Ever since washing and drying machines have found a permanent place in our homes, laundromat businesses have been struggling.
The traditional use of laundromats has gone drastically, but there are still use cases in certain places, such as near the dorms or in the universities.
That’s why a laundromat business could bring in good profit if you know where to open it and how to operate it.
It might be lucrative, but it requires a significant investment of time and money. You have to factor in many things, and you might wonder whether it’s worth it to open or own a laundromat.
We will explore the average cost to open a laundromat, the different types of costs, factors affecting the cost, and other topics about a laundromat’s income.
Average Cost to Open a Laundromat
Just like opening any kind of business, opening a laundromat also comes with different types of costs. In addition, these individual costs vary depending on several factors about the business.
That’s why it’s important to understand that the average costs are generally very generalized and could be extremely different for your store.
According to some estimates, the cost to open a laundromat can be anywhere between $200,000 and $500,000.
Expenses such as leasing or purchasing a property, buying equipment, hiring staff, obtaining licenses and permits, and all other costs are included in this number. Here is a breakdown of two different costs:
| Startup Costs | $55,000-$2.4 million |
| Fixed Costs | $9,170-$20,200 |
Startup costs are the costs that you pay before opening the shop, and fixed costs are the monthly recurring costs.
Some things you buy at the startup phase, such as the equipment and building, could affect the fixed costs significantly.
Also Check Out 10 Best Laundromat Franchise Opportunities
Type of Costs to Open a Laundromat
As we mentioned before, the average cost to open a laundromat consists of different types of costs.
These costs are startup costs, fixed costs, and variable costs. Variable costs are hard to calculate, and there are no average numbers available for this type of cost.
Startup Costs
Startup costs refer to the expenses involved in setting up a new laundromat. These costs incur when you are first building the laundromat, and they are not recurring costs.
Most of them are one-time fees. The important thing about startup costs is that most decisions you make could affect the fixed costs later on when you start operating.
| Property | $3,000-$1 million |
| Equipment | $40,000-1.3 million |
| Permits and Licenses | $200-$1,000 |
| Utility Connections | $500-$10,000 |
| Marketing | $10,000-$20,000 |
| Amenities | $500-$15,00 |
| TOTAL | $55,000-$2.4 million |
This is because startup costs include leasing or purchasing property, buying equipment, hiring staff, getting licenses and permits, and marketing.
If you rent an expensive property, get old and problematic equipment, or choose to pay higher benefits and salaries, your fixed costs will be higher. That’s why even though they are not directly recurring costs, they are a crucial part.
Fixed Costs
Fixed costs are recurring costs, mostly monthly, but they could also be annual recurring costs. These expenses do not change, regardless of the level of sales.
They are determined by the contract, like the rent you sign, or monthly spending budgets like marketing.
Fixed costs can include rent, utilities, insurance, property taxes, and loan payments.
| Utilities | $2,000-$4,000 |
| Rent & Related Real Estate Expenses | $3,000-$5,000 |
| Maintenance | $120-$500 |
| Salaries | $1,950-$5,687 |
| Marketing | $2,000-$4,000 |
| Miscellaneous | $100-$1,000 |
| TOTAL | $9,170-$20,200 |
Variable Costs
Variable costs change based on the number of sales or customers. These costs mostly depend on the market prices of the items and the quality of the items you choose to buy.
You can always choose to increase or decrease the costs depending on the fixed costs of your business.
Variable costs do not have an average number for laundromat businesses. However, we can easily say that they are relatively low and do not have a massive impact.
Variable costs include utilities, maintenance and repair costs, and supplies such as detergent and cleaning products.
Factors That Affect The Cost of Opening a Laundromat
Just like any business, there are certain factors affecting the cost of opening a laundromat.
These factors could also affect the income of your laundromat, so it’s best to be careful with these factors from day one. Here are some of these factors.
Location
As you might imagine, each location has its own costs in terms of rent and property taxes or even business permits.
That’s why location is a crucial factor in the cost of opening a laundromat. The location will also affect your rent in the fixed costs part, so this is a factor that affects both types of costs.
In addition, a high-traffic location can increase the cost but also increase the potential for more customers.
Size of the Store
The bigger the store, the bigger help and more equipment you are going to need.
In addition, the utilities, rent, property taxes, and other similar costs will be higher than in a smaller store. You might also need to have more employees, which will cost you in the long run.
Real Estate
One of the things that many people overlook is the condition of the real estate of the laundromat. As a laundromat, you are going to need quality and strong plumbing, ventilation, water heaters, and so on.
If the building is old or doesn’t have quality systems in place, you will need to fix these, which will cost you a lot of money in the beginning.
Operating Hours
You are free to keep your laundromat open as long as you want. You could open it only for a few hours or keep it open 24 hours, 7 days a week.
However, the longer the operating hours are, the more the costs will be. You will need more staff, higher maintenance costs, and higher utility bills.
Number of Employees
This generally affects your fixed cost because the more employees you hire, the more salary and benefit you will have to pay.
This goes into the fixed costs part, which will be one of your biggest cost drivers.
The number of employees required will depend on the size of the store, the hours of operation, and the number of machines available.
Additional Machines
Additional machines, such as vending machines or dry-cleaning machines, can also impact the cost. While these machines can generate additional revenue, they also require additional investment.
Also, they might require specialized staff, and they will need maintenance which might add up to your variable or fixed cost depending on the maintenance type.
Getting Financing for Laundromat
If you don’t have the necessary funds in cash ready to spend, this doesn’t mean that you can’t open a laundromat.
There are options to finance your opening of the laundromat, and you can choose one of those options.
Finding the necessary financing could be challenging or easy, depending on your current financial situation.
You can get a traditional commercial loan, a business line of credit, a small business loan, or find investors who are willing to invest.
Most business owners choose to obtain low-interest loans from banks or credit unions. Some opt for alternative financings, such as crowdfunding or private investors, because it might be easier to find financing that way.
How Much Does a Laundromat Make?
The revenue generated by a laundromat can vary depending on various factors, such as the number of machines you have, your location, and others.
According to a report by Coin Laundry Association, the average cash flow for a laundromat is somewhere between $15,000 to $300,000 annually.
If your store is in a good location and has high foot traffic, there are also examples of over $1 million annually in profit.
You must focus on running the business well and continuously getting customers in while keeping costs low.
Conclusion
A laundromat business seems like an outdated business idea for many, mostly because almost everyone has a washing machine at home now.
However, there are also many people, like students or people living in the dorms, who don’t have access to these machines.
That’s why strategically opening a laundromat could be an extremely lucrative business.
The total cost of opening a laundromat could go as high as $2.5 million, but the average number depends mostly on several factors.
These factors include location, size of your store, employee numbers, and other operational expenses.
Once you open the laundromat, the average income is between $15,000 to $300,000 annually. So the ROI could be extremely high.
FAQ
Can I run a laundromat part-time?
It’s not impossible to run a laundromat part-time. However, you may require additional staff to cover operating hours.
Finding this additional staff will cost you and increase your fixed costs which could decrease your overall profit.
Do I need a license to open a laundromat?
Since you will be running a business, you mostly need both a license and a permit.
The exact requirements of these licenses and permits depend from location to location.
Some states might require you to have only one license, but some other states might have extra requirements.
What is the typical return on investment period for a laundromat?
The typical ROI period for a laundromat can vary but is typically between three to five years.
If you run it very successfully, you could do it earlier than the average, but it’s highly unlikely.
Amit Gupta is the founder of DrFranchises – a digital marketing agency that helps brands rank better on Google Maps through local SEO strategies. Amit has over 11 years of experience in digital marketing, SEO, email marketing, and social media marketing. He’s also the owner of multiple franchises and has helped countless brands achieve success online. When he’s not working, Amit can be found playing with his dog.