Laundromats have been around for over 50 years. The
Coin Laundry Association has written this article and we pass it to you as a
(Source: The Coin Laundry Association)
INDUSTRY DEFINITIONS AND BACKGROUND
The term coin laundry is defined as 'commercial grade, self-service laundry
equipment placed into service in a retail space.' Coin laundries generally
occupy the retail space on long-term leases (10-25 years), and generate
steady cash flow over the life of the lease. Coin laundries are unique small
businesses in that they have no inventory or receivables, and no traditional
employees. A minority of coin laundries employ attendants.
Coin laundries range in market value from $250,000 to $1,000,000 or more.
Business hours typically run from 6:00 a.m. to 10:00 p.m and now, new
superstores are being built and open 24 hours a day.
The stores usually occupy 1,000 to 8,000 square feet of retail space. New
coin laundries are valued based on actual construction and equipment costs;
while existing coin laundries are valued based primarily on revenues. Coin
laundries are perfect examples of passive-income generators. Coin laundries
are also referred to as "coin-op laundries," "coin-operated laundries," or "laundromats."
Coin laundries are one part of the self-service laundry business; the
industry is actually comprised of two distinct segments. The first is
coin-op laundries, and the second is represented by coin-operated machines
located in apartment housing. This "apartment" segment of the business is
referred to as the "multi-housing laundry business" or the "coin route
business." These two segments frequently overlap; in more mature markets,
the self service laundry business is estimated to be evenly split between
the two. The self service laundry market consists of an estimated primary
customer base of 89 million people living in rental housing, as of the 1990
U.S. Census. The secondary customer base consists of the non-rental
population, which uses coin laundries only occasionally.
The coin laundry industry is approximately 50 years old, and is primarily
composed of individual owner/operators. No significant franchises are in
operation at this time. Currently, there are around 35,000 coin laundries in
the United States, generating several billion dollars in gross revenue
Clean clothes, like food and shelter, are considered a necessity of life--
and coin laundries provide a basic health service for millions of Americans.
While coin-ops are found in virtually all neighborhoods across the country,
stores seem to perform exceptionally well in predominately renter-occupied,
densely-populated areas. These areas are increasing in number with each year
throughout the country. The intense population growth, coupled with the
expansion of rental housing has increased the customer base for coin
Coin laundries thrive in periods of both growth and recession. During
periods of recession, when home ownership decreases, the self service
laundry market expands as more people are unable to afford to repair,
replace, or purchase new washers and dryers, or as they move to apartment
housing with inadequate or nonexistent laundry facilities. The market size
grows proportionately to the increase in population. Revenues of a coin
laundry rarely vary from month to month. The public will always need this
basic health service...people always need to wash clothes!
INDUSTRY TRENDS AND CHARACTERISTICS
Industry growth is based on the demographics of population density,
population mix, and population income. The more concentrated the population,
the greater the need for quality coin laundry facilities. National and
regional demographics indicate renters, the primary users of coin laundries,
are the fastest-growing segment in the nation. As of the 1990 U.S. Census,
35.8% of the nation's 94.6 million households were renter occupied, up from
34% in 1980.
The number of coin laundry stores built over the past 40 years has grown
steadily as the population has increased and shifted to more concentrated
areas. The end result has been a mature, stabilized industry with
predictable rates of turnover and values of existing coin laundries;
development of new "turn-key" facilities; and, equipment expansion and
Coin laundries normally sell for a multiple of their net earnings. The
multiple may vary between three and seven times the net cash flow, depending
on several valuation factors. The following primary factors establish market
(1) The net earnings before debt service, after adjustments for
depreciation, and any other non-standard items-- including owner salary, or
payroll costs in services.
(2) The terms and conditions of the real estate interest (lease),
particularly length; frequency and amount of increases; expense provisions;
and overall ratio of rent to gross income.
(3) The age, condition, and utilization of the equipment, and leasehold
improvements; the physical attributes of the real property in which the coin
laundry is located, particularly entrances/exits, street visibility, and
(4) Existing conditions, including vend price structure in the local
(5) The demographic profile in the general area or region.
(6) Replacement cost and land usage issues.
This resale market standard assumes an owner/operator scenario, with no
allocation for outside management fees. Marketing time for store sales
averages 60 to 90 days, depending on price, financing terms, and stores
available at the time of sale. Coin laundry listings are generally offered
by business brokers who charge a sales commission of 3% to 10%. Most coin
laundry distributors also act as brokers.
The accepted standard of "useful life" for commercial coin laundry equipment
is as follows:
(12Ibs. to 14Ibs.) 5-8 years
(18 Ibs. to 50Ibs.) 25 years and up
(30 Ibs. to 60 Ibs.) 25 years and up
25 years and up
25 years and up
This schedule will vary upon usage, sales volume, and maintenance. "Useful
life" may differ for accounting or tax purposes.
OPERATIONS AND PERFORMANCE LEVELS
Coin laundry operations consist of three basic areas: janitorial,
maintenance, and the handling of money (which consists of collections and
loading coin changers). Bookkeeping, administration, and banking are
typically off-site management areas.
A standard profit and loss statement for a coin laundry typically includes
the following line items:
1) Income; consisting of wash and dry; and 2) Other income, which would
include vending, dry-cleaning, and/or wash-dry-fold service.
Expense categories would typically consist of:
1) Accounting; 2) Advertising; 3) Insurance; 4) Legal costs; 5) Licenses; 6)
Maintenance (includes parts and labor); 7) Payroll (usually limited to
onsite work -- i.e., janitorial or employees); 8) Personal property tax; 9)
Rent; 10) Common Area Maintenance charges ("CAM"), also known as "Net"
charges including: real estate taxes, maintenance, insurance, and other
charges; 11) utilities (gas, water, electric and sewer); 12) vending
expenses; and 13) miscellaneous costs (including: wholesale dry-cleaning
costs, fluff-n-fold supplies, and labor).
The percentage for each category will vary from store to store and region to
region. Interest charges, depreciation, and other non-standard items, such
as owner salary, generally appear on tax returns, but are excluded from the
standard profit and loss statement for purposes of valuation and
determination of cash flow. Sales volume, and/or individual store
performance varies based on a number of factors. These factors may include
demographics; overall services offered; design and general condition;
equipment selection, condition, and vend prices; hours of operation;
exposure of the building; parking; and competition. National surveys,
conducted by the Coin Laundry Association, indicate a wide range of
performance for individual stores and types of equipment. The industry
terminology for individual equipment performance is "cycles per day," or
"turns per day (TPD)." These designations refer to the number of times per
day, on average, each machine is used. While this statistic varies widely,
based on many factors including those indicated above, the range for washing
machines is generally from 3 TPD to as high as 8 TPD or more. The primary
factors affecting TPD include: population demographics, such as density and
percentage of renters; capacity and quantity of the washers; the vend prices
charged; and the prevailing market vend prices.
Dryer income can vary greatly due to: total wash poundage generated; overall
vend prices of both washers and dryers; heating efficiency of dryers; total
number of dryers in relation to washers; and dryer size and capacity. Dryer
income is usually expressed as a percentage of overall income. Generally,
dryer income varies between twenty-five and fifty percent of total washer
and dryer income. Income and expense percentages may vary significantly for
stores offering additional services such as dry-cleaning and fluff and fold.
Today's coin laundry industry is a strong and vibrant one. Even more
appealing is the fact that this dependable public service industry continues
to grow and thrive. The demographic trends toward an even greater "apartment
dwelling" segment of the population predict continued prosperity.
The Coin Laundry Association (CLA) used statistics, surveys, and other
sources to provide the information contained in this overview of the coin
laundry industry. While the information has been given to CLA by business
owners and other sources that appear reliable, CLA in no way, expressed or
implied, guarantees the accuracy or validity of the information provided
Prospective parties interested in the industry are advised to consult the
appropriate professionals and experts before making any major decisions.