Laundry is an essential chore regardless of whether or not you own a washer. For those who don’t have the luxury of having a washer at home, nearby laundromats are often the only choice.
Now, laundromats have steady demand, guaranteed profit potential, and a success rate of more than 94%. This makes laundromats an exciting endeavor for someone who wants to tap into this opportunistic marketplace.
But wait. Do you know how much does it cost to open a laundromat? If you don’t have an answer to this, how will you figure out your initial investment needs?
Well, don’t worry. We are here to help you figure that out.
With this in-depth guide, you will get a detailed breakdown of all the costs associated with starting a laundromat. Not only that, you will also get a startup cost calculator to calculate the actual costs for your business.
So let’s get started and dive right into the topic.
What is the cost of starting up a laundromat?
Opening a laundromat in the United States typically costs between $114,000 to $450,000. However, if you plan to get a laundromat franchise, expect to pay $75,000 and $300,000 to fulfill the minimum liquid cash requirement.
In terms of profitability, laundromats tend to have healthy net profit margins between 20-28%. Laundromats with optimized efficiency and customer volume can enjoy rewarding margins as their ROI increases significantly over time.
Average Costs for Starting a Laundromat
Before we dive into details, check out this laundromat startup cost checklist. It will help you plan your startup budget and know how much financing you need to get started.
| Item | Average Cost |
|---|---|
| One-time Expenses | |
| Lease deposits | $10,000-$30,000 |
| Equipment Purchase | $40,000 to $260,000 |
| Remodeling | $20,000 to $50,000 |
| Permits & Licenses | $2,000 to $5,000 |
| Annual insurance | $2,000-$3,000 |
| Furniture and Fixtures | $10,000 to $20,000 |
| Technology and POS Systems | $5,000 to $20,000 |
| Initial Inventory | $3,000 to $7,000 |
| Grand Opening and Marketing | $5,000 to $13,000 |
| Signage | $2,000 to $5,000 |
| Legal and Professional Fees | $2,000 to $7,000 |
| Total One-Time Expenses | $101,000 to $420,000 |
| Recurring Expenses (Per Month) | |
| Lease or Mortgage | $5,000 to $10,000 |
| Payroll | $2,000 to $3,500 |
| Maintenance and Repair | $500 to $5,000 |
| Utilities | $4,500 to $9,000 |
| Supplies | $1,000 to $2,000 |
| Total Recurring Expenses | $13,000 to $29,500 |
| Total | $114,000- $450,000 |
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The traditional method—startup costs worksheet
The startup costs worksheet helps you calculate the amount needed to take your business off the ground. It is a comprehensive list of fixed and recurring costs to help you determine the actual cost of opening a laundromat.
Remember that many startup costs fall under recurring expenses, so cover those costs monthly, quarterly, or annually.
This cost worksheet helps you estimate the funding required to get your startup costs covered.
Calculate your startup costs using this worksheet.
The Upmetrics method—financial forecasting tool
It is an intuitive and efficient method of calculating startup costs. Using Upmetrics will not just help you estimate startup costs but also help with financial forecasting.
All you need to do is enter your sales, costs, and other financial assumptions and let the tool calculate monthly/quarterly/ and yearly projections for you.
Pro-tip
Check out the financial forecasting tool for accurate financial forecasting. Once you have an accurate estimate of startup costs, you can easily identify funding requirements for your laundromat.
Raising funds for a new startup is certainly a nerve-wracking and time-consuming process, but having a solid laundromat business plan can make things a lot easier.
Let’s move ahead and discuss the factors that affect your laundromat startup costs.
Factors that affect Laundromat startup costs
A laundromat can be a low-risk business endeavor, but here are some critical factors that can significantly affect your startup costs.
1. Location
The location of your laundromat plays a prime role in determining the cost of starting your business.
Be it lease rental expenses, licensing costs, insurance, or the payroll— the costs of everything increase when you choose a prime metropolitan location.
However, don’t let cost be the only factor of consideration influencing the choice of your laundromat location.
For instance, laundromats tend to perform well if they are within close proximity of residential areas. While the rents may soar high for such properties offering parking space, they would also reward you with high footfall.
That being said, location truly is the most important factor determining your startup costs.
2. Lease and Mortgage
In terms of location, you have one of the two choices—purchase or lease a property.
Now, purchasing a decent-sized space for your business in a major city can cost between $500,000 and $1 million. However, in smaller towns or suburbs, you may be able to find a suitable space for $200,000.
However, if you decide to lease a commercial space, monthly rent payments can vary between $5,000 and $10,000 depending on the location and size of the laundromat.
At this stage, you also need to pay the lease security deposits that are worth 2-3 months of your rent, i.e. $10,000-$30,000 to finalize your lease contract.
Lastly, if you plan to buy an existing laundromat, the property costs would be significantly higher, ranging from $300,000-$800,000 inclusive of equipment and basic infrastructure.
Depending on your budget, start shortlisting the locations that can be suited for your idea.
3. Renovations & Installation
Getting your commercial space ready for all the laundry equipment is another big upfront cost. You may be required to undertake plumbing work, electrical upgrades, ventilation improvements, flooring replacement, painting, and other leasehold improvements.
The costs for remodeling and refurbishing your laundromat depend on the condition of the space you buy or lease. However, for a naked place with basic outfittings, you can expect to spend anything between $20,000 – $50,000 and sometimes even more for premium laundromats.
Also, consider the furnishing costs for equipping your laundromat with couches, decks, tables, and waiting stations. The pricing for this would vary between $10,000 and $20,000.
4. Equipment and Supplies
Outfitting your laundromat with all the necessary washers, dryers, and other amenities represents a major upfront cost.
Depending on the features and technologies, the prices for commercial washers and dryers run between $1,000 and $2,600. Now, depending on the size, you may require 40-100 washers, the initial investment for which would vary between $40,000 and $260,000.
These washers and dryers typically last 10-15 years before they need replacement. Over their lifespan, expect to spend $120 – $500 per service call for repairs and maintenance.
Other supplies like laundry carts, cleaning tools, signage, security cameras, TVs, WiFi, soap, and more will run you $1,000 – $2,000.
The takeaway is that outfitting a laundromat requires major upfront capital, but many expenses like commercial washers and dryers are long-term investments. Proper equipment management is the key to managing lifetime costs.
5. Licenses, Permits, and Insurance
After finalizing the location, acquire licenses and permits essential for operating a business legally in the laundromat industry. The costs for these can vary between a few hundred to a few thousand dollars annually, depending on where you are located.
Here are a few licenses that are generally required for a laundromat business:
- Business License
- Fire department permit
- Health department permit
- Zoning permit
- Specialized permits for water usage and waste management
The cost of licensing in different states varies according to the rules, however, you can budget $2,000-$5,000 on licenses annually.
Additionally, also consider the costs of insurance to protect the business against predicted and unpredicted casualties.
Ideally, you need general liability insurance, worker’s compensation fund, and accident claim funds to offer protection against property damage, employee sick health, accident claims, and equipment damage happening at the laundromat.
Small business owners should consider paying $2,000 annually for basic coverage on their laundromat insurance for the first few years. Then as the business grows, you can go for higher premium policies.
6. Utilities
Amongst the largest operating expenses, laundromats need to consider the utility costs for running all those water- and power-intensive washers and dryers.
The utility bill generally depends on the size of your laundromat, the number of machines, and their efficiency. However, you can expect to spend $4,500 – $9,000 monthly to pay your water and electricity bills.
7. Employee salaries
Staffing your laundromat will contribute to your operational costs in the form of employee salaries and benefits. For a laundromat of small size, a few attendants on an hourly basis will get you started on the right foot.
Depending on the size of your business, you will require 2-4 attendants at max to offer laundry services and oversee the operations.
Now, the average hourly wage of a laundromat attendant in the US varies between $11-$18. Keeping aside $2,000-$3,500 for initial salaries will be sufficient.
You must manage the payroll expenses as the labor costs directly impact your bottom line. However, you also need adequate staffing to keep the laundromat running smoothly. So find a balance and make essential hires.
8. Marketing and advertising expenses
Your marketing and advertising efforts have a significant impact not only on your startup costs but also on the profitability and sustainability of your company.
Typical promotional options include print/radio ads, flyers, direct mailers, digital ads, search engine marketing, and social media. Allot $2,000-5,000 initially to create brand awareness through various channels.
Down the road, aim to spend 1-2% of total estimated annual revenue on sustained advertising. For a laundromat grossing $200,000 annually, that’s $150-$500 monthly to maintain visibility.
And those are pretty much all the hard expenses you need to make to get started. However, let’s now learn about a few practical ways to bring down these initial expenses.
Tips for reducing Laundromat startup costs.
The start-up costs for every laundromat business vary significantly. However, here are a few effective ways to reduce your initial capital investment.
1. Choose a built space
Instead of renting a naked space that requires all sorts of leasehold improvements, choose a property that has basic infrastructure pulled together. This would save significant expenses on plumbing, electrical, and flooring expenses.
2. Negotiate your lease terms
Push for longer terms and gradual rent increases before you finalize the lease contract. This would help you lock in better rates during the initial year. You can also negotiate allowances for renovations and improvements to save on remodeling expenses.
3. Buy second-hand equipment
When purchasing essential laundromat equipment like washers and dryers, consider buying quality used or refurbished models rather than brand-new units. There are great deals on gently used machines if you search. Just be prepared for potential repair costs.
4. Equipment lease
Leasing equipment is another smart option to avoid major upfront capital investments. Explore flexible leasing arrangements with future buyout options.
5. Preventive maintenance
Regular inspection and service fix minor errors and issues, thereby, reducing the chances of major breakdowns. So, prepare a schedule and follow it strictly to maintain your machinery for a long time.
If you want to prolong the lifespan of equipment and avoid expensive breakdowns, preventive upkeep is crucial.
6. Manage Utility Costs
Install water recycling systems to reuse wash water multiple times rather than single use. Similarly, you can prioritize an Energy Star-rated washer and water heating system to reduce electric and water bills over time.
Conclusion
And there you have it. With this comprehensive guide in hand, you should now have a clearer understanding of the key costs involved in opening your own laundromat.
The next step is to estimate precise costs for start-ups in your region and budget for it accordingly. Use our startup cost worksheet to effectively calculate your costs in no time.
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