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Own your own coin laundry!
There are thousands of businesses to choose from...everything from retail, wholesale, manufacturing, to service-oriented business. Why should the coin laundry industry be among your top choices? Let's discuss some of the reasons why coin laundry should be among your choices for a new business venture.
Industry experts list several advantages or strong points associated with the coin laundry industry. Here is a quick list of characteristics that may make the coin-op business attractive to you:
- Coin laundries satisfy a basic need in the community.
- Coin laundries have proven to have a low downside risk.
- All cash can be controlled by one person, the owner.
- As a service business, coin laundries have little or no inventory; virtually eliminating inventory control shrinkage, spoilage, and theft.
- Coin laundries generally have no accounts receivable...this is a "cash-in-advance" business.
- Coin laundries are not labor intensive.
- Generally, only unskilled labor is required.
- Coin laundry income is typically very consistent, varying only 10% to 20% over the course of the year.
- Coin laundries are somewhat insulated from fluctuations in the economy...some would call it "recession proof".
- High fixed costs combined with low variable costs means "the more volume, the more profit".
- Coin laundries may be successfully operated on a part-time basis.
- The coin laundry business lends itself to future expansion and multiple-store ownership.
- It's a business that is not reliant on "personality".
Coin laundries have a relatively simple formula for success. The real key, although it sounds too simple, is to keep your store immaculately clean at all times. People will not want to clean their clothes in a dirty environment...it's that simple. Additionally, you must keep the equipment in good repair day-in and day-out. Finally, you must provide a secure, safe, and pleasant environment, to insure that your customers feel good about doing this dreaded weekly chore in your coin laundry. Did you know that laundry ranks second only to cleaning the bathroom as the most disliked household chore?
It is also important to consider the long-term investment value of coin laundries. Coin laundries with proven track records are sold with relative ease and at top dollar. If you've run a profitable, successful laundry, and if five years later you choose to sell, you may expect to find a buyer quickly and, in most cases, command a much higher price than you paid to start-up your business. In other words, most laundromats appreciate in value, even though the equipment depreciates. In many cases, stores pay for themselves in only a few years, leaving you with a "nest egg" which may be a far better investment than the conventional savings account, money market, IRA or mutual fund.
Another benefit lies in your ability to easily upgrade and maintain your laundry through simple remodeling and regular equipment replacement.
History of the Coin-op Laundry Business
It may further help your understanding of our industry to get a feel for how this multi-billion dollar industry has developed over the years.
The origins of the coin laundry business date back over fifty years. The first wringer washer was developed around 1907, but the public laundry concept was first seen in the late '20s and early '30s. Initially, all of the "take-in" laundry was done by an attendant and returned to the customer. Later, early washers were made available on a per-hour or per-day basis. This continued with the first "automatic washers" in the late '30s and early '40s. The coin laundry or "laundromat" concept really took off in the '50s with coin meters being added to the machines, establishing a true self-service, coin-operated business. Today, there are approximately 30,000 to 35,000 coin laundries in the U.S., which generate several billion dollars in gross revenue annually.
The first coin laundries were small, narrow stores that offered a few washers on one wall, and a few dryers on the other. Many of these laundries were open 24 hours a day, many did not even have locks on the doors!
In the early years, demand for this type of service was tremendous, almost guaranteeing success for coin-op pioneers. Many of the early investors were absentee owners, who were not knowledgeable of coin laundry operation, nor were they "hands on" enough to correct problems. As a result, a high percentage of their coin laundries fell into disarray...machines weren't maintained...stores weren't kept clean...and many stores were left open to vandals and thieves. The result of the deterioration of the early stores was a very poor public image of coin-ops, and a poor reputation for coin-ops in the local business community.
Eventually, a "new breed" of investors jumped in to the coin laundry industry with a professional, "hands on" approach to the business. In the '60s, the industry entered a high-growth period as owners built larger stores; employed attendants; and offered additional services such as drycleaning and tailoring. New owners spent time in their stores; keeping the stores clean; and keeping the machines in top condition. Profits soared because service had been improved, while rents and utilities remained very low.
Manufacturers and distributors of coin laundry equipment also profited during this time, as some local distributors built as many as 20 to 40 new coin-ops per year. As the early '70s rolled around, the oil embargo hit, and the energy crisis put a damper on profits and new store construction. Interest rates were also on the rise, making resources scarce for new investors. The demand for coin-ops continued through the '70s, but it wasn't until around 1980 that coin laundry construction had made a comeback.
The stores being built during this time were bigger and better than ever! New investors were more sophisticated, and the larger stores required substantial investments. By this time, equipment had become more energy efficient, more reliable, and offered more options to the customer.
Our industry is in the midst of another upswing today. Many areas of the country are facing matured markets and tough competition, but the demand for quality coin-ops remains in much of the country. We are seeing a trend toward larger stores, and stores that provide additional services such as wash-dry-fold, drycleaning, tailoring, shoe repair, and other laundry-related services. New laundries are expanding services even further by offering a variety of "extras" such as tanning beds, videotape rental, mailbox rental, concessions, restaurants, convenience stores, exercise equipment, children's play areas, TV lounges, shipping services, faxing, photocopying, and dozens more ancillary services.
Today's profit margins do not compare with the pre-oil embargo period; however, they are still high enough in most cases to provide a very favorable return on investment. The coin laundry industry is stronger than ever, and industry leaders are optimistic for future growth.
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