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Coin Laundry Business
HK Laundry Equipment has been helping our customers get into the Laundromat business for almost four decades. Below is a general overview of the Laundromat business. This is general broad based information on the basics of building and analyzing Laundromats. It is designed to be an honest, informative presentation of the Laundromat business. To quote Sy Simms HK:
"Firmly believes that the most educated consumer is our best customer"
To this end we hope to educate you about the Laundromat business.
In this world of rising costs and large corporations, independent entrepreneurs can still turn a profit. More and more foresighted businessmen are investing in HK equipped Coin Operated Laundromats. With a relatively small down-payment they have been able to provide themselves with a lucrative source of cash income. While each situation is an independent venture and must be considered as such, there are basic guidelines which have proven universal. These guidelines were produced to help answer most of the questions of a prospective Laundromat owner and to assist him in planning a successful coin laundry business.
HK Laundry Equipment Inc. has been around since 1967 and now has close to 4 decades of experience in both the construction and operation of Laundromats. As a full line authorized distributor, HK handles a compete line of quality commercial laundry equipment from washers & dryers, to bill changers, card systems, vending machines, super efficient water heaters and a complete line of folding tables & seating units. HK Laundry Equipment Inc. also has its own laundry parts depot and a staff of fully trained mechanics to install & service what we sell.
Table of Contents
- Who Needs A Laundromat
- Location Is Vital
- Basic Necessities
- Commercial Laundry Equipment
- Advantages Of A Laundromat Business
- Economic Analysis Of A Store
- What Your Equipment Dealer Should Provide
Who needs to wash clothes? The answer is everyone! Washing clothes is as necessary as food and shelter. So everybody should be busting down the door of your Laundromat to wash their clothes, right? Wrong! Everybody found a place to do their laundry last week. To get that market, you have to provide a better place to do their laundry. Better can be any of the following:
- more convenient location,
- cleaner store,
- safe environment,
- superior equipment (cleaner wash),
- good mix of laundry equipment,
- nicer atmosphere & decor,
- climate controlled (AC),
- additional services (attendant, WDF etc...)
A properly run and maintained HK equipped Laundromat business will draw customers because it will be providing a superior place to wash laundry. This HK equipped Laundromat will be providing ease of operation, convenience, quicker washing time, better quality wash (results that can not be duplicated at home), safety and security.
The HK equipped Laundromat has many advantages; paramount is the choice of 5 different sized truly commercial washers (20, 30, 40, 60 and 80 lbs. capacity). Each HK equipped commercial washer is similar in design, construction and in washing ability. No one is demoted to a lower quality washer because they have a smaller load. Ease of operation comes from doing the whole week's wash at one time. This provides for a more efficient washing time because the entire week's laundry can be washed, dried and folded in under 2 hours. The HK equipped commercial washer is unlike any home style washer because it is a front loading machine. With a front load washer the clothes are tumbled through the water and produce a noticeably cleaner wash. Ease, safety and security come from the quality of commercial laundry equipment and the basic design of the store.
With the emergence of the working woman, many homes (62% to be exact) have become 2 (or more) paycheck families. The most precious commodity for the working family is time. One of the reasons that the fast food chains grew so rapidly in the 1970's and 80's is because the working Mom didn't have time to make dinner. Now, instead of doing 8-15 loads of laundry a week, the family can go to the Laundromat and get the whole wash done in less than 2 hours, while doing some light shopping too.
Location! Location! Location!
The proper location is of prime importance. The wrong location will always be a failure; the right location will be a goldmine! The advent of the car has made the housewife extremely mobile in her selection of places to shop and trade. No longer is she tied to the neighborhood stores; she thinks nothing of getting in her car and driving miles to accomplish her shopping chores. She will travel to the Best coin operated laundry which gives her a feeling of security, is clean, and provides her with a superior wash.
The working class areas have proven extremely good markets for a Laundromat business. Look for the neighborhood with 3 or 4 family homes in it. Usually only one family will have access to the basement and to the laundry facilities. This means that the other 3 families in the building have to go elsewhere for their laundering.
Apartment buildings offer the potential of large concentrated populations. Remember that each building (and floors in some cases) will have its own laundry room. On the other hand, many apartment buildings will not have an adequate number of washing machines and dryers. Of the older apartment buildings that do have laundry rooms the equipment is frequently inadequate, broken down and unsafe. Many women won't go down into the basement laundry rooms alone. Research your location!
It is far easier to take the weekly laundry to a HK equipped Laundromat and wash it all at once, than to haul it up and down stairs to an apartment house laundry room and wait in line for a machine. Most of the apartment laundries are only using top-loading washers and have no big frontload washers to handle larger loads. The emerging trend is for the working family to visit the Laundromat once a week to get the laundry "chore" done along with some shopping.
The lower income areas have a great need for good coin laundry facilities. However, such a site should be examined with an eye to security (for you and your customers). People only will wash in Laundromats in which they feel safe and secure. The locations situated on the fringes of an inner city area have proved excellent and relatively trouble-free.
Laundromats in upper middle class areas have also done quite well, but keep in mind the needs of people they attract. Additional services such as a 'Wash, Dry and Fold' and even drop-off 'Dry Cleaning' are sometimes recommended in upper income areas, fulfilling the concept of the one-stop Fabric Care Center.
Not to be overlooked is the purchase of an existing store. Frequently the rundown neglected coin laundry store doing a marginal volume of business can be quickly and economically retooled and renovated to become extremely profitable store. Often the rent is low, utilities and plumbing already exist, and the volume of business can only increase after the change of management and renovation. An additional benefit is that the store already has loyal customers so you don't need as many new faces. HK can assist you with store renovations and equipment up-grades. Remember to focus on the fundamentals of a good location: Visibility, Easy In & Out, convenient-up-close Parking, good demographics and the need for washers.
Of all the possible Laundromat locations, the best sites are in busy, well-frequented shopping centers. Ideally, the center will have a popular supermarket and satellite stores such as a liquor store, beauty parlor, deli, etc. Big traffic draws such as McDonalds will not help your business but, instead, simply take up more than their allotted parking spaces.
Ideally, the Laundromat should be close to other businesses that are frequently visited during the weekly shopping. Free standing stores also work quite well as long as they are on active streets (or close to shopping) and have adequate parking.
Enclosed malls should be avoided because their customers are doing major buying purchases rather than their weekly repetitive shopping. In other words, they will be there to buy appliances, furniture, or shoes; not to buy groceries and do their laundry.
HK is a local based company serving the New York City metropolitan area and the entire state of Connecticut. HK has close to 40 years of experience in Laundromat site selection. HK would love to provide you a FREE Laundromat site survey if your location is within our territory. The Free Site Survey includes looking at the Laundromat location, local demographics, determining equipment layout, and identifying potential hidden costs in constructing the Laundromat at that location. In addition HK Laundry Equipment can provide equipment layout & design services, assist you in obtaining financing, provide pointers in negotiating a satisfactory lease, and help you build your own HK equipped Laundromat.
The Laundromat will need certain utilities to run the store. These are the utilities required for the average 26 washer Laundromat. If these utilities are not available in the store, they will have to be brought in at additional expense.
The minimum utilities should consist of:
- 1.5 to 2 inch water line,
- 2 million BTU's /hr. of gas (natural or LP),
- 4 to 6 inch waste line (minimum),
- 200 Amps of between 208-240 volts (400 Amps if using AC) 3 phase electricity.
If heating the hot water with oil then you have to provide for a 1000 gallon oil tank, but your gas supply is then reduced to 1 million BTU's/hr.
Inasmuch as both the dryers and the hot water heater use large quantities of air, provisions must be made for the venting of these units and for an adequate supply of make-up air.
If you are considering a store with more machines, air-conditioning, or a store that will eventually have dry-cleaning equipment, your electrical requirements need to be increased to a 400 Amp, 3 phase service.
Laundromat customers will come to your store if you provide them with a Better place to do their laundry than they had last week. Better can be a cleaner Laundromat, a more secure and pleasant laundry environment, a more convenient location, the ability of a Laundromat to wash a whole week's laundry at once, and (very important) the superior wash results produced by the commercial washers.
Many of our best customers have perfectly good domestic washers at home or have access to a domestic washing machine with a coin slide hung on it, in their apartment laundry room........they still prefer an HK equipped Laundromat. HK equipped washers are American made!
HK commercial laundry equipment come in 6 convenient sizes of 20, 30, 40, 60, 80 and 100 lb washers and are all virtually identical in operation, appearance and washing ability.
The woman with the smaller laundry bundle is not downgraded to the lesser washing machine because she does not have the quantity to fill the larger commercial washer. HK equipped Laundromats have a machine for every sized bundle!
HK equipped commercial washers save significantly on water and energy bills. Because HK uses only quality front loading washers, only a 1/3 of the drum has to fill with water to assure an excellent wash. This is because the clothes are constantly being brought in and out of the water and it is this action that produces the noticeable cleaner clothes. The front loading energy efficient HK equipped washers have a 16-20% utility expense on gross income. That means 20 cents out of every dollar received will go to pay the utility bills. Conversely, today's so called 'energy efficient' top loaders will have a 35% or more utility expense on gross income.
The primary reason that HK equipped commercial washers have such an exceptionally long lifetime, is the design of the machine. The HK equipped washer has the heaviest frame and greatest distance between bearings creating the strongest most durable washer made. The simplicity of design of the washer means trouble-free operation. This is because there are no: transmissions, gears, clutch, brake pads, or pumps in the HK equipped washers. If the extra parts are not there - they can't break.
After you have built your HK equipped Laundromat, the pledge of quality and excellence stays with you. HK Laundry Equipment as an authorized factory equipped and trained distributor. HK regularly conducts service schools to enable you to repair your own machines and save money. Our equipment manufactures also have a "Service Hotline" telephone number for their customers. This phone number connects you to a service engineer whose job it is to help you, over the phone, fix your machine. HK, of course, will also be available to assist you or provide service if you can't solve the problem yourself. We sincerely firmly believe that the self-sufficient operator will be the most successful operator and we will do everything within our resources to assist you in reaching this goal.
Why should any one get into the Laundromat business? If you put your money into a savings account you would get 3 1/2% Return On your Investment (ROI). Terrific Money Market Funds are currently paying around 10%. If you have a good year in the Stock Market or invest in good Mutual Fund you might get 15% ROI.
With Laundromats it is extremely possible to realize a 35-100% return on investment. Laundromats are also a Cash business. The advantages of a cash business are there are 'no checks in the mail', no inventory, no debts, and no account receivables because the customer pays in advance and supplies their own labor.
A coin operated laundry is a recession proof business. Economic conditions have little effect on the overall volume of business. Some of the best times for Laundromats have been in times of economic down turn. Available monies are limited and people will defer purchasing and repairing household laundry equipment.
There are several major tax advantages that are available to the Laundromat owner including equipment depreciation and the deduction of any financing interest. These situations may lead to a very favorable tax position.
The basic formula in buying a Laundromat is to put down at least 30% (approximately $60-100,000) and finance the balance over a 5 to 7 year note. This in conjunction with at least a 10 year lease will assure you a handsome return on your investment even if you can't renew your lease. The commercial laundry equipment in a HK equipped Laundromat will easily last 15 to 20 years, and if you keep the equipment clean from soap and standing water the machine will last longer.
After the notes are paid off, the store is all yours and then the real money starts coming into the business. Once above the break-even point, just a slight increase in volume creates a substantial profit.
The price of the typical HK equipped Laundromat ranges from $150,000 to $450,000. The wide price range is dependent upon the amount of equipment installed, remodeling decor and necessary leasehold improvements.
HK Laundry Equipment has financing available through our equipment manufactures. In these cases, HK can obtain up to 100% financing (for qualified buyers) on all serialized equipment. (i.e.: washers, dryers, bill changers, hot water heating systems etc...) Your HK salesman can provide you with all the financing options. Bank Financing is also available and for the entire purchase price, not just the equipment. But banks generally are harder to borrow money from.
In any Laundromat operation there are both fixed and variable costs. Fixed costs continue at a set rate each month, no matter what volume of business is conducted. Fixed Cost items are:
- Payroll & Cleaning Costs
- Alarm & Cable TV/Internet Costs
- Trash Collection
- Note Payments
Variable costs are a direct function of the volume of business and consist of those utilities consumed such as water, sewer, gas or oil, and electricity. These utilities will generally run approximately 16 to 25% of the total volume of business, or gross. An all HUEBSCH coin laundry store with energy-saving dryers will generally be 16 to 20% of gross. (The following example is figured at a conservative 20%.)
A formula which has proved to be accurate in determining the weekly break-even point (and thus provide a basis for calculation of profitability at various levels) is as follows:
Multiply the sum of the Monthly Fixed costs by 0.28. This equals the weekly break-even point. (This factor of .28 figures in the variable costs of utilities at 20% of gross and that there are 4.3 weeks per month.)
Below is a smaple economic anaylsis for a 1600 square foot Laundromat. The Laundromat has 26 washers and 30 dryer units.
Variable costs are a direct function of the volume of business and consist of those utilities consumed such as water, sewer, gas or oil and electricity. These utilities will generally run approximately 16 to 25% of the total volume of business, or gross. An all HK equipped store with energy-saving dryers will generally be 20% of gross. (The following example is figured at a conservative 23%.)
A formula which has proved to be accurate in determining the weekly break-even point (and thus provide a basis for calculation of profitability at various levels) is as follows:
Multiply the sum of the Monthly Fixed costs by 0.302. This equals the weekly break-even point. (This factor of .302 figures in the variable costs of utilities at 23% of gross and that there are 4.3 weeks per month.)
An example of a 26 washer store would be as follows:
Monthly Fixed Costs (less note)
To this figure, add the monthly payment for notes. Assuming that the total cost of the store was $339,398 and that $84,398 was the down payment and the balance was financed at 10% interest; the monthly note payment (covering interest and amortization) would be $4,233 per month for 84 months.
Therefore your total Fixed Monthly Cost would be:
Rent, Payroll etc.
Total Fixed Costs
minus Vending (mo.)
minus Video / Games (mo.)
minus WDF (mo.)
Adjusted Fixed $
Weekly Break-Even Point
Almost without exception, the coin operated laundries which we have constructed during the last 5 years show a weekly gross income range of $2000 to $6000. Assuming the lower end of this range as a conservative estimate we have:
$4,489 Weekly Gross Business
$2,343 Less Break-Even Point
But because a portion of this difference must be allocated to pay the increased utility costs (above the break-even point), only 77% of this difference is profit. In this example the profit is $1,652 per week or almost $86,000 per year. This is a ROI of 101% - not too bad! In this the store owner is making a handsome profit while Building Equity in the store at a rate of over $36,000 per year.
If you increase your business by an additional $400 a week your profit is now over $101,000 per year. For every dollar above the Break-Even point 77% is profit. This is a tremendous multiplier. Just a little more business can make a big difference!
Still have questions? Read our Five Important Numbers in Evaluating Laundromats.
Continue to Coin Laundry Business FAQs.
HK Cost Analysis Sample
PDF, 29 KB
What should you expect from your equipment dealer?
Obviously, you get what you pay for. The equipment dealer is in the business of selling machines. It is his livelihood! However, the quality dealer will show his sincerity with the attitude he takes towards the customer. The success of the business venture should be the driving motivation for both parties, not just the sale. The dealer who is straightforward and honest will indicate both the pros and cons of a situation, the competition, the demographics, and the potential pitfalls. In short, is he presenting you with a valid representation of the situation and doing all that he can to provide for your success?
Building a Laundromat today is a lot harder than it was 20 years ago. If all there was to opening a Laundromat was buying the laundry equipment, then stores would be built from mail-order catalogs or the internet. What you need today, is a dealer who can provide you with complete comprehensive services; a dealer who not only sells the equipment but can also install it and service it, a dealer who has a list of satisfied customers who can attest to his workmanship and his ethical business dealings.
There are many different types of laundry equipment and many different types of dealers. Here are a few services that HK provides for all of our customers:
- FREE Laundromat site evaluation.
- Assisting you with the Design & Layout of the store.
- Free Demographics and Store Analysis & Revenue estimates.
- Assisting you with his knowledge of store Construction, Building Codes, Permits, Layout, and Requirements of the Equipment.
- Provide the Commercial Laundry Equipment the week you need it, (NOT 3 months before so you won't be paying your note while your equipment is still in its crate.)
- Provide a Complete and Quality Installation to the Manufacturer Specifications.
- Provide in writing and stand behind the Equipment Manufacturer's Parts Warranty. (You paid for it when you bought the machine, your dealer should also honor it.)
- Provide FREE Service Schools for customers.
- Factory trained Technicians to Service your Laundry Equipment, (This means competent, professionally trained mechanics who know the machines inside and out.)
There are dealers out there that will promise the world and never deliver. As with everything today; it's the customer beware. Does the dealer come well recommended by customers and by suppliers?
HK Laundry Equipment sincerely believes that it practices what it preaches. We keep our promises! Our success is clearly indicated by the fact that we have been involved in the new construction or renovation of over 1000 new Laundromats or renovations since 1967....not one of them is marginal....everyone is a success!
You now have all the information and 'trade secrets' to become a successful Laundromat business owner. Now begins the hard work. Go out, drive around, and find yourself a location. Contact commercial real estate brokers and have them bird-dog locations for you. Take this guide as a reference and see what other owners are doing. Visit coin-op owners, go to seminars and subscribe to the trade magazines. Buy a book.
If you have a location in the New York City or Connecticut area, give us a call for a Free Site Survey.
HK Cost Analysis Sample
PDF, 29 KB