Are Laundromats Profitable? [Costs Breakdown]
Whether you’re looking for a side hustle or thinking about adding a small business to your portfolio, you may want to consider opening or purchasing a laundromat. As an easy-to-run, essentially self-service business, a laundromat can be the ideal venture for some people. But, before you jump into such an investment, you probably want to know whether laundromats are profitable.
Laundromats can be profitable, generating net returns between 20% to 35% of the initial investment within the first year. That means an initial investment of $150k can generate profits of over $50,000. Plus, laundromats typically have about a 95% success rate, making them fairly safe investments.
How Much Profit Do Laundromats Make?
Laundromats are typically profitable businesses due to their low overhead costs and virtually zero labor expenses. Because of the minimal operating costs, laundromats usually generate a return on investment (ROI) of between 20% and 35%.
In fact, most laundromats around the country are worth anywhere from $50,000 to $1 million or more, and the average net profits are between $15,000 and $300,000 per year.
|Initial Investment||Average Profits|
|$100,000||$20,000 – $35,000|
|$150,000||$30,000 – $52,500|
|$200,000||$40,000 – $70,000|
|$250,000||$50,000 – $87,500|
|$500,000||$100,000 – $175,000|
|$750,000||$150,000 – $262,500|
Of course, the actual profits that you make will depend heavily on many factors such as your fees, location, and actual expenses.
Still, with the average laundromat in the U.S. generating revenues of $300,000 on average, there’s plenty of room to turn a good profit if you manage your expenses well.
How Much Does it Cost to Open a Laundromat?
Opening a laundromat typically costs around $200,000 to get started. The actual cost could be more (or less) depending on your geographic location, the location of your building, mortgage loan or rent costs, repairs and renovations, and equipment costs.
The good news is that once you get your business up and running, laundromats don’t require much in terms of ongoing costs and expenses. The up-front cost is typically quite higher than what you’ll need to budget for over time.
Plus, the start-up costs for opening a laundromat are typically lower than those for starting up other small businesses. For example, opening a car wash, convenience store, or mini-storage business would usually cost more up-front than the expenses for starting up a laundromat.
Of course, the costs could also vary depending on whether you purchase an existing laundromat or build the business from the ground up.
Things to Consider When Opening a Laundromat
If you decide to jump in and start your own laundromat, there are many things to consider to help you determine if it’s a good investment for you. Here are some of the most important things to think about.
Type of Laundromat
There are several different business models within the laundry business. Before you start building yours, it’s important to think about what type of laundry facility you want to own.
You could open any of these kinds of laundromats
- Coin-operated laundry
- Private laundromat for apartments or condominiums
- Full-service laundromat (wash-and-fold)
- Commercial laundry services (example: linens, uniforms)
- Dry cleaning
- Pick-up and delivery services
Depending on the kind of laundromat you open, you may need additional equipment, space, or staff. The laundromat type can also impact your revenue and profitability. For example, you’ll be able to charge more for wash-and-fold services, but you’ll also need to hire (and pay) staff to do the work.
New or Existing Laundromat
You’ll also need to decide whether you want to open a brand new facility or purchase an existing laundromat. There are certainly advantages and disadvantages to either, so you’ll want to consider the costs and other factors to make this decision.
Purchasing an existing laundromat means you’ll already have the equipment and a building that’s suitable for your laundry business. You’ll also already be connected to water and sewage systems, which could save on construction and hook-p fees. Plus, there are likely already existing customers that will continue to frequent your laundromat after you purchase it.
On the other hand, if you buy an existing laundromat you may be purchasing old equipment that’s nearing its end of life. You also won’t know how well it’s been maintained over time, so there could be problems you aren’t aware of.
Depending on how successful the previous business was and its reputation, you might have to do some marketing and advertising to let the community know the business is under new ownership.
Any of these factors could impact the cost to get your laundromat up and running and how long it takes your business to become profitable.
Geographic location can make a huge impact on how well your laundromat does and how much money you can make. For example, laundromats located in popular tourist areas or regions where there’s a lot of multifamily housing typically do much better than those located in rural areas or places where there’s less demand for laundry facilities.
The more densely populated the area is, the better it will be for a laundromat. Most people don’t want to travel a long distance to wash their clothes, so you’ll want there to be enough of a customer base in a one-mile radius.
In addition to the physical geographic location, you’ll also want to consider your building and its location in relation to other places like grocery stores and other shopping centers. The building should be in a safe area and look clean and well-maintained.
Looking at demographic data is important, as well as checking out the competition in the area. A neighborhood without a laundromat nearby would be a better money-making opportunity than opening up somewhere that has more than one laundry facility.
Besides a building, your equipment will be the other big up-front expense to consider when you open a laundromat. You’ll need commercial washing machines and dryers and you’ll need enough of them to satisfy demand.
If you don’t purchase enough equipment, you’ll risk losing customers if they show up and have to wait for a washing machine to become available.
The type of equipment you purchase is an important decision because you’ll need to consider the machine’s quality and warranty coverage along with the price tag. Since you’ll own the machines and be responsible for maintaining them, it might make more sense to spend a little more on better-quality equipment.
Or, you may want to start small and then invest in upgrading your machines once you start making some money.
Other Income Opportunities
In addition to just offering washing machines and dryers for customer use, there are some other ways to make passive income at a laundromat. You definitely want to offer laundry detergent, bleach, and fabric softener for purchase. If a customer shows up and forgets their detergent, you don’t want to lose their business altogether.
Some laundromats have vending machines stocked with laundry supplies while others have an attendant available to sell laundry supplies. If you want to keep your laundromat open 24/7, you may want to go with a vending machine.
Many laundromats also have vending machines with snacks and drinks for people to purchase while they wait. These are great ways to make extra income without too much-added cost up-front.
You can also offer added services like wash-and-fold, ironing, or pick-up and delivery. These are great ways to increase your revenue stream but don’t forget that they will require staff to do the work. Unless you want to do the jobs yourself, that will mean hiring people to work for your business.
The Bottom Line
Owning and operating a laundromat can be a great investment and a good source of income. Still, the success of your business will depend on many factors which will impact how much money you actually make.
Location is a huge factor when it comes to any business, and laundromats are no exception. To make the most profit, you’ll need to do some research to find the right location where there’s significant demand for laundry services and not too much competition.
Opening up near multi-family housing buildings is a great way to boost revenue and profits. Not all apartments have washer and dryer hookups inside and not all families can afford to buy their own machines. Having a laundromat in a highly-populated area and near enough where people could walk if they wanted to can help boost your customer traffic.
In addition to the income from laundry services, laundromats offer great opportunities for added passive income from vending machines as well as other services.
Just remember that there’s more to opening a laundromat than just buying a few washing machines. You’ll need to do enough research ahead of time to develop a smart business plan and set yourself up for success.
Laundromats can be successful and profitable business ventures if handled correctly, but keep in mind there is always some inherent risk in starting your own business.