Ever considered buying a laundromat? Know this

Whether you’re interested in establishing a new laundromat or considering investing in an existing one, the potential for a consistent income stream is undeniable. With minimal maintenance once set up, laundromats offer great profit potential when strategically located and efficiently managed. This makes them an excellent opportunity for both first-time investors and seasoned business owners.

For anyone contemplating entering the laundromat industry, it’s natural to have questions. You might be wondering whether it’s better to buy an existing laundromat or set one up from scratch, how much startup capital is required, or what specific equipment is necessary to get started. 

Buying vs. Setting Up a Laundromat in Victoria

When weighing the option of purchasing an existing laundromat versus starting a new one, both paths offer distinct advantages and drawbacks. The choice largely depends on your role in the business, whether as an owner-operator or a passive investor, and your budget.

Buying an established laundromat can provide a turnkey solution if the business already has a solid reputation, modern equipment, and a loyal customer base. However, there may be additional costs if upgrades or rebranding are needed. 

On the other hand, setting up a new laundromat offers a blank slate. While it involves more responsibility and upfront work, it allows you to control every aspect of the business, from branding to equipment and layout.

Why Invest in a Laundromat?

Laundromats can be profitable, provided they are managed well and located strategically. A key advantage is the immediate cash-for-service model, which minimises common cash flow issues found in other industries. 

With low operational costs, laundromats can yield a return on investment (ROI) as high as 30% in the right location. Additionally, staffed laundromats can provide additional income streams through services like garment alterations or laundry pick-up and delivery. These extra offerings not only build stronger customer relationships but also pave the way for future expansion.

For those looking to maintain a healthy work-life balance, laundromats can be ideal. Owner-operators have the flexibility to manage the business on their terms, while passive investors can enjoy income with minimal hands-on involvement.

How Much Startup Capital is Needed?

The startup costs for a laundromat vary based on the size of the business, the number of machines, and location. Generally, opening a new laundromat in Australia can require between $100,000 and $400,000. This includes the cost of securing a lease, equipment, installation, and interior setup.

Equipment and Card Payment Systems

Investing in high-efficiency washing machines and dryers is essential for long-term profitability. Front-loading machines are preferred as they are more energy-efficient and durable than top-loading machines. 

Given society’s shift away from cash payments, installing card or mobile payment systems is becoming increasingly necessary. While these systems may be more expensive to set up, the convenience and security they provide can result in higher profits and fewer maintenance issues.

Laundromat Business Models

Laundromats generally operate under two models: self-service or fully serviced. Self-service laundromats provide access to machines for a fee, with customers managing their own laundry. This model is ideal for owners seeking low-maintenance businesses, though it’s important to consider expenses such as cleaning, security, and maintenance.

A fully serviced laundromat, however, offers additional services such as folding, ironing, and laundry pick-up or delivery. While this model requires more staff and incurs higher costs, it also allows for higher customer engagement and the potential for higher revenue.

Is a Laundromat a Good Business?

When managed effectively, laundromats can be reasonably profitable. They are often considered “recession-proof,” given their consistent demand. While the initial investment in time, money, and effort is significant, the business can eventually provide steady, passive income.