The Small Store

By Bob Nieman | Apr 30, 2010

Al Bookhard very well may be operating the smallest coin laundry in the country.

With six washers, three stack dryers and measuring in at an even 1,000 square feet, this unattended laundromat is located in a converted garage in Coatesville, Pa. – above a basement and below a six-flat that Bookhard owns. 

“It was a five-car garage,” explained Bookhard, who also owns two apartment buildings and several single-family rental homes. “I had it completely gutted and framed up. And I turned it into a nice little laundromat for the community. The building was already doing a nice profit margin without me doing anything with the commercial space, but I figured it would be a plus.

“The overhead isn’t anything crazy,” Bookhard added. “And it’s convenient for the neighborhood. Why go three blocks down the street if they could stop right here? Other stores may be bigger than mine, but size doesn’t really matter as long as customers can wash their clothes.”

And there’s one more thing Bookhard really enjoys about the laundry business.

“With tenants, you’re always hearing a sob story about the rent,” he said. “There’s no negotiating with the machines. You’ve got to put your money in and that’s that.”

Gary Gray of Little Rock, Ark., also has owned some small stores in his day. And he’s owned larger ones, too. Plus, as a distributor, he’s built a number of self-service laundries for others as well.

“I consider a ‘small store’ to be a store that’s 2,000 square feet or less and usually earning $100,000 in revenue or less,” explained Gray, who currently owns 14 laundries – two of them in the aforementioned 2,000-square-foot range. “I can’t justify building a new small store in the trade area that I work in now. However, if you’re in a small area that only needs one small store, I think it is a very viable option.”
 
Bob Eisenberg, a distributor in the Philadelphia market, would consider anything 1,800 square feet or less to be a “small laundromat.”

“No one can be all things to all people,” Eisenberg said. “Not all people want to go to a big, impersonal store. Some would rather go to a smaller, more intimate store.”

For Stephen Bean, a laundry distributor and storeowner in the Detroit area, the definition of a “small store” is a bit looser.

“From my distributorship standpoint, a small store to me is somewhere around 2,000 to 3,000 square feet,” Bean said. “I don’t like to go below 2,000 square feet, because I don’t think you can get enough machines in there to make things happen, and you run into a logistics problem.

“It’s not only square footage,” he added. “It’s the geometric configuration. If you get a long, narrow store, that’s a problem logistically and perceptually when customers walk in. If given a choice, I would prefer a rectangle, which is wider than it is deep so that customers have a chance to move around a little bit. Also, you can’t display your machines properly in a very narrow store.”

Not that Bean would rule out building a smaller store altogether, especially if a particular market’s demographics ruled out the need for a mega-laundry.

“The demographics are the pulse and blood pressure of the industry,” Bean explained. “In my view, the demographics completely rule everything we do. They rule the size of the store, as well as the nature, quantity and quality of the machinery – even the ancillary vended products we offer. I would not build a big store in a small demographic any more than I would build a small store in a large demographic.”

“In many locations, you can’t have a big store,” agreed Tod Johnson, who owns an 1,800-square-foot laundry in Snohomish, Wash., and a 1,300-square-foot store in Carnation, Wash. “When you focus strictly on bigger cities and large metropolitan areas, you’re ignoring all of the small towns of 1,000 to 4,000 people out there. Those towns couldn’t support a mega-store is they wanted to, but they still have the need for a laundromat. Because we were dealt those particular cards, we adapted our stores to that reality. For instance, in Carnation, the town has only 1,600 people.”

The Pros and Cons of Going Smaller

There are some obvious benefits to opening a smaller self-service laundry. Clearly, such an enterprise requires a lower investment and, thus, carries lower risk for the owner. It stands to reason that the cheaper a laundry is to build, the less business the owner needs to do in order to succeed.

“If you build a small store, your overhead is controlled, because you’re not paying rent on 5,000 square feet, you’re paying it on 2,000 square feet or less,” Bean said.

For many would-be laundry owners the choice of whether or not to go with a smaller laundry is made for them. “Some people can open that smaller store, where they simply can’t afford a larger store,” Gray commented.

Of course, larger stores have their built-in advantages as well – the leading one being profitability.

“You’ve got to spend more time evaluating the different possibilities of a small store,” Eisenberg said. “While a large store can make money way before three turns per day, a small store may not break even until four or five turns a day. So you’ve got to really pay attention.”

What’s more, competition is much more critical for a small laundry because there is only so much of a market that it can carve out.

“A small store is always in jeopardy of a larger store going in down the street,” Eisenberg said. “That’s a real problem. It’s like a True Value hardware store across the street from a Home Depot. Not every True Value hardware store goes out of business when a Home Depot goes in, but the ones that are not run well do.”

Utility costs also come into play.

“I find that my utility costs are higher in the small stores, no matter how much effort I put into it,” Gray divulged. “Both my electric and my gas bills are always higher. It seems that air conditioning costs are higher proportionally, and even the cost of providing hot water is higher.”

In addition, you never want to irritate your customers by requiring them to constantly endure long waits for washers, dryers and folding space on the weekends – because your store is too small.

“If you’ve misread the demographics, the light at the end of the tunnel could be a freight train coming at you, because now your customers are complaining that they can never get an open machine. It’s an art form. You have to be very careful about the size of the store.”

With smaller laundries, it also takes more management time per dollar of revenue, according to Gray.

“To me, it takes almost as much time to manage those 2,000-square-foot stores as it does my 5,000-square-foot stores,” he said. “We only attend the small stores three hours a day, rather than eight hours a day, but it’s still an employee that must show up for work.”

Another disadvantage of having less square footage and, in turn, less equipment is the fact that, when a machine goes down, that out-of-service washer or dryer is much more noticeable to your customers.

“It represents a higher percentage of your total equipment mix,” Gray said. “So, you’ve got to be more vigilant in keeping that equipment running. Otherwise, you may only have four out-of-order signs up, but it’s going to look like half of the store is out.”

Also, in many cases, smaller laundries by their nature are built in older renovated facilities that often require an extraordinary amount of construction, according to Eisenberg.

“Some of them need new storefronts, drop ceilings, roofs, new floors and so on,” he said. “So, your construction costs could be atypical of normal, larger self-service laundry. It’s like building a million-dollar restaurant, and then only putting in two tables. You can’t generate enough business to pay for the work you did.”

The Keys to a Successful Small Store

Overall, the basic parameters of good management apply no matter what sized store you have. Perhaps the only management issue specific to smaller stores – and it’s a positive thing – is the fact that some smaller stores may be easier to clean and easier to handle… less machines, so less problems with the machines.

“It’s the same to run a small store as to run a larger store,” Bean said. “It just means you’re dealing with a smaller enterprise. It’s a matter of scale. You have to have snacks and drinks. You have to have televisions. You’re limited in terms of geographic space, so you might be limited in terms of the kinds of amusement-type games and the amount of vending machines you can put in, but it’s just a matter of scale. After all, the customer requires the same thing, whether he or she walks into a small store or a large one.

“There are four variables in the success formula of every coin laundry: fundamental demographic validity, some trade area exclusivity, intelligent management and marketing style, and intelligently conceived overhead. If they’re in harmony, you’re going to go places. If not, you’ve got trouble with a capital T. Those are the only four principles I know of, and those principles of management and marketing of a small store are the same as the principles for a large store.”


One of the ways in which some smaller stores differ from their larger counterparts is with regard to labor.

“One of the only ways that many small laundries can work financially is as unattended stores,” Eisenberg explained. “That way, you can eliminate $5,000 to $6,000 in payroll per month and replace it with $1,000 a month for a janitorial service.

“Of course, you have to be in a neighborhood where you can actually be unattended,” he added. “You’re probably not going to go into the south side of Chicago with a 1,000-square-foot store and run it unattended. It just wouldn’t work.”

Whether attended or not, the key is keeping everything working, according to Gray. “Out-of-order signs will turn off your customers quicker than anything,” he said.

“Especially for a small store, an absolute must is a reliable, experienced equipment repair service that can readily obtain parts,” explained Deb Piccirillo, a small-store owner in Pottstown, Pa. “Having one of my two large washers down translates into a 50 percent loss of my large washer revenue, whereas with someone who may have five large washers, one machine down is only 20 percent, which can be made up a little bit easier.

Piccirillo added that she went through three different repair services in my first year of operation. “It really cost me,” she said. “I’m on my fourth group now, which is finally working out wonderfully.”

Furthermore, many smaller laundries are “walk-in” stores that cater mainly to their surrounding neighborhoods, as opposed to “drive-in” locations, according to Eisenberg. And this must be taken into consideration when determining the business’ demographics. In other words, you may need to focus only on a quarter of a mile radius around your laundry to determine your customer base.

And, although you will need some big equipment (especially if you plan to offer a wash-dry-fold service), it doesn’t make sense to install a lot of large-capacity washers and dryers.

“The little old lady isn’t going to walk down the street with 300 pounds of laundry in her laundry cart,” Eisenberg said. “With a walk-in store, we typically put in a predominance of smaller equipment.”

W-D-F and Commercial Accounts

A small laundry can generate only so much income. In fact, as a rule of thumb, a good store in a solid location should earn between $2 and $3 a square foot per week, according to Eisenberg. That said, a 1,000-square-foot laundry will generate, at best, $2,000 to $3,000 a week in business – and that’s it. Unless, of course, you’re supplementing that income with a healthy dose of wash-dry-fold and/or commercial business.

“The only way many storeowners can afford small stores is if they’re in a position to do a lot of wash-dry-fold or commercial work,” Eisenberg explained.

Clearly, whether you’re servicing wash-dry-fold or commercial accounts, your basic business plan will change with the decision to go after these added clients.

“Doing a large volume of drop-off laundry is work and requires the owner to be more hands on,” Eisenberg noted. “Some owners want that, and some do not.”

Nick Philko, who operates one 2,500-square-foot self-service laundry in Waterford, Mich., just outside of Detroit, is definitely all in when it comes to supplementing his revenue through drop-off laundry business.

“I’m only a mile away from our county building, so we do a lot of county laundry work,” explained Philko, who works full-time in the insurance industry and estimated that his commercial accounts and wash-dry-fold business account for about 25 percent of his total revenue. “We have a lot of commercial accounts and wash-dry-fold customers, so my employees are busy. I believe that the key to making more money and being profitable with a smaller store is through commercial accounts and wash-dry-fold.

“In the beginning, I struggled because I was relying on just the walk-in customers. You will not survive by just opening the door. I couldn’t live off of one stand-alone store. I would need two to four, efficient stores like this to really make a good living.”

Again, demographics will play a major role. If wash-dry-fold or commercial work is a part of your small-store business plan, be sure you are located in the proper marketplace to support that segment of your laundry operation. In addition, with commercial accounts, pickup and delivery will be expected, so also plan for a driver, a vehicle, related insurance and so on.

Another form of add-on business for a small store is drop-off drycleaning. “It becomes one-stop shopping at your store,” Eisenberg said. “Drop-off drycleaning does require some extra work, but you can get into it with no real added investment – just some racks, shelving and a counter.”

However, this ancillary profit center might not work for most laundry owners, as the majority of laundromats are typically not located in the strongest drycleaning markets.

Crunching the Numbers

When looking at potential success or failure of a new laundry venture – big or small – the above $2 to $3 a square foot per week gets bandied about often; however, there is no guarantee that your new store will earn that much… or even come close. You don’t know that there’s $3 a week of business in the neighborhood until you interpret the demographics and fully understand the market share.

“If you’re going to predict your store to do $15,000 a month, there has to be $15,000 a month worth of business in that area in the first place,” Eisenberg said. “Actually, there has to be more, because all you’re going to get is your share. If you’re looking to do $15,000 a month within your primary trading area, there needs to be at least $30,000 a month of business out there.”

For Gray, the key statistic he refers to is rent as a percentage of his gross revenue. He added that it’s especially critical for smaller stores to enjoy “cheap rent.”

“To me, my goal for a smaller store would be 10 percent of revenue,” Gray explained. “A lot of my larger stores are 10 percent, although some of them started out at 20 percent, which is my top threshold. If I don’t think a laundry is going to get to the 20 percent level rather quickly, I just won’t do it.

“My goal then is to bring that percentage down,” he added. “One of my most profitable stores pays 15 percent; because of the area in which it’s located, it has expensive rent. In some parts of the country, they’re paying 30 percent of gross revenue on rent. Of course, the larger the store the higher that percentage can be, because you’ve got more room and more opportunity to make money. The store where I’m paying 15 percent is 4,500 square feet.”

When taking the temperature of his customers’ laundries, Bean likes to research the amount spent per household visit.

“You have an overhead, and you have a profit to make,” he reasoned. “If you know exactly what is spent per household visit, you then can determine how many customers you need to get to where you want to be.”

For example, if you know that the average customer spends, on average, $15 per laundry visit, you can determine how many customers you need to get through your doors to get your revenue to where you need it, according to Bean.

The Future of the Small Laundromat

“A single small store can survive,” Gray said. “Can it support a big family? Probably not. Can it provide some ancillary income for someone who’s retired? Yes.

“It can make money. And if a store can make money, it can survive. In fact, the small store is less likely to lose money, although it may not always make that much.”

For Bean, it’s all a matter of goals and objectives, when it comes to deciding to pull the trigger on a small store or not.

“You can divide owners into a number of categories,” he said. “For instance, there is the person who already has a job and is just looking for a side business but is not dependent upon the store to make a living. Then, there is the retiree who’s looking to work in the store, thus defraying the cost of labor.”

And there are a number of other scenarios where the small self-service laundry is the ideal fit for a certain market and a particular owner’s lifestyle.

“If I had the choice to have the only business in a small town or a business where there is competition around, I’d take the small town where I’m the only guy there,” Johnson stated. “If you pick up the phone book, you can probably find 10 communities within 10 miles of where you’re at that don’t have laundromats. Imagine being the person who goes to those 10 communities and puts in a store.”

“If you run it in an intelligent, highly efficient manner – and you control your overhead – I think you can take a small laundry and do very well with it,” Bean said.

“It all depends on your business plan,” Eisenberg concurred. “If you’re looking for this to be your profession, then you’re not going to make it with one small store. The viability of a laundromat is the long-term goal, not the short-term goal. It’s not a get-rich-quick scheme.

“The unique thing about the business is, if you’ve done your homework correctly, the proceeds of the business will pay down the debt. It’s like having someone else paying down your home mortgage and, after 15 years, you’ve got a mortgage-free property to sell. That’s the real advantage of a laundromat. But, again, it all depends on what you’re looking for.”