So you think the coin laundry business is for you? Easy money you collect once a week? Place runs itself? Consider these factors when looking at the coin laundry business
1. Change Machines
Good coin laundries run on change machines. If a customer cannot get change, they are going somewhere else. How many change machines does the store have? A Standard change brand change machine can hold about $3000. You can easily check the specifications on their website. On change machine means the owner is running a tight ship. Two change machines means the place is hopping. No change machine means people either have to ask the grumpy guy behind the counter or the place is not really a laundromat.
2. Store Sign
Look at the store sign. Does it light up? Is half of it missing? Does it clearly tell people what that it's a coin laundry or does it just say “Bob's”? The store sign will tell you everything you need to know about how well the store has been run. A great store has a great sign.
3. Top Load Machines
With today's utility costs, it is very difficult to make money with Top load machines. If the store you are looking at has them and the place is busy, this is the kind of store you DO want to buy cheap and replace the top load machines with 3x – 5x front loads. You will have to invest in new machines but you will increase you prices and profits. If the store has top load machines and is empty, drive around to see what competitor just popped up that has all new front loaders. Stay away from this store
4. Brand of Equipment
The Maytag man you see falling asleep in the commercials on TV should go visit some Maytag equipped coin laundries. While Maytag is a good household name, they don't make all there own commercial laundry equipment and quality has suffered. The top brad in the industry is Wascomat. Who is Wascomat? Ever heard of Electrolux? An all Wascomat store is a very good sign. Go look at a Wascomat beside any other brand and chances are, you will want to use the Wascomat. Try it!
5. Utility Bills
There is a commonly understood method that your utility bills are 14% of your sales. Be careful with this as old equipment will be more like 20% of your sales. I don't recommend looking at utility bills unless you are calculating consumption. This means that you are making a calculation based on the total amount of water being used divided per laundry load divided by the vend price to try to get approximate wash revenue. If you can do this calculation, this is good.
There may be a big difference in how you would run a store versus how the store is being run by the current owner. Are you friendly and ongoing? Do you care about your customers? Will you fix the store sign and make sure you always have change and washers available? The owner of the store affects conversion more than any other factor but is not the only factor. New bigger equipment also helps but at the end of the day your personality will drive the business. I should say you “consistent” personality. Once you lose interest, sell the business before you kill it.
Get the population demographics from the city. You want a good mix of ethnic backgrounds and the more kids (the more dirty laundry) the better. A neighborhood full of retired people is bad news. A neighborhood with too high average household income is no good. Low rise 8 plex to 24 plex are better than the giant high rise buildings because they generally have poor laundry rooms. Also, rental properties in the neighborhood trump condos for coin laundries.
Make sure there is either plenty of parking or an awful lot of people within walking distance. Imagine how far you would carry your laundry if you had to walk to a laundromat. You really want to have a lot of parking if possible. If you don't have parking in the front of the store, you likely will not have a drop off laundry business.
Also as a side note, if the road directly in front of the store has an island that separates traffic, you will have to stand outside and watch traffic flow into the store. Traffic islands are generally small business killers.
9. Wash and Fold
I would suggest to anyone looking at the laundry business to ask themselves what the benefit of having a drop off laundry counter is.
I have seen many real estate agents claiming that you can increase your business by adding a wash and fold counter. You can increase your business, but not the way you think. Getting a new revenue stream from drop off laundry means committing to the effort of building up that business and paying someone to be there for extended hours. It is rare (but they do exist) that a laundromat exceeds it's cost of staff in wash and fold sales.If you are running the place yourself full time then do it, you are there anyway. If you are buying as an investment consider this. If you have a full time person already doing wash and fold and plan to eliminate it, count on a 10% to 40% drop in your self-serve traffic. The real prize in having an attendant comes from the comfort you give to the person doing self- serve laundry.
Well run laundries are consistent in everything. I mean EVERYTHING! This includes (but limited to) your store hours, staff, method of cleaning, cleaning schedule, wash and fold method, machine brands, available change, soap, supplies etc etc.
The less consistent you are, the less consistent your customers will be.
I have run 3 laundromats for 5 years now and unfortunately for me, its time to exit the business. I have learned a lot and met many new wonderful people. I sold 2 of the three stores I had and both new owners took my advise to heart and have made good use of there new investments. I have one store left for sale and I'm torn to see it go.