May 17, 2021 at 4:32 pm #5641Gavin HirschParticipant
I’m getting ready to buy my first laundromat. The one that I’m researching at the moment the owner doesn’t keep any books. I would imagine this is not uncommon!
Looking for any helpful tips or suggestions to evaluating a laundromat when you can’t verify any finances.
May 17, 2021 at 5:43 pm #5642CKHParticipant
Contact your local utility companies (gas, water, electric) and do a public records request. Get as many years worth of records from them as they’ll give you. Then get the model numbers on all the machines and contact the manufacturer to get utility usage figures for those machines. Do some math and guesswork to determine what kind of business the place is doing. Contact a few local distributors to get their insight on whether your estimates are logical. Then, do as long of a due diligence period with them as you can, checking the coin collections to make sure it matches what you would expect the place to be bringing in based on your math.
I’m in the beginning of this process as well. I contact utility companies for each laundromat I look at to get the back history of payments and usage. They’ve al been willing to help me out so far.
May 17, 2021 at 5:49 pm #5643WILLIAM ROGERSONParticipant
The laundromat I purchased did not keep books either. What I was able to do was join him for collections for two weeks (was there for every one) and confirm the revenue during that period. Subsequently, I was able to obtain water bills (this will likely be your most accurate bill) and scale earnings for each month according water usage. For example, if the laundromat made $2000 over two weeks, you would expect it to make $4,333 for the month (there are 4.333 weeks in a month). If water usage this month was 100k and water usage the prior month was 110k, you could reason that it made $4,333 x 1.1 ($4766) that month. You can repeat this process for each month to get an annual run rate.
Now these calculations may not be perfect, but they should be a good indication. One of my concerns during the vetting process was that the owner might be stuffing the coin boxes with extra quarters. While I don’t think that was the case, something to be aware of as well.
Hope that helps!
May 19, 2021 at 6:45 pm #5660Jason DodgeParticipant
Utilities can run between 15% and 25% of gross washer and dryer sales. Older equipment towards the 25% range, newer equipment in the 15% range. Really old mats with a ton of top loaders could even be 30%.
So if the seller is stating $100,000 in annual gross sales, utilities should be $15,000 to $25,000 annually. A owner can also let the water run so this isn’t a perfect science. If they have no records you should proceed carefully and don’t pay a fortune for a place that could be losing money. I guarantee they have records, they just don’t want to show you. The question is why?
June 18, 2021 at 2:31 pm #6145DannyParticipant
What about a laundromat where the previous owner quit, so no financials, and cannot get the financials from him? To me this scenario is really risky especially since I’ve never owned a laundromat. I can guess all I want, but the big guess is: why did the previous owner leave? was he losing money? I feel like it would be pretty much starting over as there is no customer base (unless it just recently went on the market)
June 20, 2021 at 10:24 pm #6168Eric FischerParticipant
Are there any experts here with experience in acquiring laundromats? Any willing to work as a consultant? I just started evaluating a laundromat for purchase. $1.2m, 4k sqft laundromat with all machines purchased in 2019.
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