Industry Experts Decode the Art and Science of Finding the Ideal Laundromat Location
“Location, location, location.”
You’ve heard it hundreds of times. It’s the key to retail success. It’s your magic wand to laundromat riches. Just find that ideal location.
But what makes a “perfect location” so perfect? What actually goes into the laundry site selection process? And, perhaps more importantly, how has the game changed in the last few years?
We posed just those questions to the people whose job it is to know the answers. Our expert panel includes:
Jason Fleck
Vice President, Vended Sales
Laundrylux
Stephen Gramaglia
CleanFresh Laundromat
Bronxville, N.Y.
King Lee
Director of Marketing and Product Development
Dexter Laundry
Matt Seehawer
Wash World Eco Laundry
Vancouver, Wash.
Tod Sorensen
Vice President
Continental Girbau West
Santa Fe Springs, Calif.
Alex Tosta
Franchise Success Director
Speed Queen Laundry Franchise – North America
What are the leading factors to consider when selecting a location for a new laundromat buildout?
Stephen Gramaglia: The big-ticket items are the density of the area, competition, household size, income levels, and the types of housing in the area. We are looking for high density, larger household size, middle income, and multifamily/apartment buildings. Also, what does the competition look like, what are their capacities, how big are they, what does their parking look like, and what are their pricing levels for self-service and drop-off laundry?
Jason Fleck: First of all, it’s important to note that you should consult experts, rather than trying to find a location on your own because there’s a lot of complexity involved.
Order a professional demographics analysis to find out the percentage of renters and large families in the neighborhood, as both can be key laundromat customers. This analysis also can estimate laundry market share available in the area. Additionally, if applicable, have a professional look over the lease, because a lot can go wrong with this document.
With that said, when selecting a location – if leasing – look for a long-term lease with a minimum of 10 years and two five-year options. Adequate parking and easement access are crucial. Also, I prefer locations with co-tenants that complement a laundromat business, as well as areas with weak competition.
Nothing beats driving through the neighborhood to observe the types of businesses in the area and the condition of any existing laundromats.
Alex Tosta: We look at the demographics, the visibility of the site, traffic patterns, and competitors in the area.
Tod Sorensen: Assess the demographics, the visibility of the location, the parking situation (we generally prefer five parking spots per 1,000 square feet), and the ease of ingress and egress. Renters are a core customer base that frequents laundries, so it’s good to find locations dense with renters and apartments. Retailers located nearby also can help draw customers into your area. If you’re offering pickup and delivery, we recommend a rear entrance for loading and unloading commercial work. Also, look for an engaged landlord who values the complementary elements of a laundromat tenant.
King Lee: A location with a high percentage of renters – above 30 percent, and especially in older apartment complexes – is an ideal location. I also look for good retail neighbors like rent-to-own businesses, dollar stores, and prepaid wireless services. In addition, I prefer end units, because that type of location helps with dryer venting if the roof is not conducive and makes the store more visible. Visibility within the shopping cents is a key factor.
Matt Seehawer: The factors I look for when selecting a laundry site include:
- Storefront visibility and ingress/egress
- Available customer parking
- Demographics
- Building condition and improvements required
- Utility acquisition and impact fees
- Equipment distributer/network and service area
- Competition and vend pricing
What factors would make a potential location a non-starter?
Gramaglia: Our biggest concern is the size of the location. We won’t look at a laundromat that is under 4,000 square feet. The economics make more sense for us between 4,000 and 6,000 square feet.
Fleck: Lack of parking is a major red flag. Insufficient utilities – such as having only a septic system or no access to natural gas – also can be deal-breakers. A bad landlord or a bad lease can make a location untenable. Extremely strong competition nearby or high-impact fees are additional factors that would make a potential location a non-starter.
Tosta: If the demographics aren’t compatible to a laundry business or if there is a lack of visibility, we’d consider those factors to be non-starters.
Sorensen: Stay away from locations with no access to utilities, large sewer connection fees, the inability to secure a 20- to 25-year lease, or where the rent is more than 25 percent of your projected gross income. Also, be wary of a disengaged landlord who doesn’t value a laundromat as a tenant.
Lee: Obviously, if the demographics are unfavorable, that could be a determining factor. Another reason would be a lease that is too expensive for a laundry business to sustain. Some shopping plazas with big-name anchors like Walmart can become too expensive per-square-foot, and your laundry business might tend to get lost in the shuffle.
Seehawer: For me, a few characteristics that would be deal-breakers are: poor visibility, poor ingress/egress, inadequate parking availability, poor laundromat demographics, substandard building condition with costly improvements required, an inability to acquire the needed utilities, high impact fees, and significant competition in the area.
What specific demographic numbers or characteristics are you looking for in the local population and local area these days?
Gramaglia: We need a 50 percent or higher rental population to support the turns per day that we want to achieve.
Fleck: When selecting a site for a new laundromat, I focus on several key demographic characteristics. The total population needs to be substantial enough to support the business. A renter population greater than 40 percent is crucial, as renters are more likely to need a laundromat’s services. Additionally, I look for areas with a median household income of less than $50,000, which typically tends to indicate a higher demand for laundromats.
Tosta: We look markets with potential customers who don’t own laundry equipment. Obviously, a high density of renters remains an important data point for new store development. However, because we offer large-capacity machines at our stores, even homeowners with residential washers and dryers can become occasional customers when they want to wash larger items – such as quilts and bedding – and larger loads faster and more efficiently.
Sorensen: I like to see the following:
- 3+ people per household
- The presence of K-12 schools
- Renters representing 45 percent to 50 percent of the population
- Businesses such as spas, motels, medical clinics, moving companies, and vacation rentals to support full-service work, if the operator wishes to provide additional services
Lee: Beyond the number of rental households, I like to look at household income levels below $50,000 per year, and keep in mind that a lot of those households intersect with the rental households within that geography.
Seehawer: In northwest Oregon and southwest Washington, we’re building 4,000- to 5,000-square-foot stores. And we are looking for the following demographics within one mile of our laundromats:
- 6,000 to 9,000 households, with a total population of 15,000 to 25,000
- Household sizes of 2.3 to 3.1 people
- 3,000 to 4,500 renters
- 45 percent to 55 percent of the households earning less than $50,000 annually
- Hispanics representing 15 percent to 24 percent of the population
Within three miles of our stores, we prefer:
- 30,000 to 55,000 households, with a total population of 90,000 to 150,000
- Household sizes of 2.3 to 2.9 people
- 10,000 to 25,000 renters
- 35 percent to 45 percent of the households earning less than $50,000 annually
- Hispanics representing 10 percent to 20 percent of the population
How have those numbers or characteristics changed in recent years? If so, why?
Fleck: The percentage of renters has remained fairly consistent. However, median household incomes have increased over the last 20 years, rising from approximately $30,000 to sometimes as high as $60,000 to $70,000, depending on the cost of living in the area. This change reflects broader economic trends and varying cost-of-living adjustments across different regions.
Tosta: We have seen a change in the customer base that’s using laundromats. Given the inviting atmosphere of our laundromats, we’ve been attracting individuals who previously weren’t laundromat customers. What’s more, wash-dry-fold business continues to grow at our stores and other laundromats. Therefore, proximity to middle- to high-income areas isn’t a bad thing these days.
Lee: When looking at rental households, it’s important to understand the area and know the market. For instance, a higher-end apartment complex within a particular area will still be counted as a rental unit – however, it will skew your results, since that complex most likely will be equipped with washers and dryers within each individual apartment unit. The household income level also has risen in the past 10 years; we used to look at household incomes of $35,000 per year and under, but with inflation and the rising cost of home ownership, the dollar doesn’t go as far as it used to.
What key site selection factors don’t necessarily show up in the demographic numbers?
Fleck: Ethnic and cultural factors don’t always show up accurately in demographic data, but they can significantly impact the success of a laundromat. In addition, gentrification trends might not be immediately evident in the numbers, yet also can affect an area’s future demand for services. Being aware of these subtle influences can make a big difference in choosing the right location.
Tosta: We look at the current utility service to the facility. Will upgrades be required? Also, traffic flow, ingress and egress, and parking are important factors to consider.
Sorensen: Factors such as visibility; parking availability; and geographical barriers like rivers, lakes, and mountains won’t appear in the “numbers.” Of course, all laundry investors have different goals, so it’s important to select a location that meets those goals.
Lee: Beyond just traffic count, one factor I like to look at is whether or not a road is actually too busy. If a location is fantastic numbers-wise but the street is too busy to properly make a left turn out of the parking lot, this could sway customers away from visiting your location. Another such key factor is utilities. If a site doesn’t have the proper utilities and the cost to bring in added amperage and/or water and sewer lines becomes cost-prohibitive, this could be a deal-breaker that won’t necessarily show up in the numbers.
This is where having an experienced local distributor can be invaluable. Numbers on a demographic report can only tell you so much. Having someone who knows the area can provide potential owners with more information on which to base their decision.
How do you evaluate the competition in a potential area?
Gramaglia: We look at the cleanliness; the size of equipment; parking availability and ease; amenities like air conditioning, payment options, and folding table availability; and the friendliness of the staff.
Fleck: To evaluate the competition in a potential area, I look at several key factors. First, I assess the condition of the store and the age of the equipment. Next, I consider the range of services and amenities offered and how busy the laundromat is on weekends, as this indicates popularity. Moreover, I examine vend pricing, parking availability, and easements. Lastly, I review the business’ marketing presence to determine how effectively it attracts and retains customers.
Tosta: We compare the services and amenities offered to our own. We also examine the infrastructure – from the HVAC system to the equipment mix, and the parking situation to the accessibility of the locations.
Sorensen: I evaluate the competition based on what they offer. And I consider the following points: (1) Is the laundromat attended and clean? (2) Is the equipment modern? (3) Are there 90-pound-capacity washers or larger? (4) What amenities are being offered? (5) How wide are the aisles? (6) What laundry services are being provided? (7) What is the store’s parking and equipment availability?
Seehawer: The number of laundromats in a specific area or market is important, but it’s not a critical “go/no-go” differentiator. We look more at the quality and customer experience offered at the local competition.
If there are several “abandoned” and “rundown” laundromats with many machines out of order, we love it. We know that 80 percent of our new customer base will be coming from these existing store, so the worse they are the better for our model.
In addition, when we enter a new market, we conduct a comprehensive pricing survey for all services offered. This is a critical input to our pro forma evaluation.
In your opinion, what types of nearby businesses or amenities – such as shopping centers, schools, etc. – are most beneficial to a laundromat’s success?
Gramaglia: We really like grocery stores, delis, and dollar stores as co-tenants or neighbors, especially we share the parking. Shopping centers can be good or bad, depending on your location within the center as it relates to parking. For example, we like endcaps, and we would never take the center space (or the “armpit”) in an L-shaped center. Visibility is very important to us.
Fleck: Proximity to public transportation, such as a nearby bus stop, can be beneficial because it increases accessibility. Locations near shopping centers, grocery stores, cafes, or other frequently visited businesses enable customers to multitask while doing laundry, which increases foot traffic and attracts more customers. Being close to colleges, Airbnb and VRBO properties, and apartment complexes also is advantageous, since these areas often tend to have a high demand for laundromat services.
Tosta: Quite simply, we look for co-tenants that serve the same demographics as our laundries.
Sorensen: Commercial businesses in the area are great, because they can help build a laundry’s full-service business, as well as drawing customers to the area. Shopping centers, anchor stores, and restaurants are can be very beneficial to a laundry business.
Lee: I look for C-level shopping centers, especially in ethnic-centric neighborhoods with neighboring businesses like rental centers, bodegas, and smaller grocery stores. Depending on the area, public transportation can be important, as well as having sidewalks on your side of the street.
Seehawer: We like to be in close proximity to high-density grocery stores and/or general retail businesses, such as Walmart, Target, Aldi, and so on
What’s your thought process regarding leasing vs. purchasing a laundry location outright?
Gramaglia: There are advantages and disadvantages to both. Ideally, you want to be your own landlord, but in many parts of the country owning property doesn’t make financial sense for a laundromat.
Fleck: If the location is great, either option can work. However, if it’s your first laundromat, it’s probably best not to buy the property. Purchasing ties up a lot of capital in real estate that could be used to expand and buy a second store. Instead, you can negotiate with the landlord for a first right of refusal option to purchase the property in the future. This way, you keep your options open while preserving capital for growth.
With that said, I see a lot of multi-location operators begin to acquire real estate as they expand their footprints and enjoy increased cash flow. Owning the property can provide long-term stability and additional revenue streams.
Tosta: To me, that’s really more a question of financials. Our focus is on making sure the laundry is set up for long-term success – whether that’s via a long-term lease or property ownership.
Sorensen: It’s always a good idea to purchase the property, because you can depreciate it, finance it, and wrap everything together with a Small Business Administration loan for financing over a longer term. There are several advantages to owning the “dirt.” Plus, down the road, if you decide to get out of the laundry business, you can sell the business on a multiple and lease the building, which will provide stable, long-term future income.
Lee: “Owning the dirt” makes sense for some laundromat owners, as they view leasing a space as throwing away money. However, many first-time prospective owners don’t have the capital to buy property right off the bat.
Seehawer: With the overall equipment life and investment required, owning the real estate is the best long-term option from a tax and financial perspective. If you can find and afford the real estate of a great laundromat location, do it.
Leasing is a viable option, as long as you’re negotiating 15- to 25-year leases with acceptable escalations over the life of the lease. We prefer to negotiate rent escalations at every five-year milestone, rather than annual increases, in order to minimize the compounding of interest escalation.
What kind of zoning regulations or local laws need to be considered when selecting a site for a new laundry?
Gramaglia: First, it’s important to be sure that the city or town actually allows laundromats, because some don’t. Then, verify that you will be able to receive the proper amount of natural gas, water, sewer, and electricity service – and at costs you can live with.
Fleck: The location must be zoned for commercial or mixed use, and it needs to comply with building and fire codes. If a location doesn’t meet zoning requirements, a variance may be needed, which involves applying for permission to deviate from certain zoning rules. Impact fees also can kill a project if they’re too hefty; however, they sometimes can be negotiated down or even waived.
Tosta: When considering a potential laundry location, doing your proper due diligence for utilities is a must. Is the utility provider capable of delivering what the laundromat will need in terms of power, water, and natural gas? Also, are there any tap or impact fees?
Sorensen: Zoning is critical. For example, in California, we have a C2 zone, but sometimes this classification does not allow laundries to offer additional services. Therefore, zoning can get you in trouble if you’re not careful and don’t perform adequate due diligence.
Lee: The big ones to consider in some municipalities are impact fees that are charged in order to connect to the local water and sewer lines. Some cities and towns charge a flat fee or assign a number of points allotted to a complex or center. Some municipalities will assess the fee based on the number of washers at the location – and this can become extremely expensive, especially if the fee climbs into the hundreds or thousands of dollars per washer. A potential owners also may need a variance if his or her site is not zoned accordingly.
Seehawer: Every municipality and jurisdiction is different, but a few items to consider include permit fees; inspection fees; architecture and design requirements; fire suppression system requirements; water/sewer handling requirements; sumps, pumps, recycle, wells, drain fields, and septic; parking improvements; and ADA compliance.
How have technological advancements – such as AI, geofencing, GIS technology, etc. – influenced the site selection process for new laundromats in recent years?
Fleck: Although I’m always open to learning new things, I’m a bit old school when it comes to site selection. I still rely on my gut and years of experience in the industry. There are certain things you will learn only by having feet on the ground and eyes on the neighborhood.
Tosta: I see the basics of site selections as unchanged. However, the fact that today we have access to more information about prospective customers and their purchasing behavior adds supporting data to reinforce whether or not we have the customer demographic we need for a successful laundromat in a specific area.
What changes in consumer behavior have impacted the criteria for choosing a laundromat location?
Fleck: With more people wanting wash-dry-fold services, laundromats now can thrive in middle- and upper-class areas, too. Plus, laundry operators who are taking advantage of loyalty programs and cashless, app-based payments have found these offerings to be big hits. These tech-savvy options can attract a wider range of customers, and they should be factored into your site selection criteria.
Tosta: Again, I think the rise in popularity of full-service laundry offerings like wash-dry-fold and pickup and delivery have led to a shift in thinking. Some locations bordering or within middle- and upper-income areas, which were once eliminated out of hand, and are now being more strongly considered for laundromats.
Sorensen: Residential pickup and delivery is really booming. People simply don’t like to do laundry. Individuals outsourcing the laundry task and getting back some of their free time is the future of laundry – however, you must provide a high-quality service. If you go this path, be sure to invest in a solid POS system to help manage the logistics of your wash-dry-fold and pickup-and-delivery services.
Lee: With the growing demand for pickup-and-delivery services in certain markets, some laundry entrepreneurs who are focusing strictly on that segment of the business may not require a location that can cater to walk-in traffic.
Can you share a success story of a laundry location you selected and what made that location particularly effective?
Gramaglia: Our most successful location is in a shopping center anchored by a CVS. It also includes an Outback Steakhouse; a Chuck E. Cheese’s; and some smaller mom-and-pop businesses such as a nail salon, a deli, a small grocery store, and an accounting office. We are the end cap, and we have unlimited parking.
Fleck: Throughout my career, I’ve had the privilege of being involved in selecting new store sites that generate more than $100,000 a month in self-service business. Although such successes are rare, they share common DNA in both location choice and the investment made into the laundromat to achieve such high volume.
Sorensen: I haven’t ever had one go bad. The only negatives that can occur are when laundry owners either decide they don’t like the laundry business once they’re already in it, or realize they don’t have the time necessary to properly manage and grow the business model. Buyers need to know that laundry management takes time and effort to run a successful operation. Additionally, joining the CLA is among the most important investments an owner can make; the industry’s trade association offers numerous events, programs, and resources to help laundry investors operate first-class businesses.
Lee: There’s one location, which is not one I would have selected because it was on the back side of an existing building and not visible from the main road. However, the investor liked the demographics of the area, which were quite strong, and the rent price was quite fair since it had limited appeal to most retailers. The other strong selling point was that it shared a parking lot with a large Goodwill retail center, and everyone in town knew where that was located. With some savvy marketing right off the bat, that laundromat did very well right from its first week in business.
Seehawer: Currently, our most successful store is located just off Interstate 5 on Highway 99 with great visibility and strong traffic counts. It also helps that it’s across the road from a Walmart Supercenter.
What’s the best advice you’d give other laundry owner or potential investor with regard to site selection?
Gramaglia: Take your time. Do a lot of due diligence on the location, the other businesses in the area and, most importantly, the competition.
Fleck: Seek expert advice, and avoid going it alone. There are numerous variables to consider, and the stakes are high if you make a mistake. Conversely, getting it right can yield significant rewards. Expert guidance will help you navigate the complexities and maximize your investment.
Sorensen: Visibility and ease of ingress and egress are essential – and so is plenty of parking and a solid lease. Customers will drive right past your laundromat if it’s not easy to get into and out of. As a result, always consult with your laundry distributor before securing a location, because they will help you thoroughly assess all of a site’s possibilities and limitations. For this reasons, it’s important to have a good working relationship with your distributor, knowing you will depend on them for post-sale support, service, parts, and training throughout the life of the business. Make certain you know who they are, as you will depend on them now and into the future.
Lee: If you are not local to the area in which you’re looking, I would suggest partnering with a local salesperson who knows the competition and the neighborhood, and can provide you with much-needed expertise so that you can make a smart decision. Local experts also very likely may have connections with local officials, real estate brokers, and contractors. Another piece of advice is to do your homework beyond social media posts. If you see an empty space in a plaza, go there and talk with who your neighbors would be. They can give you the 411 on the landlord and the local area.
Seehawer: Be sure to take your time during your due diligence period – it can save you hundreds of thousands of dollars in development costs that can be anticipated and avoided, if you just do your homework.
