People patronize laundry businesses out of both convenience and necessity. The median cost to open a laundromat from the ground up is approximately $1.2 million, and you can expect to pay a similar price for an existing laundry business. Operational costs average about $15,000 per month, but the good news is that laundromats can be very profitable.
Everyone needs to do laundry! For people who don’t have the luxury of a private washer and dryer, a local laundromat is a necessity. Laundromat business owners know that there will always be a need for their services, which explains why the laundromat industry is worth about $5 billion in the United States. Maybe you want to take on a new business venture as a laundromat owner, but how much does it cost to open a laundromat? In this article, we’ll go over the costs to open and operate your own laundry business.
How to start a laundromat business
Starting a laundromat business can be a big undertaking, but it can also be so rewarding! You’ll have the satisfaction of being your own boss while providing value to your local community. If you’re wondering whether a laundry business can be profitable, the good news is that the laundromat industry sees about a 95% success rate.
To get your laundromat business started, follow these steps:
- Choose your business model: Decide if you want to buy an existing laundromat or franchise or if you want to start from scratch. You’ll also have to decide what kind of laundromat you want to operate. This includes choosing your operating hours, equipment, and service offerings.
- Set up your business: Setting up your business includes writing a business plan, registering your business, getting business licenses and permits, purchasing a business insurance plan, setting up a business bank account, and financing the business.
- Select a great location: Location is everything for a laundromat. In fact, 87% of laundromat customers live within one mile of their preferred laundromat. Low-income apartment renters are the most common patrons of laundromats. Consider potential locations within a mile of several apartment buildings. Also consider your potential competition before settling on a location.
- Buy or build your laundromat: Buy an existing laundromat or acquire the property to build your own. Then start connecting utilities, installing equipment, and preparing the business for opening day.
- Market your laundromat business: Make sure all the locals know about your new laundromat. Start with attractive signage and a great website. Use channels such as social media, newspapers, and TV to market the laundromat to your target customers.
- Provide great customer service and stay on top of maintenance: Gain new and returning customers by providing great service and keeping your business in good condition.
Start-up costs of a laundromat business
Starting any business always requires an initial investment. The investment you’ll make in a laundromat depends on your business model. If you decide to start a laundromat from the ground up, you can expect to face the following costs:
Real estate is the most important — and likely the most expensive — cost associated with opening a laundromat. Location can make or break your laundromat business. The cost of a property depends on its size and location, as well as the surrounding businesses. Laundromat spaces typically range from 1,000 to 5,000 square feet, and you can expect to pay more for prime locations — for example, property in downtown Los Angeles will cost far more than property in Terre Haute, Indiana.
This cost also depends on whether you decide to buy or rent the property. Renting is a great choice for business owners with less available capital to invest up front. If you have the capital and you want to plant roots in your community long-term, buying a property for your laundromat is worth the investment.
Considering the high variability of this cost component, it is estimated that purchasing a laundromat property can cost anywhere from $200,000 to over $1,000,000. If you decide to rent a commercial space, security deposits, initial rent payments, and other fees can add up to approximately $3,000 to $10,000.
You can’t open a laundromat without the right commercial laundry equipment. This includes more than just washers and dryers. The best laundromats are outfitted with all the products their customers need to do laundry safely and effectively.
Turning an empty building into a fully functioning laundromat requires the following equipment:
- Security system: You should make sure you and your customers feel safe by installing a security system in your laundromat. A security system should include surveillance cameras, an alarm system, adequate lighting, a high-quality lock system, and security signage. If you want to level up your laundromat’s security, you can even hire an on-duty attendant.
- Washers and dryers: This point might seem obvious, but it’s worth noting that the washers and dryers you’ll need for your laundromat aren’t your everyday household machines. There are many types of commercial-grade equipment to choose from, including top- or front-loading, coin- or card-operated, and new or used. Whatever types of machines you choose, it’s important to select high-quality, efficient washers and dryers for your business.
- ATM and bill/coin changer: If you plan on using coin-operated machines at your laundromat, an on-site ATM is a must. Customers will appreciate the convenience, and you’ll appreciate the extra bit of income you make from ATM fees. A bill and coin changer will allow customers to turn the money they pull out of your ATM into coins they can use to do their laundry.
- Card reader system: You may want to step up your laundry business by offering card payment capabilities for your customers. For some people, this is the most convenient way to pay for their laundry. A card reader system can be costly, so you may want to consider waiting to invest in one until after you’ve collected some profit.
- Detergent vending machine: Investing in detergent vending machines is another way to benefit the customer and yourself. Your laundromat can be a one-stop shop with everything the customer needs to get their laundry done. You can also make a little profit from soap sales.
- Folding tables: No, these aren’t portable tables that can be folded. Rather, they’re standard tables on which customers can fold their finished laundry.
- Chairs: Some customers will choose to stay and wait for their laundry loads to finish washing and drying. While they do so, they will appreciate a place to sit. How many chairs you need will depend on your floor space, but five to ten chairs should suffice.
- Signage: Invest in an eye-catching sign to advertise your business to passersby. Minimize any confusion by installing proper signage within the store as well.
- Water heater: If your building doesn’t come with one, you’ll need to install a water heater. Depending on how many washers your business has, you’ll need to heat large quantities of water at a time, so the heater should be heavy-duty and high-capacity. A water heater professional can help you calculate capacity needs and find the best heater for you.
- Electrical panel upgrades: Washers and dryers require tons of electricity. Upgrade your building’s electrical capacities to make sure it can handle all your machines without fail.
The following table illustrates the estimated costs of laundromat equipment. Keep in mind that these estimates may vary by location, brand, and quality. The estimates assume average laundromat quantities of 20 to 100 washers and dryers, up to 20 folding tables, and five to ten chairs.
|Cost Component||Minimum Costs||Maximum Costs|
|Card reader system||$40,000||$80,000|
|Soap vending machine||$300||$3,000|
|Electrical panel upgrade||$2,000||$30,000|
When estimating the upfront costs of opening your laundromat, don’t forget about the expenses associated with setting up the business. Business expenses for a new laundromat include the following:
- Commercial business insurance: Laundromat owners and other small business owners face risks when opening a business. Accidents such as injury or property damage aren’t unheard of at laundromats. A good liability insurance plan will protect a laundromat owner in case of a mishap.
- Licensing and permitting: Licenses and permits you’ll need may include (but are not limited to) local business licenses, zoning permits, fire safety permits, health permits, and utility connection permits.
- Registration: New small business owners must choose a business structure, register the business, and acquire federal and state tax ID numbers for the business.
Business expenses and fees related to these essential items can range from approximately $200 to $1,000.
A laundromat has unique utility capacity requirements. If your property’s existing electrical and plumbing utilities aren’t enough to handle the high capacity of a laundromat business, you’ll need to upgrade these connections. This will likely require additional permitting, engineering, and construction.
The costs of these services are highly variable. Depending on your local jurisdiction, construction costs and utility connections may cost anywhere from $1,000 to $10,000.
Marketing is one of the most important contributors to the growth of a laundromat business. It’s worth investing time and money into a great marketing strategy to spread awareness of your business and get customers through the door. This strategy can include an excellent website, online advertisement campaigns, social media campaigns, newspaper ads, TV ads, radio ads, email marketing, and promotional events. Marketing professionals can help you make your marketing strategy efficient and effective.
Overall, you should budget for marketing expenses equal to $10,000 to $20,000 for the first six months of business.
Including extra amenities in your laundromat is completely optional, but they can make your business very appealing to potential customers. Optional amenities may include food and beverage vending machines, TVs, Wi-Fi, laundry carts, video games, air conditioning, and phone charging stations.
Amenities can help you stand out among any competition, but they can add approximately $500 to $15,000 to the overall cost of your business.
Operational costs of a laundromat business
Once you’ve gotten your laundromat up and running, you should expect certain monthly expenses to maintain and grow your business. The following are typical operational expenses for laundromat businesses:
Utilities are some of the costliest ongoing expenses associated with running a laundromat. A laundromat requires extensive use of water, sewage, and electricity. Some municipalities also charge additional fees for high-capacity utilities. Check with your local municipality’s fee schedule to see if this applies to your business.
Monthly utility bills for a laundromat can amount to about $2,000 to $4,000 per month.
Real estate expenses
Real estate expenses for a laundromat include rent or mortgage payments and property taxes. These expenses depend on your business’s location, so it is difficult to accurately estimate how much this expense will be for you.
That said, estimated ongoing real estate costs typically range from $3,000 to $5,000 per month.
Repairs and maintenance
Commercial-grade equipment requires regular maintenance. You want your business to run several machines for multiple hours of the day (maybe even 24 hours), so you should set money aside for whenever machines break or run into technical difficulties.
Repairs and maintenance can cost anywhere from $120 to $500 per service call.
The cost of payroll depends on how many employees your business has and how many hours they work, as well as the business’s location and structure. Of all laundromat businesses, 70% have two or fewer employees. The average laundromat employee salary in the U.S. is $27,300 per year.
With two employees or fewer making average U.S. pay rates for laundromat employees, your payroll expenses can amount to $1,950 to $5,687 per month.
As mentioned above, marketing is a crucial part of running a laundromat business. Ongoing marketing costs may include marketing professional fees, website fees, and ad campaigns. These expenses can and should grow as your business grows.
Marketing expenses may add up to $2,000 to $4,000 per month.
Other miscellaneous costs associated with operating a laundromat include accounting, supplies, and vending machine expenses. These miscellaneous costs can amount to about $100 to $1,000 per month.
How much does it cost to open a laundromat business?
All these costs combined put the average laundromat startup cost at around $1.2 million. The cost for your business will ultimately depend on your location, store size, operating hours, number of employees, equipment, and amenities. The right professionals in your area can help you estimate a reasonable price.
The table below summarizes the overall startup cost of a laundromat. Be aware of the variability of many of the components of this initial investment. Talk to your certified public accountant (CPA) and local vendors to get a more specific estimate for your location and business goals.
|Cost Component||Variability||Minimum Costs||Median Costs||Maximum Costs|
These estimates assume you’re building a laundromat from the ground up. If you want to buy an existing laundromat, you can expect to pay about $500,000 to $2,000,000.
The table below summarizes the operational costs of a laundromat. Again, consider the variability of some components. These estimates are not necessarily indicative of what the cost would be in your specific situation. Before starting a laundry business, you should do your research to get a better idea of what these costs will look like for you.
|Cost Component||Variability||Minimum Costs (per month)||Median Costs (per month)||Maximum Costs (per month)|
|Repairs and maintenance||Average||$120||$310||$500|
Financing a laundromat business
How will you cover the costs of opening your new business? If you don’t have enough of your own capital available, consider taking out a loan. The following are some financing options to consider; your accountant can help you choose the best one for your situation:
- Personal loans
- Business loans
- Business line of credit (LOC)
- Home equity investment (a.k.a shared equity agreements)
- Home equity line of credit (HELOC)
How much do laundromat business owners make?
The laundry industry is largely successful, especially in dense metropolitan areas. A typical return on investment (ROI) for a laundromat business ranges from 20% to 35%.
According to The Coin Laundry Association, the average laundromat cash flow is between $15,000 and $300,000 per year.
Is owning a laundromat profitable?
The average laundromat has a profit margin of 20–35%, which is high for a small business.
How much money do you need to invest in a laundromat?
The average laundry business requires an initial investment of around $1,200,000.
Is it hard to start a laundromat?
It’s harder to start a laundromat from scratch than it is to buy an existing business. As with starting any new business, building your own laundromat comes with a learning curve.
What is the average net profit of a laundromat?
The average net profit of a laundromat is $5,000 to $7,000 per month.
Is the laundromat business dying?
The laundromat business is not dying; in fact, it is steadily growing and thriving.
- A laundromat benefits its community and business owner. Laundromats thrive in highly concentrated residential areas.
- Starting a laundry business from scratch requires property, laundry equipment, a good business structure, utility connections, and marketing. You can purchase an existing laundromat to skip some of the initial required setup. Startup costs for a laundromat can range from $55,000 to $2,500,000.
- To keep a laundromat running optimally, you’ll need to cover monthly expenses, such as rent or mortgage payments, utility bills, marketing costs, repairs and maintenance, payroll, and other expenses. These costs can amount to about $9,000 to $20,000 per month.
- It’s important to choose the right financing option for your laundromat. Common financing options include personal loans, business loans, and HELOCs.
With hundreds of business lenders on the market, trying to find the right one for your business can be overwhelming. Use SuperMoney’s comparison tool to compare business loans and find the best one for your new business!
View Article Sources
- How to Start a Laundromat – Chamber of Commerce
- How Much Does It Cost To Open A Laundromat Business? – International Centre for Trade and Sustainable Development
- Industry Overview – The Coin Laundry Association
- Laundromat Safety and Security Tips – Laundry Solutions Co.
- Laundry Worker Salary in USA – Talent.com