Originally posted – Oct issue/2012
Written By: Chris Aycock
A New Multi-Store Owner Discusses How He’s Breathed New Life into a Couple of Old, Closed-Down Laundromats
Professionally, I’m a software engineer, not a coin laundry veteran. However, during the last three years, I’ve opened two self-service laundries, and I am currently considering a third.
In 2009, I was looking for an investment opportunity outside of the stock market and was turned on to the coin laundry industry by a friend who owns stores in Texas and told me just how profitable it could be.
I started by finding a distributor partner, D&M Equipment in Albuquerque, N.M. Following their suggestion, I explored the possibility of buying a former laundromat that had closed. My distributor had told me that rehabbing an existing laundromat can be less expensive and quicker than building a new store.
Why Rehab and Where to Start?
Although it takes a lot of work to rehabilitate an older laundromat, there are significant cost and time savings. For example, the infrastructure from the previous laundromat usually remains intact. The electrical, plumbing and sewer are already available, which means there will be less financial investment up front. The store also may be grandfathered into municipal sewer or water agreements, which means you could end up paying a lower rate for those utilities.
Location is a major factor when considering opening a laundromat. A great location will be an area that is highly populated with renters with lower to middle incomes. A commercial laundry distributor is a great resource to help find closed laundromats that have potential for a successful future with the right owner. Distributors have access to profitability analysis, detailed demographic information and are familiar with the industry in your area.
I was able to secure my locations for a low leasing rate due to the economic conditions. Even today, there is a lot of commercial real estate available and, because of high and long-lasting vacancy rates, buyers are able to negotiate better deals than ever before.
Successfully Rehabbed
When I opened my first laundromat – Carlisle Laundromat – in Albuquerque, the original store had been closed for about a year. It was in a good location, but the previous owners hadn’t invested in it, and the interior needed to be completely renovated. Carlisle Laundromat is 2,500 square feet, located in a strip mall and has 44 washer-extractors and 20 stack dryers.
In 2011, I was interested in opening a second location, and again chose to rehab over new store development. The combination laundromat/car wash had been closed for nearly five years, but the demographics and likelihood for success were good, so I decided to take it on as my next store – La Plaza in Bernalillo, N.M. La Plaza is 4,000 square feet and has 50 washer-extractors and 25 stack dryers.
In both stores, I had to completely strip the interiors and start with a blank slate. I replaced the floors, painted the walls and updated all of the fixtures. I didn’t have to invest too much into the outside of the buildings as they were in good condition. On top of the cosmetic improvements, it was also important to make sure the stores were clean all of the time. Customers notice the small details, and cleanliness could be a deciding factor between your store and a competitor’s laundry.
Each of my stores took about five to six months to rehab. Remember, though, each project is different. It can take up to six months to rehab a laundromat, but building a new store can take up to year.
Rehab Challenge
One major challenge I encountered with my rehabbed stores was generating customer awareness. When a store has been closed for six months or longer, previous customers find other laundromats at which to do their wash. To announce the opening of my first store, I sent out direct mail pieces offering specials to renters. This helped generate excitement and bring back customers. Once your customer base is established, your priority should be to keep the store clean and inviting, and try to get to know as many customers as possible to show them that their business is important. I try to spend as much time as possible in my stores talking and listening to customers.
Financial Investment
The cost of the stores, including build out and equipment, was approximately $400,000 to $500,000 each. A new store can cost you about $1 million. I was able to finance my equipment, and choosing the manufacturer’s financing options allowed the process to go smoothly; it was similar to buying a house or car. My loan officer was able to secure a great rate with reasonable monthly payments for the loan, which has helped me be profitable faster and has given me the financial stability to open a third location.
Investing in self-service laundry was a great business opportunity for me, and new investors should at least consider rehabbing before deciding on building a brand new store. A rehabbed laundromat can be a fairly quick business investment with high ROI and is generally quite a bit less expensive than building a new laundromat. With the help of a good distributor and a strong manufacturing partner, a rehabbed laundromat is a great choice.
Chris Aycock is a software engineer and owner of two rehabbed laundromats, Carlisle Laundromat in Albuquerque, N.M. and La Plaza in Bernalillo, N.M. He can be reached at [email protected].
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