Laundromat Industry Overview

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. A minority of coin laundries employ attendants.

Coin laundries can range in market value from $50,000 to more than $1 million, and can generate cash flow between $15,000 and $200,000 per year. Business hours typically run from 6 a.m. to 10 p.m. The stores usually occupy 1,000 to 5,000 square feet of retail space, with the 2002 average being 2,260 square feet. New coin laundries are valued based on actual construction and equipment costs, while existing coin laundries are valued based primarily on revenues. Coin laundries are perfect examples of passive income generators. Coin laundries are also referred to as coin-op laundries, coin-operated 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 coin route business. These two segments frequently overlap; in more mature markets, the self-service laundry business is estimated to be evenly split between the two. The self-service laundry market consists of an estimated primary customer base of 86 million people living in rental housing, as of the 2000 U.S. Census. The secondary customer base consists of the nonrental population, which uses coin laundries only occasionally.

The coin laundry industry is approximately 60 years old and is primarily composed of individual owner/operators. No significant franchises are in operation at this time. Currently, there are about 35,000 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.

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 population. The public will always need this basic health service – people always need to wash clothes!