Are Laundromats a Dying Business? - Laundry Solutions (2024)

FAQs

Are laundromats a dying industry? ›

The laundromat industry is thriving today and is projected to continue to grow in the coming years. Self-serve laundromats are far from dying. However, the service side of the business is growing at an increasingly rapid pace through the addition of drop-off laundry services and laundry pick-up-and-delivery services.

With an ultra-high success rate of 94.8 percent, a cash-on-cash ROI of 20 to 35 percent and a simple management structure, laundromats are an attractive investment, regardless of the economic landscape.

Although the stock market provides a great opportunity to grow your wealth, putting a little time into a new business could be much more lucrative. For example, the average return on investment of a laundromat business is 20% to 35%, a much higher return than the S&P 500 has historically provided.

Neglecting or mismanaging your business

Bad management is the top reason why many laundromats eventually fail. All too often, a person will purchase a laundromat with the idea that as long as they collect their earnings every week or two, the business will continue running. However, this is not the case.

1. High Success Rates. A recent Gallup poll found that 66% of potential entrepreneurs are held back by the fear of business failure. However, one study found that laundromats have an extremely high rate of success – approximately 95% of laundromats succeed over a five-year period.

Dave Menz's initial purchase of a run down laundromat he found on Craigslist has led him to becoming a millionaire. Here's how he did it – and you can, too. As of 2022, there are 18,264 laundromat businesses in the United States that generate about $5 billion in combined nationwide gross annual revenue.

While not entirely passive, laundromats do provide a high rate of return, usually 20-25%+, for a minimal amount of time investment. Any business that deals with people and equipment will need some managing, but there are ways to set up your laundromat business to make it relatively passive.

Running a laundromat is fairly straightforward – the equipment is easy to maintain, labor costs are low and there's no inventory involved. It's also a reliable source of income, as you can expect a steady stream of customers at any time of the year.

Why do people sell their laundromats? ›

After years of ownership, many sellers find themselves ready to retire from the semi-retired life of laundromat ownership. They may want to travel more, spend time with family, care for health concerns, or a combination of reasons. Owners who are ready to retire from the business are some of the more common sellers.

If you keep the laundromat clean, the machines in good order, and offer good customer service, chances are you'll see between 20-35% ROI (return on investment).

High utility costs

A laundromat relies on electricity, water and sewage for daily operations. As utility costs increase, you might find it hard to turn it into a profitable business. While you can't control inflation, you can definitely control the energy and water efficiency of your equipment.

There are a number of risks associated with laundry operations including fire, water damage and health and safety, which if appropriately identified and managed can be greatly reduced or even avoided.

Spontaneous combustion is a critical risk factor for commercial laundries. It's a by-product of spontaneous heating, which occurs when linens increase in temperature without drawing heat from the surroundings.

The average laundromat makes between $450-$500 per day. This includes revenue from the washers, dryers, and other secondary income streams such as vending revenue. The range of daily income from self service laundry is around $100 per day to $1,500 per day. You might be thinking, that's a huge range!

So when are laundromats the busiest? As a general rule, laundromats are most crowded on weekends. Since most people work Monday to Friday, they save their visits to the laundromat for Saturday or Sunday. According to American Coin-Op's survey of self-service laundries, Sunday tends to be a bit busier than Saturday.

As we just saw, laundromat businesses typically have a ~80% gross margins (excl. rental costs).

How can I increase my laundromat revenue? ›

Laundry Services: Offering customers additional laundry services is a common method for laundromats to gain additional revenue. Wash and fold, delivery, ironing, and dry cleaning are a few examples of laundry services that can help attract new customers and increase engagement among existing customers.

Whether you're creating a brand-new business or buying an established company, it isn't uncommon for entrepreneurs to spend anywhere from $200,000 to $500,000 opening an average-size laundromat. The funds you'll need to open a laundromat have everything to do with the type of laundry business you're starting.

Cost of the machinery and installation and maintenance. Cost of the clerk and accountant and shopkeeper and painter and cleaner. Cost of insurance and health care and social security of the clerks and attendants and the accountant and the tax specialist.

Laundromat machines are highly efficient and use much less water than washing machines at home. At a laundromat, the washing machines typically use only 15 gallons of water, while an average washing machine at home generally used double that amount. That will save you money on your utilities.

Most laundromats provide vending-machine detergent. Some even supply you with detergent for free. Nevertheless, you may wish to bring your own because of preferences or allergies. Jugs of detergent and softener can be cumbersome, so invest in travel-sized containers.

Depending on what kind of car wash business you operate, your income may be mostly passive with just light weekly maintenance to do. Passive income is becoming an increasingly popular concept as many business owners have gone viral online with videos of profits from car washes, laundromats, vending machines and more.

The vending machine industry is an attractive opportunity for first-time entrepreneurs and anyone who wants a passive income. Vending machine business owners can start small with a single drink vending machine and scale their business in a controlled manner to be as large as they choose.

Do laundromats dry faster? ›

The clothes will dry more quickly and with fewer wrinkles. Be sure you get everything in the dryer before you start it up. Opening and closing the door loses heat and time. Bring a large Plastic Bag – After getting those clothes dry, be sure they arrive home that way.

When you use a laundromat instead of the washing machine in your home, you will use less water. Each individual wash uses less water in addition to other conservation benefits all of which add up over time.

The self-service laundromat model is the most traditional and simplest way to run a laundromat business. Customers bring their laundry, wash it themselves, and then dry and fold it. Self-service laundromats typically have a lower operation cost than full-service laundromats, as they require less staff and overhead.

Customers Demographics

Low income renters are the primary users of coin laundries. More than 60% of laundromat patrons are women. 87% of customers live within a mile of the facility. Laundromat customers' median household income is $28,000.

Combining all of these factors, the average cost of a load of laundry is $1.27. At this cost, if you do one load per week, doing laundry costs $66.04 per year. If you do four loads per week, doing laundry costs $264.16 per year. If you average eight loads per week, doing laundry costs $528.32 per year.

There are two reasons your local laundromat still has a coin-only machine. Replacing machines is an investment and most laundromats do not have enough competition to force that investment.

How Much Money You Need to Start a Laundromat Business. The minimum initial investment required to start a laundry business when using leverage is $50,000. When purchasing a laundry business leveraged, plan for a minimum of $200,000. When building a new laundry business, a minimum of $250,000 will be required.

That number is 30%. So 30% of the US population (317,000,000) is 951,000. I believe these numbers are plausible as I work in a real estate office and this is based on trends. What do you think about people doing laundry at the laundromat?

The formula is relatively simple: first, price is divided by life expectancy, and the weight of the item is multiplied by the laundry cost per pound. Cost per use can then be calculated by adding the two results together.

Laundromats are actually quite recession-resistant. Unlike other businesses, people still need to wash their clothes even when money is tight. So, while you may see a decrease in business during a recession, it is unlikely that your laundromat will go out of business.

Is the laundromat about money laundering? ›

Director Steven Soderbergh Takes A Look At Money Laundering In 'The Laundromat' Director Steven Soderbergh looks at money laundering and the Panama Papers scandal as if they were elements in a heist comedy in his new satire, The Laundromat.

Easy To Operate And Low Labor Costs

Of course, your store must be cleaned, and you may choose to offer extra services, but compared to other retail-type businesses, laundromats incur very low labor costs are relatively easy to maintain.

Frequently Asked Questions About This Report

The U.S. laundry facilities & dry-cleaning services market was estimated at USD 10.82 billion in 2021 and is expected to reach USD 11.17 billion in 2022.

damage by fire, flood or other natural disasters. unexpected financial loss due to an economic downturn, or bankruptcy of other businesses that owe you money. loss of important suppliers or customers. decrease in market share because new competitors or products enter the market.

The Future of Laundromat Management is Here. As of mid-2021, the coin-operated laundromat market is $14.6 billion annually, and that number is projected to grow at 9.4% per year up to 2027.

The average laundromat makes between $450-$500 per day. This includes revenue from the washers, dryers, and other secondary income streams such as vending revenue. The range of daily income from self service laundry is around $100 per day to $1,500 per day. You might be thinking, that's a huge range!

The laundry and dry cleaning industry is forecasted to reach $334 billion by 2022, with a compound annual growth rate of 4.5%1. This growing industry presents a unique opportunity for entrepreneurs looking to start their businesses.

How long do coin laundry machines last? ›

According to the Coin Laundry Association, the accepted standard of useful life for commercial coin laundry equipment is as follows: Topload washers (12 lbs. to 14 lbs.): 5-8 years. Frontload washers (18 lbs. to 50 lbs.): 10-15 years. Dryers (30 lbs. to 60 lbs.): 10-15 years.

Coinless operation by switching to cashless digital payment apps. Flat-screen TVs, Wi-Fi, and charging stations to keep customers connected and entertained. Play areas (in some locations) that make laundry day a more entertaining trip for the kids. More wash-and-fold services for busy families and individuals.

While not entirely passive, laundromats do provide a high rate of return, usually 20-25%+, for a minimal amount of time investment. Any business that deals with people and equipment will need some managing, but there are ways to set up your laundromat business to make it relatively passive.

Laundromats are actually quite recession-resistant. Unlike other businesses, people still need to wash their clothes even when money is tight. So, while you may see a decrease in business during a recession, it is unlikely that your laundromat will go out of business.

That's the idea behind a startup called SudShare. It's sort of like Uber for laundry. Once you sign up, you agree to wash other people's dirty laundry in your own home. You pick up, wash, fold and deliver the clothes back within 24 hours or even the same day for extra cash.

There are a number of risks associated with laundry operations including fire, water damage and health and safety, which if appropriately identified and managed can be greatly reduced or even avoided.

How to Assess Your Laundry Business and Increase ROI. As a laundromat owner, it's not unrealistic to expect returns upwards of 25 to 35 percent. Your profit, however, rests in the quality and performance of your machines, location, and marketing efforts, among other factors.