the working Mom didn't have time to make dinner. Now, instead of doing 8-15 loads of laundry a week, the family can now go to the Laundromat and get the whole wash done in under 2 hours, while doing some light shopping too.

The proper location is of prime importance. The wrong location can kill a potential store; the right location can create a gold mine!

The advent of the car has made the housewife extremely mobile in her selection of places to shop and trade. No longer is she tied to the neighborhood stores; she thinks nothing of getting in her car and driving miles to accomplish her shopping chores. She will travel to the best coin-op laundry, the one which gives her a feeling of security, is clean, and provides her with a superior wash.

The working class areas have proven extremely good markets for Laundromats. Look for the neighborhoods with 3 or 4 family homes in it. Only one family will have access to the basement and the laundry facilities. This means that the other 3 families in the building have to go elsewhere for their laundering.

Apartment buildings offer the potential of large concentrated populations, remember that each building (and floors in some cases) may have its own laundry room. On the other hand, many apartment buildings will not have an adequate number of washing machines and dryers. Of the older apartments that do have laundry rooms the equipment is frequently inadequate, broken down and unsafe. Many women won't go down into the basement laundry rooms alone. Research your location!

It is far easier to take laundry to a Laundromat and wash it all at once, than to haul it up and down stairs to an apartment house washroom and wait in line for a machine. The emerging trend is for the working family to visit the Laundromat once a week to get the laundry "chore" done along with some shopping.

The lower income areas have a great need for good laundry facilities. However, such a site should be examined with an eye to security (for you and your customers). People only will wash in Laundromats in which they feel safe and secure. The locations situated on the fringes of an inner city area have proved excellent and relatively trouble-free.

Laundromats in upper middle class areas have also done quite well, but keep in mind the need's of people they attract. Additional services such as a `Wash, Dry and Fold' and even drop-off 'Dry Cleaning' are recommended in upper income areas, fulfilling the concept of the one-stop Fabric Care Center.

Not to be overlooked is the purchase of an existing store. Frequently the rundown neglected store doing a marginal volume of business can be quickly and economically retooled and renovated to become extremely profitable store. Often the rent is low, utilities and plumbing already exist, and the volume of business can only increase after the change of management and renovation. An additional benefit is that the store already has loyal customers so you don't need as many new faces. We can assist you with suggestions for store renovations and equipment up-grades. Remember, the fundamentals of a good location: visibility, parking, good demographics, and the need for washers and dryers (like areas with a lot of apartment buildings nearby.)

Of all the possible Laundromat locations, the best sites are in a busy, well-frequented shopping centers. Ideally, the center will have a popular supermarket and satellite stores such as a liquor store, beauty parlor, deli, etc. Big traffic draws such as McDonalds will not help your business but, instead, simply take up more than their allotted parking spaces.

Ideally, the Laundromat should be close to other businesses that are frequently visited during the weekly shopping. Free standing stores also work quite well as long as they are on active streets (or close to shopping) and have adequate parking.

Enclosed malls should be avoided because their customers are doing major purchase buying rather than the than their weekly repetitive shopping. In other words, they will be there to buy appliances, furniture, or shoes; not to buy groceries and do their laundry.

We have over 40 years of experience in the Laundry business. The site survey includes helping you to evaluate your Laundromat site, determining equipment layout, evaluating demographics of the location, and identifying hidden costs in constructing your Laundromat.

The Laundromat will need certain utilities to run the store. These are the utilities required for the average 20 washer Laundromat. If these utilities are not available in the store, they will have to be brought in at additional expense.

1 1/2 to 2 inch water line,

Gas Supply (Natural or LP), sufficient for total equipment planned.

4 to 6 inch waste line (minimum),

Approximately 200 Amps of 208-240 volts, 60 cycle,3 phase electrical service.

In as much as both the dryers and the hot water heater use large quantities of air, provisions must be made for the venting of these units and for an adequate supply of make-up air.

If you are considering a store with more machines, air-conditioning, or a store that will eventually have dry-cleaning equipment, your electrical requirements need to be increased to a 400 Amp, 3 phase service.

The top loaders provide a washer for very delicate items and a machine for the customer who demands a washer "just like mom had". We only recommend a limited number of top loaders in the modern Laundromat, because of poor washing performance and high energy costs when compared to front load washers.

Even with 5 water changes per wash load, the Front Loading washer saves significantly on water and energy bills. Only 1/3 of the drum has to fill with water to assure an excellent wash. This is because the clothes are constantly being brought in and out of the water and it is this action that produces the noticeable cleaner clothes.

The front loading energy efficient washers have a 16-20% utility expense on gross income. That means 20 cents out of every dollar received, will go to pay the utility bills. Conversely, today's so called `energy efficient' top loaders will have a 30 % or more utility expense on gross income.

You will want to consider various sizes since your customer will expect a size that fits what they want to do. Your ultimate design layout should allow for the  addition of various sizes of Equipment as you grow your store.

Why should any one get into the Laundromat business? If you put your money into a savings account you would get 3 1/2 % Return On your Investment (ROI). Money Market Funds are currently paying around 10 %. If you have a good year in the Stock Market or invest in good Mutual Fund you might get 20% ROI.

With Laundromats it is extremely possible to realize a 30-90% return on investment. Laundromats are also a Cash business. The advantages of a cash business are there are 'no checks in the mail', no inventory, no debts , and no account receivable because the customer pays in advance and supplies their own labor.

A coin-op laundry is a recession proof business. Economic conditions have little effect on the overall volume of business. Some of the best times for Laundromats have been in times of economic down turn. When available money is limited, people will defer purchasing and repairing household laundry equipment.

There are several major tax advantages that are available to the Laundromat owner including equipment depreciation and the deduction of any financing interest. These situations may lead to a very favorable tax position.

The basic formula in buying a Laundromat is to put down at least 25 % (approximately $40-75,000) and finance the balance over a 5-7 year note. This in conjunction with at least a 10 year lease will assure you a handsome return on your investment even if you can't renew your lease. The Front Load equipment in a Laundromat can last 15 to 20 years, or longer if you keep the equipment clean and in good repair.

After note is paid off, the store is all yours and then the real money starts coming into the business. Once above the break-even point, just a slight increase in volume creates a substantial profit.

The total price of the typical Laundromat ranges between $120,000 to $250,000. The wide price range is dependent upon the amount of equipment installed, remodeling decor, and necessary leasehold improvements.

We have financing available through our equipment manufactures and Equipment Leasing Companies. In these cases, we can obtain up to 100% financing (for qualified buyers) on all serialized equipment. (i.e.: Washers, Dryers, Bill & Coin Changers, hot water heating systems etc.) Your salesman can provide you with all the financing options. Bank Financing is also available and for the entire purchase price, not just the equipment. But banks are a lot harder to borrow money from in the past 10 years.

Rent

Payroll & Cleaning Costs

Trash Collection

Insurance

Repairs

Note Payments

Variable costs are a direct function of the volume of business and consist of those utilities consumed such as water, sewer, gas or oil, and electricity. These utilities will generally run approximately 16 to 25 % of the total volume of business, or gross. (The following example is figured at a conservative 20%.)

A formula which has proved to be accurate in determining the weekly break-even point (and thus provide a basis for calculation of profitability at various levels) is as follows:

Multiply the sum of the Monthly Fixed costs by 0.28 this equals the weekly break-even point. (This factor of .28 figures in the variable costs of utilities at 20% of gross and that there are 4.3 weeks per month.)

Rent $1800 per month

Cleaning $450

Trash $100

Insurance $200

Repairs $100

Fixed Costs (less note) = $2650

To this figure, add the monthly payment for notes. Assuming that the total cost of the store was $180,000 and that $60,000 was the down payment and the balance was financed at 10.5% interest; the monthly note payment (covering interest and amortization) would be $2254 per month for 72 months.

Rent, Cleaning, etc. $ 2650

Note Payment $ 2254

Total Fixed Costs = $ 4904

Conversion Factor x .28

Weekly Break-even Point = $ 1373

$2600 Weekly Gross Business

Less - $1373 Break-even Point

$1227 Difference

But because a portion of this difference must be allocated to pay the increased utility costs (above the break-even point), only 80 % of this difference is profit. In this example the profit is $982 per week or over $51,000 per year. This is a ROI of 85% - not too bad ! In this the store owner is making a handsome profit while Building Equity in the store at a rate of almost $27,000 per year.

If you increase your business by an additional $200 a week your profit is now almost $60,000 per year. For every dollar above the Break-even point 80% is profit. This is a tremendous multiplier. Just a little more business can make a big difference!

What should you expect from your equipment dealer?

Obviously, you get what you pay for. The equipment dealer is in the business of selling machines. It is his livelihood! However, the quality dealer will show his sincerity with the attitude he takes towards the customer. The success of the venture will be of prime importance. The dealer who is straightforward and honest will indicate both the pros and cons of a situation, the competition, the demographics, and the potential pitfalls. In short, is he presenting you with a valid representation of the situation and doing all that he can to provide for your success?

Building a Laundromat today is a lot harder than it was 10 years ago, if all there was to opening a Laundromat was buying the equipment, then stores would be built from mail-order catalogs. What you need today, is a dealer who can provide you with complete comprehensive services. A dealer who not only sells the equipment but can also install it and service it. A dealer who has a large list of satisfied customers who can attest to his workmanship and his ethical business dealings.

There are many different types of equipment and also many different types of dealers. Here are a few services that we provide to all of our customers:

Provide a FREE Laundromat site evaluation.

Assist you with the Design of the store.

Assist you with his knowledge of store Construction, Building Codes, Permits, Layout, and Requirements of the Equipment.

Provide the Equipment when you need it,

Assure a Complete and Quality Installation to the Manufacturer Specifications.

Provide in writing and stand behind the Equipment Manufacturer's Parts Warranty for new Equipment. (You paid for it when you bought the machine, your dealer should also honor it.)

You now have all the information and 'trade secrets' to become a successful Laundromat owner. Now comes the hard work. Go out, drive around, and find yourself a location. Take this guide as a reference and see what other owners are doing. Visit coin-op owners, go to seminars and subscribe to the Trade magazines.

Copyright © 2000-2007  Steve and Arlyn Rust