10 Reasons Why Your Laundromat May Be Unsuccessful

Do you have an unsuccessful Laundromat? Here are the top ten reasons why:

  1. Location – Many laundromats suffer from “inferior location complex”. Laundromats located in a defunct plaza can suffer when the plaza has gone south, lack of upkeep to the plaza, poor parking, limited visibility, bad neighbors (neighboring businesses that attract the wrong crowd, fail to attract business, etc.) A Laundromat located in an aging plaza with poor signage can greatly impact the customer traffic.
  2. Demographics – A laundromat located in an area that has the wrong demographics will almost never see success. The right demographic for any successful laundromat is made up of working class, high renter occupancy, and a good mix of family demographics. Areas where the income is too high impact the business because these families tend to live in their own homes and own laundry equipment. Conversely a demographic mix that contains high renter occupancy, but has heavy unemployment or residence subsisting solely on government assistance can do poorly as well. Decades ago the thought was a laundromat located in a low income neighborhood would thrive, this is no longer the case. While many distributors may tell you otherwise it doesn’t work. Vend pricing must be sufficient to cover overhead, debt service, etc. Low income customer often do not have the disposable income available to pay the right vend pricing. You also should take into account that many people within this demographic receive laundry equipment for free or at a low cost through government programs.
  3. Equipment – another very common factor in a non-performing laundromat is the equipment.  Old inefficient washers/dryers use more energy, are visually unappealing, often out of order, too small for the customers needs, and are costly to main. 
  4. Parking – poor parking has a much greater impact than you may think. America is now the land of convenience. Customers are often stretched for time and carrying 30 to 40lbs. of laundry across a busy parking lot is not as appealing as parking directly in front of the entrance. A lack of available spaces can also cause a potential customer to pass by in search of easier access to a laundromat. Having a parking lot that suffers from loitering is an absolute turnoff to your customer base. Keeping the parking lot CLEAN is another must for success.
  5. Cleanliness – a dirty laundromat is a guaranteed killed to keeping customers. When a customer steps out to wash laundry they are looking for a CLEAN and safe place to do so. Trash barrels overflowing, dirt, lint and litter on the floor are unappealing factors.
  6. Rude/Inattentive Staff – attended laundromats often performance better than unattended laundromats. This is usually because an attended laundromat is kept clean, feels safer to the customer, and presents the customer an option of speaking with someone when there has been an issue. However, if your staff is unprofessional, rude or ignores a customer in need it can have a huge imp ace on the customers’ desire to return to the business. Making sure your staff is well-trained, friendly and attentive is another key factor in success.
  7. Vend pricing – As I mentioned earlier vend pricing has a big impact, you need to consider all of the overhead of the business, rent, utility costs, payroll, maintenance, etc. Having the “lowest” vend pricing in your ares doesn’t mean success. You first have to offer the right environment and atmosphere, then price accordingly to profit from each transaction. If you are getting volume but not profiting then you are simply passing money through your hands.
  8. Overly competitive market – Having competition isn’t a problem for a well-run, clean, modern laundromat, however, having too many competitors can be detrimental. A good survey of the competition should always take place before building or acquiring a laundromat. Understanding the strengths and weaknesses of your competitors is essential, analysis of the demographics, size of the population, traffic flows, etc.
  9. Lease/Mortgage Costs – Signing a favorable lease is vital to success. A good lease offers a laundromat owner sufficient time to achieve a return on investment (ROI). Typically a laundry owner should want to 10 year lease with a least one 5 year option (two options would be ideal). Price per square foot must be in line with the revenue expectations to achieve profit. Market prices vary from region to region so there is no standard expectation. Take a look at the property and observe if it is well maintained. If it is in a plaza setting, look at the operations of the other tenants to get a feel for their success relative to the location.
  10. Working Capital – with any new business venture, it is necessary to understand your capital needs. Entering a new venture without sufficient working capital can mean that regardless of all your strength you will find yourself out of business.  The specific amount of working capital will vary depending on individual circumstances, it is best to take into account all factors (rent, debt service, payroll, utility costs, maintenance, insurance, etc.) A good distributor can offer sound advice if they have experience in operating a laundromat or other small business. Be wary of taking advice from someone who doesn’t have the background in small business operation.

While I could go on further and list a number of other factors that affect the success of your Laundromat (marketing, hours of operation, etc.) I believe the ten reasons listed above are the most impactful to success. In future posts I will continue to point out best practices vs. bad choices in running a smooth and profitable operation. 

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