So you are thinking about investing in the Laundromats business and wondering are Laundromats profitable?
You might be aware of its many benefits already, but in order to find out the nitty-gritty of this business, such as the required investment, its profit margin, pros, and cons, etc., keep on reading!
What Are Laundromats?
Laundromats, or coin laundry, as the name suggests, is a coin-operated laundry facility where a person can wash and dry their laundry.
Laundromats usually have washing machines and dryers, but some can even provide iron, fold, and drop-off service.
Different Laundromats vary in size and amenities. Some may offer self-serve, while others may offer assistance.
Some Laundromats require the customer to bring their own detergent, soap, etc., while others may sell miniature boxes of washing products.
Laundromats are perfect for travelers, students, or for those who do not have a washing machine at home.
It is also ideal for washing heavy or big pieces of clothes, such as a king-sized comforter, dog blankets, etc.
If you are thinking about starting your own Laundromat, then keep on reading to find out more information.
Are Laundromats Profitable?
| Statistic | Value |
|---|---|
| Average Cash-on-Cash ROI | 20%-35% |
| Success Rate | 94.8% |
| Labor Costs | 3 employees cost |
| Profit Margin | 10-20% |
Since Laundromats require a substantial amount of investment, you might be thinking, are Laundromats profitable?
Well,Laundromat is a very profitable businessasit generates 20%-35% average cash-on-cash ROI. Additionally, it also has asuccess rate of 94.8%which is pretty amazing.
Another great thing about Laundromats is that your machines do the work for you, and as such, you do not have to incur a lot of labor costs. In fact,70% of Laundromat owners have only 0-3 employees.
What is a Typical Profit Margin In Laundromat Business?
The profit margin for laundromat businesses typically falls within the range of 10-20%. This margin represents the percentage of revenue that remains as profit after deducting operating expenses, such as utilities, equipment maintenance, and labor costs
To know the profit you need to know the cost of starting a laundromat business and how much a laundromat makes.
How Profitable is the Laundromat Business?
| Statistic | Value |
|---|---|
| Annual Turnover (average) | $142,857 |
| Average Revenue | Up to $300,000 |
| Profit (10% – 20%) | $14,285 to $60,000 |
| Survival Rate after 5 years (LaundryLux) | 95% |
| Percentage of Returns compared to mutual funds | 25% more than average returns |
| Recession-proof | Yes |
| Seasonal Dependency | No |
Based on the total number of Laundromats in the US and total market value, a Laundromat business can generate an annual turnover of$142,857on average, and the average revenue can go up to $300,000, depending on the location, size of your Laundromat, etc.
The profit for a laundromat business can vary, but a general estimate suggests a profit range of approximately $14,285 to $60,000, depending on factors such as revenue, expenses, and profit margins.
Statistics tell us that owning a Laundromat business is quite safe. As perLaundryLux, 95% of Laundromats live past five years and generated 25% more returns than average mutual fund returns.
Another benefit of starting this business is that Laundromat is recession-proof and is also not dependent on seasonal changes.
If you are willing to put in the required hard work and care this business entails, then it can be a very safe yet profitable business for you.
Investment Required To Start A Laundromat Business
| Cost Category | Cost Range |
|---|---|
| Property | $200,000 – $500,000 |
| Utilities | $4,000 – $8,500 per month |
| Insurance | $350 – $750 per year |
| Supplies & Equipment | $800 – $2,600 per piece |
| Dryers and washers | $32,000 – $260,000 |
As perCoin Laundry Association, you need to invest anywhere between$100,000 and $300,000to start a Laundromat.
Here’s a list of different costs that you need to consider while starting a Laundromat:
Property
First things first, in order to start a Laundromat, you will need a decent space. On average, a Laundromat is 2,170 square feet in size. So depending on your location, you might have to invest between $200,000-$500,000 for the property.
If you invest in an already-existing Laundromat, then the value of the property may be even more, but then you won’t have to spend so much on equipment.
Utilities
Since the Laundromat business depends on water and electricity, it will be your largest ongoing expense ranging anywhere between$4,000 – $8,500 a month.
Additionally, you would also need to get insurance to cover unexpected costs. This would cost you between$350-$750a year for a $1 million general liability coverage.
Supplies & Equipment Cost
Without equipment and supplies, a Laundromat cannot exist. So be ready to cash out$800 – $2,600 apiecefor commercial dryers and washers that would last for up to 10-15 years.
A typical Laundromat has 40-100 dryers and washers, so you can expect to invest$32,000-$260,000for this.
Laundromat Profit Calculator
Before we look at the Laundromat profit calculator, let me explain some key terms:
- Cost of Goods Sold: This refers to the total amount that your business spends for the sale of a product.
- Revenue:Revenue refers to the total income generated from the sales of goods or services.
- Cost:Cost refers to the total money spent to produce a service or a product.
- Break-even point:This is the point where your total revenue and total costs are equal.
- Profit:Profit refers to the amount that you take home after deducting all your expenses.
- Fixed Cost:This refers to the expenses that are fixed and that you will incur at all costs. For example, rent, salaries, interest on debt, etc.
- Variable Cost:This refers to the cost that changes with the quantity of the service or goods that you produce.
- EBITDA: This refers to earnings before calculating interests, taxes, depreciation, and amortization.
Formulas for calculating profit for your Laundromat business.
- Profits = Revenue – Expenses.
- Revenue (per day) =Machines x total washes per day per machine x Utilization rate x Average price per wash.
- EBITDA= Revenue – COGS – Operating Expenses.
- Break-even point= Fixed costs / Gross margin.
Calculating Laundromat Business Break-even Point
Break-even Point represents a no-profit, no-loss situation, and this is why it is important for you to learn how to calculate it because anything you earn above your break-even point will be your profit.
Suppose your laundromat business makes $32,400a month and has the cost structure shared below:
| Operating cost | Variable vs. fixed cost | Amount (per month) |
|---|---|---|
| Rent | Fixed cost | $5,000 |
| COGS | Variable cost | $6,500 |
| Staff | Fixed cost | $5,000 |
| Marketing | Fixed cost | $1,500 |
| D&A | Fixed cost | $4,500 |
| Operations, other | Fixed cost | $2,000 |
| Interest & taxes | Fixed cost | $2,000 |
| Total | $26,500 |
Then your break-even point would be:
Break-even point = Fixed costs / Gross margin% = $20,000 / 80% = ~$25,000.
This means anything you earn above $25,000 (according to this calculation) would be your profit.
Pros and Cons of Laundromats Business
Pros of Laundromats Business
- High ROI.
- Recession-proof business.
- Requires minimal staff & management.
- Potential for growth & expansion.
- Not a seasonal business.
- Requires minimal inventory.
- Flexible business.
Cons of Laundromats Business
- Be available at irregular hours.
- Competitive industry.
- Requires substantial investment.
- Rising operating costs.
Wrap Up
After looking at the details of the Laundromat business, we can say that Laundromat is a great business investment.
By investing between $100,000 and $300,000, you can easily make between average revenue of up to $300,000. The best part about the Laundromat business is that it is evergreen, in-demand, and recession-proof as well.
We hope you found this guide on whether are Laundromats profitable helpful.
FAQ
Is owning a Laundromat business a full-time job?
If you want to manage your Laundromat business hands-on yourself, then it is going to be a full-time job, and if you outsource work or hire other people to work for you, then you can enjoy greater flexibility.
Do I need to put up vending machines in my Laundromat?
You can put up a vending machine in your laundromat to earn extra some extra income. However, Vending machine entails maintenance and electricity cost that you
Do washing machine requires a lot of maintenance?
Yes, the washing machine requires continuous cleaning and disinfecting. Not doing so can result in customer complaints or even complaints made to your local health department.
Amit Gupta
Amit Gupta is an experienced expert in digital marketing and co-founder of DrFranchises. With more than 11 years of knowledge in franchise digital marketing, SEO, email marketing, and social media marketing, Amit has helped many brands achieve incredible success online. As a passionate entrepreneur and owner of 7 franchises, he continues to study franchise models, looking at costs, revenue, and profitability to guide brands toward profitable growth. When he’s not working on digital marketing, Amit enjoys spending time playing with his beloved dog.
