Store Size

[New2laundry2]

Hi everyone, I'm looking to buy my first store and I'm grappling with which size store to start with. I have one store that I'm seriously considering that is a little less than 3,000 sq ft and seems like it would be a great store for a complete noob like me to get my feet wet. The plan would be to add another store or two in the next year or so. But the idea of a bigger, potentially more profitable store sounds enticing too rather than owning several smaller ones (less running around). Of course I also risk putting all my eggs into one basket by going the bigger route.

I realize there is no "right" answer for this question as everyone will have their own preference, but I'm hoping to get some opinions on both sides of the fence. What size stores do you guys own and why do you like (or dislike) what you've got? Thanks.

[CanCanCase]

Store size is mostly irrelevant, IMO. I say mostly, because the small bit of relevancy it does carry is related to the particular market you operate in.

I'm really liking owning several small stores, and am currently developing the largest "mega-mat" within several hundred miles... by "mega-mat" in this market, I mean 2000 square feet and 19 washers...

My point is that in THIS market, there are ONLY small mats, so of course I'll be in favor of many small vs. a few very large operations. Population and business volume here would never support a larger operation.

Now, I'm assuming you're in a market that supports both styles of mat. That said, don't look at the size of mat, look at its profitability. I've seen 1500 sf mats and 5000 sf mats earning the same net profit. If that's the case, go small and never look back. If you can make more money with a larger or smaller or medium-er operation, do that!

-Case

[chad]

In LA it does, Smaller stores are getting ran over by new big stores. In the last 1yr or so that is what is going on. Big stores are coming in and cleaning house.

Think of it this way, If you can find a big store and see the numbers that you can improve them I would go with a big store. Because a small store can only handle so much volume. esp in Los Angeles.

Most small stores that our in the market right now need work or already have machines that are pretty old.

[CanCanCase]

Exactly my point, Chad... store size is relevant depending on market. The OP didn't mention where they're at, so, with no other information to work on, I still say find the best bottom line, regardless of size.

-Case

[Adamski]

Originally Posted by New2laundry2

Hi everyone, I'm looking to buy my first store and I'm grappling with which size store to start with. I have one store that I'm seriously considering that is a little less than 3,000 sq ft and seems like it would be a great store for a complete noob like me to get my feet wet. The plan would be to add another store or two in the next year or so. But the idea of a bigger, potentially more profitable store sounds enticing too rather than owning several smaller ones (less running around). Of course I also risk putting all my eggs into one basket by going the bigger route.

I realize there is no "right" answer for this question as everyone will have their own preference, but I'm hoping to get some opinions on both sides of the fence. What size stores do you guys own and why do you like (or dislike) what you've got? Thanks.

Newbie,

Choosing whether to own several small stores or just 1 or 2 larger stores often boils down to what you feel most comfortable with. Each is a different operating style. The larger stores generally justify using employees to your advantage but then you also get the problems that come with having employees. The smaller stores can be run with just a cleaning crew once or twice a day but often the vend price is lower because they're not as nice as a large store. Either way, it depends on your personal style and comfort level.

Since you asked, my store is 3,700 sf and I have 3 or 4 employees (besides myself) to maintain my FiveStar facility.

By the way, I know a newbie who said she wanted to build 7 stores in 7 years. That was almost 7 years ago. She still has just that first store.

[Howard]

OK, I'll chime in too. You don't say where you are so it is hard to give a specific answer. You have hears some already, and if you search the forum you will find older discussions about this issue.

There are some economies of scale with a large store - but very few. You will pay the same for equipment, utilities, etc... You might save some on advertising, and payroll depending on how you staff. That said, you do have all your eggs in one basket. I see that as a major problem in today's stupid business environment. Since interest rates are now close to zero, there is a lot of stupid money seeking higher return. What that means is if you invest everything in a mega mat, some idiot may build an even bigger mega mat two blocks from you. Now what? On the other hand if you have three or four smaller stores that are not all one on top of another then you have diversified your risk profile.

[New2laundry2]

Originally Posted by CanCanCase

Now, I'm assuming you're in a market that supports both styles of mat. That said, don't look at the size of mat, look at its profitability. I've seen 1500 sf mats and 5000 sf mats earning the same net profit. If that's the case, go small and never look back. If you can make more money with a larger or smaller or medium-er operation, do that!

-Case

I am in a market that supports both types. When you look at profitability is there a certain % of cost or a particular ratio that you like to see? The monthly net for this place is around 20% of the price btw.

[New2laundry2]

Originally Posted by Howard

That said, you do have all your eggs in one basket. I see that as a major problem in today's stupid business environment. Since interest rates are now close to zero, there is a lot of stupid money seeking higher return. What that means is if you invest everything in a mega mat, some idiot may build an even bigger mega mat two blocks from you. Now what? On the other hand if you have three or four smaller stores that are not all one on top of another then you have diversified your risk profile.

Sounds like your a proponent for smaller/medium sized stores? In my area we have all sizes, so it does worry me a bit to go super-big and run the risk of what you're saying. However part of what makes this store enticing is that it's surrounded by apartments and houses with very little commercial property in its surrounding area. I don't think any other 'mats will be able to open up within a 2 or 3 mile radius because there's nowhere for them to go.

[rbh]

If its a possibility in your market, I'd let the ability to own the RE play an important role in the size you choose.....

[Howard]

Originally Posted by rbh

If its a possibility in your market, I'd let the ability to own the RE play an important role in the size you choose.....

Yea, because you want to own a building with a failed laundromat in it!

Seriously though, owning real estate should be a separate issue from owning a laundromat. If you manage the real estate correctly the only difference should be that you are the landlord rather than someone else. Yes there may be some slight advantages to that one point. But there are down sides too. As I said upfront sort of tongue in cheek, what do you then do with the building if the laundry turns out to be a big looser? You are now stuck with a building all set up for a laundry that can't make any money. Also the return on real estate is typically much lower than on an operating business. Perhaps it would be better to own three or four laundries in rented facilities for the same capital outlay.