Earn More MoneyNovember 14, 2019December 16, 2019

How Much Money Can A Laundromat Make?

The other day, I was driving by an area I used to live in. However, I realized I was running out of gas which leads me to stop at a gas station. As I was standing there I realized something quite peculiar. A laundromat. However, this wasn’t any laundromat. This was the very same wash and folds that I used to go to when I was a child. I was shocked. Therefore, this leads me to develop a chain of thoughts that I had to write about. How much do laundromats make? Of course, laundromats aren’t the cash cows like they used to be. However, is it possible to start up a laundromat and earn a decent living? We will take a look into what a few other factors which can help us answer this question!

What Is A Laundromat?

To put it simply, a laundromat is a place that you go to do laundry. These establishments are usually a 24/7 operation. However, the employees tend to work from 9-5 (depending on the business). Typically, people come here if they don’t have a washer or drying and they’d like to clean larger items. All you need is change and a bit of time.

It’s important to note that during the day laundromats can get very busy. There have been many times where I visited the laundromat only to be met with a wait time for washers and dryers. Waiting is not fun, especially since these wait times can be extremely long.

It’s best to go in the morning or at night after 12 am. This is because some laundromats have peak prices. For example, the laundromat near my area charges $2.00 per cycle. However, if you go after 12 am, the price is reduced down to $1.25. Therefore, try to be strategic when and if you ever need to go to one. Lastly, if you forget to bring detergent, don’t worry. A lot of laundromats allow you to buy detergent through vending machines or over the counter.

Services

Aside from being able to use machines to clean clothes, some laundromats have other services. Mind you, these services depend on your area and the business itself. Many laundromats offer a wash, fluff, and fold service. These prices can vary. However, you can drop off your clothes and they’ll wash them for you. Once this is done, you can pick up your clothes between business hours. However, this is usually a same-day operation.

Next is dry cleaning. This is a rare service in laundromats. However, they definitely do exist. This is convenient because you can simply drop off your dry cleaning at the same time you start your other laundry. You won’t have to make a trip to two separate businesses. Furthermore, the prices are always competitive which means it may be cheaper than some of your local dry cleaners.

Some laundromats have other minor services available as well. These services can be a waiting area, child playroom, free wife and television! Waiting can get quite annoying, especially since laundry can be an errand that lasts a whole day. This is also why you’re going to need vending machines within your business. These can be a great source of smaller income while giving the customers something to munch on. No matter what it is, companies will implement ways for their customers to be occupied and not dread coming to wash their clothes.

Average Annual Income

When you pass a laundromat, you may not think that they bring in much money. Maybe break even or have a low-profit margin. However, when researching how much money they make, I considered opening one myself. While searching for how much money laundromats can make, I noticed something peculiar. There is a rather wide range of earnings. Some can be earning as low as $30,000 while others are reaching nearly half a million in revenue. Yes, $500,000. This truly shocked me. Here are some stats that I was able to pull from the Canadian government websites.

This is a picture from the Canadian government website where it displays the revenue for coin-operated laundries and dry cleaners in 2017. As you can see, there are approximately 943 businesses that are operating. The graph is separated into percentiles so it gives you an average of how much money laundromats and dry cleaners are making. For example, the top quartile (25%) is making, on average, $428.700. That is a ridiculous amount of money. Mind you, these are business that is clean, have many different services and are open 24/7.

If you’re serious about opening a laundromat, I’d advise that you go around your local neighborhood. Try to enter as many laundromats as you can and see what they have to offer. Find out their services, how clean they are, if it’s busy and how good their reviews are.

If people are really discontent with the way a business is operated there is a good chance they’ll complain through a Google review. However, whether you do everything right, there are always going to be people who’ll complain. Therefore, companies will try and minimize that as much as they can.

The important question is whether you should open a laundromat or not. Well, there are actually a couple of things you need to seriously consider before jumping in.

Should You Open One?

The question that is on everyone’s mind. Should I open a laundromat? The answer is unfortunately not that simple. There are so many things that go into opening a laundromat.

The first factor we should look at is whether you’re an entrepreneur and have the ability to persist through struggle. I’m saying this because opening up a laundromat may not be the easiest start-up business. However, this may sound extremely negative but the reality is I want those to read this to know what they’re getting into. If you know what to avoid and how to business work in the slightest, you can build off of that. Once you gain an adequate amount of knowledge, you can successfully run a laundromat.

Start-Up Costs

Like any business, there are going to be start-up costs. These costs can vary depending on whether you’re building from scratch, purchasing an already existing business, renting and area. Many people lease space and fill it with machines. This is probably the cheapest and fastest way to get your laundromat up an running. The cost of the lease can be cheap. However, the machines can cost you several thousands of dollars.

Purchasing the property can be a bit expensive. However, it is also a really good idea due to the fact that the property can appreciate over time. Furthermore, if you decide that you don’t want to own a laundromat anymore, you can rent the space out. As an initial investment, you’re looking at around $100,000 – $500,000. This varies depending on the factors stated above.

Competition

Competition in the laundry business can be extremely heavy. There can be multiple laundromats in one area and some may have high-quality equipment. Therefore, your job is to beat out the competition or stay competitive at the very least. As a competing business, you need to look at the standards that your competition operates under. Once you’ve analyzed this, you can do well. This means that if you go to a competing laundromat and see plenty of ‘out of order’ machines, you’ll benefit from having 100% operational ones. However, this isn’t the only factor.

You need to have better or on-par customer service, available services, wifi, vending machines, cleanliness, etc. However, even if you create the holy grail of laundromats, you can’t win over everyone. There are people who stay with a certain company or brand because of consistency. These are the loyal customers that’ll keep your business going. If you think that these customers don’t exist, you may want to reevaluate your perspective.

I’ve had customers call me at both call centers and tell me that they stay with the company due to loyalty. The kicker was that these guys were paying higher than average prices. Consistency and good business practices create a strong bond between customers and businesses.

Maintenance/ The Chores

Maintenance can be a pain as well. Machines tend to break constantly. Therefore, you’ll find yourself visiting your laundromat a few times a week to check and see if everything is work. If a machine is down, this will correlate to lost money. You will need to make sure your vending machines are stocked and operational. These are a huge cash cow when it comes to the laundromat business. This is because most people stick around and wait for their clothes. Another chore (albeit a good chore) is collecting your earnings.

You’ll want to go semi-frequently to collect your money from the machines. You don’t want the money to accumulate to the point where the machine can’t accept anymore. Furthermore, the less money you have in the machine, the less someone will get if they decide to break it and steal. These are only some of the many chores and maintenance that you’ll have to do when owning a laundromat.

Costs

Let’s talk about costs. As we previously said, it’ll cost you around $100,000 – $500,000 as an initial investment. What about the ongoing costs?

There is a slew of expenses when it comes to running a laundromat. From rent costs and payroll to insurances, laundromats have their fair share of expenses. Therefore, you need to take into account all of these expenses when opening a business. There is a correlation between the money you earn, your expenses and profits. The lower percentile has a smaller amount of expenses but a profit of $1,000 on average. However, the highest percentile has over x8 more expenses but earn x70 more. Just a little food for thought.

Looking at the numbers, running a laundromat seems like a great investment. However, it’s competitive and hard to prosper in. If you can learn the business, analyze the competition and develop good business practices, you can earn quite a healthy living. Furthermore, you can have a job while running a laundromat since they operate 24/7. Think of it as a passive income of sorts.

That’s all I have to say for today, happy investing!

Shameed Chris Khan

Shameed is just a man on a mission to help those around him gain financial success. Obsessed with writing about all things finance, this GTA native is constantly learning and sharing his experiences with others.