How to Start a Laundromat

Part 1 - How to start a Laundromat business - Background

Laundromats make it easier to get laundry done when customers either don’t have a washing machine at home or need to wash more clothing than their machines can handle at home. Laundromats also sell detergents and soaps, dryer sheets, and other related items to help customers get their laundry done.

Our guide is in 3 parts:

• Part 1 - How to start a Laundromat business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a laundromat?

Costs for starting a laundromat are significant. Depending on the location, it can cost you between $100,000 and $200,000 to buy an existing business or it can cost up to $1 million or more.

Businesses you buy in larger cities tend to cost more. Also, some states are inherently more expensive than others. For example, buying a laundromat in California, Florida, or New York may be much more expensive than buying one in Idaho or Alabama.

If you’re starting out of your home, you can start with little to no money upfront.

Expect total startup expenses for a small business outside the home to be between $100,000 and $250,000.

A big part of the startup cost is the machines. Get “like new” machines that have been well-serviced and you can save yourself some money and lower your startup costs. However, be aware that used machines may not come with reliable or accurate service records. New machines may initially cost more, but you will also know the entire service history.

If you finance the business, rather than pay cash, you may only need to put down 10% to 30% of the total cost. Utility costs are a big expense. While the machines themselves can cost you $500 to $700 each for top loader and $3,500 and $20,000 for front loaders, utilities to run them (water, heating, etc.) can run between $200 and $2,000 per month, each.

Read our laundromat purchasing guide to learn about the materials and equipment you’ll need to start a laundromat, how much to budget, and where to make purchases.

What are the ongoing expenses for a laundromat?

The biggest ongoing expenses are the utilities. Expect to pay between $200 and $2,000 per machine just for the water and heating. You should also set aside money for maintenance. Maintenance costs can range from $50 to $150 per machine for simple maintenance and repairs.

Who is the target market?

Preferred clients are businesses with long-term service contracts. However, a laundromat can also service the general public and bring in a consistent stream of revenue. Ideal customers are those living in apartments where there are no onsite laundry services or washers and dryers for self-service. This might mean placing the laundromat near low-rent or poor neighborhoods.

How does a laundromat make money?

A laundromat makes money by charging customers to wash and dry their clothes. A laundromat may choose to operate as a self-serve operation, where customers insert quarters into machines to operate the washers and dryers, or it may be run as a full-service business in which customers pay to have staff do their laundry for them.

This business usually handles transactions in cash. However, some laundromats do offer the use of credit cards, checks, and even laundromat-specific cards. Cash-based transactions help to keep costs down for the customers and owner because there are no credit card fees. However, accepting credit cards increases convenience, potentially leading to more customers.

How much can you charge customers?

Costs for laundry services are driven almost entirely by the location. In bigger cities, you can charge more. In smaller towns, less. On average, you can charge customers $3 per load of laundry, washed and dried.

How much profit can a laundromat make?

The average annual income of a laundromat in the U.S. ranges from $30,000 to $1 million, according to Brian Wallace of the Coin Laundry Association. Average profit margin is between 20% and 30%. Some laundromats make significantly less, however. An owner-operated laundromat may be able to sustain a high profit margin by doing his own maintenance, and working in the business instead of paying an employee.

A larger business, with multiple locations, may only net a 10% to 20% margin after operating costs.

How can you make your business more profitable?

One of the best ways to make your business more profitable is to offer additional services. For example, you could offer self-serve dry clean machines, sell detergent, snacks, and coat hangers, dry cleaning bags, and laundry bags. Offer free or discounted wifi Internet services for customers to help them pass the time while they wait for their laundry.

Another way to dramatically reduce costs is to operate your business in an area where taxes and utilities are lower. Check county taxes and water utility rates. These can vary significantly from one location to the next.

Do your own maintenance. Maintenance on washing machines and dryers isn’t too difficult for someone with basic handyman skills. If you purchase washers and dryers that are easily serviceable, you can save yourself several thousand dollars per year.

Day-to-Day and Growth

What happens during a typical day at a laundromat?

Running a laundromat can be simple or more involved. It all depends on the type of laundromat you want to run. A simple business model for this type of business is an unmanned laundromat service.

A more involved version of this business would include daily monitoring of the laundromat, collecting money from customers, folding clothes for those who paid for full service, and managing the books.

What are some skills and experiences that will help you build a successful laundromat?

Aside from having good business sense, good negotiation skills, and being mechanically inclined, there are no special skills or education needed to start a laundromat.

What is the growth potential for a laundromat?

Growth potential for this type of business is almost unlimited. Laundromats can be operated at a small scale, with a single building servicing many customers with a handful of machines. You can even start a small business out of your home, offering full-service laundry and folding services.

It can also be operated at scale with multiple locations across a town or city. Some laundromats operate near colleges and dorms where college students can easily access the building to wash their clothes.

Should you consider joining a franchise?

Joining a laundromat franchise can be a good option for entrepreneurs who prefer to use a proven model rather than start from scratch. While joining one can mean slightly higher initial costs and less control, a quality franchise offers great benefits such as initial and ongoing support, marketing assistance, and brand recognition.

Opening a laundromat franchise typically requires $230,000-$600,000.

Interested in joining a laundromat franchise? Check out our favorites.

What are some insider tips for jump starting a laundromat?

These businesses sink or swim based on location. Try to get good real estate for your laundromat. Usually, this means setting up shop in neighborhoods where local residents don’t have easy access to laundry services and machines.

Another tip is to focus on securing a few small corporate clients, like janitorial businesses and restaurants, as clients. This will give you a strong base of income to work off from.

How and when to build a team

A coin laundromat doesn’t need a large staff and might be able to be non-staffed. However, you should consider hiring at least one to two employees to watch over the place, encourage customers to pick up after themselves, and to keep the place clean.

Each location can be minimally staffed, however.

Part 2 - Is a Laundromat business the right fit for you?

Part 3 - Action plan to launch your Laundromat business in 90 days