How to Start a Laundromat Business

In order to find out how to start a laundromat business we have laid out a detailed outline and have taken a deep dive in to the laundromat business. Some of the key highlights of our study is laid out:

How Much Does a Laundromat Make a Year?

The average laundromat in the United States generates $142,857 in annual revenue. However, the actual amount of money a laundromat makes can vary widely depending on a number of factors, including:

Location: Laundromats in high-traffic areas with dense populations tend to make more money than laundromats in rural areas.

Size: Larger laundromats with more washers and dryers can generate more revenue than smaller laundromats.

Equipment: Laundromats with newer, more efficient equipment can save money on energy costs and generate more revenue from customers who are willing to pay more for the convenience of using newer machines.

Services: Laundromats that offer additional services, such as wash and fold service, dry cleaning, and vending machines, can generate more revenue than laundromats that only offer basic washing and drying services.

Competition: Laundromats that are located in areas with a lot of competition may have to lower their prices or offer additional services in order to attract customers.

How Much Does it Cost to Start a Laundromat Business in USA?

The cost to start a laundromat in the USA varies depending on a number of factors, including the size of the laundromat, the type of equipment you purchase, and the location of the laundromat. However, on average, the cost to start a laundromat in the USA ranges from $200,000 to $500,000.

Here is a breakdown of some of the major costs involved in starting a laundromat:

✅ Equipment: The largest cost associated with starting a laundromat is the purchase of equipment. Commercial washers and dryers can cost anywhere from $800 to $2,600 apiece. You will also need to purchase other equipment, such as folding tables, vending machines, and a change machine.

✅ Lease or purchase of space: The cost of leasing or purchasing space for your laundromat will vary depending on the location and size of the space. In general, you can expect to pay between $10 and $20 per square foot to lease space for a laundromat.

✅ Permits and licenses: You will need to obtain certain permits and licenses in order to operate your laundromat. The cost of these permits and licenses will vary depending on the location of your laundromat.

✅ Marketing and advertising: You will need to spend some money on marketing and advertising in order to attract customers to your new laundromat. The cost of marketing and advertising will vary depending on your budget and the size of your target market.

Other costs that you may need to consider include insurance, utilities, and staff salaries.

If you are considering starting a laundromat, it is important to do your research and develop a business plan that takes into account all of the costs involved. You should also consider seeking funding from a bank or other financial institution.

Are Laundromats Profitable?

Profitability is one of the key factor for answering how to start a laundromat. Some of the key factors which determine profitability include pricing strategy, overhead costs and location. We have taken deep dive into profitability analysis of a typical laundromat including detailed analysis on revenue, cost and startup cost. Find out- Is Laundromat Business Profitable? Use the laundromat profit calculator to find out the viability of your laundromat.

Why Laundromats Fail in USA?

✅ Market Saturation: In densely populated areas or cities, there can be a high concentration of laundromats, leading to intense competition. This can make it difficult for individual laundromats to stand out and attract a sufficient customer base.

✅ Economic Factors: Economic downturns and fluctuations can impact the disposable income of potential customers. During economic recessions, people may cut back on non-essential expenses, including laundry services.

✅ Seasonal Variations: Some regions of the USA experience significant seasonal variations in weather. Laundromats in areas with harsh winters may see a drop in customers during the colder months when people are less likely to go out for laundry.

✅ Rent and Operating Costs: High rent and operating costs can make it challenging for laundromat owners to maintain profitability. Utility costs, labor costs, and taxes can be significant expenses.

✅ Regulations and Compliance: Laundromats in the USA need to adhere to various local and federal regulations, including environmental standards. Ensuring compliance can be a significant challenge and may require additional investments.

✅ Rise of Home Laundry: The increasing affordability of in-home washing machines and dryers means that more households have the option to do their laundry at home. This can reduce the customer base for laundromats.

✅ Changing Consumer Habits: Some consumers in the USA are increasingly seeking convenience and time-saving options. Laundry pickup and delivery services, often facilitated by mobile apps, have become more popular, posing a threat to traditional laundromats.

✅ Technological Advances: Mobile payment options, online booking, and loyalty programs have become important in various service industries, including laundromats. Laundromats that do not adopt these technologies may lose customers to competitors who offer these conveniences.

✅ Marketing Challenges: Effective marketing and advertising are essential to attract and retain customers. Laundromats that do not invest in marketing efforts may struggle to reach their target audience.

✅ Customer Service: Quality customer service is vital for retaining customers, and a lack of friendly and helpful staff can result in customer dissatisfaction and loss of business.

✅ Demographic Changes: Shifting demographics, such as changes in population density or the age and income distribution of a neighborhood, can affect a laundromat’s customer base.

✅Maintenance and Equipment Costs: Outdated or poorly maintained equipment can lead to high repair and maintenance costs. Keeping equipment in good working order is vital for customer satisfaction and the laundromat’s long-term success.

Market Research

Industry overview

The US laundromat industry is a multi-billion dollar industry with a strong presence across the country. With an estimated revenue of $6.0 billion in 2023, the industry is expected to grow at a moderate pace of 1.4% in the coming years. There are approximately 18,304 laundromats in the US, employing around 60,000 people. The average laundromat generates $327,000 in revenue per year with a profit margin of 10%. The average person visits a laundromat 12 times per year, spending an average of $10.00 per visit. The top 5 states by number of laundromats are California, Texas, Florida, New York, and Illinois. The most popular laundromat services are wash and fold, dry cleaning, and ironing. Growing trends in the industry include self-service laundry, attended laundry, and technological advancements.

Competitive landscape analysis

Start the competitive landscape analysis by making a list of all the competitors in close proximity to your location. Since this is a physical business so you can easily do this using Google Maps. For e.g. if I am opening store in Downtown Detroit then this is how it looks:

Once you have made the list then dig deeper and find out key information such as pricing, number of years in business, services offered, etc. In some cases such information are available on their website and in some cases you might have to call them.

Market size

Divide the market size into TAM (Total Addressable Market), SAM (Serviceable Available Market) and SOM (Serviceable Obtainable Market). In order to get a better understanding of these three elements let me give you an example. Let’s say that I wish to start my laundromat business in Florida so in that case we have the following TAM, SAM and SOM:

✅ TAM (Total Addressable Market): The TAM for the laundromat industry in Florida is estimated to be $1.5 billion. This is calculated by multiplying the total number of households in Florida (9.2 million) by the average annual spend on laundry services per household ($163).

✅ SAM (Serviceable Available Market): The SAM for the laundromat industry in Florida is estimated to be $1.2 billion. This is calculated by subtracting the revenue of existing laundromats in Florida from the TAM.

✅ SOM (Serviceable Obtainable Market): The SOM for a new laundromat business in Florida is estimated to be $300,000. This is based on the assumption that a new laundromat can capture 25% of its local market.

Target market segmentation

You can choose your target market based on your offerings and your investments. Initially you should concentrate on a small group of target market and expand as you move forward. Here are some examples of target markets:

✅ Families with Young Children:

Demographics: Parents with young children.

Needs: Families often have large volumes of laundry, including baby clothes, bedding, and towels. They may appreciate services like extra-large machines for bedding and a clean, safe environment for their children.

✅ Students:

Demographics: College students or individuals attending nearby schools.

Needs: Students living in dorms or apartments may not have access to in-house laundry facilities. They seek affordability and convenience. Promotions and flexible hours can attract them.

✅ Tourists and Vacationers:

Demographics: Tourists and seasonal visitors.

Needs: Tourists staying in short-term accommodations such as hotels or vacation rentals may require laundry services while traveling. Offer quick turnaround and easy payment options.

✅ Seniors and Retirees:

Demographics: Older individuals or retirees.

Needs: Seniors may need help with heavier loads or may prefer full-service options. Provide friendly and helpful staff to assist with laundry needs.

✅ Pet Owners:

• Demographics: Pet owners.
• Needs: People with pets often have pet bedding and blankets that require regular washing. Offering pet-friendly detergents and dryer sheets can be a unique selling point.

✅ Business Travelers:

• Demographics: Business travelers and professionals.
• Needs: Business travelers may need quick laundry services between meetings or while on extended stays. Highlight your express options and the availability of Wi-Fi for work while they wait.

✅ Healthcare Workers:

• Demographics: Healthcare professionals, including nurses and doctors.
• Needs: Healthcare workers have busy and unpredictable schedules. They may need extended hours and appreciate a clean and safe environment for hygiene reasons.

✅ Eco-Conscious Consumers:

• Demographics: Individuals who prioritize sustainability.
• Needs: Eco-conscious consumers may prefer a laundromat that uses environmentally friendly detergents and practices. Promote your eco-friendly options and conservation efforts.

✅ Local Businesses:

• Demographics: Local restaurants, salons, and other small businesses.
• Needs: Local businesses often require commercial laundry services. Offer bulk discounts, reliable pickup and delivery, and linen rental services.

✅ Athletic and Sports Clubs:

• Demographics: Gyms, sports clubs, and athletes.
• Needs: Sports clubs generate a significant amount of athletic gear and uniforms that require frequent cleaning. Offer specialized machines and services for sports equipment.

✅ Snowbirds:

• Demographics: Retirees who spend part of the year in Florida.
• Needs: Snowbirds may require laundry facilities during their winter stay in Florida. Offer long-term membership or loyalty programs to encourage their repeat business.

✅ Migrant Workers:

• Demographics: Seasonal agricultural workers.
• Needs: Migrant workers often require laundry services. Consider extended hours during peak seasons to accommodate their schedules.

✅ Military Personnel:

• Demographics: Active duty or military families.
• Needs: Military personnel may need laundry services, especially if they are stationed or residing near your location. Offer discounts for military personnel and accommodate military uniforms.

Write a Laundromat Business Plan

The business plan is needed if you are looking for a loan, investment or wish to validate your idea without making a significant investment into the business. You have certain plans about your laundromat business but unless you put everything on paper, it will not help you identify the gaps in your plan. Check out the Laundromat Business Plan written by our season consultant Elma.

How to Promote your Laundromat?

This is one of the key components of How to Start a Laundromat. This will directly impact your revenue and overall profitability. In addition, the promotional budget, CAC (Customer Acquisition Cost) and No. of sales are directly connected through the financial model in the Laundromat Business Plan. So if you wish to dig deeper then checkout the business plan mentioned in previous paragraph.

I will discuss about the promotional strategy briefly and if you wish to get an in depth look then check out Laundromat Marketing Plan.

In order to give you an example, I will assume that you are starting the laundromat business in Florida. Following are some channels I can use to promote your laundromat:

✅ First Customer Launch Event: Organize a grand opening event to generate excitement. Offer free or heavily discounted laundry services for the first day, complemented by refreshments and entertainment to draw in locals and create a memorable experience.

✅ Local Alliances: Forge strategic partnerships with neighboring businesses, particularly apartment complexes and hotels. Develop mutually beneficial agreements, such as offering discounts to their residents or guests. Distribute eye-catching promotional materials to your partner locations.

✅ Online Visibility: Create a professional website and optimize it for local search. Ensure your business is listed on Google My Business for easy discoverability. Incentivize first-time customers by providing an online-exclusive discount.

✅ Social Media Advertising: Launch highly targeted Facebook and Instagram ad campaigns that focus on your local community. Highlight your laundromat’s standout features, be it sparkling cleanliness, 24/7 accessibility, or green practices.

✅ Local Directories: Maximize online presence by listing your laundromat on local directories, including Yelp, Yellow Pages, and local business association websites. Attract first-time customers with a special introductory offer.

✅ Printed Promotions: Design visually appealing flyers and door hangers to distribute throughout nearby neighborhoods. Include a limited-time offer or a unique promo code to encourage the first visit.

✅ Referral Incentives: Implement a referral program that rewards your initial customers with discounts or free services when they refer friends and family to your laundromat. Word-of-mouth marketing can be powerful.

✅ Local Print Advertising: Invest in advertisements in local newspapers and community newsletters, reaching a broad, local readership.

✅ Face-to-Face Networking: Attend local community events and networking gatherings to personally introduce your laundromat to potential customers. Building local connections can be instrumental in growing your customer base.

✅ Community Involvement: Showcase your community commitment by sponsoring or participating in local events and charity initiatives. In doing so, you’re not just promoting your laundromat but also fostering goodwill and trust.

✅ Online Reviews: Prompt your initial customers to leave positive reviews on platforms like Google and Yelp. These reviews serve as social proof and can persuade others to try your services.

✅ Cross-Promotions with Local Businesses: Create mutually beneficial arrangements with local restaurants, cafes, and shops. Display their marketing materials in your laundromat in exchange for them promoting your services, widening your reach.

✅ Email Marketing: Build an email list with the contact information of your early customers. Send them exclusive offers, updates, and engaging content to retain their loyalty and encourage repeat business.

✅ Community Forums and Social Groups: Participate in local online forums and community groups. Engage in conversations, sharing information about your laundromat and offering solutions to laundry-related queries.

✅ Continuous Improvement: Gather feedback from your first customers and implement improvements based on their suggestions. Demonstrating a commitment to providing an exceptional experience can foster long-term loyalty and generate positive word-of-mouth.

In Conclusion- How to Start a Laundromat

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