Operations and Performance
The term coin laundry is defined as commercial-grade, self-service laundry equipment placed into service in a retail space.
Coin laundries generally occupy the retail space on
long-term leases (10-25 years) and generate steady cash flow over the
life of the lease. Coin laundries are unique small businesses in that
they have no inventory or receivables.
Coin laundries can range in market value from $50,000 to
more than $1 million, and can generate cash flow between $15,000 and
$300,000 per year.
Business hours typically run from 6 a.m. to 10 p.m. and the
stores usually occupy 1,000 to 5,000 square feet of retail space, with
the 2014 average being 2,170 square feet. New coin laundries are valued
based on actual construction and equipment costs, while existing coin
laundries are valued based primarily on net revenues.
Coin laundries are also referred to as coin-op laundries, coin-operated laundries, self-service laundries or laundromats.
Coin laundries are one part of the self-service laundry
business; the industry is actually comprised of two distinct segments.
The first is coin-op laundries, and the second is represented by
coin-operated machines located in apartment housing. This apartment
segment of the business is referred to as the multi-housing laundry
business or the route laundry business.
The coin laundry industry is approximately 70 years old and
is primarily composed of individual owner/operators. No significant
franchises are in operation at this time. Currently, there are about
29,500 coin laundries in the United States, generating nearly $5 billion
in gross revenue annually.
Clean clothes, like food and shelter, are considered a
necessity of life and coin laundries provide a basic health service for
millions of Americans. While coin-ops are found in virtually all
neighborhoods across the country, stores seem to perform exceptionally
well in predominately renter-occupied, densely populated areas. These
areas are increasing in number with each year throughout the country.
The intense population growth, coupled with the expansion of rental
housing, has increased the customer base for coin laundries.
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Coin laundries thrive in periods of both growth and
recession. During periods of recession, when home ownership decreases,
the self-service laundry market expands as more people are unable to
afford to repair, replace or purchase new washers and dryers, or as they
move to apartment housing with inadequate or nonexistent laundry
facilities. The market size grows proportionately to the increase in
The public will always need this basic health service – people always need to wash clothes!
Industry growth is based on the demographics of population
density, population mix and population income. The more concentrated the
population, the greater the need for quality coin laundry facilities.
National and regional demographics indicate renters, the primary users
of coin laundries, are the fastest-growing segment in the nation.
As of the 2010 U.S. Census, 34.5percent of the nation’s 116
million households were renter occupied. The number of coin laundry
stores built over the past 70 years has grown steadily as the population
has increased and shifted to more concentrated areas. The end result
has been a mature, stabilized industry with predictable rates of
turnover and values of existing coin laundries, development of new
turn-key facilities, and equipment expansion and replacement.
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Coin laundries normally sell for a multiple of their net
earnings. The multiple may vary between three and five times the net
cash flow for most transactions, depending on several valuation factors.
The following primary factors establish market value:
- The net earnings before debt service, after adjustments for
depreciation and any other nonstandard items including owner salary or
payroll costs in services
- The terms and conditions of the real estate interest (lease),
particularly length; frequency and amount of increases; expense
provisions; and overall ratio of rent to gross income
- The age, condition and utilization of the equipment, and
leasehold improvements; the physical attributes of the real property in
which the coin laundry is located, particularly entrances/exits, street
visibility and parking
- Existing conditions, including vend price structure in the local marketplace
- The demographic profile in the general area or region
- Replacement cost and land usage issues
This resale market standard assumes an owner/operator
scenario, with no allocation for outside management fees. Marketing time
for store sales averages 60 to 90 days, depending on price, financing
terms and the quality and quantity of stores available at the time of
sale. Coin laundry listings are generally offered by business brokers
who charge a sales commission of 8 percent to 10 percent. Many coin
laundry distributors also act as brokers. The accepted standard of
useful life for commercial coin laundry equipment is as follows:
- Topload Washers (12 lbs. to 14 lbs.): 5-8 years
- Frontload Washers (18 lbs. to 50 lbs.): 10-15 years
- Dryers (30 lbs. to 60 lbs.): 10-15 years
- Heating Systems: 10-15 years
- Coin Changers: 10-15 years
This schedule will vary upon usage, sales volume and maintenance. Useful life may differ for accounting or tax purposes.
- Coin laundry operations consist of four basic areas:
- Employee management
Bookkeeping, administration and banking are typically
off-site management areas. A standard profit and loss statement for a
coin laundry typically includes the following line items:
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- Income, consisting of wash and dry
- Other income, which would include vending, drycleaning and/or wash-dry-fold service
Each category will have a percentage that varies from store
to store and region to region. Interest charges, depreciation and other
nonstandard items, such as owner salary, generally appear on tax
returns, but are excluded from the standard profit and loss statement
for purposes of valuation and determination of cash flow.
- Legal Costs
- Maintenance (Includes Parts and Labor)
- Payroll (Usually Limited to On-Site Work–i.e., Janitorial or Employees)
- Personal Property Tax
- Common Area Maintenance (CAM) Charges (Also Known as Net Charges
Including: Real Estate Taxes, Maintenance, Insurance and Other Charges)
- Utilities (Gas, Water, Electric and Sewer)
- Vending Expenses
- Miscellaneous Costs (Including: Wholesale Drycleaning Costs, Fluff-n-Fold Supplies and Labor)
Sales volume, and/or individual store performance varies,
based on a number of factors. These factors may include demographics;
overall services offered; design and general condition; equipment
selection, condition and vend prices; hours of operation; exposure of
the building; parking; and competition.
National surveys, conducted by the Coin Laundry Association,
indicate a wide range of performance for individual stores and types of
equipment. The industry terminology for individual equipment
performance is cycles per day, or turns per day (TPD). These
designations refer to the number of times per day, on average, each
machine is used. While this statistic varies widely, based on many
factors including those indicated above, the range for washing machines
is generally from three TPD to as high as eight TPD or more. The primary
factors affecting TPD include: population demographics, such as density
and percentage of renters; capacity and quantity of the washers; the
vend prices charged; prevailing market vend prices, and the quality and
quantity if competition.
Dryer income can vary greatly due to: total wash poundage
generated; overall vend prices of both washers and dryers; heating
efficiency of dryers; total number of dryers in relation to washers; and
dryer size and capacity. Dryer income is usually expressed as a
percentage of overall income. Generally, dryer income varies between
forty and sixty percent of total washer income. Income and expense
percentages may vary significantly for stores offering additional
services such as drycleaning and Wash-Dry-Fold.
Today’s coin laundry industry is a strong and vibrant one.
Even more appealing is the fact that this dependable public service
industry continues to grow and thrive. The demographic trends toward an
even greater apartment dwelling segment of the population predict
The Coin Laundry Association (CLA) used statistics, surveys
and other sources to provide the information contained in this overview
of the coin laundry industry. While the information has been given to
CLA by business owners and other sources that appear reliable, CLA in no
way, expressed or implied, guarantees the accuracy or validity of the
information provided herein.
Prospective parties interested in the industry are advised
to consult the appropriate professionals and experts before making any
major decisions. The Coin Laundry Association, the only national trade
association for the coin laundry industry, is the best place to begin
your journey into the business. CLA offers a number of educational,
promotional and cost-saving programs for coin laundry operators.
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