Laundromats can earn 20% to 30% cash-on-cash annual returns with a high ROI. The only problem is they can be capital intensive to start. Laundromat equipment can range from $75,000 to $550,000 or more with an average, decently sized laundromat using around $400,000 in equipment. With good credit, this equipment can be financed, but the costs don’t stop there. A laundromat will typically require another $100,000 for construction costs, and unfortunately, this can’t be financed through conventional means. So, buyer beware - ownership requires a large initial capital investment.

Here are good links.

Coin Laundry Association

Inspiration: Spin Laundry Lounge, Portland

Inspiration: Tide Laundromat

Blue Kangaroo

Planet Laundry

Laundrylux

Electrolux Concept Store

Inspiration: Teeter’s Products

The Laundromat is Hot, New York Times

Getting a laundromat off the ground is a journey with a million little steps. But rest assured, Arizona

Commercial Laundry will be there to answer any questions you have and find the best equipment and

solutions for your needs. When you’re ready to start, reach out to us and help us get to know your

project. We’ll be with you every step of the way, tailoring a plan that works for you.

A 1-mile, 3-mile, and 5-mile radius demographic report for the location you’re considering is a crucial step in starting your business. You can use this data to analyze several different data sets, including whether there is enough traffic at this location and how big of an operation this location can sustain.

Arizona Commercial Laundry makes this step easy by providing the demographic report and the analysis.

Here’s how we break it down…

We start by calculating the total number of renter occupied households. We assume 20% of those renters don’t have washers or dryers and are in need of a local laundromat. Next, we assume each of these households is going to spend $10 a week on laundry.

Estimated total dollars spent each week “A” = Number of renter occupied households x 20% x $10.

The second step is figuring out the total number of households with an income less than $35K. We can assume half of those households will be laundromat customers. And we always assume each household is budgeting around $10 a week for laundry.

Estimated total dollars spent each week “B” = Number of households with an income less than $35K x 50% x $10.

Third, we calculate the total number of households. Assuming 7% of those households are going to

be laundromat customers, and sticking with $10 as a household budget for laundry...

Estimated total dollars spent each week “C” = Number of households x 7% x $10.

With the three formulas, we’ll capture three different customer markets for your potential place of business. The first is the renter’s market, which is important, because people with bad apartment complex laundry rooms are strong customers. The second is lower income households who may not be

able to afford laundry appliances. Finally, total households speaks to the overall population density.

The final calculation is taking an average of the three formulas. But we always have to keep in mind, this number is split among all of the laundromats in the area. Above $7,500 is a project that can be greenlit.

Above $10,000 is a strong prospect.

Sites like Loopnet or a commercial realtor can help you find locations to lease or buy.

Once a location is determined to be promising, we’ll visit the site to make sure the place is well positioned for a laundromat. (We’ll take a look at things like poles or any narrow spaces, which could be red flags.) We also will look to see if the proper utilities are available. A laundromat needs at minimum a 300-amp electrical service, the ability to upgrade the gas line to at least 1/2” pressurized, a minimum 1 1/2” water line, and a sewer run with an added sump pump pit that can handle draining.

And remember, it’s common for white box sites not to be equipped with these utilities. Adding the utilities can be a cost of around $35K. We can help you identify what is needed and get quotes from the

utility companies and subcontractors to set up these utilities. This is important information to know prior to any lease negotiations or business budgeting.

This step is about developing two very important things:

1. A layout drawing of what equipment you’ll need and where it will go.

2. A pro forma business plan that will inform your decisions as an owner and will help you secure financing.

Choosing Equipment

When deciding on your washers, there’s an important decision to make: “normal” or “high” speed washers. Normal speed washers have an extraction g-force of 100, while high speed washers can reach a g-force extraction of 450.

Other than the obvious benefit of a higher extraction washer removing more water faster, they also make the fabric feel better. The final cycle of any wash always has a small bit of dirt and chemicals in it.

But a higher extraction reduces this to a minimum.

Another benefit to high-speed washers like Wascomat is a feature called “Automatic Weighing Service,” which weighs the load of clothes and provides just the water needed to effectively wash the load – no more, no less. In Arizona where water is at a premium, this can greatly reduce your water usage by not using the maximum amount of water for every load.

When it comes to drying, Wascomat dryers use “axial air flow,” which drives more air across the clothes.

The result is the fastest drying times in the business.

Having a high-speed washer and a Wascomat dryer will result in your laundromat being a “high speed store.” This has a few benefits. First and foremost, you’ll decrease production time and get more turns per day with the same number of machines without the store feeling crowded. Higher turnover also means less square footage and less parking spaces needed, decreasing your real estate costs.

A high-speed store also uses less utilities. The washers, as mentioned above, use less water, and the dryers use less natural gas. A conventional store uses around 22% of their revenue on utility costs. A

Wascomat high-speed store only uses around 12%.

There is a bit of a trade-off since Wascomat equipment involves a greater up-front cost and a somewhat shorter life cycle (due to the fact that they spin more). However, with Arizona’s high natural gas prices, Arizona Commercial Laundry recommends most laundromats be high speed stores with a small exception for lightly populated, small-town stores where real estate is cheap.

Creating a layout

The right layout will give equal prominence to the three important pieces of a laundromat: washing, drying, and folding. If any of these parts are less than ideal, your customers will notice, and they’ll take their business elsewhere.

A laundromat should have a good flow. In Arizona, the minimum aisle width is six feet, but we’ve found that aisles should really be eight feet or more to accommodate two customers passing each other with machine doors ajar.

Now let’s talk about your drains. Drains come in three different configurations:

• The open-pit concrete drain.

• The “hard-piped” drain - usually 8” PVC with many 3” tees that accept drain hoses from the machines.

• The polypropylene (plastic) drain troughs. These are the best option. They are light and easy to install but strong enough that you can stand on them. And with a 3” hole-saw, you can drill holes for the drain hoses. The two major manufacturers of these are Solomatic and H-M.

Odoban is a great product to keep your drain troughs clean and smelling good.

With the right mix of equipment, you can build a great pro forma business plan. Here is a pro forma spreadsheet that you can work with. The pro forma depends on what inputs and assumptions you make about the project and it is by no means a promise of future returns.. You are encouraged to change the assumptions and see how it affects profitability. For example, calculate what happens when turns-per-day go down.

We will get you the best quote for the washers and dryers. However, you will most likely need some ancillary equipment. Let’s look at some popular choices for the other laundromat equipment you’ll need.

Banknote to Quarter Changer

We recommend the American Changer AC7705. Make sure to get one with a rear load for your personal security, and an MEI bill validator, along with the largest hopper to hold quarters. And always buy two changers, so that if one goes down, your store can stay open.

Bill Breaker

For coin or card stores, people may not want to spend a whole $20 on laundry. The AC7715 is our recommendation for a machine that dispenses $5 bills.

Carts

The industry standard is the RB Wire RB100E, but it’s also nice to have some carts with racks on them.

Folding Tables

Solomatic makes a handsome 2’ x 4’ stainless steel table in the SST-244-B.

Your Quote

Your quote will have a detailed, line by line explanation of what equipment you are ordering, the quantity, and the price.

Be sure to check the details of the equipment. Is it the correct voltage? Are the finishes — stainless steel vs. powder coat — what you want?

Most laundromat equipment is common. However, you may find you need to special order pieces of equipment which generally require a deposit in full because they cannot be returned.

Unless you are self-financing, the equipment quote will be handed off to your bank or financing institution for approval.

Lead times for common equipment are usually under a month. You can agree to schedule the equipment to be delivered on a date when you anticipate construction to be ongoing.

Getting financially approved is the largest hurdle for any laundromat project. While listed as the seventh step, you should begin the process of getting financially approved as early as possible.

Here are some possible funding sources:

• SBA

• Laundrylux Funding

• Eastern Funding

Each of these will request many of the same documents, such as past tax returns, current bank statements, and credit scores.

Congratulations, you’re ready to purchase your equipment!

First, make sure your lease is signed and ready to go. There is no sense in ordering equipment if there’s no store to put it in.

Next, make sure your construction is either ready to begin or has already begun. Generally, your financing institution will start the clock on payments when the order is placed. Typical terms on an order require you to have a deposit, special equipment paid in full, and the balance due on receipt. Since the financing institution has to start paying, they will ask you to start paying shortly thereafter. That’s why it’s in your best interest to minimize the time between your first payment and when the doors open and you are able to start taking in money.

Normal lead times for equipment is a month. However, with the supply chain disruptions we’re currently experiencing, times can vary wildly. Make sure to check with your distributor.

Arizona Commercial Laundry works with your general contractor and subs. We are more than happy to explain to them how the equipment works to save everyone a headache down the line.

Please note, we are not licensed to perform plumbing, electrical, or vent work. Your subcontractors will handle those areas.

Though permits vary from city to city, it is usually a requirement (and a good idea) to use an architect.

An architect can help with the construction plan and they are often a good source for finding a general contractor.

And speaking of general contractors, the classic advice holds true: interview several candidates, ask for references and check them. Ask how large of a crew they can dedicate to the job, and lean heavily on who communicates the best.

Here are a few construction specifics to keep in mind:

Laundromats have lots of drain lines. The concrete slab will need to be saw cut to make trenches to carry these lines. This can be expensive, so it’s best to minimize the length of the cuts. Also, take note that post-tension concrete cannot be cut.

Gas lines should be hung above dryers and a flex line should be used to reach each individual dryer. Each dryer needs a shut off valve. And check with us before buying extra material, because often the shut off valve is included with Wascomat dryers. This setup gives the technician room to do repairs and it also allows for changes in dryer positions.

Most municipalities require laundromats to have a lint interceptor, also called a sump pit. These are usually outside or in the back of the store. The washer drain line (not dirty sewer from the bathroom) drains and falls into the pit. The pit lets lint and solids settle. The water then exits out a separate drain line to the sewer main. You can see an example here.

Two commercial-grade, hot water tanks are recommended Bradford White or Rheem are our recommended brands. Tankless water heaters are great in theory but the modern tank heaters are just so simple and pragmatic.

Stained and sealed concrete works great for flooring. Retailers like Starbucks use it for a reason.

Stiffen up the wall that your changers or money kiosks go in. Use double studs and a a 1/2” plywood face overlaid with the usual dry wall.

Washers and dryers, even when they’re enclosed, give off heat. Your HVAC sub will need to upsize the air conditioning tonnage.

Your equipment will be shipped to the site. Usually, the washers will take up one truck load and the dryers will take up a second one. The ancillary equipment will be delivered as needed by Arizona

Commercial Laundry.

Typically, for a new laundromat, we install the washers the first week and the dryers the second week.

We meet the truck at your location and use a forklift to unload it.

Hard mount washers will be bolted down to bases. Soft mount washers will be set in position. Inlet hoses, drain hoses, and electrical will be hooked up. Another reason it’s important to have all plumbing and electrical finished before install is that once the machines are there enclosing the bay, access is limited to lay lines or add valves.

Dryers will also be set in position. Electrical and gas hook ups will be made to existing fixtures. After the dryers are set, the vents can be added by your subcontractor since the vents are made to measure.

If you are using a card system, it will be set up after the washers and dryers are in place. Card systems vary with some requiring Cat-5 cabling while others don’t.

We will help you program the pricing.

Finally, we will start and test each machine to make sure they are operating as expected and priced correctly. We make sure to leave any protective stickers on the machines until close to opening day.