An Investor’s Guide to Coin Laundries | Location | Chapter 6
We are proud to bring you this comprehensive book, ‘Investor’s Guide to Coin Laundries‘, compiled by Jay MacDonald, Vice President, Distributor Sales for Alliance Laundry Systems.
Alliance Laundry Systems is the largest manufacturer of commercial laundry equipment in the world and has over 50 years of experience in helping investors just like you, get started in the coin laundry market. This book is a compilation of experiences, ideas and input from hundreds of successful coin laundry owners and distributors from all over the world.
Taking data and industry knowledge, it is a road map to help you succeed. At the end of it, you will have a general understanding of the industry and what it will take to operate a successful business.
Chapter 6 : WHAT IS A GOOD LOCATION? The Art of Demographic Analysis
There is an art to owning a successful laundromat and the paint used to draw the most magnificent pictures is demographics. Demographics tell us who people are far beyond their age and gender. Demographics can tell us a population’s buying habits, the things they enjoy purchasing, their wealth, etc. Demographics can be dissected and molded into many different shapes, each revealing something more about the person or persons we are looking at.
As a coin laundry owner, you will use demographics to help determine the location of your store front, the size of it, how to market to your customers, the types and amount of equipment you should offer, even how to decorate and design it. As we progress throughout this chapter, there are portions that may seem repetitive, but that is the art of demographic analysis.
Using Demographics to Determine Location
In determining the location of your coin laundry, there is generally an abundant amount of information and factors that need to come together in order for the situation to be ideal. When you are first looking, drive around town, find sites that you think would be good. Get out and look at them. What are the characteristics of that site? Some of the things you want to look at include:
Is there adequate parking? What is the condition of the parking lot? Is it easy to enter and exit? What is the egress physically like? Is there enough lighting for customers who would come later in the evening?
If you aren’t building a new structure, then you are going to want to have someone look at the building itself. Does it meet current building codes? What sort of modifications would need to be made to suit your business? What is the floor made of? Is the wiring new or old? Is the plumbing sufficient enough to handle the laundry capacity of your store? Are utility connections already at the building and are they of the correct voltage, pressure, etc., you will need for your store? A distributor, architect and city engineer are good sources. This is part of your due diligence. The last thing you want is to sign a lease, secure financing and then find out during construction that a new larger water line must be brought to your site at your expense, expense of which can run into the tens of thousands of dollars.
Are the other store fronts around you clean and well lit or are they run down? Talk with the local business owners, what kind of traffic do they receive? How long have they been in business? What are those other businesses? Would they be complementary to your coin laundry? Would their foot traffic and customer base add to yours? One ideal location may be near a high-volume supermarket. Many laundromat users maximize time by grocery shopping between loads.
If you are looking at an existing site, what are the utility hookups like? Will they support your equipment or would you have to invest in upgrades? What is that cost? Could you recoup that investment? Some cities and towns may impose unique fees sometimes called Sewer Access Charges (SAC fees) for new businesses. This is typically a one time charge that can easily run into big costs.
How far away is the next laundromat? What sort of traffic do they generate? What does the store look like? Is it clean? How is their parking lot? Is the location well lit? Would you be serving the same geographic and demographic market? In my opinion, one of the best ways to learn about your competition is to visit their stores as a customer. Take in some laundry, use the machines, understand their vend prices. While your clothes are being washed, you will have time to really study their store and hopefully identify some weaknesses that you can capitalize on in your design. It’s good to visit during slow days and busy ones too. Remember that your potential customers are using those stores today or perhaps an apartment common area laundry room. Why would those people want to visit your new store instead and just as importantly, what would make them regular customers of your store?
The Neighbourhood Itself
In addition to what businesses are near you, who else is in the neighbourhood? Are there lots of apartments? Duplexes? Single family homes? Is the neighbourhood run down or well maintained? What kind of cars do you see parked in the driveways or parking lots of the complex? Is it filled with families or singles? Is there a mix? Is the neighbourhood made up of white-collar workers or blue-collar workers? Is there a park near by? Are there schools near your location? All of these things will factor into the decision of the site location. Once you’ve made a list of sites that meet the physical requirements of the location, your next step is to cross reference that information with the demographics of the potential customers in the neighbourhood. While the physical site might be ideal, if there aren’t any consumers to support you then the location would be moot.
Using Demographics to Define your Customers
One of the greatest mistakes any coin laundry owner can make is by believing in the “If you build it, they will come” philosophy. Unlike in the movie, “Field of Dreams”, just because you build a coin laundry on a site that looks ideal, doesn’t mean that customers will come to you. Even if your store is cleaner, bigger, brighter, boasting the latest technologies, coin laundry users may not drive to you, they may go some place closer. This is why demographic data is so important.
Demographics are the physical characteristics of a population. These characteristics include age, sex, marital status, family size, education, geographic location, ethnicity, and occupation. For years, demographers have used this information to develop advertising campaigns and messaging that has helped major retailers determine the viability of a location. They dissect it, breaking it down into its purest form in order to determine whether or not the business decision being made is one that will be viable. When opening coin laundries, it is no different. Your distributor can provide you with a detailed demographic analysis of a potential laundry site. You need to make this a requirement and it is money well spent. The demographics will show you whether or not the right customers are available that will be coming through your doors. It will also help you in determining other things like the right equipment mix and the vend price. To make sure you have the right equipment mix and vend price to more accurately estimate your potential income, you’re going to want to look at the average pounds washed rather than the average amount of money spent doing laundry. Most distributors will work with you on determining what the average household in the neighborhood you are looking at spends per week on laundry. There are many different formulas available, therefore, with all the variables like what defines the average laundry user, inflation, competitors, etc. We suggest using the average number of pounds per load. On average, laundromat users, use approximately 24 pounds of washer capacity per week. Keep in mind this is washer capacity and not the number of pounds per load as most will overstuff a washer. We suggest also that you work with your distributor on forecasting your market revenue.
The DREAM Coin Laundry Location – Pulling it all Together
There are many dream locations for coin laundries to open up and the demographics you pull will help you determine the right spot. From family neighbourhoods to shopping centers to college campuses, there are proper environments that make each a feasible location.
A neighbourhood with large families and lots of children, combined with lots of renters who are low to middle income make an ideal family neighbourhood location. When looking at the census data for this kind of location, you’re going to want to look at the projected birth rate. You want that number to be higher than average. That means there are lots of young families who are still having children (and generating more laundry to wash).
College/ University Towns
Any city with a university, whether it’s small or large can be an ideal site, especially near campus and off-campus housing. Before you decide on a location for universities, you want to look and see if there is already a coin laundry in the area. What are the vend prices? Is it clean? What ancillary items do they offer? It’s also a good idea to check out the university’s laundry facilities. Some offer laundry on each floor at a lower rate for students, but is it really enough? Another deciding factor that should be considered is how many students actually live on campus in the dormitories or in off-campus housing surrounding the university itself. A bunch of students who live at home with mom doing laundry could impede your profits.
A shopping center can be a gold mine for coin laundry owners. Again, look at the demographics of the neighbourhood. Just like in the family neighbourhood, you are going to want to look for a location with large families surrounded by lots of rental properties in a middle to low income neighbourhood. And as we said before, if there is a grocery store as an anchor it could be a great built-in draw. However, the rent per square foot may be higher in a shopping center. There may also be Common Area Maintenance (CAM) fees that are paid to the landlord every month. One great benefit of a shopping center location is that many customers are already visiting the area and a lot of parking is usually available. There is one simple thing that will make your laundromat successful: Location. By combining demographic analysis along with market research, you’ll be well on your way to determining a site that will help you achieve your financial goals.
ABOUT THE AUTHOR
JAY McDONALD has been active in the laundry industry for over 30 years. He is the Vice President, Distributor Sales for Alliance Laundry Systems, the largest manufacturer of commercial laundry equipment in the world. He also served on the board of directors for the Coin Laundry Association and received the Distinguished Service Award “in appreciation of his leadership in furthering the welfare and best interests of the coin laundry industry” in 2009.
As your equipment distributor — the most important partner and most valuable resource you will ever have — we encourage you to get in touch so that we can help guide you through the exciting and financially rewarding industry of coin laundry ownership.