News and insights for laundromat investors

Assessing ROI - is your laundromat set for success?

Determining the success of a business venture isn’t an exact science, but certain factors can help gauge its profitability potential.

Let’s look into the critical considerations that can indicate whether your laundromat business is on track for a positive Return on Investment (ROI).

  • Strategic Rent Negotiation
    Securing a favourable rental agreement is paramount for new tenants embarking on a laundromat venture. Negotiating a rent-free period within a 5-year lease can provide invaluable setup time and breathing room for your business to establish a customer base. Prudent management of rental costs, including any potential increases, is crucial to ensure your ROI remains on a positive trajectory.
  • Utility Cost Evaluation
    Calculating utility costs, including gas, water, and chemical expenses, is a straightforward yet essential task. Local conditions and usage patterns will impact these costs, so gather data specific to your area when planning your laundromat venture. Keep in mind that these costs will vary based on turn rates and the number and size of pockets selected for your laundromat.
  • Ongoing Store Maintenance
    Regular maintenance is key to the smooth operation of your laundromat. Lint filters should be cleaned every 3 to 4 cycles for industrial or every cycle for commercial dryers, adjusted according to the types of items being dried. Additionally, maintaining a clean and presentable store is vital to creating a positive customer experience. Depending on usage levels, store cleaning should occur at least a few times per week.
  • Equipment Maintenance
    While laundromat equipment is generally low-maintenance, it is not maintenance-free. All machines require servicing every 1500 cycles or at least once per year to ensure they remain in optimal working condition. Budgeting for this upkeep is essential for long-term ROI success.
  • Pricing Strategy
    Evaluate the vending prices in your local market and assess the norm for your area. This pricing data can help you determine yields and consider the possibility of lower pricing during the initial 6 months to attract customers through promotions and discounts, ultimately boosting store traffic and contributing to ROI growth.

By carefully addressing these considerations and factoring them into your business plan and budget, you can better assess the potential for a positive ROI and set your laundromat venture on the path to success.