Laundromat Valuations

[Mike]

I looked at a laundromat today that listed on a broker site for a 3.5x net income valuation. Priced at $1.5mil making about 400k/year. That seems crazy high. It’s a 50 washer/50 dryer place with an ATM in a shopping mall. Great reviews online. Is this normal for the industry? I was expecting maybe a 2x.

[WILLIAM ROGERSON]

Hey Mike, I think the conventional wisdom is about 3-6x cash flow. From my limited experience, I have found that as the stores get larger, so does the multiplier. So while you might be able to get closer a 3x multiple for a store in the 100-200k range, it might go up to 4-5x for something in the 1M range. Obviously there are a lot of other factors at play, but that would be my 2 cents. Taking it at face value, the price seems pretty reasonable.

[Jason Dodge]

There aren’t many laundromats that net $400k a year. I wish I had one for sure. Most laundromats sell between 3 to 6 times the net income as stated above. Factors would include whether it has a solid lease in place and the age of the equipment. It sounds like a well run store.

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