Editor's note: This article was excerpted from our Coin-Operated Laundry start-up guide, available from Entrepreneur Bookstore.
The coin-operated laundry industry has undergone a revolution. No longer dingy, unsafe, boring places that customers must endure on a weekly basis, laundromats are becoming fun and attractive multiservice centers that customers enjoy visiting. "The industry is now getting a facelift," says Brian Wallace, president and CEO of the Coin Laundry Association, a national association for self-service laundry owners. "There's a trend toward coin laundries being more comfortable for the customer."
Newer laundries have snack bars, a place to leave off and pick up dry cleaning, and video games. Some of them don't even use coins. Instead, customers use swipe cards that subtract the cost of the wash or dry, much like a phone card or debit card. Many laundry owners also employ attendants to keep an eye on the store and help customers use the equipment.
The coin-operated laundry industry is changing in response to several trends currently impacting the business. The first is that, for most of us, meeting the demands of work and our personal lives leads to a time crunch-there just aren't enough hours in the day to accomplish everything we would like to. Laundry owners are capitalizing on this reality by offering their customers time-saving convenience in the form of wash-and-fold (drop-off service) and dry-cleaning service. Some are even picking up laundry from customers' homes and delivering it back to them clean and folded.
In addition, owners have realized that they can maximize their profits by providing customers with access to multiple services. Since they're paying a set amount of rent on their commercial space, they might as well use that space to its fullest potential. Many owners around the country are serving food, renting mailboxes and offering free internet access. Because the new laundries are bigger than in the past-often 3,000 or 4,000 square feet-overhead is higher, and owners are looking for ways to cover the cost. These additional services demand little increase in overhead because the rent is already paid for. Customers benefit by being able to use several services all in one convenient location.
Cindy Patel, who has owned Mountain Wash Laundry in Shelby, North Carolina, for a year, says that she is opening a snack bar and a minimart in her laundry. "I have a big space, 6,000 square feet," she says, "and this will help pay for it."
Paul Partyka, editor of American Coin-Op, a magazine devoted to self-service laundries, says that Patel's approach is the norm these days. "Trying to generate additional revenue per square foot has always been an issue," he says. "But it's even more so now with tighter competition and utility bills growing. Everybody wants to squeeze as much money as possible out of their space. Looking for an extra service that will work is always on their mind."
Another trend laundry owners have recognized is that customers prefer to visit laundromats with a more pleasant atmosphere. Many laundry owners are building kids' centers, holding music concerts, giving away coffee, and hiring attendants who are friendly and helpful. "I don't think we'll ever cross that threshold into making laundry fun," Wallace says, "but we're making it more comfortable."
Tom Leavitt, owner of Darcies Laundry in the Seattle area, opened three new stores, all of them near older, smaller laundries, most of which have since closed. Darcies offers customers a better deal: bigger stores with play areas for children and attendants on duty at all times. "Our stores are very convenient," Leavitt says. "They're clean, they have a friendly environment, and they have a lot of machines, so you can get in and out of there as fast as possible."
The Good News
As the population of the United States grows, the number of renters-your main market-is likely to grow, too. Other social phenomena, like the prevalence of two-income families, suggest that convenient services such as wash-and-fold will continue to grow in popularity as working parents have less time to attend to household chores like laundry.
According to a survey from the Coin Laundry Association, more than half of coin laundries offer wash-and-fold. "It's by far the number-one extra service for laundries," says Partyka. "It's doing well." Partyka also notes that even people with washers and dryers at home are using self-service laundries for the sake of convenience. With the regular capacity machines used in homes, it can take quite a lot of time to do load after load-and that's where laundromats come in. "They just run over to the coin laundry, use a couple of the large machines and knock it off," he says. In other words, although the majority of laundromat customers are low- to middle-income renters, some laundries are tapping into higher-income markets by offering convenience: wash-and-fold service and large machines.
In addition, office dress codes are growing increasingly less formal. And as more people wear casual clothing (which doesn't require dry cleaning) to work and leave the nicer duds for special occasions, you may find that consumers will be making more trips to the laundromat.
The Bad News
While the trends we've mentioned are favorable for entrepreneurs entering the laundry business, they don't suggest that business is booming. The industry is what experts describe as a "mature market." Save for areas that are seeing high population growth, pretty much every neighborhood that needs a laundry has one-or two or three that are competing vigorously. In some areas of the country, there are too many laundromats already.
However, there is room for new laundry owners. Many get into the business by purchasing an existing laundry and renovating it. Some also find that they can build a new laundry in an area with competing laundries and thrive by offering a bigger store, more services and better customer relations. Another way to get into the business is to locate your store where there is the best potential need for a new laundry: in an area that's experiencing population growth.
So as you consider getting into the laundry business, keep the words "mature market" in mind. Don't buy a store just because it's for sale or build a store just because you have a great idea for a new gimmick. You'll need to be very careful to make sure there's enough of a customer base to make your business thrive. You may be able to draw a little extra business from people who like using your store better because of its cleanliness or from people who use your wash-and-fold service, but the core of your business will be people who just want to get their laundry done quickly and conveniently. If there are already enough laundromats in the neighborhood to serve their needs, they're not as likely to patronize your store.
Finally, you also need to consider that getting into the laundry business requires a large initial investment. The average-size laundromat will cost you in the neighborhood of $200,000 to $500,000-whether you choose to purchase an existing laundry or build one in a retail space.