Key Statistics Laundromat Investors Should Know (2024)

FAQs

What is the success rate of owning a laundromat? ›

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.

Laundromat business model

With an ROI (return on investment) of between 20-35%, laundromat businesses have a 94.8% success rate, bringing in a gross income anywhere from $30,000 to $1 million a year.

A successful laundromat follows three main principles. First, the successful laundromat is clean, bright, and welcoming. Second, successful laundromat owners reinvest in their laundromats. Third, successful laundromat owners utilize effective marketing and promotions.

During the pandemic, laundromats were one of the few businesses that remained open, proving that the industry is extremely resilient and will continue to provide store owners with dependable income in 2023 and beyond.

As we just saw, laundromat businesses typically have a ~80% gross margins (excl. rental costs). Indeed, most expenses actually are fixed costs (salaries, rent, D&A, marketing, debt interest expense, etc.).

Laundromats make the best 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 cash flow between 7-10%. The average dividend yield for the financial sector is just 4.7%.

According to Tony Havelka of liquid image: “No, it's not likely a laundromat can make you a millionaire.”

What are the cons to owning a laundromat? ›

For example, if you invest $300,000 cash into a Laundromat you can expect to net between $60,000 to $90,000 cash on cash per year. Laundromats have A+ depreciation benefits so your taxable income will be substantially lower.

You will want to inspect the machines and store equipment, look at the lease terms, analyze the vending price, and identify any value-add opportunities. If you can see areas where you can improve the store and add value, then it may be a good deal for you!

Commercial Laundry Valuations

Generally speaking, Laundromats are sold based on a multiple of cash flow, before debt service. In California, Laundromats normally sell between 3.0 – 5.5 times yearly cash flow, or 36 – 66 times monthly cash flow.

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.

How much does a laundromat make in a year? A typical laundromat returns between 25%-35% return on investment (ROI).

Laundromats' revenue has decreased at a CAGR of 1.4% to $6.0 billion through the end of 2023, including a 0.1% increase in 2023 alone, when profit will reach 22.1%. The increase in utility costs has caused companies to exit the industry.

Doing no more than 5 loads of washing per week is optimal for any household to maintain the quality of clothes and machines. It also helps protect the environment. Do not overload the washing machine though. This can result in the clothes not being washed properly and can damage your washing machine.

Based on the math in this article the average unit might generate $4.50 per turn and have 3 turns per day. So $13.50 in revenue per day x 30 days per month = roughly $400 per month in revenue per machine. So if you have a 50 unit facility that is $20,000 per month in revenue or $240,000 per year.

How do you calculate laundry cost? ›

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.

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.

Spontaneous combustion is a critical risk factor for commercial laundries.

Turns/day for the whole store is just the total number of washer cycles divided by the number of washers. Tod Sorensen, vice president of Girbau North America distributor Continental Girbau West: The simple math to calculate average turns per day (TPD) is to divide the number of turns by the number of washers.

An Average Laundromat Business

The average laundromat facility is 2,170 square feet, but businesses range from 1,000 to 5,000 square feet. Laundromats are typically open between 6 a.m. and 11 p.m., while some choose a 24-hour model. 70% of laundromats have two employees or less.

Laundry business in Nigeria is a very lucrative business that even youth can venture into and make lots of money. Usually, this business is a good source of daily income, as you can barely find a dry cleaner without work to do unless they have a day off.

What is the failure rate of laundry business? ›

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.

It's Not Risky Business

Buying an already functioning laundromat cuts your start-up costs right away. If you're smart about the purchase, you probably won't have a giant liability on your hands. If you buy an existing business, chances are pretty good it has a built-in customer base.

They also have more machines, which means you can get your laundry done faster. Plus, laundromats are typically cheaper than doing laundry at home, and they offer more convenience since you can do your laundry any time of the day or night.

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.

How profitable are laundromat vending machines? Laundromat vending machines are a very solid way to make some income. You can even finance most new ones for less than $500 per month, and you'll likely see an ROI of around $1,000 per month.

Most of us know that costs are classified as either fixed or variable. In laundry, fixed costs include rent and labor, while variable costs include chemicals, water and some utilities.

Most of the productive assets in a laundromat are considered fixed, including washing machines, dryers, sinks, irons, presses and ventilation systems. If the building in which a laundromat is housed is fully owned, it also can be considered a fixed asset.

To provide best-in-class laundry room operations to our customers by delivering superior quality and service. To be the industry leader and laundry service provider of choice through our consistent pursuit of excellence in all that we do.

Most laundromats cost between two to four dollars per load. Commercial dryers cost about the same, making the total cost four to eight dollars per load. However, these prices often fluctuate depending on how much time the process takes. Longer washing and drying times often require additional fees.

What is the sales multiple for a laundromat? ›

An important component of valuing your laundry business is using that number to help you sell it, if needed. So what are the common selling multiples for laundromats? Ordinarily, the industry standard is to use 3-5 times the annual profits as a selling price.

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.

Typical laundromats range from 2,000 to over 5,000 square feet, costing $400,000 to over $1,000,000 all in. There are variables that go into these equations, including construction abnormalities, finishings, amenities, and municipal-related expenses such as water, sewer tap fees, etc.