The Four Factors That Determine a Successful Coin Laundry Location

[This article originally appeared in the December 2009 issue of The Journal of Coin Laundry and Drycleaning. This is the first in an ongoing, periodic series, in which we will resurrect some of the classic, timeless industry education that the Coin Laundry Association has been making available to store owners for more than 55 years.]

I often get asked what goes into determining whether or not a location is a good one for a self-service laundry business. And, in my opinion, there are four key factors in choosing the right location. They are: (1) population, (2) location, (3) competition and (4) parking.

When examining population, you need to look at the density and the makeup. Population density refers to how many people live in a one-, two- and three-mile area. In a rural setting, you can probably gauge the density up to a 10-mile area. In urban areas, most of your customers will live within a two-mile radius of your laundry; this is where 90 percent of your business will come from. On the other hand, in rural markets, customers will come from up to 10 miles away, depending on the number and quality of laundry facilities in neighboring towns.

When considering density, always remember that the more people in the smallest area the better.

Next, let’s look at population makeup. It would be advantageous to build your new store in an area featuring mainly blue-collar families. Typically, the majority of those in this demographic live in rental areas and have children. Remember that larger households mean more pounds of laundry, which equates to more business for you.

Also, regarding population makeup, perhaps consider areas that have migratory workers. After all, temporary employees do not buy washing machines. They use coin laundries.

For obvious reasons, middle- to upper-income families typically are only interested in wash-dry-fold and drycleaning services. They live in homes that have washers and dryers, and these individuals only patronize coin laundries to wash their larger items, such as rugs and comforters.

Of course, before you make your final decision, it pays to get a demographic study for your market area of interest. This can remove some of the guesswork from your decision

Next, let’s look at location. The word “location” is defined as “a particular place confined to a definite spot or geographic position.” Our definition is slightly different: Where can we build a laundry that makes money?

Let’s start with demographics. Choose an area where the population contains a majority of low- to middle-income families. Also, the number of family members per household is very important; more kids mean more pounds of laundry, which means more dollars.

What’s more, look for older housing, which likely doesn’t have proper accommodations for residential washers and dryers.

Next, look for a high-density location. But remember that there is a definite relationship between how many people are in your marketplace and how large your store needs to be. All stores have peak hours and peak days; if you can’t accommodate your customers during these high-traffic times, they will go elsewhere.

In addition, try to get the best spot in a good location. The best spot is a free-standing building with plenty of parking on a main street that has a good deal of local traffic. Exposure is constant advertising.

Why a free-standing building? It gives you complete control of parking, signage and multiple entrances. People like to park as close as possible to an entrance.

The second-best locations are small strip centers, which also allow your customers to park close to the building. Generally, they have other businesses that draw local customers to the center, which will help your business. The magic word there is “local.”

If you’re building in a small center, try to build on either end if you can. In most cases, the ends contain additional parking.

Street locations and large shopping centers typically are less than optimum laundry sites. Street locations without parking never reach their full potential and are generally the least desirable to build on. By contrast, large shopping centers draw a lot of customers, but unless you get one of the end units, parking can be a problem. Also, large centers charge quite a bit more rent and a lot of the shoppers are not local.

To summarize, a good location is an area that contains a number of people who will use a coin laundry, and a good spot is a particular place in that area that will accommodate those people in the most convenient way.

Now, let’s take a closer look at your potential competition. When looking for the right location, three of the most important questions to ask are: Who are my competitors? Where are they located? And what can I do to get the amount of business I need to make my coin laundry successful?

Let’s break down your potential competition into three separate categories. They are:

1. Residential washers and dryers.
2. Apartment buildings with laundry facilities.
3. Other retail, self-service laundries in your marketplace.

Let’s examine washers and dryers within the home. This is probably your largest – and toughest – competitor. It’s hard to beat the convenience of being able to do your laundry at home, especially now that some manufacturers offer 20-pound, soft-mount machines for the residential market – which can easily fit into a standard basement, and do a nice job.

Fortunately, there are ways to lure some business from local homeowners – such as advertising your extra-large washers and dryers. Also, be sure to promote the speed and convenience of utilizing today’s modern coin laundries, as well as the fact that your store’s commercial-grade equipment can wash rugs, heavy blankets and comforters with ease.

Your second type of competitor is likely to be the local apartment building laundry room. These facilities still offer the convenience of being on-premise, but they have many weaknesses, such as small washer capacity and small dryers that require much more time and money to dry. In addition, oftentimes, all of these machines will be filled with other tenants’ items.

However, apartment laundries can be formidable competitors in certain markets. In such cases, I might recommend offering a free-dry promotion to get those apartment dwellers into your store.

The third type of competitors are other self-service laundries in the neighborhood. When choosing a location, some people seek out areas that have very little competition in the form of other laundromats. When it comes to this type of mindset, be careful. There may be a very good reason why there are no other laundromats in the area. Perhaps the market is “too middle-class” or comprised mainly of homes or is sparsely populated. So check it out thoroughly.

The best areas to build a store are where there are already stores in place – all competing and all making money. In such scenarios, you know that there is a strong base of customers in the area who frequent coin laundries. And, generally, the store that has the best location with the most customer conveniences will receive the most business. Competition in many cases is very healthy. It brings more people out of their homes and apartment buildings.

However, competition also can be harmful, especially when there are too many stores in an under-populated area or when the market features competitors who give away their products in the form free dry or deeply discounted washes. (Business 101: Don’t give away what you’re trying to sell.)

Of course, there is nothing wrong with running discount specials. That’s just good marketing. But, remember, it’s not always price that brings in the customers. Speed and convenience are the main factors, followed by cleanliness. Pricing only becomes a major factor if it is unreasonably low.

All in all, in a free market society, you will always face some competition – no matter what business you’re in. But if you do your due diligence before making a decision on where to build your business, the odds will be on your side.

The fourth factor is parking. Good parking is the most essential aspect of a good location. In today’s society, most people don’t do a lot of walking, especially when they are carrying 50 to 100 pounds of laundry. Therefore, let’s break down parking, from the best to the worst.

1. A free-standing building with two or three entrances. This is absolutely the best option. It allows more of your customers to park as close as possible to any of the entrances. The shorter the distance the better off you are. Having more than one entrance and parking spaces around the entire building allows more customers to park close to an entrance.

2. A free-standing or small, strip-center location. This allows your customers to park near the building, close to the entrance. Plus, this parking option is visible from the street, which is very important. If customers can see the size of your parking lot from the street, it is much better than a lot that is hidden. In most instances, if customers can’t see your parking, they assume you don’t have any.

3. Side parking. This is a good option, as long as your entrance is close to that side of the building, and it’s visible from the street.

4. Rear parking. By definition, this parking option is not visible from the street. Therefore, potential customers often don’t realize that it is there. Also, rear parking makes some customers feel unsafe at night. If you have rear parking, be sure to have plenty of lighting back there.

5. Large shopping-center parking. This is the least desirable parking option of all. With a shopping center lot, customers are always unsure as to how far away they will be parking. Also, in most cases, you can’t park close to the building’s entrance. If you’re in a large shopping center, be sure to inquire about special parking concessions that you might receive from your landlord.

All in all, no matter how many washers and dryers you have, if you don’t have the proper amount of good parking, your location will never achieve its full potential.

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