Vended Laundry

An overview of vended laundry.

vendedlaundry1The term vended laundry is defined as commercial grade, self-service laundry equipment placed into service in a retail space. Vended laundries are also referred to as "coin laundries, "coin-op laundries," "coin-operated laundries," or "Laundromats." Laundromats generally occupy retail space on long-term leases (17-30 years) and generate steady cash flow over the life of the lease. Laundromats are unique small businesses in that they have no inventory or receivables.

Laundromats range in market value from below $50,000 to $1,000,000 and may generate gross revenues between $15,000 and $750,000 per year. Revenue is comprised of self-service use of washers and tumblers, dry-cleaning drop-off service, wash and fold drop-off service, and vended sales, which include soap, video games, pay phone, sodas and snacks. Business hours vary but typically run from 7:00 a.m. to 11:00 p.m. seven days a week and some are open 24 hours a day. New vended laundries are valued, based on actual construction and equipment costs; while existing vended laundries are valued, based primarily on revenues. Vended laundries are perfect examples of passive-income generators.

Vended laundries are one part of the self-service laundry business; the industry is actually comprised of two distinct segments. The first is vended laundries, and the second is represented by coin-operated machines located in apartment housing. This "apartment" segment of the business is referred to as the "multi-housing laundry business" or "route business." These two segments frequently overlap; in more mature markets, the self service laundry business is estimated to be evenly split between the two.

When talking about the self service laundry market customer base, generally we consider people living in rental housing or people in lower income demographics and then those who use vended laundries only occasionally when their machine breaks down or for large items. The vended laundry industry is approximately 70 years old, and is primarily composed of individual owner/operators. No significant franchises are in operation at this time.

Industry growth is based on the demographics of population density, population mix, and population income. The more concentrated the population, the greater the need for quality vended laundry facilities. National and regional demographics indicate renters, the primary users of vended laundries, are the fastest-growing segment in the nation. As of the 2010 U.S. Census, 34.5% (or about 40 million) of the nation's 116 million households were renter occupied. This represents a continued increase in the number of renter households when compared to the nearly 34 million taken from the 1990 U.S. Census and almost 36 million from the 2000 census. The number of vended laundry stores built over the past 60 years has grown steadily as the population has increased and shifted to more concentrated areas.

The end result has been a mature, stabilized industry with predictable rates of turnover and values of existing vended laundries; development of new "turn-key" facilities and equipment expansion and replacement. Today's vended laundry industry is strong and vibrant offering a dependable public service while continuing to grow and thrive. There are about 35,000 laundromats operating in the U.S. for a total of nearly five billion dollars in annual revenue. The demographic trends toward an even greater "apartment dwelling" segment of the population predicting continued prosperity.

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