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Increasing the Value of Your Laundromat

There are many benefits to a well-managed Laundromat. From having a clean sitting and folding area to keeping your commercial laundry equipment running smoothly, there are many things you as a Laundromat business owner must do to maintain your store. Not only to well-run stores and up-to-date washers and dryers keep customers returning, but they can also help you increase the overall value of your laundromat. Learn other things that you can do to help increase the selling price of your Laundromat.

Location is Key

You’ve heard it before; location, location, location! The cost of the lease is the biggest area of potential profit or loss. There are many locations where it is much too costly to operate a Laundromat. For example, the rental costs per square foot in New York City are going to be much more expensive than rents in downtown Bridgeport or in Granby, Connecticut. At one point in time, I was looking at rent costs in Greenwich, Connecticut that were over $85/sf, which was just too high to have the store make money.

The same store 20 miles away in Bridgeport, Connecticut would have a rent of $14/sf. If the vend prices are similar, which Laundromat makes more profit and which store is worth more money? If you have negotiated a cheap, long term lease then you have also reduced the value of the building or the property. This is important if you ever are looking to purchase the building & the property.  If you have also negotiated the "right of first refusal" in your lease, you now have lowered the potential selling price of the property, potentially saving you even more money.  The ultimate condition is to own the property (rather than being a tenant) because as the landlord you can control your own destiny.

Secure a Long Term Lease

If you have two identical Laundromats where each has the same rent and the same revenue, the store with the longer lease will have a higher value than one with a shorter term. This is because the Laundromat with the longer lease will make more money over the long haul. Ideally you want to tie up the Laundromat location for as long as possible. When I initially negotiate a lease, I try for a 10 year lease with 2 or 3 - 5 year options. This assures that there will be a Laundromat in this location for a long, long time.

Evaluate for Cost-Saving Opportunities

In addition to choosing the right location for your Laundromat business, tactics like reducing expenses also help increase the store’s profits. Some ideas include:

  • Shop around for insurance
  • Talk to your landlord about reducing your rent
  • Shop around for deregulated utility expenses
  • Clean the Laundromat (dirty Laundromats have high repair frequency and less efficient dryers)
  • Contact a repair service to fix your machines on a contract basis (rather than time & material)
  • Replace your old T-12 light bulbs with the newer T-8's or even LED's
  • Shop around for soap & supplies and replacement parts
  • Reduce or eliminate WD&F attendants where the WD&F is being subsidized by the rest of the Laundromat

Choose Automated Laundry Equipment

Another way to up the value of a Laundromat is by increasing the multiple at which the store is valued. If the store has state-of-the-art laundry equipment with a card system, then we are increasing our multiple because the store is worth more. Logic says that if you have a coin operated Laundromat and you have to process coins three to four times a week; that that is a lot more hands-on work than a card operated Laundromat where you only have to handle the currency once or twice a week.

Brian Brunckhorst, who wrote "The secrets of owning & buying Laundromats" states that the more automated you’re able to make your Laundromat, the higher profitability and the higher the multiple. Brian says that when you own stocks you pay up to a 30 time multiple because as an investor you don't do any running of the business except receive a dividend check.

Upgrade to Efficient Equipment

Another method for increasing the profit of the Laundromat is by replacing an inefficient piece of equipment with a new super-efficient replacement. For example if you have an old tank type water heater it is probably running at 60% efficiency, which wastes a lot of natural gas and increases your utility expenses. If you were to replace that heater with a new modern 95% efficiency water heater you will start saving dollars now and in the future. By reducing your expenses you are also increasing your profits and also increasing the value of the Laundromat.

My Briarcliff Laundromat is a perfect example of using new Huebsch Galaxy 600 washers and having their note payment being paid for by the water & sewer savings. (I win with new machines, new warranty, increase customer satisfaction, reduced water & sewer & gas costs and the store is valued at a higher number.)Games soda snacks low res

Consider Offering More Vended Options

Have you performed a Profit and Loss on your own Laundromat? If you have, look at maximizing everything that adds revenue. Often you can add more revenue just by adding more vended options, including:

  • vending machines
  • adding video games
  • ATM's
  • arcade games
  • car vacuums
  • adding additional large washers or dryers

All of the above can add additional revenue to your Laundromat. You can also advertise your WD&F service to increase your business and make more WD&F profits.

Increasing the value of your Laundromat business is beneficial for short term and long term reasons. The above tips will not only provide your customers with more value, leading to more money in your pocket each month, but will also increase the overall value of your Laundromat.

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