Two for One

By Bob Nieman | Feb 07, 2011

Julie Lux was starting to get really tired of driving 15 miles three or four nights a week to work out at a fitness center in a neighboring town.

And, apparently, that’s how Cascade, Iowa, ended up getting its new – and only – laundromat.

Confused? Don’t be.

Lux and her husband, Matt – who live in Cascade – realized that they weren’t the only ones who would appreciate and support a fitness center in their town.

“We joked around about building a fitness center here,” said Matt Lux, who has operated his own residential appraisal business for the last 10 years. “And then the laundromat just sort of fell into that whole business plan. We knew that a laundry would probably be a good idea. It’s something we’ve always talked about. For example, my wife has a friend who drives all the way to Monticello to do her sheets… things like that.”

So, when the Luxes purchased a lot in an industrial park at the edge of town with plans to build their fitness center, a coin laundry also was part of that equation.

“We bought that last January,” Lux explained. “There are plenty of older main street storefronts we could have bought and renovated, but we didn’t want to have an old building, and our parking would have been limited.”

The couple purchased the acre-and-a-half lot on the outskirts of town for $28,000.

“There are about five lots here that are designated as ‘highway commercial,’ and we get some visibility from the interstate that goes around Cascade,” Lux said.

On that lot, the Luxes built a 4,000-square-foot facility, with about 1,000 square feet dedicated to the Whitewater Laundromat and the rest going toward D’Lux Fitness.

Lux served as the general contractor for the six-month building project, using as many local contractors from Cascade and the surrounding area as possible.

“It went pretty smooth,” he said. “We had our obvious weather delays, and there were some issues with the new FEMA maps that put part of our lot on a floodplain – so we had to work through that. But for the most part, we planned from October 2009 until we first started digging dirt in April 2010.”

Lux noted that his laundry distributor, Century Laundry Distributing, was a huge help in planning his new business. In addition, Lux’s plumbing contractor, who owns his own self-service laundry another town, was able to impart some industry-specific wisdom.

“Obviously, everything takes longer than what you think it’s going to take,” Lux said. “But our costs stayed in line. We didn’t run over budget.”

One of the Luxes’ top priorities with their new business was to make it as energy-efficient as possible.

“We really focused on overhead because that is the one cost you can control, to a point,” Lux noted. “With some other things, you have no idea what your expenses are going to be. With utilities, you can do things to keep those down, percentage-wise.”

As a result, Whitewater Laundromat features geothermal HVAC, which thus far has been a big money-saver.

“The bottom line is that the electric company we’re with is a cooperative, and they offer discounted rates for geothermal,” Lux explained. “It’s about a five-year payback period. In November, my heating bill was $17 for a 4,000 square foot building. That’s pretty cheap. And I’m looking at about $50 for the month of December, and it’s been brutally cold here.”

Other “green” touches added to the building include extra insulation in the walls, two-inch foam under the concrete to keep the cold air from traveling through the outside foundation inside through the floor, and having all of the store’s lights on a motion switch.

“It’s all about pennies and nickels and quarters, not dollars,” he said. “Save a dollar here and a dollar there, and it ends up being your profit margin in the end. All of those little things add up.”

All in all, the coin laundry portion of this project, including equipment, cost approximately $190,000.

“Obviously, we’re in a rural area in Iowa, and the USDA loans money to small communities for homes or business startups, and that’s one thing that really made this work for us,” Lux said. “We were able to borrow all of the money for our equipment at 3 percent for seven years. That’s a $1,000-a-month money-maker for us right there. Three-percent money – you can’t beat that on equipment. You can’t even get that on your building.”

Whitewater Laundromat, which opened for business last October, serves the nearly 3,500 people who live in Cascade and the surrounding rural area. In addition, the store draws some business from nearby Dubuque, which is about 25 minutes to the northeast.

“There is an Hispanic population here,” noted Lux, whose 24-hour store is unattended. “Many of them work at the cement plants in town, and they are a huge part of our business. They live in the apartment buildings downtown, and they really help drive the laundry business, representing about 30 percent to 40 percent of my business.”

Whitewater also attracts local homeowners, who come in to wash their blankets, comforters and larger items. Plus, some of the nearby businesses utilize the store’s larger, more efficient washers and dryers on a regular basis.

“There’s a new truck stop going up in town,” Lux added. “So, we may be getting some truckers and travelers stopping in to use the laundry occasionally.”

In addition, the store also receives some business from the fitness center members next door. However, Lux – who offers free Wi-Fi access at his laundry – doesn’t specifically cross-promote his two businesses

“We’ve had a few people who go to our gym who will throw in their comforters and then go work out, but for the most part, it’s not the same clientele,” said Lux, who is at his laundry every day and plans to handle the majority of the equipment maintenance himself. “I don’t see a real tie in there, other than sharing the building.

“We keep a very controlled environment in the fitness center. There are no walk-ins and the doors are accessible only with a swipe card; unless you’re a member, there’s usually no one there to let you in.

“It’s all under the same roof, but there is no relationship between the two. In fact, we’ve designed it so that we can split one business off from the other and sell it if we so choose – separate entrances, separate utilities.”

Lux admits that he’s a bit surprised by the early success of his coin laundry.

“I had some pretty conservative projections, based on the laundromats in the nearby towns,” he explained. “My plumber, who owns a store in Monticello, told me what he earned per year, and I just prorated that on a two-year, graduated scale to get up to full speed – and we’re way ahead of that. We’re probably double of what I projected. Between the two businesses, we’re close to approaching our breakeven point.”

So, will there be any future laundries in the Luxes’ future?

“There are coin laundries in two or three other towns that are very old,” Lux said. “And these towns are two to three times the size of Cascade. If we get this one up and running to where we’re making a profit, we have considered doing that. We’ll see how this one goes.”