Laundromat Owners Share Best Practices for Long-Term Success
[This is the second of the two-part feature article. Read Part 1 here.]
Several leading laundromat owners share their best business and operational advice, tips and strategies for new store operators and those considering an investment in the laundry industry:
Larry Larsen
Laundromat123.com
I think many first-time buyers are encouraged in websites and online forums to start auxiliary services within their laundromats to increase their bottom line profits. One of the more popular current services being touted is wash-dry-fold, sometimes with pickup-and-delivery services included as well.
I would avoid adding any labor-intensive services until you have at least six months of experience with operating and managing your new laundromat. For new owners, your laundromat knowledge will increase dramatically in those first six months.
Waiting six months will provide you time to analyze whether or not these management- and labor-intensive services will really provide the benefits you’re seeking. In my experience, many (if not most) laundromats located in low-income service areas don’t generate enough revenue from these services to justify the level of increased labor required.
In southern California, an employee costs nearly $15 per hour. With workers’ compensation and payroll contributions, this rises to about $18 per hour. If your business hours are 6:00 a.m. to 10:00 p.m., your cost for one employee is approximately $8,160 per month.
If your in-house laundry service grosses less than $8,160 per month, adding these services can actually cost you money.
I’m aware that some states have lower minimum wage requirements and that some owners figure their laundry attendants can handle store cleaning duties when not busy processing wash-dry-fold loads. In addition, some owners seem happy to give themselves a part-time job doing other people’s laundry.
However, new operators would be wise to consider all aspects of adding any labor-intensive services before entering into an activity that doesn’t always provide the income anticipated.
Best Advice I Ever Received: When looking to buy a laundromat, it’s always best to carefully consider and modify the income and expense sheet provided by a seller to reflect what will be a new buyer’s actual expenses. Laundrylux founder Bernie Milch shared this advice with me. He was the most intelligent, hardest-working person I’ve ever encountered in my time in the laundromat industry.
Here are some common areas where your costs may be higher:
- Insurance: An existing laundromat owner may be insuring his or her business for less than the selling price. As a new owner, you will not be receiving an experience- or loss-free discount on your insurance policy.
- Repair Labor: Many owners become experienced and skillful repair people. However, as a new owner, you may need to outsource some repairs. Those costs can vary, depending on the brand and age of the equipment.
- Repair Parts: Sellers often underreport this expense. The previous owner may have purchased rebuilt parts or have parts in stock. You should assume a minimum cost of $500 per month for laundry parts. The expenses for your water heating system, air conditioning unit, bill changers, vending machines, restroom maintenance or any minor vandalism issues should be accounted for under a separate line item.
- Cleaning Labor: Review this expense carefully. Are the employees being properly identified and legally compensated? The era of under-the-table payments is long gone. However, this is still the most commonly underreported item on most expense sheets provided to potential buyers.
- Miscellaneous Expenses: Cleaning supplies, restroom lock rentals, security internet and video, trash pickup, accounting, business personal property taxes, and marketing and advertising are often left off the expense sheet. Keep this in mind.
Michael Finkelstein
Associated Services Corp.
Danville, Va.
The best advice I’d give to another laundry owner or a potential investor is to join the Coin Laundry Association and attend its seminars and conferences. Of course, I also strongly suggest going the Clean Show, which is the industry’s trade show and convention. In other words, learn as much as you can about the industry.
At the same time, understand the importance of a good location. Realize that success isn’t about building it, “and they will come.” It doesn’t work that way.
Do you have the financial wherewithal? Is your rent workable? Do you have a long-term location? Can your store properly service the area? You don’t want to be in a “Goldilocks situation” – the laundromat can’t be too big or too small. It has to be just right. It’s all about the population and the demographics.
Best Advice I Ever Received: It was from Izzy Cohen, the chairman of the grocery store chain, Giant Food. He said you can operate a retail store in a variety of ways – it can be a bare-bones operation offering the lowest prices, or it can be an upscale store truly servicing the community. He impressed upon me that you can’t be everything to everybody. You have to figure out what lane you want to be in. That stuck with me.
When I entered the laundry industry, my businesses were – for the most part – bare-bones, low-priced options. However, I ended up turning them into the better-operated stores in their markets.
Andy Merendino
Suds Yer Duds Laundromat
Carneys Point, N.J.
If you plan to keep your “day job” and run a laundromat as a side business, understand that it can be done – but I don’t recommend it. Unless you really want to make laundromats your full-time career, you’ll probably never be great at it.
Over the last 35 years, I’ve been involved in a number of businesses, from a liquor store and a pizza shop to apartment rentals and a snack route. I prefer the laundromat business for several reasons. First, I like the steady cash flow it can provide. Second, I like the fact that machines are more predictable and reliable than employees. Third, if I stay relatively healthy, I can operator this type of business well into my later years. And, lastly, owning the real estate (which I do) gives me an option to sell the business, but still collect rent into retirement.
For potential investors, visit as many laundromats as you can. While there, study what machines, services and amenities are offered. If you can chat with customers, employees and owners, that’s even more helpful.
If you are new to the industry, I would recommend buying an existing laundromat, versus building a new store. In my opinion, it’s much less risky and certainly an easier way to start. Even if the existing store is a bit rundown and not doing much business, it still can be a less risky venture.
Building new seems like a great idea, but you must be prepared for layers and layers of bureaucratic hurdles and government fees.
Also, don’t believe that – if you build an awesome new laundromat in a town with several old, rundown stores – those other laundries will simply go out of business. After all, a smart businessperson can easily buy them and retool, while you are in deep debt. Plus, I’ve learned through the years that customers have habits and strong preferences that tend to die hard.
Since getting into the business in 2006, my three top priorities have been (1) a clean store, (2) working equipment, and (3) hassle-free customer refunds.
Best Advice I Ever Received: I receive it from my customers regularly. Meeting their needs and satisfying their desires is what keeps those quarters clunking.
Cary Lipman
CL Consulting Co.
Atlanta
Long ago, I was struggling to continue working as a district manager for a large insurance firm and simultaneously operate my first laundromat in Bloomfield, N.J. A close friend and mentor said to me, “You can’t ride two horses with one ass and expect to win the race. Choose one and run like hell.”
As a result, I left a lucrative job at the insurance company and went on to open seven successful laundromats over the years, which put five kids through school – all of whom are successful today in their own right.
Don Baker
Daisy’s Launderland
Santa Clara, Calif.
We’ve been in the business since 2008. At one time, we had three stores and a pickup-and-delivery business. However, as we have gotten older, we’re down to one store, which we recently remodeled.
The remodel included new washers and dryers, as well as a trough system. We also installed a water softener, which provides improved washing and lengthens the lives of the washers and water heaters. Additionally, we installed an ozone system that is very popular with our customers and really differentiates us from our competition.
For someone thinking about getting into any business, spending time working in that type of business is the best way to learn. You can’t learn the laundry business by merely reading and asking questions – although the Coin Laundry Association provides a lot of information to point people in the right directions.
I think it’s best to start with one store. You will learn how to manage the business, and also find out if it’s the right industry for you.
In our experience, site selection and lease terms are the first concern.
With regard to the site, can you purchase the property? How does the site relate to the competition? How are the parking, utility installations, etc.?
As far as the lease, it needs to be long-term with extensions that don’t include uncontrollable increases. A laundromat is a great tenant for a landlord, and that fact should provide some leverage to negotiate a lower rental rate.
If you’re buying an existing store, find out how the business is doing and why it’s being sold. Read and fully understand the lease. Next, learn about the store’s laundry equipment, and its electrical and plumbing installations. Are there any problems? If so, how will you solve them?
With either an existing store or a new build, the equipment supplier and installer can make or break you – so do your research and get referrals.
Bruce Bitman
Alligator Laundry
Long Beach, Calif.
Whether you’re taking over an existing store or building out a new one, my advice is to establish a solid relationship with your staff. I have often seen this part of the business neglected and mismanaged.
Your employees are the ones who maintain the laundromat and interact with your customers. There is a big difference between someone doing the bare minimum for a paycheck, and staff members taking care of a business because they feel that they’re a part of a team. That feeling extends to the interactions between your employees and customers.
Also, understand that your employees can provide you with all sorts of tips and valuable advice as to what improvements you can make, especially if you’re just getting into the business.
Best Advice I Ever Received: Looking back, I received the best advice from a talented industry technician named Alfredo Duque. At the time, I knew absolutely nothing about the business and was fortunate enough to have connected with Alfredo. Specifically, he explained how a card system works and how it could improve my business. In general, I’d suggest forming a relationship with someone reliable and experienced to help with all of the questions that will come up.
Colleen Unema
Brio Laundry
Bellingham, Wash.
This may sound strange, but it really surprises me how much stuff people leave in their pockets, or the items they attempt to wash in a washer. That machine damage caused by customer neglect, abuse and sheer stupidity is real – and you have to plan for it.
If you think it won’t happen, it will. So, plan for it. Also, plan on how you’ll keep yourself from getting discouraged by it. Fix it and move on.
The day I opened for business, a customer crammed a canvas boat cover into my extra-large washer. Unfortunately, none of us noticed this – and the machine was so out of balance that it nearly ripped right off of its base, with the concrete floor actually moving.
Day No. 2 in business: a cannabis grower comes in and fills several washers with soft, wool pots. The dirt ended up clogging our entire drain trench, and the store flooded.
So, watch out for suspicious black garbage bags that customers drag right up to your washer doors.
Best Advice I Ever Received: I’ve got two…
1. The first piece of advice was from my SCORE mentor a year before I opened my first store. He had just read my business plan and said, “Colleen, this will work, if you stick to the plan. Do not be distracted by naysayers, and do not be swayed by questions you cannot answer. Do not be distracted by attractive alternatives. Stick with the plan.”
I kept a laser focus on my design, methods and operations from my plan. And he was right. It worked.
2. Pack up your car and go do laundry in laundromats – all over, all types. Become a customer first, then an owner. That nugget came from my older brother and accountant.
As a side note, he also suggested I write a business plan for when it all goes badly – “Plan X.” I did that and ended up implementing that baby during the pandemic.
Chuck Hinkel
Laundry Depot
Waterloo, N.Y.
I think many have the perception that laundromats are a business you can buy and then let them run themselves.
Although that may be true in some cases, I think the best-run laundromats have owners who are visible and engaged with the customers on a regular basis. Interacting with your customers regularly – whether it’s to answer a specific question or just to ask how they’re doing – allows them to feel more connected to the business, which builds customer loyalty. And that will lead to a more profitable business.
It also enables you to educate customers on how to use the equipment correctly and sets a good example to your employees about how important great customer service is to a successful business.
Everyone likes to say they “know the owner” and feel like they’re a part of the business.
Best Advice I Ever Received: Prior to purchasing my first laundromat, a friend gave me some advice – know the business numbers, the location demographics and the community. And, ask yourself, “Do I see a clear opportunity for the business to grow under my ownership?” If you can answer yes to these things and are willing to work harder than you ever have in your life, it’s a business you should purchase.
