The Coin Laundry Association kicked off Day Two of Clean 2019 in New Orleans with an in-depth look at “The Lifecycle of a Laundromat,” which was presented by Northern California multi-store owner Brian Brunckhorst of Advantage Laundry.
Mr. Brunckhorst began with an overview of the six stages of a laundry business’ life: development, startup/launch, growth, expansion, maturity and eventually decline — then sharing ways to maximize a business for best return on investment for its given lifecycle.
He spent a good deal of time on the valuation of a laundromat, including formulas for reaching a realistic store value as well as the key factors that will impact what a vended laundry is worth.
According to Brunckhorst, two variables the will most strongly affect a laundromat’s value is the length of the lease and the age of the laundry equipment.
With regard to lease terms, he suggested a few factors to negotiate into that critical document:
- A minimum length of 15 years
- A five-year option
- Rent increases no more than every five years
- Rent increases based on the CPI, and capped at 4 percent
- Rent payments no more than 20 percent of gross sales
- The right to assign the lease
- The first right of refusal to buy the building
- The right to sublease
- The right to choose utility companies
- An exclusivity clause
- Avoiding large rent increases each year
“You start with your dream lease, and meet the landlord in the middle,” Brunckhorst explained. “When you make concessions, be sure to get something in return. And, if you get five to eight items on your wish list, it’s a win.”
As far as equipment, he noted that the best time to reequip is at the beginning of the decline stage of a store’s lifecycle, which he followed with an example of how and why to go about equipment replacement.
“It will extend your lifecycle,” he pointed out. “Expenses will drop. It’s also the best time to renew your lease, which essentially begins a brand new lifecycle — and then you get to play the game all over again.”
The second session of the morning was “CLA Connect LIVE: Interactive Idea Exchange,” a panel discussion moderated by CLA Director Of Membership and Section Relations Danielle Bauer.
The panelists included veteran laundry owners Art Jaeger of Southern California; Gail Vladimir from Philadelphia; Ken Barrett of Alabama; and Dave Menz from Ohio.
The panel tackled a number of topical and timely issues — including important factors when retooling a store, trouble-shooting equipment, laying out a new laundromat, operating a wash-dry-fold service, pickup and delivery, and employee relations.
