Originally posted – Jan issue/2012
Southern California Laundry Owner Opens Fourth Store
Joe Thompson wasn’t looking to expand his three-store laundromat chain in southern California when he came across a store for sale in Tustin.
He was just helping out a friend who was looking to get into the business.
“Interestingly enough, I was not looking for a fourth laundromat for myself,” Thompson explained. “I was looking for a friend who wanted to follow in my footsteps. Unfortunately, the killer deal I found required a lot of capital to retool the store. It needed a complete remodel. It looked like nothing had been done to it for 21 years.
“The tiles were so worn out that you could see through to the concrete in a lot of places,” he added. “It had four 30-pound frontloaders and the rest toploaders, and old chain-drive dryers.
“After we calculated the acquisition costs and the remodel costs, he couldn’t afford to do it. But it was only five minutes from one of my other stores, so I decided to take on the challenge.”
Not that challenges were anything new to Thompson, who opened his first coin laundry 11 years ago.
Before getting into the laundry business, he served as general manager for an automotive manufacturer that made catalytic converters.
While working full time, he received his real estate broker’s license and promptly purchased his own property management company.
As if two full-time jobs weren’t enough, Thompson started looking for other opportunities – and found the perfect one in a 3,000-square-foot laundromat in Santa Ana.
“I bought my first laundromat in January 2001,” he said. “I’m so happy I bought that one. It’s been a goldmine for me.”
With his hectic schedule, Thompson explained that he was especially drawn to flexibility and freedom a laundry business could provide.
“It doesn’t require you to show up every single morning and report for work,” he said. “I was trying to figure out another way to generate multiple streams of income, but I didn’t have any time. I had to find a business that was so flexible that I could fit into my schedule.”
Right before purchasing his second laundry in 2004, Thompson retired from the manufacturing company.
“Laundries will take a little bit of your time,” he said. “As you add one and then another, it sucks a little more time out of your life, so I couldn’t handle the load anymore. I was putting in 16 hours a day.”
In 2005, Thompson bought his third laundromat – and he thought he was done.
But that was before he came across the run-down, 40-year-old store in Tustin last March, which would eventually become the new Big Joe’s Laundry.
“The previous owner had it for 21 years, and it didn’t look like he did much to it,” noted Thompson, who acquired the store in May. “For the first month I had it, it was open. But, once we got into the details of getting everything done and getting the new equipment coming in, it was just chaos everywhere so we had to close the store for about four weeks. There was stuff everywhere. It was a complete remodel. We were moving walls. It just wasn’t safe.”
When Big Joe’s re-opened its doors for good in July, gone were the toploaders, gone were the inefficient dryers from yesteryear and gone was the worn-out VCT tile. In their place was a sparkling new self-service laundry with brand new, high-efficiency equipment.
“I put ‘Big Joe’s’ up there in great big neon,” said Thompson, who estimated that the 1,500-square-foot store and its renovation cost him approximately $400,000. “I also used neon signs to designate the sizes of the machines in the store. I’ve got all of the big machines in front because that’s what people like.”
Big Joe’s – open 6 a.m. to 11 p.m. daily – is located in a stand-alone, 3,000-square-foot building, which is shared by a drycleaning business that occupies the other 1,500 square feet.
“We’re in a strip mall, but the building is separate from that strip center,” said Thompson, noting that his market is heavily Hispanic and dominated by renters. “I’m adjacent to a park and a small elementary school, so a lot of moms park in my parking lot when they come to pick up their kids. There’s high visibility here, and there are a lot of apartments. That’s what I liked when I first saw this store.”
Of course, there also are competitors. Thompson’s laundry is flanked by two other stores – one a quarter-mile to the south and the other a quarter-mile north.
To firmly establish his newly renovated business within the crowded marketplace, Thompson has not been shy about promoting his store or running in-house specials.
“The first eight days I was open I offered free washing to anybody, as much as they could do,” Thompson said. “They had to pay for their drying, but those machines were running from 6 a.m. until we closed. It was pretty exciting.”
Thompson also sent out 5,000 postcards, while handing out an additional 2,500 flyers himself on foot.
In addition, he thinks his pricing strategy has been a key factor in his store’s quick start.
“I want to be the low-price leader,” stated Thompson, who employs one full-time attendant. “I’ve adjusted my pricing by temperature of water. I can match my competitors’ prices on warm water. I’ll be below their prices on cold water, and maybe match or be above their prices on hot water. My machines can run the statistics, and it seems like about 60 percent of the washing is done in cold water, probably because of pricing.
“It was a strategy to get me out of the box, but I think I want to do it long term,” he added. “Once everybody reads this they’re going to kill me, but that’s OK. My distributor wants me to raise my prices – but, hey, Wal-Mart is the number-one retailer in the world.”
He said that his vend pricing can be so low because his machines are so efficient.
“If I get too busy, I might adjust my prices,” he conceded. “I’ll revisit that issue after a year has gone by.”
Thus far, Big Joe’s is pulling in about $12,500 a month, and Thompson – who is considering adding debit card readers to some of his larger machines – is expecting that number to hit $13,000 to $14,000.
“I would tell anybody who wants to have an extra income stream to go for a laundromat, but do your due diligence first,” he said. “Make sure there are plenty of apartments around. Make sure the demographics verify that a store is needed there. You need to find an area that doesn’t really have laundry services within a reasonable range and then provide the very best you can for your customers. And they will support your business. The key is doing your research first. Don’t make a mistake by going too fast. Take your time. Talk to distributors and other owners.”
Thompson’s next move likely will be to purchase an apartment complex, not another coin laundry. However, even that will be down the road a bit, he said.
“I think I have enough to keep me busy,” explained Thompson, who recently sold his real estate business. “I was so extremely busy before that I’m just tired of being too busy. It’s been go, go, go. Now, I’m starting to enjoy my life. I’ve paid my dues.”
Equipment Mix
Big Joe’s Laundry – Tustin, Calif.
10 Electrolux 18-pound frontloaders, $1.75
10 Electrolux 25-pound frontloaders, $2.00
4 Electrolux 30-pound frontloaders, $2.25
4 Electrolux 60-pound frontloaders, $4.75
2 Electrolux 75-pound frontloaders, $5.50
12 Electrolux 30-pound stack dryers, 25 cents for 10 minutes
2 Electrolux 45-pound stack dryers, 25 cents for eight minutes
1 Raypak water heating system
1 Standard Change-Makers bill changer
8 R&B Wire Products laundry carts
5 Customized folding tables
Porcelain tile flooring
1 full-size soap vending machine
1 soda vending machine
1 snack vending machine
1 42-inch flat-screen television
Distributor: Sterling Equipment Sales, Santa Ana, Calif., (800) 552-7967
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