A Profitable Industry
Taking the step into the world of laundry is one of the most profitable opportunities for any aspiring entrepreneur. It’s a business that you can continue to develop over time with the contribution of different revenue streams and laundromat services. Picture this: you’ve got everything running smoothly in-store, maybe it’s time to move online? Or, start a new pickup and delivery service? For laundromat owners, there are plenty of avenues to go down. We know the potential of a steady income, but people often wonder about the financial side of the business. It all comes down to the question of, how much do laundromats make?
In this blog, we will discuss the economic potential of a laundry business. We’ll highlight the average income of a successful laundromat, different revenue streams and factors that can affect profitability.
Laundromat Income
Let's take a look at the income for an average laundromat. Every store won't be exact, and it's important to understand that the amount will differ depending on location, volume of laundromat customers and the types of laundromat services that are offered.
Income Average in the US
In the United States, the standard laundromat business will generate around $150,000 in annual revenue. Nationwide, the gross annual revenue of laundromats combined reaches a staggering number of $6 billion. These figures highlight just how much of a profitable business you can own in the laundromat industry. But of course, how much annual profit is generated from a single store will depend on region and location. As an example, if a laundromat is operating in an urban area where there's a higher population and demand, they may generate more daily revenue compared to stores based in rural areas where there is less foot traffic.
Profit Margins
One way to work out how much a laundromat makes is by looking at profit margins. This measure is used to show a businesses sales revenue after deducting all other costs for aspects such as utility bills, maintenance and rent. From a laundromat perspective, the average profit margin sits between 20% and 35%. If a business is operating in a more expensive area where leases and utility bills are high, then the profit margin will be slightly lower due to the increase in cost deductions. On the other hand, run a laundromat in a cheaper side of town, costs are lower, and profit margins will be higher.
To get the most money out of a business, laundromat owners will offer additional services as a way of opening up multiple revenue streams.
Additional Revenue Streams
The main source of laundromat revenue will be generated from your washing machines and dryers, but there are additional services that you can add to create new streams of income. These range from setting up a pickup and delivery service to expanding your customer base to those in the commercial industry. Let's look into how a laundromat business can maximize its revenue potential with extra services.
A Laundromat's Main Revenue Stream
The most reliable and consistent stream of revenue will come from the money people pay to use your laundry machines to clean their clothes. Purchasing new modern machines may seem like a high initial investment, but it will pay off in the long run. On average, the cost of laundry per pound ranges between $1.00 to $3.00, and will increase depending on the type of laundry service that a customer has opted for. Drying machines will be priced per minute, the longer the cycle, the higher the cost, increasing your estimated dryer income.
Vending Machines & Laundry Products
Offering extra amenities is one way to create more daily revenue. Laundromat owners can set up vending machines that sell different laundry items including fabric softener and detergent. It's a great addition to add to your store, just make sure you keep the stock replenished when needed. You can also install vending machines that sell snacks and drinks, offering your customers something to enjoy while they wait for their laundry to be cleaned.
Wash-and-Fold Services
One of the most popular laundromat services you can offer besides the standard self-service model, is a wash-and-fold service. This is where laundry is dropped off and collected later, all freshly washed and folded by your team. Business owners will offer this type of service with a type of pricing strategy that is based per pound. In the US, the costs range between $1.45 and $2.95 but can differ depending on the quality of service. It's an attractive option for customers as it's convenient, and saves them time from having to clean and fold themselves.
Dry Cleaning
Offering a dry cleaning service is another revenue stream available for laundry businesses. People often prefer taking delicate clothing items such as suits, formal wear and wedding dresses to a dry cleaners, as it can be professionally cleaned with all the necessary equipment. Customers can get a high quality result that they wouldn't be able to achieve if they tried to clean these items on their own at home. It's nice to leave the work to the professionals! Customers will spend anywhere from $25 to $50 in a dry cleaners, but this will also depend on the type of clothing that they need processed and how many items are in their order.
Pickup and Delivery
Over the last few years, pickup and delivery (P&D) has become a really important service for businesses in all different types of industries, especially laundry. It's great for laundromat owners as it expands the customer base, and it's great for your regular customers as it's convenient and takes the chore of laundry out of their day-to-day lives. Customers schedule their order, the laundry gets collected from their home, washed, dried and then delivered straight back to their doorstep at a time that works for them. How this service is priced depends on the amount of laundry loads that there is to pick up, how far the customer's location is and the type of clean that they are expecting. The average price is around $25 to $50 for P&D with turnaround times of a day or two.
Alterations, Shoe Laundry and Repair Services
Extra value-added services such as shoe repair, alterations or even shoe cleaning are other alternative avenues that you can add to your business model when looking for extra income. Check out one of our customer case studies from Devonn Vidal, Founder of Sneakky Klean in Miami, Florida. Devonn has found huge success in his sneaker laundry and repair service expanding to 3 locations. Devonn finds that with his approach "footwear can be renewed instead of being replaced with new pairs - a much more sustainable method." For those with high-end sneakers, it's a cheaper option to get them repaired rather than thrown away and replaced. How much is charged for this service varies depending on the type of shoe and repair. The average price for jobs such as heel replacement or resoling can cost anywhere from $20 to $100.
What Can Affect Laundromat Profits?
So, we know laundromats can be really successful and there are a few different routes to go down as a laundromat owner to create new revenue streams. However, there are a couple points to think about which can affect the overall laundromat profitability such as competition and change in demand.
Competition and Opportunity in the Market
Where your store is based will greatly affect your laundromat revenue and income potential. If your business is in an area with a high population density and there are some big competitors nearby, you may find that it's more challenging to attract customers and retain them. It's important to stay on top, so do some research and work out what other nearby laundromats are doing that you can do better. Are they offering a service which is more convenient for customers? Is the pricing lower? Maybe they have excellent customer service.
If you find the market is very saturated, then it'll be tricky to stand out against nearby businesses who have already been operating for some time. People like to find a service and routine that they are used to and stick to it, unless there is an offer which another store has which will greatly benefit them.
Seasonal Fluctuations
You may notice that demand will change depending on the time of year. It's important to understand and prepare your business for each season to help you keep a steady cash flow. Cold, winter seasons are often busier for laundromats. This is because people are wearing more clothes trying to wrap up warm! So during this time, customers may be bringing in more clothes than usual to wash in your facility. In fact, the gross revenue for a standard coin laundry can be 10% to 15% less in the summer compared to winter. During times where the footfall is slightly quieter, it's worth creating and promoting some special offers which will entice customers to use your services. For example, you could offer 10% off a customer's next order or free pickup during a specified time. Take a look at your business expenses and see if you have some budget to set up some marketing strategies that you can put in place to keep customers stopping by during quiet times.
In this blog, we've uncovered the economic potential for laundromat businesses. With the average laundromat making over $100,000 in revenue every year, the laundry industry is a profitable venture for any entrepreneur. The real potential is within the extra services and revenue streams that you add to your business. Adding additional offerings such as pickup and delivery, WDF or even a new set of customers such as those in commercial and hospitality will all contribute towards an increase in income and your overall laundromat profitability. If you are opening a laundromat for the first time, or you are experienced and opening a second or third store, the best advice is to stay adaptable, focus on customer preferences and always look for new ways to take the next step in the industry.
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