Demograhics Study - Now What?

[kgilliam]

I just ordered a demograhics study. What attributes do I look for when I get it back. I am looking for placement of a new or phurchase of an existing Coin-op.
While keeping in mind: Location, Location, Location!!!

Any help and guidance would be appreciated.

Thanks,

Kevin

[Charlie]

I'm not a demographics expert, but have spent lots of time talking to some this past year. My first suggestion is to contact Brian Wallace at CLA. He can give you some great advice. Below is my condensed version of what I comprehend.

1. Figure that 30% of the renters in your target market are potential coin laundry customers.

2. Each potential customer is worth $8 to $12 per week in income. (I suggest using a conservative number for planning purposes)

3. Multiply the number of potential customers by the average income per customer to compute the TOTAL market.

3. Waht % of the business in your target market can you bring in? This is the tough question for which there are no easy answers. Apartment buildings will take some, other laundromats, etc.

This gives you your weekly projected income. Figure 65-70% of this is washer income. Use this number to calculate how many total turns you can support daily. Divide daily turns by desired machine turns to get the number of washers you will need.

Another figure you can use is 100% of people with incomes below $20K. Sometimes this matches up well with the renters figure, other times it doesn't. Again, judgement comes into play. You will need to interpolate the numbers from Claritas to get the $20K number.

I found this whole thing very difficult to comprehend until I had run demographics on about five locations. I ran demographics on every laundromat on the market for which I had sales numbers, even if I did not intend to buy. However, that allowed me to compare my demographics computations with real life sales, to get a feel for how accurate my numbers were.

Another judgement call is the range to consider. In an urban area, you might run .5 mile, 1 mile, and 2 mile numbers. Remember that your market share will diminish as you extend the range, so that you might hope for 50% of the business with 1/2 mile, 20% in one mile, and 5% in 2 miles (don't use these numbers, they are meaningless, again the actual percentage depends on the competition on the specific location and is a judgement call). In a rural town, 5 , 10, and 20 mile ranges might be appropriate.


I know this is confusing. Again speak with Brian Wallace. I can tell you that these numbers helped me eliminate several locations that looked good on the surface, but didn't have the numbers to support them.

Good Luck
Charlie

[Howard]

Sounds like great science, but remember the numbers you get from the demographic reports may be very wrong. Do they include "illegals". In some areas that will be the majority of your customer base. Also, how quickly does the population change in the area - if your demographics are more than a year or two old they may not be worth much.

[kgilliam]

Thanks Charlie this at least give me a staring point and understanding what I must look for. I am also planning on making those contacts you have suggested.

Appreciate the help

[kgilliam]

Howard, I will keep all of your information in mind also as I go through the Demographics.

I can use all of the help I can get.

Thank You