Jordan Berry [00:00:00]:
My wife had a family friend who was working a tech job, making really good money, bought one laundromat, replaced that income and went down to working five or ten hours a week. And we’re like, yes, who doesn’t want a boatload of money coming in with very little time going out? When it comes to monthly income, your average run of the mill laundromat is probably making about six or seven thousand dollars a month. But the range is wild. I’ve got a client who nets $100,000 a month this laundromat and it’s a self serve only laundromat. This is a great business to be in for the business itself, but it’ one of the last places communities gather in person. And laundromat owners have a really cool opportunity to make a real impact in communities while making good money doing it. So that’s been the surprising cool thing about laundromats from my perspective.

Brien Gearin [00:00:45]:
Also, I’m really excited to talk about our topic today, which is how to buy a laundromat. Obviously you’ve made a little empire in this space. You’re one of the foremost experts on it. So super stoked to have you here. Before we jump into that, Jordan, I love to have you share your origin story. How did you get to being the laundromat buying expert?

Jordan Berry [00:01:04]:
Hey, listen, I like most people, I grew up dreaming about owning a laundromat and no, I’m just kidding. Nobody does that. And it’s really weird. I was telling you right before we hit record that it feels weird being a laundromat guy and talking laundromats, but here I am and here’s how it came to be. I was a youth pastor and a pastor for 15 years. And when it came time to merge out of that as my full time job, I was trying to figure out what to do with my life. I had young kids. I know you got some young kids too.

Jordan Berry [00:01:31]:
And you know, having a job where I was doing some traveling, my schedule was all off. I was working weekends and evenings and just looking for a little bit of stability for the family, was trying to figure out what to do. I had a little bit of an identity crisis because I was like, I don’t know where to go from here. And my idea, which is kind of funny actually, my idea was we owned our house in Southern California at the time. Like I said, two young kids. I was like, why don’t we rent out our house here and go buy a condo on the beach in Hawaii and sell jewelry or Whatever, who cares? We’ll be on the beach in Hawaii, right? Whatever, right? And my wife said, we could do that or we could buy a Laundromat. And we ended up buying a Laundromat, not a house in Hawaii, even though that’s where I’m at now. And the reason for that was because my wife had a family friend who was working a tech job in the San Francisco Bay area, and he was making really good money, but he was working 70, 80 hours a week doing it.

Jordan Berry [00:02:25]:
He bought one laundromat, replaced that income, and went down to working five or ten hours a week. And we’re like, yes, this sounds awesome. Who doesn’t want a boatload of money coming in with very little time going out? That’s the dream. That’s why people are listening to this podcast, right? So we’re like, hey, we love that idea. Let’s do that instead of moving to Hawaii. So we went and bought a laundromat.

Brien Gearin [00:02:48]:
We.

Jordan Berry [00:02:49]:
We bought what we call a zombie mat in the industry to fixer upper laundromat and fix it up and waited for the cash to roll in. And lo and behold, the field of dreams, if you build it, they will come model did not work for us. And we ended up making a whole bunch of mistakes, losing a whole lot of money early on, and I shouldn’t say losing money paying for an education early on there and ended up, you know, working my way out of that over time. But it was painful. It was a huge struggle. It was a lot of pain. I found out that other people in the industry had gone through similar things. Right? There’s some unique obstacles to buying a laundromat.

Jordan Berry [00:03:31]:
Like, it’s a cash business. How do you know how much money it’s making? It’s really easy to hide expenses. You know, the business is a mom and pop industry, so there’s just a lot of unknowns that we didn’t know. And so, yeah, so made a lot of mistakes. And once we finally kind of worked our way out of that, started to see the original vision of, hey, you know what? If you do it right, this business can be a really powerful business to be in. You know, and I’ve said, and I believe this, that 99% of Americans could replace their 9 to 5 income with one or two laundromats. And so, you know, if you’re looking for financial freedom, if you’re looking for cash flow, if you’re looking to leave your nine to five, obviously, like you’re talking about cash flow here, and it’s really hard to be a laundromat when it comes to cash flow. So that’s sort of like the, you know, and then bought and sold laundromat since then.

Jordan Berry [00:04:23]:
And you know, I’ve brokered deals. I’ve done over 1500 consulting calls now. Like I’ve, you know, I’m kind of steeped in the industry, which is just weird. I never expected that. And it’s Laundromat feels so random, but here I am.

Brien Gearin [00:04:37]:
Awesome. So let’s talk about kind of the numbers. You mentioned how, you know, with one or two laundromats, 99% of Americans could replace their current income. Tell me about like your portfolio. How many laundromats do you guys own? I know you buy and sell too, so maybe that’s a fluid number, but also kind of, let’s start with that high level overview of what are the earning potentials of laundromats. I know that can vary, but kind of give us approximations.

Jordan Berry [00:05:01]:
Yeah. So you know, when it comes to monthly income, like your average run of the mill Laundromat’s probably making netting about 6 or $7,000 a month. But the range is wild. I mean, you go from me, when I first started being the world’s worst laundromat owner and losing money to I’ve got a client who nets a hundred thousand dollars a month, this laundromat and it’s a self serve only Laundromat that’s not adding drop off laundry or pickup and delivery. So. So these things can do, you know, pretty good money, you know, but your average, like sort of base hit deal, you’re looking at six or $7,000 a month, kind of an average. You know, Laundromat is, you know, maybe 400 to $600,000, although you can get them for cheaper and you can get them for a lot more. So that’s kind of what you’re looking at there.

Jordan Berry [00:05:51]:
What’s interesting about it and the way that I kind of like to think of it is to back into the things I like to, when I talk with clients, I say, okay, what’s your goal? What’s your, you know, do you have a cash flow goal? Do you have an amount of money you need to make to leave your job? Because then we can sort of back into, okay, here’s how much you’re probably going to need to invest in a Laundromat. And depending on your loan terms, here’s how much you need liquid in order to do that. But what’s beautiful about this business is that it’s a cash flow centered business and the valuation is based on the cash flow, which means you, you kind of know what you’re getting as long as you get that cash flow. Right.

Brien Gearin [00:06:30]:
Got it. Okay, so I want to lay the groundwork for the overarching question and the theme of our episode today is how to buy a laundromat. So I guess let’s start at square one. You’ve decided it’s time to buy a laundromat. What’s the first thing you do?

Jordan Berry [00:06:45]:
Yeah, great question. Okay, so, I mean, first things first is you got to learn a little bit about the business. There’s lots of resources out there now, you know, ours is one, obviously, but there’s lots of YouTube videos and podcasts and tiktoks and stuff. So, you know, just get familiar with the business, maybe go visit a couple, that kind of thing. You know, do your preliminary education. My one word of caution on that is that it’s really easy to get into doom cycle when it comes to education. You know, listening to podcasts, watching YouTube videos, and you stay in that research mode. You get your dopamine from that.

Jordan Berry [00:07:19]:
You never actually make any progress in your life, right? You never accomplish any of your goals. You gotta, you know, get a base level of knowledge. There’s so much stuff you’re never going to know until you actually get into it anyway. So get a base level. And then, then you start looking. You start looking for a laundromat now, right? Now, finding a laundromat deal is trickier than it’s ever been. And the reason for that is a couple fold. Number one, there are a lot of, you know, maybe you’ve seen them, or if you’re listening out there, maybe you’ve seen them.

Jordan Berry [00:07:50]:
There’s a lot of, like, people collecting quarters. People love those quarter collecting videos about laundromats. There’s people with stacks of cash in their hand that they’re getting from their change machines and stuff like that, right? So the profile of laundromats has been raised over the last couple years. We’ve got Cody Sanchez talking about boring businesses, right? So there’s a lot of people who never thought about laundromats who are interested now, which is a good thing because what that means is our industry has this reputation of, you know, I don’t know. When you think of a laundromat, most people think of like, dark, dingy, dirty, homeless people sleeping, right? It’s like, who wants to go clean their clothes? At a place like that. Right. But that’s been the. The reputation of the industry, so it’s helping to elevate sort of our industry there.

Jordan Berry [00:08:43]:
But finding that deal can be tricky. So we’ve got a couple things that we do with clients and that we encourage our clients to do or you to do. You can do this on your own, too. A coup of things. Number one, obviously, you can look around online. There’s lots of websites that have listings online, and you can find deals there, and you can turn some of those into deals. But the reality of it is that a lot of these transactions are happening before they hit the online space. So what we encourage you to do is when you’re looking online, take note of who the broker is and start reaching out to the brokers directly about the deals you find online, but also about any other deals they might have that fit your criteria.

Jordan Berry [00:09:23]:
And then we also encourage you to do direct mail, actually send letters to laundromats and say, hey, you know, my name’s Jordan. I’m looking to buy a laundromat in the area. I’ve been doing research. You know, I’m curious if you’re interested in selling, and if not, no worries. But we’ve seen clients have a lot of success with that direct mail. Obviously, you can do cold calling if you can get a hold of them. Obviously, you can go, you know, speak in real estate terms. You go door knocking.

Jordan Berry [00:09:49]:
You actually go to the laundromats. But one of the reasons most people get in the business, because you don’t have to be at the business all the time. Right. And so it can be hard to pin down an owner there. So that’s why we like the direct mail and calling brokers on a regular kind of cadence there. So that’s finding the laundromat. Those are the best ways to do it. I’ll pause there in case you have any questions.

Brien Gearin [00:10:12]:
Yeah, well, it kind of leads me to my next one of, you know what? I guess what’s the average price on a laundry again? I’m sure this varies wildly by area and, you know, state of the business. But I guess maybe a better question is, what’s a good target sale number for buying your first laundromat?

Jordan Berry [00:10:28]:
Yeah, so there’s sort of. I’ll put them in three phases. Right. So, like, phase one was what I would call, like, my fixer upper laundromats. That would be like around $250,000 or less, you know, give or take would be sort of what I ballpark is a fixer upper laundromat. And as a just a rule of thumb, laundromats that are priced at 150,000 or less, generally speaking, they’re either, you know, making very little money or they’re just not making any money at all. And they’re going to require you to have a plan on how to revive this laundromat basically. Right.

Jordan Berry [00:11:07]:
So that 250 or less, those would be more on the fixer upper sides. You know, once you get over the 250 to you know, maybe 650 or 700 thousand dollar mark, those are sort of those sweet spot laundromats where they’ve already got stable cash flow. The systems are mostly in place. You know, everything is all set up and they’re more on the turnkey side of the spectrum. But there’s probably still some room for improvement, either adding a service or having better customer service, things like that. And then once you get over that like 750,000 plus 2 million, 3 million, whatever. And on those are your kind of well oiled machines. Generally speaking, they’re higher volume, the machines are newer, employees are in place and they have good employees.

Jordan Berry [00:12:00]:
Their systems are in place, they have good systems and they lean heavily more towards the turnkey side of things. So kind of depending on where you’re at with your financial situation, what your goals are, you know, you’ve got sort of these different categories that you can kind of go after if you’re looking for, you know, something that’s already running pretty well but has a little room to grow. Maybe, you know, maybe that sweet spot would be the thing. But maybe you’re, you know, a high income earner and you know, doctor, an engineer, an investor and you’re looking for the cash flow and, or tax depreciation from the machines and maybe you want to go on the higher end of that.

Brien Gearin [00:12:40]:
So what’s the typical, and this is just me being curious, what’s the typical multiple for the sale of one?

Jordan Berry [00:12:46]:
Yeah, so traditionally the range has been three and a half to five times net. But like I said, the last two years we’ve seen more and more interest coming in because of the popularity online and also because we finally have been getting some technology that allows us to run our business a little easier. You know, we got all excited about a year and a half ago or so and we finally had touch screens on our washers. I was like, welcome to 2008. Right. But we’ve got software that helps us manage it now and you know, we can get More access to data and analytics, things like that. Right. So, you know, there’s been kind of more interest in the business now.

Jordan Berry [00:13:31]:
I forget. I got so excited. What was your question?

Brien Gearin [00:13:34]:
Just the general multiple on the sale.

Jordan Berry [00:13:36]:
Oh, the multiple. Yeah, yeah. So all that say thank you. I just got into it, man. All that to say because there’s been more interest. We’ve seen the multiple going up. So I’d say the average multiple is more like four and a half to five and a half right now.

Brien Gearin [00:13:49]:
Got it, Got it. Okay. So the investment is there, too. If you’re looking at this as an investment, you can buy one, hopefully at a lower price, build it up, you know, improve it, and then look at that as the possibility of a 4-5x exit at some point in the future. All right, so when you’re doing due diligence as a. A buyer of a laundromat, what are kind of the top, you know, two, three, four or five things you’re looking at when you’re assessing a deal and trying to decide if this is the right one to make?

Jordan Berry [00:14:16]:
Yeah. So when you’re analyzing a deal, I would say there’s two phases of it. So phase one of analysis is you use the numbers the seller gives you. So here’s the scary thing about buying most laundromats right now is most laundromats are still cash businesses. So when you get numbers from a seller, a lot of times there’s going to be a whole lot of zeros on that page. Right. It’s like it makes $15,000 a month. Expenses are $9,000 a month.

Jordan Berry [00:14:45]:
The Nets, $6,000 a month. Right. So that’s a little scary, especially with the cash business. It could be hard to verify those numbers. But I’ll tell you how we remedy that in a second. So when we do this first analysis, there’s four numbers we need. Okay. So number one, we need the net income.

Jordan Berry [00:15:04]:
That’s the cornerstone of the value of your laundromat business. You’re going to apply the multiple to that. Right. So then the question then is, well, how do we know what the multiple is? There’s a range of somewhere between three and five and a half. How do we know where on the spectrum a particular laundromat lies? Right. So that’s where the other three numbers comes in. So the first one is the age and condition of the machines. So obviously, newer equipment is more valuable, which puts upward pressure on the multiple, older equipment less valuable, downward pressure on the multiple.

Jordan Berry [00:15:37]:
The second number that determines the Multiple and the third are both related to the lease, the rent amount. And you know, the question then is like, how do we know if a rent amount is a good amount or not? Our target of what we’re aiming for is 25 of the gross or less. As soon as you start creeping up over 25% for your rent amount, the multiple starts dropping there. And then the third number is the number of years remaining on the lease. So for a laundromat, a long lease is better. Like if we’re doing a brand new lease, what we’re looking for is like a 10 year lease with two five year options to renew or three five year options to new. So we have 20 to 25 years. And the reason for that is, you know, if a landlord decides not to renew the lease or if a landlord says, hey, you know, we’re going to double your rent, you know, when we renew your lease, you know, now you’re in trouble because you can’t just pick up and move a laundromat to a different location.

Jordan Berry [00:16:39]:
You’ve got a lot of plumbing, electrical, gas lines, vents for your dryers, the equipment’s heavy, expensive to move. Right. All that stuff. So that gives us business security when we have the long term lease. So the shorter it is, the lower the multiple goes. So that’s how we do our first analysis. But I’ll pass.

Brien Gearin [00:17:00]:
Well, it actually, it’s going to lead me to a left turn is laundromat ownership. Is there a real estate play here? Are there opportunities to own the real estate that, you know, the actual building or the land and the building that it’s on?

Jordan Berry [00:17:12]:
Yeah, absolutely, absolutely. And in fact, if you can get those deals, a lot of times they can be, I call them like a wealth accelerator. Right. Because I think, right when I think of real estate. So I own real estate. I own, you know, commercial residential, short term rentals, long term rentals and laundromats obviously. And I love real estate because of the appreciation and debt pay down I can get. And because of the tax benefits and cash flow a little bit I was sort of on the bigger pockets bandwagon for a long time, like financial freedom through real estate.

Jordan Berry [00:17:43]:
And I realized, started doing the math on like how many units I’d have to own to get there. And I was like, man, you know, and just for context, if you’re doing just like a base hit residential rental property, you’re probably looking at maybe an 8 to 10% cash on cash return for your money. If you’re buying a laundromat a base hit deal, which is a 5x multiple, it’s just like a base hit. It’s not a home run, it’s just a base hit. Average deal, that’s a 20% return on your investment unleveraged. So once you, you know, add a loan, your return on investment can be north of 30, 40, 50%, pretty commonly for a base hit deal. Right. And so you can see how the cash flow of a deal like that is much more attractive than something like real estate.

Jordan Berry [00:18:32]:
When you’re looking to exit your 9 to 5 as quickly as possible, or you’re looking to get financial freedom or whatever it is. Right. That’s where a laundromat comes into play. So if you compare the equity potential and the tax benefits of real estate with the cash flow and tax benefits of laundromats, it’s like a match made in heaven. You got what I call the wealth tripod of, like, tax advantages, equity and cash flow. You got all three of those working. And obviously you can build equity in your laundromats. It just builds slower than real estate.

Jordan Berry [00:19:05]:
And you can get cash flow in your real estate. It’s just not as much as laundromats. But if you pair them both together, that’s a wealth accelerator for sure.

Brien Gearin [00:19:14]:
So would it be fair to call that kind of like a diamond in the rough type of opportunity if there’s a laundromat for sale that also includes the land and the building that it’s on? On?

Jordan Berry [00:19:22]:
Yeah, yeah, definitely. I mean, it doesn’t necessarily have to be a diamond and rough. It can be a diamond on a ring. I don’t know. Yeah, just be a diamond. But. Yeah, but definitely. I mean, I think, you know, and especially, like, I have clients who will buy like a strip center with a laundromat and operate that.

Jordan Berry [00:19:40]:
Right. And then they. There’s things you can do also. We don’t get crazy into it, but you can convert leases to triple net leases. You can get them up to market rents. You can charge your own laundromat top of the market rents, as long as it’s justifiable and shift equity over to and cash flow over to the real estate, which there’s advantages of in terms of valuation, stuff like that. So there’s a lot of levers you can pull when you own both. So it can get really exciting.

Brien Gearin [00:20:07]:
All right, awesome. So let’s get to the next step here. Let’s say you found a deal. You’ve closed on a deal. It’s the right one. For you, it’s kind of like, hey, here are the keys. What are the next steps? What are the operational steps? When you’ve now completed the deal for your first laundromat?

Jordan Berry [00:20:21]:
Yeah, yeah. So, I mean, I have a picture of my wife and I were holding up keys in our first laundromat like deer in the headlight. Look, like, what do we do now? Like, what’s going on? And just like you did, we pretty much skipped due diligence. So I’m gonna just address due diligence for a second because that’s where it can go really wrong. And then I’ll tell you, like, what we do, if that’s okay. Is that good?

Brien Gearin [00:20:44]:
Oh, yeah, go for it.

Jordan Berry [00:20:45]:
Okay, cool. So on. So that first analysis, we use the numbers that the seller gives us. Again, unverified numbers, average round number numbers, right? But once we get the offer accepted, which comes before we get the real numbers, so we add contingencies into our offer so that if we do our due diligence and things are not as advertised, we can back out of that deal or renegotiate, right? So our second analysis, we use the numbers we discover, and that’s what we call due diligence, right? So we have what we call our four pillars of due diligence. So we want to verify income, verify expenses. We want to look at the trajectory of the business, both looking back, coming to the present, and from the present going forward. And then our fourth pillar is what we call our value add, which is our game plan for when we take over, which is what you were asking. Right.

Jordan Berry [00:21:33]:
So real quick, on, you know, the due diligence side, on verifying income, that can be easier said than done. We utilize what we call our income verification stack, because still, most laundromats are coin cash businesses, right? So verifying the income can be tricky. So we utilize a few different methods, and we stack them on top of each other to see if there’s anything, any anomalies, anything that sticks out, anything that’s weird. If they all pretty much line up, then we can be pretty confident this business is doing that. So a couple of, like, things that we do is we do coin counts, where we actually go and count the coins with the seller as they collect the coins to see how much money came in over a certain period of time. And when we do that, we take water meter readings from the actual water meter, like on the street or in the back room or wherever it is on the side of the building to compare the amount of money that came in to the amount of water that’s used. Because that’s going to tell us a story, right? And we can utilize, you know, past water bills, the usage, how much water is used to. We have a spreadsheet that does this for you.

Jordan Berry [00:22:43]:
So it sounds intimidating, but we basically can do a calculation where we say, okay, use this much water. You have these machines, each wash costs this much. Here’s how much money you should be making, right? So a few different methods like that, where we stack them on top of each other to make sure the income’s coming in. On the expense side, if you miss $1 500amonth expense, which is very easy to do in a business, right? Because we’re working out of five multiplier, that $500 a month is 6,000 a year times five, that’s $30,000 of equity that can vanish like that, right? You immediately lose that equity if you close on that deal without knowing that, right. That your net worth goes down by $30,000. Like it’s just, it’s not good, right? Not to mention you also not getting $6,000. You thought you were getting a year, right? So, you know, we have a checklist that we go through for that as well. The trajectory is just the performance of the business over time.

Jordan Berry [00:23:43]:
That one’s overlooked a lot. But you know, what’s the saying? You don’t want to catch a falling knife, right? If business is dropping off a cliff, unless you have a solid plan, it’s pro, not a good option. So that brings us to pillar four, which is basically what you’re asking, what do we do now? Right? Once we own this thing. And the short story is it depends on your business and your business model. Most people think of a laundromat as a self serve laundromat. You know, the basics are the business, right? So that’s keeping the store clean, that is keeping the machines working. If you’ve got a coin store, that’s keeping the quarters in the change machine and making sure that people can actually give you money for the service, right? That’s smiling at people. And if you have employees making sure they’re smiling at people and friendly and welcoming, you know, culture of your business, right? Like these are the basic things, making sure, you know, the people who aren’t supposed to be there, aren’t there and the people who are supposed to be there feel welcome there, right? Keeping all the lights working, keeping it bright and safe.

Jordan Berry [00:24:51]:
These are the basics. And if you just do that consistently, you’re gonna have a successful business the bar is still very low. There’s more like I was mentioning, there’s more and more like sophisticated business owners come in, people who are passionate about this industry, people who catch the vision of laundromats coming into the business, and that’s starting to change. But still the bulk bar in most markets is very low. So if you just take care of business, you’re gonna be doing just fine. So I just said a whole lot of stuff that was like a dump. So I’ll pause in case you have any questions there.

Brien Gearin [00:25:25]:
No, that’s great. I love that. I love the, you know, tcb. Just take care of business, right? And it’s like that in so many businesses, across so many industries, if you do the basics and you do them really well, you’re already ahead of 98 of your competition. Because in so many industries, it’s like if you just do the small things like, you know, greet your customers, get to know them a little bit or treat well and, you know, resolve issues in a timely manner and do it in a way that’s, you know, polite people take note of that and that makes them want to come back and do more business with you. So cover the basics and do it really well and you’re already ahead of the game. I’m curious about the, you know, kind of the overhead of a business like this. So we talked about the solid cash flow in a laundromat business, but what are some of the overhead expenses that this business has and what are maybe some unique to this business or maybe we probably wouldn’t think of unless we were talking directly to you? Like, look at this, we are today day.

Brien Gearin [00:26:16]:
How convenient.

Jordan Berry [00:26:17]:
Yeah. So the three biggest expenses for most laundromats are going to be your rent, if you are renting, your labor costs, even if you only have somebody there. You know, we have unattended business model where there’s nobody there most of the time, but somebody probably is going to come clean every day and, and do that. Right? So you got your labor and then you’ve got your utilities, which I would say is probably not necessarily unexpected if you sit and think of it. But it’s kind of surprising how much utilities are. We’re sort of a utility rental business. I mean, obviously like we’re renting machines out, but those machines are just consuming gas and electric and water, Right? Like those are just kind of non stop. So those on average, somewhere between 15 and 25% of your revenue goes towards utilities, depending on, you know, your pricing and how old your machines are.

Jordan Berry [00:27:14]:
Older Machines, it seems like to me back in the day, they just didn’t care how much water a machine used. They’re like, let’s just put all the water in here. And you’re like, do you really need 150 gallons of water for that wash? Like, screw it, just put it all in there. I just put it all. Just pumped all the water, drain Lake Michigan and then pump it back in there.

Brien Gearin [00:27:37]:
So.

Jordan Berry [00:27:37]:
So machines have gotten more efficient, right? So that, that is a little bit of it. Other than that, I mean, you’ve got the other one that might surprise people. Again, not that this expense exists, but how much it can be is the repair and maintenance. Listen, I mean, we’ve got like a lot of machines in these stores, right? And they last, you know, 15 to 20 years. The washers, it may be 20 to 25 on the dryers, but the older they get, the more often they break down. And so, you know, you’ve got to reinvest in your business. You know, the reason that a lot of people walk into their local laundromat and there’s a bunch of machines down is because it’s not cheap to fix the machines. But if you don’t fix the machines, you lose customers, which means you make less money, which means you have less money to fix the machines, which means more machines break down and eventually you, you run yourself out of business, right? So you’ve got to reinvest in the business and fixing the machines.

Jordan Berry [00:28:36]:
And then other than that, I mean, you’ve got your typical, like, insurance and, you know, I don’t know, whatever the normal business expenses are, accountants and taxes and all that stuff. Loans. Another thing that might surprise. Speaking of loans, that might be one that might surprise people. Equipment rent costs can be very high. Financing terms can be very good. But if you’re building out, just kind of give you a ballpark. If you’re building out a brand new, let’s say it’s a 3,500 square foot store.

Jordan Berry [00:29:08]:
You might spend, you know, $750,000 on the equipment and installation on a 3,500 square foot store with brand new equipment. So, you know, and equipment costs, they were high. And then when we had that whole number one, like we couldn’t get anything into the tree and, you know, distribution was just shut down for a while. And then the price of everything went up, I think. Everything? Yeah, I mean, everything like loosened up and some stuff kind of came back down. Well, the cost of machines did not come back down at all, and it just kind of kept going up. So, yeah, you can pay, you know, if you go buy a 80 pound machine, you’re gonna pay between 20 and $25,000amachine. So that cost can get pretty significant, which is a surprising expense.

Brien Gearin [00:29:59]:
Yeah, yeah. Well, I mean, it makes sense, you know, these things that they last 15. You said 15 to 25 years. There’s a whole lot of loads of wash and drying that’s going to be happening. So, you know, you look at that, you know, over that span, that’s probably a decent price. Like, it’s definitely not cheap in the short term, but given if you keep it maintained and you keep it in store, you get the max life out of it. Obviously a worthy investment. And also, real quick sidebar.

Brien Gearin [00:30:24]:
What’s like the go to brand of washer and dryer for these types of laundromats?

Jordan Berry [00:30:29]:
Yeah, so I’d say there’s like a top three. Probably the number one is like an alliance brand, which the two main ones of alliance is Speed Queen. That’s the main one, I’d say. And then Hipsh, which nobody knows how to say, it’s like Huish, but it’s hip. So they’re basically like the same machine. And then Dexter is the second one, and then Electrolux would be the third one. Those are the three main ones. There’s some other ones too.

Brien Gearin [00:30:54]:
Okay. Okay, well. And through an experience three months ago when we bought our new house and needed a new washer and dryer, I learned all about the quality of speed Queens. And you know what I ended up with a Speed Queen washer and dryer. And it’s going to last 25 years. So here we are.

Jordan Berry [00:31:08]:
There you go.

Brien Gearin [00:31:09]:
Okay, you heard it here first, folks. Hit them up.

Jordan Berry [00:31:11]:
That’s right.

Brien Gearin [00:31:13]:
All right, so you had mentioned unattended stores versus attended stores. So obviously this can play a big part in your overhead costs between labor or not having labor. Help me understand the benefits of each and our unattended stores. Is that kind of more the norm these days or is it little split between the two? And which one do you prefer?

Jordan Berry [00:31:34]:
Yeah, it’s kind of an interesting dynamic happening right now. We’ve got sort of this. The industry’s kind of going two different ways, right. Unattended stores, like the benefits are, are obvious. Right. So unattended store means less labor costs and, you know, less people to manage, frankly. And attended stores is a higher labor cost. Right.

Jordan Berry [00:31:55]:
The downsides to an unattended store is depending on your neighborhood, you might get people coming through that, you know, laundromats Tend to attract, like a transient community or a homeless or, you know, community. People are looking for places to just hang out where they’re not going to be bothered. Right. And if nobody’s at the laundromat mat, that can be a, you know, place that they land. And then if you think about your target demographic, for most laundromats, it’s like a mom with some kids and stuff. And so that can make it feel very uncomfortable for them. And so you end up losing customers if that happens too much. Right.

Jordan Berry [00:32:34]:
So again, that’s not in all markets, but kind of depends on where you’re at, for sure. So the benefit of going attended, you can go partially or fully attended is number one, you just. You erase the majority of your problems. Like your return on headache goes way down or up, whatever. The good way is you have less headaches, less problems that happen in your stores. When customers are there, they have somebody who can help them out, so problems can get resolved quicker. So your customer service should be better as long as you have the right employee in there. I’ve had the wrong employee in there, side note a couple times, and everything I’m saying is not true in that case.

Jordan Berry [00:33:15]:
The other kind of benefit of having attendance at the store is that then you have the ability to offer service to customers and you can open up a whole new demographic. So people can drop off their laundry like a wash and fold, where they take the laundry to you or your attendance, do the laundry and fold it, wash it, dry it, fold it and give it back. They come back and pick up up their laundry or something. That’s been booming since COVID especially is the pickup and delivery model where you actually have a driver who goes to your house. You just leave your laundry on the porch, or they knock on your door and you hand it to them and it comes back to you the next day, clean, folded, ready to put away. Those services can be very profitable. And if you have somebody there, you can offer those services. You have somebody to accept the laundry and then process the laundry while you’re there.

Jordan Berry [00:34:07]:
But very different business models for sure.

Brien Gearin [00:34:11]:
So that leads me to my next question of are there opportunities for this business to be a subscription type of business where it’s like, hey, there’s three different tiers, and here’s what you get in three tiers. And it’s, you know, 50, 100, 150amonth, whatever that is, is this business lend itself to that opportunity.

Jordan Berry [00:34:28]:
Yeah, we’re starting to see more and more subscription, you know, part I mentioned, like the technology coming in, really difficult to do that. Before we had some software to help us, a lot of people were doing like the handwritten tickets until even still some people do it now, but until pretty recently. So now that we’re seeing that the subscription model is starting to gain some traction in the business. Right. And it’s really easy to say, hey, you know, it’s 225 a pound if you just bring your laundry in. But if you have a subscription, we’re going to give you, you know, $2 a pound or whatever or a set amount and you can bring in X number of pounds or, you know, there’s different models to do it. But yeah. Which, you know, again I mentioned we’ve seen the multiple rising.

Jordan Berry [00:35:13]:
Depending on how things go here, that multiple might keep rising. So it’s still a really good time to get in this business, I think, because subscription businesses are just more valuable than other businesses. And laundromats just by themselves are almost like a subscription business. I call them a habitual business. Right. Because people usually go at this on the same day, around the same time to the same place to do their laundry. And they only stop doing that if you’re doing something really wrong. Right.

Jordan Berry [00:35:46]:
If machines are breaking down or it’s dirty or some your attendance rude or whatever, that might get them to change their habit. But otherwise people don’t really change their habit. So it’s already sort of like that. But we’re kind of formalizing it, which I think will increase the value of the businesses.

Brien Gearin [00:36:03]:
Yeah. And I guess that also does that make this business, I presume, hyperlocal. Right. Because if you know you’re within a X square mile radius of this laundromat and you’re in need of that service, that’s the place you’re going to. Right. That kind of inherently makes it like a subscription, even if it’s not.

Jordan Berry [00:36:20]:
Yeah, yeah. And that’s how it’s been treated for a long time. That’s why you see a lot of rundown laundromats. Because owners are like, why don’t have have to put money back into it? People are going to come here anyways. But what we’re finding is as newer, nicer, larger laundromats are coming into the market, they are starting to absorb a larger and larger share of the market. Because people are like, yeah, I’m going to go to that one. It’s way nicer. The experience is way better.

Jordan Berry [00:36:49]:
And so they will drive past two or three laundromats, so they will take A bus a little bit further to a laundromat. And then obviously as you add the services, you know, drop off service extends not only just a new demographic of people who, you know, I have laundry facility in my house where I have washer dryer, you have washer dryer. But who wants to spend half a Saturday doing laundry or who wants to do laundry, you know, three nights a week if I could just pay somebody to do it once a week and it’s done for the week and I can spend my time doing whatever else, you know, why would I not do that? And so having these services adds a new demographic, but it also expands the radius. If you’re, if I’m willing to go pick it up from you, I’m probably not going to come to Cincinnati from Hawaii. But you know, but somebody on the other side of Cincinnati where you would never drive to that laundromat would come to you and pick it up from you. Right. So your radius expands as well. But they are hyper local, especially self serve laundromats.

Jordan Berry [00:37:53]:
But even the service side is definitely local business for sure.

Brien Gearin [00:37:57]:
You mentioned the technology that’s starting to show up in the industry. You said touch screens on the units. So is that where it’s essentially a, you pay with credit card and B, it’s all done digitally there. So that I imagine that reduces a lot of the hassle with being a cash business. Does it that mean that are you excluding a certain part of the demographic depending on, you know, the city or neighborhood you’re in, or do you offer both? Or is that kind of the future where it’s like, hey, the vast majority of people have credit cards and my business is based in an area where that is true or maybe it’s not. Does that, how does that affect your decision making when starting to add technology into this type of business?

Jordan Berry [00:38:32]:
Yeah, I mean, it’s a great question. I mean it’s a debate that happens all the time. There’s definitely the COIN loyalists and whether that’s, you know, because they feel like their demographic will only use coin or because they don’t want a paper trail behind how much money is coming in, which is pretty common in this business. And so here’s kind of what I think. There’s a hybrid model for sure where you can take coin or you can take card. What most people, because there’s lots of the new stores are going card only. But what I mean by that is they will accept up credit card EBT cards, but also loyalty cards. Right.

Jordan Berry [00:39:12]:
And so you can still Come with cash. Maybe you’re not. You know, most people, they come with bills and then they put them in the changer and then they get coins and they go pay. So instead of doing that, they put their, you know, their bills in and load it onto a card, and they still pay with card, but you can still pay with cash. Right? So. So I think it doesn’t exclude that demographic. There’s an older generation, you know, thing where they’re like, I just want to use coins. And that’s, you know, that’s a real feeling.

Jordan Berry [00:39:40]:
And you want to, like, honor that. But at the same time, you got to make the best decision for your business, for your overall business. And I’ve also found that the people who are resistant to change like that tend to forgive a whole lot if you give them something free. So having a card, loyalty cards, you know, being able to say, hey, do 10 washes, get one free, or put $20 on, get $2. You know, a lot of people, when they do like a grand reopening and they add like, new machines and stuff, they’ll say, hey, for the first week, we’ll double whatever money you put on your card, we’ll double it. And people get over the coin thing pretty fast if you give them something for free and you teach them how to use the technology. But there’s different thoughts on that. I tend to lean more towards the card system.

Jordan Berry [00:40:26]:
You know, even now, like snap cards, you know, they get a card, right? EBTs. So they’re used to using cards. Cards. It’s just a different kind of card. So, you know, but there’s different models and different people have different feelings about it, for sure.

Brien Gearin [00:40:41]:
So as we round this out here, I’m curious, and obviously this is a decision up to the person buying a laundromat, but is it easy enough to start building a portfolio of laundromats, or is there kind of a point of diminishing returns where it gets harder to own enough? Or does it make sense to have all your laundromats be local to you, or can you start building, like a regional or maybe a national network of laundromats? How does that work?

Jordan Berry [00:41:05]:
Yeah, so we’re starting to see it’s been really difficult to do that because of the coin thing. And like I said, this technology now that we have allows us to manage more stores. We can do them from further away. So. And we’re definitely starting to see a consolidation in the industry where owners are owning more locations. Used to be mostly onesie twosie owners One store, two store, but. And it still probably is, but there’s more that own 10, 20, 30 than probably ever before. So yeah, it’s definitely possible to kind of build an empire here.

Jordan Berry [00:41:44]:
The regional thing is still being worked out in our industry. I definitely think it’s possible. There are people doing it, it’s doable. But in order to own outside of your area, you, you need two main things. You need the right technology, which is the easy piece, and then you need the right people to help you manage. Like the worst thing you want to do is, you know, drop a million dollars on a laundromat and then hand it over to minimum wage employees. Right. You need somebody who’s a higher tier to be able to manage your business for you.

Jordan Berry [00:42:14]:
And it’s hard to buy that now because it doesn’t exist very much. And the people who’ve already built that out, they’re not selling. Right. And so you have to actually build that out because it’s not readily available there. So it’s a big opportunity though, and a lot of people are starting to move in that direction right now.

Brien Gearin [00:42:34]:
Is this an area that private equity is crashing or has not yet crashed or does not crash?

Jordan Berry [00:42:39]:
Starting to again because the technology is getting there. We’ve seen some private equity come in to help with the technology in building out software and hardware, payment systems, things like that. We’ve definitely seen that. And now we’re starting to see. We just had our. It’s called the clean show, which is our big trade show that happens every other year. We just had it this past August and there were a lot of private equity representatives there. So it’s definitely peaking interest.

Jordan Berry [00:43:08]:
I think laundromats might start going the way of like car washes and self storage here pretty soon. But the one big obstacle is, is it’s difficult to acquire them right now. And so deploying large amounts of capital quickly is tough.

Brien Gearin [00:43:24]:
Okay, so there’s sharks in the water, but there’s still a lot of obstacles that keep them at bay a little bit.

Jordan Berry [00:43:30]:
Yeah. And there’s still a lot of opportunity for, you know, for just a regular person like you or me or somebody listening here to get in this business for sure.

Brien Gearin [00:43:39]:
Well, and that was my last question is what does the opportunity look like in the present and in the near future? And it sounds like it’s still, still ripe for opportunity.

Jordan Berry [00:43:48]:
Yeah, I think it’s right for opportunity, for the cash flow play. And I think, you know, as soon as private equity gets into an industry, their goal is to drive up valuations, right? That’s how they make money. So you know, if you get in that, like this is early, early in the game here. So if you get in now, obviously like the cash flow is like the main play. But I think there’s people who disagree with me, but I, they’re wrong, you know, but, but I think the, the, I think the valuations are going to continue to go up, up in this industry like we saw them do with self storage, mobile home parks, car washes. I think laundromats are just going to follow suit there. It’s a good business. The one thing I want to say real quick, this is a great business to be in for the business itself, but it’s also one of the last places communities gather in person.

Jordan Berry [00:44:39]:
And laundromat owners have a really cool opportunity to make a real difference in communities and make a real impact in communities while making good money doing it. And that I think is what really makes this business special. A lot of people want to get into it, including me, because they want to make money and not trade time for money kind of thing, which it offers that. But what I found along the way is that there’s actually a lot of cool opportunities to make a difference, you know, know, altruistically or you know, in the community also to help people. So that’s been the surprising cool thing about Laundromats from my perspective. Also.

Brien Gearin [00:45:17]:
I love it. Gives you an opportunity to have impact in the community not just as a, you know, a cash flowing business. Yeah, yeah, I love it. I love it. Well, Jordan, I could keep you here longer, but I probably shouldn’t. You’re a busy man. You have to go surfing out on Oahu there today.

Jordan Berry [00:45:32]:
Waves are calling, man.

Brien Gearin [00:45:33]:
The waves are calling. I won’t keep you any longer. So thank you so much for joining me today. This was a ton of fun. I’m sure there’s plenty of people out there who are looking at this now with a different eye and thinking that, hey, you know, I ought to look into this. So for anyone who is thinking that right now and they want to learn more from you, take advantage of anything you have to offer at Laundromat Resource. What are the best ways to either get in contact with you or learn more?

Jordan Berry [00:45:56]:
Yeah, yeah. So laundromatresource.com is a website. There’s tons of free information over there. There’s a free course you can go take to get started. Get your feet wet over there and, and then we have the podcast Laundromat Resource podcast, which is a surprise. People are like, you have a laundromat podcast?

Brien Gearin [00:46:11]:
What?

Jordan Berry [00:46:11]:
And it’s a surprisingly popular podcast, and I do long form interviews with owners and industry professionals. And we got a little news segment on Fridays. And so, yeah, it’s a good place to kind of get a feel for what it’s like to own a laundromat and get some tips from just real people in the trenches over there. So. And then obviously, we’re on all the socials Laundromat resource.

Brien Gearin [00:46:32]:
All right, awesome. Well, Jordan, thank you again, man, and best of luck out on the waves today and with your laundromat empire.

Jordan Berry [00:46:39]:
Yeah. Stay warm over there, man.

Brien Gearin [00:46:41]:
Yeah, I’ll try. I’ll be dreaming of the waves. How about that?

Jordan Berry [00:46:44]:
All right. I like it.

Brien Gearin [00:46:45]:
All right, thanks, buddy. We’ll see you.

Jordan Berry [00:46:47]:
Appreciate it.