Location! Location! Location!

By Bob Nieman, CLA Member posted 26 days ago

  
Top Laundry Owners Weigh In on What Goes into a Successful Site Selection Process

Get two (non-competing) laundry owners in a room and see how quickly the conversation turns to the new, potentially blockbuster laundry markets and store sites they’re both currently looking into.

I’d set the over/under at five minutes – and then take the “under.”

Successful laundry operators are seemingly on the lookout for new locations 24/7. It’s coded into their DNA to be on the hunt for the next great store site. Even family vacations can turn into impromptu laundromat tours – just ask their spouses.

No doubt, what makes a great laundry site for one owner in a certain market may not work as well for another operator in a different setting. However, there are some common benchmarks and best practices when it comes to choosing a winning site.

This month, we asked a number of leading store owners to share their strategies for finding profitable laundry locations:

Michael Finkelstein
Associated Services Corp.
Danville, Va.

When choosing a laundry site, you need to have people in that area, and you need to look at the demographics of that population. You want to make sure that the population of where your laundry is to be located can sustain the viability of your business.

You need to figure out how many turns per day you’re going to do. Look at the potential site from a P&L standpoint, based on what type of machines you plan to install and how big the space is.

You’re looking for a good mix of renters and apartments, as well as all of those other factors that make for a successful site. Of course, it needs to have ample parking. It must have the correct amount of utilities to properly service your laundry facility – water, natural gas, etc.

If you’re considering a storefront within a shopping center, it’s helpful to have a strong anchor tenant or two. Also, having a college, a military base or a similar facility nearby – where people are continually going back and forth – can help provide business for a successful laundry. But, also, be certain that there aren’t too many other successful laundries within close proximity.

Above all, you need to do your due diligence, and not merely figure out how much volume you think you’re going to do or run a demographics report; you really have to go to that site. Be there during the day and during the night – all hours of the day, because you might think that you have the right spot, but in the end it might not be.

If you are looking to get into a shopping center, talk to the other tenants. How is the landlord? How is the space? Do those tenants plan to be in that center long term?

For example, if you were looking to put your laundry into a shopping center right now, you probably wouldn’t want to go where there is a Sears or a Kmart, considering their eminent demise. You need to make sure that the anchors are, in fact, going to be there five or 10 years down the road.

I recently was looking at a shopping center site that included a Rite Aid drugstore. It looks as if some Rite Aid locations are going to be purchased by the Walgreen’s chain; however, others are simply going to go bye-bye. This is something you need to know, because if your center loses a major anchor and isn’t drawing a lot of people, you probably don’t want to be there.

I once made the mistake of being hell bent on being in a particular location in Virginia. The owner was selling her laundry, and I believed I could really make a difference in that business if I bought it. The previous owner didn’t believe in working on Sundays, so the laundry was closed on that day. Of course, I felt I could really build up that business by changing that policy, and I did. I grew the business by 25 percent.

However, the problem I didn’t anticipate was with the landlord. He wanted an annual rent increase of 3 percent. Basically, I had a five-year option, and after that, the rent went up 15 percent. Even with my sizable increase in volume, I was unable to sustain that 3 percent annual increase in rent.

So, the key to site selection is not getting married to any one spot. You have to look at all of the details. Look at the fine points of your lease, don’t overpay, and look at what your rent increases are, because you don’t want to throw good money after bad. You don’t want to overpay. And you definitely don’t want to be working for your landlord.

Don’t be afraid to walk away from any laundry if it’s not making money. When people ask me if I’m married to any of my laundries, I tell them I have a couple of girlfriends, but I’m not married to any of them.

Bob Frandsen
Maytag Laundry
Rush City, Minn.

Just like any retail-type business, the laundry business is about location, location, location. You want to be where your customers live and where it’s easy for them to get in and out, with parking at the front door. It’s OK to be on a busy street that gives you good visibility, as long as your customers don’t have to actually park on that busy street.

Being located by a highway is not necessarily an advantage, as your customers typically won’t exit the highway to come to your laundry. Also, being located near all of the major big-box retailers isn’t an advantage either, since many of your customers won’t want to navigate all of that traffic.

In my small-town laundries, I prefer to be located close to a grocery store, a hardware store or a fleet supply store so that my customers can shop while they are doing their laundry.

I suggest you Google Map the area you’re considering so that you can see where your customers live. Look for apartments and mobile home parks close by, as they tend to house your best customers.

In Minnesota, we also get a fair amount of tourist business in the summer, so being close to campgrounds and resorts also can be great for a laundromat.

However, always remember that more than 80 percent of your customers live nearby and come in to do their laundry every week. They are your bread and butter, so choose your location with them in mind.

Bruce Walker
Wash It Kwik
Denton, Texas

Location, location, location. When choosing a site, I like to look for a 60/40 split – homeowner to renter.

I’ve found that other businesses tend to share our industry’s customer demographics, including pawn shops, check-cashing outlets, dollar stores, and pharmacies/drugstores. If these are present, you likely may have found a very strong location. It’s typically best if you can get out ahead of the fast-food chains, because these businesses will pay big bucks for locations, which most of us can’t afford.

I’ve discovered that I can find a laundromat in a town I’ve never been to before merely by finding the other key businesses that I’ve mentioned.

The biggest mistake I ever made with regard to site selection was taking out a million dollar loan. It was a bear for more than a decade, and it just wears on you. It could have ruined us, if my wife didn’t have a fantastic job. Now that I’m completely debt free, I can say for a fact that the grass feels different than it did when I had a loan on it.

The best advice I can offer when choosing a laundry site is to find a location for which you can pay cash, or simply don’t buy it. Start small and work your way into this business. After all, the tortoise won the race.

Larry Vladimir
Bakers Centre Laundry
Philadelphia

It helps if you are familiar with the area and have a good feel for it. Demographic reports are important and should be used to confirm your feelings and your own knowledge of a potential site, but you shouldn’t rely strictly on demographics alone.

Population density, percentage of renter-occupied units, and family income levels will help determine the dollar size of the laundry market. Whether you should look at a one-, two-, or three-mile radius out from your preferred site will be determined by the size of the market and the distance from which you feel the shopping center in question or its anchor will pull.

The most important attribute of a great laundry location is the anchor of the shopping center. If you want to be a destination laundromat, you need to be with an anchor tenant and in shopping center that is an actual destination. In most cases a supermarket is the anchor that people will visit at least on a weekly basis and that will attract similar demographics to your proposed laundry business. In my market, strong anchors would include Shop Rite and Super Walmart.

Of course, parking and visibility are key elements for a successful vended laundry. In my opinion, the best way to find locations is to simply drive around your targeted area. Develop relationships with the strongest commercial retail brokers in your area, as they will be a huge help to you in your search.

You also should work with a distributor who has built successful laundromats in your area. They will be able to provide key demographic analysis, and most likely already have close relationships with the local retail brokers. What’s more, they may have an opening in new shopping center still in the planning stages that you may not be aware of.

But beware of locations that have a significant amount of vacant stores, a lack of activity, the lack of a strong anchor tenant, difficult ingress and egress, a lack of visibility, and poor parking options. Also, try to avoid locations with any steps or ramps. And don’t locate your laundry too close to a busy anchor, which may take up all of the available parking spaces.

No doubt, those are just some of factors to look for and pitfalls to avoid. I would strongly suggest working with an experienced distributor, who can help immensely in finding a potentially successful location.

Jim Whitmore
Sunshine Express Laundry Center
Gloucester, Mass.

When choosing a laundry site, I always look for strong demographics, population density, visibility, accessibility, parking and a good landlord/lease.

Start by locating an underserved neighborhood or area, and then find any well-aged, neglected laundry or – as they’ve recently come to be known – “zombiemat.” Carefully examine the existing services in the area under consideration, and look for all of the elements I mentioned above. In addition, look closely at the age of the equipment and the condition of the store. Determine the ways in which you can differentiate your laundry operation – be it a rehab or new construction.

But don’t take too long. Personally, the biggest mistakes I’ve made with regard to site selection have been waiting too long or overanalyzing an opportunity. Then again, you be can’t afraid to walk away from a potential site if something doesn’t feel right. For example, even a great site and a good deal are neither if the landlord is a creep.

Peter Mayberry
Anytime Laundry
Omaha, Neb.

For your business to be successful, you must have the right location. With the best location, the worst operator in the world still could make money. But, with a poor site, even the best operator in the world still might lose money. I truly believe that location is the single most important determining factor to either success or failure.

To me, a successful site is well-trafficked and close to stores and other businesses that laundry customers patronize. If you have the right location, you will succeed. After a while, you can be in a completely different city, just driving around – and you will automatically know what is and what isn’t a good laundromat site.

The best tip I can offer regarding site selection would be, if you find an area with eight neglected laundries and that all seem to be “racing to the bottom,” you have more than likely found the right spot to build your laundry.

My biggest mistake with site selection was buying a bad laundry that I knew was a bad laundry, but I didn’t want anyone else to buy it. This store makes me money; however, I should have spent that money on something that would have offered a greater return at a faster pace. Don’t fall in love with a building. There will always be others. Don’t force it.

The key is to be patient. I wanted to build a new laundry every six months, but I have slowly begun to learn to take them as they come. I am currently in the process of building my fourth and fifth stores, with the sixth one waiting on leases to expire that the previous building owners had in place. And there is a seventh, for which I am currently trying to negotiate a sale.

At one time, I was champing at the bit and now I’m praying that nothing else comes available for sale in the other three markets that I’m currently looking at. I can say from experience that building a laundry every year is probably better than trying to build seven in three years, but I wouldn’t change a thing.

Mitchell Jaret
Speedy Laundromat
New Hyde Park, N.Y.

For me, density of population and income levels are the leading factors that make for a good laundry site. Also, I would suggest looking for “rundown” store that have been in business for a long time. Often, a broker can be a great help in locating potential sites.

Probably my biggest mistake was not buying the property when I purchased my laundromat. If possible, try to find sites where it’s feasible for you to own the building and the property, not just the laundry business. Owning the property gives you a potential source of income when you want to sell the business. Then, after all of the hard work you put into building a profitable operation, you can still receive rental income while semi-retired.

Larry Adamski
Muskegon Laundromat
Spring Lake, Mich.

A great location will be one in an expanding market, as this will help absorb the additional laundromat. It’s a location with inadequate or subpar competition within that market, as this will open up an opportunity for an enhanced level of service. No doubt, a location with a five-star competitor must be ruled out.

A great site is one with plenty of convenient parking within 75 feet of the building’s entrances – not necessarily a strip mall with hundreds of parking spaces that don’t count. It’s a site on a main, low-speed artery, preferably a corner lot with easy access off both streets. Boulevard-type street sites should be avoided.

My best advice is to know your competitors prior to committing to a location. A strong competitor can bankrupt a new laundromat in less than a year.

I’ve come to the conclusion that sites with the building near the road and all parking in the rear are much less attractive to customers.

Ken Barrett
Washin Coin Laundry
Anniston/Oxford Ala.

A single tip or even a list of them won’t work for every location. After all, a 15-foot-wide storefront in New York City may do a great business and be the perfect site for its neighborhood, but that thought would never cross the mind of a laundry owner in Idaho. Or, maybe a new 5,000-square-foot store in Los Angeles is ideal, even though there is a freshly retooled store right across the street.

In other words, know and understand the neighborhood and surrounding area you are considering, not just the demographics. Actually drive around. Look for dryer vent pipes on the housing developments. Do people walk or drive? What is the local news saying about the area? Are there other businesses that will support you or that you will support by being there?

If you are in a neighborhood where people drive to the laundromat, parking is a key. You’re going to have customers getting in and out of cars, loading into their side doors and trunks, and kids running around. Is your parking away from the road? Is it in a strip mall where there is no drive-up parking? These are all concerns to a mom with kids and a couple of baskets of laundry.

Of course, good visibility from the road and into the store are important. It makes it easy to find your store and then to see inside. Big (clean) windows enable your customers to see into the store and decide if they want to enter or wait for a better time to do their wash – and, when they’re in your laundry, they can see out.

Above all, learn everything you can about how other successful laundry owners found their sites, and choose the specific tips, strategies, and criteria you think will work in your potential marketplace.

And don’t forget that the owner with the 15-foot-wide store in New York City also may have a killer marketing and advertising campaign that pulls it all together.

Rob Maes
Express Laundry Texas
Houston

An alternative approach to laundromat site selection is to study your competition, rather than relying on a standard “cookie cutter” approach to demographics, because markets can and will be different.

Once you have determined the general area you want to explore, based on your commute or proximity, for example, pick a competing successful laundromat in that area, which you genuinely like and could see yourself owning – and then study its demographics. Next, look at its competitors’ demographics in the same area and see what they have in common, as well as how they differ. Lastly, use that information and your own observations to help guide your own site selection. This is more of an empirical approach than a traditional data-driven approach, but it can work well.

If you are an investor looking to get into the laundry business, you can take the same approach with the laundries regularly profiled in PlanetLaundry. Look at photos of the laundries being showcased, as well as their vend prices – and then run their demographics. You will soon have a “feel” for what may or may not work in your own market.

Finally, I would like to dispel the myth of a “perfect location.” Unless you happen to be in a market with a high barrier to entry, or what famed investor Warren Buffett likes to refer to as a “moat” around your business, a location will only be “perfect” until a new competitor enters the market. Examples of high barriers of entry would be market dominance by competitors with multiple locations and deep pockets, branding, financial barriers such as the cost of real estate or impact fees, and municipal barriers such as zoning and permitting.

Daryl Johnson
Giant Wash
St. Ansgar, Iowa

Just about every store we buy or want to acquire seems to be a stone’s throw from a White Castle. Clearly, that’s a huge oversimplification, but to that effect, we’re obviously looking for the right demographic mix of the customer base we’re trying to serve. We’re looking for an area with renters, larger families and all of those typical stats.

As far as the physical location itself, we look for a busy, high-traffic corner and ample parking. That’s by far the best way to go.

In addition, at least in our market, we also look for divided highways in front of the site. For whatever reason, a divided highway will kill a store in our marketplace. I know of other markets where that isn’t the case; however, in our particular market, if there is a divided street out front, customers will not cross over, for whatever reason. If there isn’t a direct turn lane into the parking lot from both directions, it’s difficult to get a laundry to succeed.

When I was first researching building a laundry in Clear Lake, Iowa, that site hit all of my parameters – every one of them. It was an ideal location, with great parking, on main highway, and with the laundromat demographics I had expected. Plus, it’s a resort community. It filled out my entire checklist, 100 percent. It was perfect. It was exactly the location on which I should put my new store.

However, I was brand new to the community, as far as doing business there. And, after having built the store, I discovered that the majority of the community lives, literally, on the other side of the tracks. Everyone has to drive down the main drag and past my store to get to their homes, but the challenge was getting these people to come out of their homes and cross the railroad tracks again to come to the laundromat.

The tracks run parallel to the main highway, which runs east/west through town. I’m on the north side of that road, and about 80 percent of the community is south of the railroad tracks.

It’s not that there’s a lot of traffic or limited access. It’s more of a mental barrier. The store is doing fine, but it’s been a challenge to market past those tracks to get customers to come in.

So, the lesson there is that you have to know the uniqueness of the community, really learn the area.

For me, I’m typically a rose-colored glasses kind of guy. Everything is always going to be better tomorrow than it was today. I’m an eternal optimist. As a result, learning to be more realistic during site selection, trusting those who I’ve brought into my inner circle, running the numbers on an area, and not being quite so rosy in my outlook have probably been the hardest lesson for me.

We have a tendency to surround ourselves with like-minded people. So, I’ve had to seek out more realistic, conservative-minded individuals and endeavor to take on more of a conservative attitude myself. Probably my biggest challenge with selecting laundry sites has been acknowledging my personality and making sure I surround myself with people who counter my personality in such a way that’s beneficial to the corporation.

If you’re a new investor and new to the industry, the best site selection advice I could offer is to be patient. Obviously, get involved with the Coin Laundry Association, and attend the Clean Show and the Excellence in Laundry Conference. But also immerse yourself in the local community and get to know the local operators – take them to lunch and pick their brains. Take time learning the industry before you buy in. Do your research. I did almost two full years of research before I bought my first store, and I still overpaid for it.

Zig Ziglar used to say that the deal of the century comes along once a week. However, you have to be educated enough to recognize that it’s the deal of the century. So get the education and get the experience. Immerse yourself in this industry, because this is an equipment-intensive, capital-intensive business – and it can wipe out a retirement if you do it wrong.

Personally, I have what I refer to as “brothers in the industry.” When I’m looking at making a decision, I’ve made a practice of reaching out to these individuals, being completely transparent, and consulting with them. Over time, I have nurtured friendships with those I’ve learned I can trust, and I’m completely open and transparent with them – and it helps me in making the decision as to whether or not to take on a new site. Never be too arrogant to take advice from someone else.

I’ll go outside of the industry for advice, too. I’ll talk to realtors, accountants, lawyers, the local hardware store owner, real estate investors. I’ll use their knowledge as I try to make an intelligent choice.

There’s a proverb that states: “In many counselors, there is wisdom.” I take that to heart and seek as much counsel as I can before making a decision, especially on site selection.
0 comments
24 views

Permalink

Get Set for Success

Maytag Commercial Laundry

Click to download the new guide from Maytag® Commercial Laundry, with tips on making your new investment successful once you’ve decided to make the vended laundry leap.