Tips for Buying a Laundromat

Trying to decide what the right investment is for you as an entrepreneur? Consider buying a laundromat. It’s a low-effort, high-reward investment that’ll keep you spinning in profits!

Why Buying a Laundromat is Smart

Here are just a few benefits of investing in a laundromat business.

It Provides Steady Cash Flow

When do people not have dirty clothes? A laundromat isn’t a business that only thrives in good times. Even in recessions and economic declines, people need to wash their clothes.

It Requires Low Labor Costs 

While a laundromat may have an employee or two (70% of laundromats have two or fewer employees), many can be run with minimal hands-on. You’ll have to decide whether you want to be the one managing the daily operations or if you want to hire a manager, which will, of course, eat into your profits.

It Has Low to No Inventory Costs

While a business like a shop has a constant inventory flow, a laundromat has little, if any. The machines are the draw. You may, however, need to stock vending machines, which we’ll cover next.

There’s the Option for Upsells

You will have the ability to bring in extra revenue with your laundromat, such as by offering a vending machine that sells detergent and fabric softener, as well as one for drinks and snacks. Another option is offering a wash-and-fold service.

It’s Not a Seasonal Business

Some businesses, like boat rentals, for example, thrive in a particular season. That’s not the case with a laundromat. Rain or shine, your business will be a necessity.

Drawbacks of Buying a Laundromat

While the benefits are many, it’s important to consider the negatives of running a laundromat.

There are No Off-Hours

Whether your laundromat operates 24 hours a day or not, machines may inevitably break down at odd hours. If you’re the one running the show, you may be interrupted in the middle of dinner with friends or in the middle of the night with a call about a broken machine or issue at your laundromat.

Upfront Costs are High

While ongoing costs are relatively low, your initial investment, especially if opening a new laundromat, may be high because you’ll need to buy top-of-the-line washing machines and dryers that will last you for years.

Utility Costs Will Rise

Your one major ongoing cost will be utilities. Whether your machines run on electricity or gas, these costs will not drop any time soon. And there’s little you can do to save on these costs, given that you need your machines to be available when your customers need them.

What to Look for When Buying a Laundromat

Here are some questions to ask before buying a laundromat.

Why Is It For Sale?

If you’re considering buying an existing business, try to find out why the owner is selling it. If he’s ready for retirement, great. But if there are signs that the business is struggling, think twice before investing.

What’s the Location?

For a laundromat, location is everything. Make sure there’s ample parking and that it’s visible from the street.

Also, see how close other laundromats are, as you’ll be in competition with any that are nearby. Many people walk rather than drive to a laundromat, and they’ll simply choose the one that’s closest to them.

If your laundromat will be open 24 hours a day, consider whether the neighborhood is safe, or if it has a high incidence of crime.

How’s the Equipment?

Find out how old the machines are and whether they have warranties. Ask when the last time they were serviced was.

Ask about maintenance schedules so you understand the routine you’ll need to follow to keep the machines in tip-top condition.

What About Employees?

If the laundromat has employees, will they stay on after the sale? It can be helpful to have experienced staff as you learn the ropes.

How Much Time Would I Need to Invest?

How hands-on is the current owner? He may be the one to service a broken-down machine, market the business, and restock supplies, or he may have a manager. Given your own availability and interest in running the day-to-day, this can be important to understand.

What are Monthly Expenses?

Get an understanding of what the owner is spending each month on utilities, marketing, rent, maintenance, salaries, and anything else. 

What’s the Profit Margin?

Here’s the gold: you want to know how much you could potentially make if you decide to buy this laundromat. Laundromats, in general, can see 20-35% profit margins, so see how the numbers for this business compare.

Ask to see financials so you can get an accurate picture of the business’ expenses and revenues.

What’s the Asking Price?

With all this information, you’ll be able to assess whether the asking price aligns with the business valuation. If you find it high, negotiate.

Consider the Work You’d Put into this Business

In a perfect world, you’d buy a laundromat that was raking in profits, and you wouldn’t have to change a thing. But in reality, you will likely want (or need) to make some improvements when you take ownership.

While the laundromats of yesterday thrived on people pumping quarters into machines, today’s laundromats often operate on a card system that allows people to pay with cash or a debit/credit card; no coins needed. Switching to newer technology could streamline operations (and keep you from having to go to the bank to get quarters every few days)!

You may want to make cosmetic changes, such as repainting the walls, replacing the tables and chairs, and updating the outside signage. You might also want to add some amenities that will attract new customers, including:

• Free wifi
• Cappuccino/coffee machine
• Televisions

If you’ve decided to run the day-to-day, you’ll have to get into a routine that will allow you to maximize your time. It may take time to get into a groove, but you’ll soon understand the best times to refill the change machine (if you use one), clean the self-serve snack bar, and make sure the machines are running smoothly.

Alternatively, you may decide to hire someone for these tasks, once you understand what daily maintenance looks like.

Set Your Laundromat Up for Success

As you build your plan for how you’ll make changes to your new laundromat business, consider the laundromat’s demographics.

Are the bulk of your customers regulars who live nearby? Seasonal visitors (such as in the case of a laundromat located in a ski town or town by the ocean)? College students?

Knowing who your customers are allows you to cater to their needs. Seasonal visitors would be more likely than locals to need to purchase laundry detergent when they do laundry, so you could install a vending machine. College students might like snacks.

And if your business is located in a neighborhood with other ethnicities, you could translate your signage into the other languages spoken by your customers.

Buying a laundromat provides the opportunity for long-term profits with relatively little effort and risk. But take your time in the process; if there are multiple opportunities for buying a laundromat, compare them to determine which is the best investment for you.