Laundromats 101
-
(a
basic introduction to
Laundromats)
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
Laundromats.
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-Op
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 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 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 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
Laundry Equipment
Advantages Of A Laundromat
Economic Analysis Of A Store
What Your Equipment Dealer Should
Provide
Who Needs A Laundromat?
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 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 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 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
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 Is Vital
Location ! 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-op
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 Laundromats.
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 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 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 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.
Basic Necessities
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
1/2 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.
Equipment
- Washers & Dryers
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 HK
equipped washers.
Many
of our best customers have
perfectly good domestic
washers at home or have
access to a domestic 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
equipment come in 6
convenient sizes of 20, 25,
30, 40, 60, and 80 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 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 washer saves
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 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.
Advantages
Of Owning A Laundromat
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-op 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
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.
Economic Analysis
Of A Store
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:
- Rent
- Payroll
& Cleaning Costs
- Supplies
- Insurance
- Advertising
- Repairs
- 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 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
sample economic analysis for a 1600 square foot laundromat.
The laundromat has 24 washers and 24 dryer units.
The laundromat is attended with a wash-dry and fold
attendant and also has soap and soda vending.
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. his 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 20 washer
store would be as follows:
|
Item: |
per
month: |
|
Rent
Labor/Cleaning
Supplies
Repairs
Insurance
Alarm/Cable
Misc.
Monthly Fixed Costs (less
note) |
$3200
$3225
$409
$150
$300
$175
$150
--------
$7609 |
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:
|
Item: |
per
month: |
|
Rent, Payroll etc.
Note Payment
Total Fixed Costs
minus Vending (mo.)
minus WDF (mo.)
minus WDF (mo.)
Adjusted Fixed $
Conversion Factor
Weekly Break-Even Point
|
$7,609
+ 4,233
----------
$11,842
- 430
- 430
- 3,225
----------
$ 7,757
x
.302
----------
$2,343 |
Almost without exception,
the coin-op 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
--------
$2,146 Difference
|
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!
To download
the PDF file for the images below, click
here.
To download
the PDF file for the above images, click
here.
What
Your Salesman Should Provide
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 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
equipment and many different
types of dealers. Here are
a few services that HK
provides for all of our
customers:
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?
H K
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 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
NYC or Connecticut area, give us a call for a Free Site Survey !
If
you have any questions
regarding Laundromats or
locations, please feel free
to call:
HK Laundry Equipment Inc.
914-273-5757
800-229-4572
E-mail
