113. Laundromats

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• Laundromats, while appearing simple, require significant operational management covering high utility costs (15-25% of revenue), machine maintenance (budgeted at 3-5% of revenue), and daily lint removal.  Copied to clipboard!
• The laundromat industry is bifurcating between traditional self-service coin-operated models and a rapidly growing service component (wash-and-fold/pickup), attracting a new wave of portfolio-building investors due to recent tech integration.  Copied to clipboard!
• Despite technological advances, many laundromats remain cash-heavy, leading to the cumbersome but necessary process of collecting, counting, and recycling heavy buckets of quarters from machines that can hold up to $200 each.  Copied to clipboard!

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Jordan Barry’s Entry into Laundromats

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(00:01:02)

• Key Takeaway: Jordan Barry sought a low-effort business after being a youth pastor and was inspired by a friend who worked few hours running a laundromat.
• Summary: Jordan Barry’s background and motivation for buying his first run-down laundromat for $70,000 cash, followed by financing new equipment and remodeling.

History and Industry Size

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(00:03:05)

• Key Takeaway: The first coin-operated laundromat opened in 1934 during the Great Depression, and there are now about 30,000 in the U.S.
• Summary: A brief history of laundry washing methods leading up to the first laundromat, and current statistics on the industry size.

Self-Serve vs. Service Models

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(00:04:18)

• Key Takeaway: Laundromats are segmented into traditional self-serve (coin-operated) and the rapidly growing service component (wash and fold/drop-off).
• Summary: Jordan Barry defines the two main categories of laundromat business models and notes the increasing demand for laundry pickup and drop-off services.

Ideal Demographics and Habitual Business

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(00:05:32)

• Key Takeaway: The core customer base is renters without in-unit laundry, and the business is strong due to predictable, habitual customer visits.
• Summary: Discussion of the target renter demographic, the robust demand, and the recurring revenue generated by habitual customer behavior.

New Investment Trends and Tech

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(00:07:05)

• Key Takeaway: The industry is seeing a rise in investment interest, driven partly by social media, leading to more sophisticated management and digital payment adoption.
• Summary: The shift from mom-and-pop ownership to portfolio building, enabled by new technology like digital payments and management software.

Acquisition Costs and Machine Pricing

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(00:08:41)

• Key Takeaway: Finding laundromats is tricky due to high buyer interest; average deals cost $400k–$500k, with machines costing $4,000 to $25,000+ each.
• Summary: How to find laundromats for sale, typical purchase prices, and the high cost of commercial washers and dryers, which are often gatekept by distributors.

Measuring Efficiency and Machine Size

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(00:11:40)

• Key Takeaway: Efficiency is measured by ’turns per day,’ and larger machines are often more profitable as they increase wash capacity within the same footprint.
• Summary: Details on turns per day metrics, pricing structure ($3 to $12 per load), and the financial benefit of installing larger capacity machines.

The Quarter Problem

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(00:13:08)

• Key Takeaway: Despite technology, many laundromats remain cash-based, leading to the physical burden of collecting and managing heavy quantities of quarters.
• Summary: The preference for cash transactions, the weight of quarters in machine boxes (5 to 10 pounds each), and the process of collecting and recycling coins.

Overhead: Maintenance and Utilities

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(00:18:28)

• Key Takeaway: Substantial overhead includes machine upkeep (3-5% of revenue) and massive utility bills (15-25% of gross revenue) for water and power.
• Summary: Examples of common machine breakdowns (like bra underwires) and the complex infrastructure (boilers, drainage, lint screens) required to run the facility.

Profit Margins and Community Role

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(00:22:59)

• Key Takeaway: Typical profit margins are 20% to 35%, and laundromats often serve as unexpected community gathering spots.
• Summary: Final profit estimates, anecdotes about strange items washed (rugs, bath mats), and the intimate, community-building aspect of the business.