Site Selection

By PlanetLaundry staff | Jan 05, 2011

In the January issue of PlanetLaundry magazine, we gathered a panel of industry experts to discuss the ins and outs of coin laundry site selection. And, as a website-only bonus, we’ve included a sneak peek of what our panelists felt was the best advice they could give someone searching for a laundry site today:

Jeff Brothers, Senior Vice President-North America
Alliance Laundry Systems, Ripon, Wis.

My advice is to get the most advice you possibly can. Find the best distributor, who will be honest and not necessarily tell you what you want to hear. Get a list of laundry owners who have done business with your distributor and talk to them. Use outside consultants as appropriate for lease negotiations, financial decisions and construction estimates. Also, join the Coin Laundry Association and take advantage of its member materials, books, training tools, etc. Our favorite investor is the one who comes into our industry after doing his or her homework. They are good for our industry.
 
Bob Eisenberg, President
Qualclean Equipment, LLC, Blue Bell, Pa.

Find the right distributor who will very patiently help you choose a location and will honestly tell you what the costs are to get in the door. And, to whatever they tell you, add another $40,000 to $50,000, because you don’t want to be undercapitalized.

Let’s say you’ve got $100,000 to invest. If you give the entire 100 grand to your distributor, you have no operating capital. You have no startup capital. And that’s a major reason why businesses fail. You have to be capitalized correctly.

Michael Finkelstein, President
Associated Service Corp., Baltimore

Do your homework. Check on the competition and the vend pricing in the area. What is your rent? Can the town support another store? What are the area’s demographics? If it’s an existing store, get the utility bills and the tax returns.

Also, you need to go to the Clean Show and join the Coin Laundry Association. Those are two bulletproof things you can do to enhance your rate of success.

Bill Reed
Daniels Equipment Co., Auburn, N.H.

In addition to the CLA, become involved with your local CLA affiliate; a lot of very helpful, informal discussions take place at those affiliate meetings. And work with a reputable distributor who knows the marketplace.

Don Tomasian, President
D&M Equipment Co., Chicago

The more information you get, the better. Talk to other owners, and go into stores. A lot of investors enter this industry not really knowing it, and they get themselves into bad deals – locations that really didn’t warrant the type of store they built. They overbuilt, and their overhead too high.

Also, I’m not an advocate of putting stores into rental properties. In many cases, if it’s a solid buyer, a mortgage payment can be a lot less than a rental payment. This is a long-term business. It’s not a get-rich-quick, overnight business. And, when you own the property, you’re building equity every month, so it’s a lot easier when you want to sell the store if you own it.

Bill Gilbert, President
SLM Corp., Belton, S.C.

The cost involved in developing and equipping a new coin laundry has steadily increased over the years. We find that banks and other financial institutions are not as eager to lend to commercial development. So, the money a potential customer has to invest must be used wisely.

My strong advice is to consult a CLA-member equipment distributor that is familiar with the market – an equipment distributor that knows the local utility codes, impact fees, nearby competitive laundries, demographic layout of the area, and will continue to support the new business with the tools to help the customer’s business grow.

Tom Jessen, Vice President, Coin Laundry Division
BDS Laundry Systems, St. Paul, Minn.

The first step should be to interview and visit the offices of the distributors you may want to work with. Selecting a distributor at the beginning of the project can help you do the best job with this new investment. Distributors offer knowledge of the marketplace, lease assistance, demographics, CAD design, model selection, technical support, installation and service support.

Brian Brunckhorst, Author
“Secrets of Buying and Owning Laundromats”

Here are some basic guidelines I use to select a winning location. The street is a major city artery, usually two lanes or more in each direction. The location resides on a corner with a traffic light, for better visibility. The storefront is visible from the street with plenty of glass in front. It is preferable to have a store that is wider with more glass than deeper. The location has at least one parking spot per four washers. More than 50 percent of the surrounding neighborhood is comprised of renters. The average household size is greater than 2.5 people. The neighborhood has a large percentage of families who earn less than $25,000 per year. The location is not in a high-crime area, where customers and workers would feel unsafe. The lease, including any well-defined options, is at least 10 years in length and the terms contain language to limit the rental increase to no more than the cost of inflation, and that includes all expenses associated with the lease. By following these guidelines, you will greatly increase your chance of success in opening a new coin laundry.
 
Don’t miss the rest of this conversation in the upcoming issue of PlanetLaundry magazine.