How Much Does a Laundromat Cost?

If you are looking for a profitable business opportunity, consider opening a laundromat. Customers can use coin-operated machines to wash their clothes at this self-service laundry facility. Laundromats are popular among people who need access to their washing machines, such as renters and travelers. But how much does a laundromat cost?

This blog will discuss valuing a laundromat, setting up your business structure, and more. We will also explore some of the funding options available for laundromat owners.

Cost to Open an Existing Laundromat

One way to start a laundromat business is to buy an existing one that is already established and has a loyal customer base. This can save you time and money on finding a suitable location, obtaining permits and licenses, and building brand awareness.

However, it comes with some challenges. You must do your due diligence and inspect the financial records, contracts, equipment condition, and the seller’s customer satisfaction. You also have to negotiate a fair price that reflects the value and potential of the business.

According to BizBuySell, an online marketplace for buying and selling businesses, the average asking price for a laundromat in the US was $299,000 in 2020. However, the price may vary based on location, revenue, profit margin, and competition.

Cost to Open a New Laundromat

Another way to start a laundromat business is to open a new one from scratch. This gives you more control and flexibility over your facility’s design, equipment, services, and pricing. You can distinguish yourself from competitors by offering value-added services in a niche market.

However, opening a new laundromat also requires more upfront investment and risk. You must find a suitable location with high traffic, low competition, and affordable rent. To start your business, you must complete several tasks, including obtaining permits and licenses, hiring and training staff, and marketing to attract customers.

According to Laundrylux, a leading provider of commercial laundry equipment and financing solutions, the average cost of opening a new laundromat ranges from $200,000 to $1 million.

This cost includes the following significant expenses:

Property for Your Laundromat

The first expense you have to consider is the property for your laundromat. You can buy or lease a space that meets your needs and budget. The ideal size for a laundromat is between 1,000 and 5,000 square feet, depending on how many machines you want to offer.

The cost of buying or leasing a space depends on the property’s location, condition, and demand. According to LoopNet, an online platform for commercial real estate listings, the average asking price for retail space in the US was $16.76 per square foot per year in 2020.

Utilities

The second expense you have to consider is the utilities for your laundromat. It would help if you had water, electricity, sewerage, and internet services to operate your machines and provide convenience to your customers. The cost of utilities depends on your equipment’s consumption rate, tariff rate, and efficiency.

According to Laundrylux, the average utility cost for a laundromat is about 25% of its gross revenue. However, the percentage can vary based on season, time of day, and customer usage patterns.

The Right Equipment

The third expense you have to consider is the equipment for your laundromat. It would help if you had washers, dryers, vending machines, tables, chairs, and security systems to run your business. The equipment cost depends on the machines’ size, capacity, and quality.

According to Laundrylux, the average equipment cost for a laundromat is about $200,000. However, this cost can vary depending on the number and mix of machines you need, the brand and model you choose, and your financing options.

Business Insurance

The fourth expense you must consider is your laundromat’s business insurance. You need insurance coverage to protect your business from fire, flood, and other risks. The insurance cost depends on the value of your property and equipment and your facility’s location and size.

According to Insureon, an online platform for small business insurance, the average insurance cost for a laundromat is about $2,000 per year. However, this cost can vary depending on the insurance company you choose, the policy you select, and the claims history of your business.

Marketing and Advertising

The fifth expense you must consider is your laundromat’s marketing and advertising. Marketing and advertising strategies are crucial for promoting your business and attracting customers. The marketing and advertising cost depends on the target market you want to reach, the channels you want to use, and the duration you want to run.

According to Laundrylux, a laundromat’s average marketing and advertising cost is about 3% of its gross revenue. However, the percentage of success of your campaigns can depend on various factors, such as your business goals and the effectiveness of your marketing strategies.

Funding Options

As you can see, opening a laundromat can be a costly endeavor. However, you can explore several funding options to finance your venture.

Some of the most common funding options are:

Traditional Commercial Loan

A traditional commercial loan is a type of loan that banks and other financial institutions offer to businesses that meet their eligibility criteria. It usually requires a good credit score, a solid business plan, and a substantial down payment.

A traditional commercial loan typically has a fixed interest rate, a fixed repayment term, and a fixed monthly payment.

Business Line of Credit

A business line of credit is a loan that banks and other financial institutions offer to businesses with an established relationship with them. This allows you to borrow up to a specific limit as needed and only pay interest on the amount you use. It usually requires a good credit score, a positive cash flow, and collateral. 

Small Business Loan

The Small Business Administration (SBA) or its partner lenders offer a small business loan to businesses that meet their eligibility criteria. A small business loan usually requires a fair credit score, a feasible business plan, a reasonable down payment, and collateral.

Investors

Investors are individuals or entities providing capital to businesses for equity or profit sharing. Some can be friends, family members, angel investors, venture capitalists, or crowdfunding platforms. They usually require a compelling pitch, a proven track record, a high growth potential, and an exit strategy. 

Frequently Asked Questions (FAQs)

How much does a laundromat make a year?

The amount of money a laundromat makes in a year depends on several factors, such as the location, size, services, pricing, expenses, and customer base of the business. According to BizBuySell, the average annual revenue for a laundromat in the US was $213,000 in 2020.

Is owning a laundromat worth it?

Owning a laundromat can be worth it if you are looking for a steady source of income that only requires a little time. Laundromats are considered recession-proof businesses that have low operating costs and loyal customers. 

However, owning a laundromat also comes with challenges, such as finding and maintaining a suitable property and equipment, dealing with utility bills and taxes, and complying with regulations.

Is it hard to start a laundromat?

Starting a laundromat can be risky if you need more experience and capital to run a successful laundry business. It would help if you did extensive research, planning, budgeting, and execution to open a new laundromat. 

You will also need to overcome various obstacles and difficulties along the way, such as finding a suitable property, obtaining permits and licenses, and attracting customers.

Is the laundromat business dying?

The laundromat business is still alive but evolving with changing customer needs and preferences. They adapt to new technologies, trends, and opportunities, such as online platforms, mobile apps, card systems, eco-friendly practices, and niche markets. 

How can I open a laundromat with no money?

Opening a laundromat with no money is possible but challenging. It would help if you found creative ways to finance your laundromat business without using your savings.

Some options that you can explore are:

• Partner with someone with money willing to invest in your laundromat idea.
• Leasing equipment instead of buying it to reduce upfront costs and pay monthly fees.
• Applying for crowdfunding to raise money from supporters who believe in your laundromat project.
• Negotiating with landlords and sellers to lower the rent and price of the property and defer the payment.

Conclusion

Opening a laundromat can be rewarding if you have the passion, vision, and resources to make it happen. However, opening a laundromat also requires significant investment and planning. It would help if you considered various factors that impact the cost of opening a laundromat, such as property, utilities, and funding options. 

This blog has given you some helpful information and insights on how much does a laundromat costs and how to start your business.