How Are Laundromats Valued? (2024)

FAQs

How are laundromats valued? ›

Commercial Laundry Valuations

In California, Laundromats normally sell between 3.0 – 5.5 times yearly cash flow, or 36 – 66 times monthly cash flow. In order for a laundry to have substantial value, the lease needs to have a reasonable stated rent for at least 10 years and the lease needs to be assignable to a buyer.

Asset-based valuation:

This method involves valuing the laundromat based on its assets, such as the equipment, property, and inventory. To use this method, you would add up the value of all the assets and subtract any liabilities to determine the net asset value of the laundromat.

Ordinarily, the industry standard is to use 3-5 times the annual profits as a selling price. It's important to consider the length left on the lease, condition of laundry equipment, and future store expenses as well when you are choosing a selling price for your operation.

Valuation analysts divide the future earnings using a discount rate rather than a capitalization rate. This method helps the appraiser determine the value of a laundromat based on the time value of money. Typically, the discounted cash flow method is best for laundromats that have strong financial histories.

Are laundromats a good investment? Laundromats make great cash-flowing investments. With an average, unleveraged return of 20-30%, the average laundromat investment is far superior to the average real estate investment, which will produce between 7-10%. The average dividend yield for the financial sector is just 4.7%.

Understanding laundromat value

U.S. Laundromats post impressive numbers with a 95% average success rate and 20 - 35% profit margins. But whether or not your laundromat can meet (or exceed) these industry standards depends on some important factors.

Don't give your life story, instead think back to your list of personal values and select several of them to describe yourself. Be prepared to provide examples (which you'll have from the exercise outlined earlier). Just ensure your answers are relevant to the job that you have applied for.

You can talk about the health benefits, work-life balance, workplace culture, growth, or even continued education opportunities. The sky is the limit! "What I value most in the workplace are growth opportunities.

To identify your own personal values and why they are important to you. Research the values of the company in which you are applying and be clear on how your values align or misalign with theirs. Think of examples for how you have demonstrated both your own values, and those of the company.

Generally, customers want a convenient and comfortable laundry experience. They want a clean, well-maintained facility with ample space and many functional machines. They also want machines that are easy to use and accept multiple payment methods.

How do I make my laundromat successful? ›

Average EBITDA Multiple range: 3.44x – 4.85x

On average, EBITDA multiples for laundromats range between 3.44x – 4.85x. Apply this multiple to a laundromat's EBITDA to determine an implied value of the business. Refer to the following equation.

Answer: Monthly profits can vary widely based on the location, size, and operational efficiency of the laundromat. On average, smaller laundromats might earn between $1,500 to $5,000 in profit per month, while larger, well-established ones in prime locations might see profits of $10,000 to $30,000 or more per month.

With a historically stable ROI, attractive profit margins, and versatility in operation models, a laundromat can be a smart investment decision if done correctly. However, like any business, they come with their challenges—from ensuring regular maintenance to staying ahead of industry threats.

The average profit margin for a laundromat will range between 10% and 35%. There are some really great blog posts online with real laundromat owners sharing their financial results.

Average EBITDA Multiple range: 3.44x – 4.85x

On average, EBITDA multiples for laundromats range between 3.44x – 4.85x. Apply this multiple to a laundromat's EBITDA to determine an implied value of the business. Refer to the following equation.

Laundromats can be highly profitable, recession-resistant, and flexible businesses, making them highly attractive for entrepreneurs. However, as with any business investment, there are risks to owning a laundromat which potential investors should carefully consider before diving in.