How does the laundromat business look as we enter this changing environment? Is it still as easy to operate a laundry and be profitable? Is it still the American Dream Business that it has been known to be? Yes, but… Chuck Post, Laundry Advisor & Consultant initiates this BizBen Discussion post.
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How does the laundromat business look as we enter this changing environment? Is it still as easy to operate a laundry and be profitable? Is it still the American Dream Business that it has been known to be? Yes, but…
Costs of operating laundries have become exceedingly high. Utilities are climbing at rates never seen; 15% and even more in many areas as it is for about everything else that a laundry needs to operate. This is not just a laundry problem. This is a national restructuring of the American business model. Every business operator is in the same environment. Yet, by necessity, the laundry is facing an even greater model challenge. Laundries are supposed to be an absentee owned business. Is that still true?
Today, laundry owners are also facing the need to pay higher wages while needing to increase staff hours in order to keep even their loyal customers feeling safe and coming back. In several California markets, it is difficult to find quality staff at even $17.00 per hour. A self-service laundry pays out about 10% of its gross for cleaning, some staff presence and closing. Obviously, these models need to be re-thought.
The laundry lease is also something to consider. If buying a laundry today, it may be necessary to live with a shorter-term lease than the 20 - 25 years which has been typical. There may also be higher escalators and even more conditions placed on the lease, requiring adjustments to the investment model and exit strategies as well as operations.
So, are these laundries still easy to run profitably? Yes, when the laundry owner puts the policies into place and staffing is taken into consideration, the laundromat can be an ideal investment. Our clientele has also changed; now requiring better service, atmosphere, personality, and they now respond better to branding.
How can the laundry afford to pay these higher costs?
Today's laundry wins market share by adding the better customer experience. Cleanliness and Safety have always been the motivator for increased patronage, but never like it is now. Laundries which have added staff, and are now offering services, more and improved ancillaries, along with good operating procedures are gaining market share; some up by 20% and even more. In addition to market gains, price increases have accelerated up 10 and 15 percent, with more coming.
Those who have improved operations in their laundries are experiencing a larger market share have also found that individuals who once did not enjoy coming to the laundry, now experience the many advantages of those improvements, which gains exposure and caters to a larger customer base.
Laundry owners consist of some of the greatest firsthand entrepreneurs in America. The actual time required by ownership of today’s new modern laundry is not greater than running an old model. However, it does require better organization of thought, planning, hiring, and training. Once the owner sets up the newer model, they can still easily get by with under 10 hours of their personal weekly time.
It is the inability of many laundry owners to develop a model that will profitably service the community that keeps the opportunities coming. These major changes offer a greater opportunity to the prepared investor; more than ever before.
I've found laundromats to be a great investment, because as housing gets more expensive, and rent costs increase, many people are sharing these expenses more and more, and so a laundromat becomes more convenient for their needs. I agree with Chuck, those certain amenities, such as Wi-Fi, and additional on-site staff, are very important, and will help the business gain a higher market share in the area. In big cities, such as NYC, Chicago, LA, etc., there is always someone on site, as some locations will even charge $ per pound to clean the clothes for you and bundle them upon your return. These are services that many laundromats in suburbia are starting to adapt and see great success.
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