Laundromats Vs. Alternative Investment Opportunities

There are many options available to those looking to invest their money. However, when compared to a laundromat investment, many of these investment alternatives fall short in a number of key areas that affect profitability and overall success. Choose an industry from the drop-down menu to see how it stacks up in a side-by-side comparison with a laundromat investment.

Laundromat VS.  
 
 
(23) 23. Speed Queen Financial Services estimates this start-up cost range between $50,000 and $300,000. This is based on an average of thirty percent down payment required on total laundry store development costs for new laundry store transactions.
(1) 1. 7-Eleven Inc. (Date Unknown). Entrepreneur.com. Retrieved May 15, 2013, from goo.gl/OctvBm (6) 6. Circle K. (Date Unknown). Entrepreneur.com. Retrieved May 15, 2013, from goo.gl/J8S3cw (18) 18. Self Storage Franchise (Date Unknown). Alloptions.com. Retrieved May 15, 2013, from goo.gl/k4rKPv (24) 24. Conveyor or in-bay automatic? (October 11, 2010). Carwash.com. Retrieved December 23, 2013, from: goo.gl/YJxvBs

Laundromat (12) 12. Speed Queen laundromat success rate is the number of NOT charged off loans per laundry divided by total numbers of loans originated from January 2001 through June 2013, based on experience of Speed Queen Financial Services.   Vs. Car Wash (21) 21. Why Start a Car Wash Business. (2010, March 18). Entrepreneur.com. Retrieved May 15, 2013, from http://goo.gl/ZL0xZf

Car wash investments do offer some of the same benefits found in a laundromat investment, such as being primarily a cash business and requiring few employees. However, car washes also present a number of challenges not found in laundromat ownership, including:

Complex equipment may require frequent servicing or cause lengthy downtime Variables like time of week, season and weather that affect profitability Hands-on management, such as dealing with equipment failure, ordering new supplies and maintaining inventory Creative bookkeeping to manage cash flow during slow seasons Little to no business support, unless investing in franchise where other fees exist

Laundromat (12) 12. Speed Queen laundromat success rate is the number of NOT charged off loans per laundry divided by total numbers of loans originated from January 2001 through June 2013, based on experience of Speed Queen Financial Services.   Vs. Convenience Store (8) 8. Competition Increases for Convenience Shoppers’ Attention as Grocery and Other Retail Outlets Appeal to These On-the-Go Consumers, Reports NPD. (2012, February 1). Npd.com. Retrieved May 15, 2013, from http://goo.gl/ZINq7C (20) 20. What a Ride. (2010, June). Csnews.com. Retrieved May 15, 2013, from http://goo.gl/QUP1v1

Like all alternative investments, there are benefits to investing in a convenience store. However, there are also many factors that investors will encounter that they wouldn’t see in a laundromat investment. Aside from a statistically higher failure rate and greater startup costs as illustrated above, convenience stores also face:

Increased competition in price-point from other retailers and online suppliers Ebbs and flows in cash flow connected to the economy Extensive inventory management and reordering responsibilities

Laundromat (12) 12. Speed Queen laundromat success rate is the number of NOT charged off loans per laundry divided by total numbers of loans originated from January 2001 through June 2013, based on experience of Speed Queen Financial Services.   Vs. Self-Storage (2) 2. About Starting a Self-Storage Business. (Date Unknown). Smallbusiness.chron.com. Retrieved May 15, 2013, from http://goo.gl/JLCnYP (3) 3. An Introduction to Self Storage. (Date Unknown). Selfstorage.org. Retrieved May 15, 2013, from http://goo.gl/JiD6pE (18) 18. Self Storage Franchise (Date Unknown). Alloptions.com. Retrieved May 15, 2013, from http://goo.gl/9r9vjc

Many investors considering a laundromat are also interested in a self-storage facility because of their similar hands-off management and low maintenance benefits. However, there are many risks you must consider when investing in self-storage that you typically will not face with a laundromat investment, including:

The need for a large amount of real estate, which increases costs Complicated bookkeeping, including tracking down accounts receivable and frustrating litigation of non-payment Strict government regulations (Lien Laws) on storing customers’ belongings

Laundromats Vs. Franchise Investments

Many investors assume that, because of their brand recognition and extensive support network, franchise investments provide a safer and more profitable investment opportunity. However, there are many factors and risks involved in a franchise investment that you won’t encounter with a laundromat investment. These risks, which reduce cash flow and increase potential for failure, include:

Expensive franchise fees and ongoing royalties that significantly affect cash flow Typically higher initial startup costs, liquid capital requirements and other investment roadblocks Business decisions made at the corporate level, limiting flexibility and independence Long-term franchise agreements Typically do not have in-house financing May not have local representation or distribution network

(16) 16. SBA Franchisee Failure Rates by Brand, 2012. (2012, June 15). Bluemaumau.org. Retrieved May 15, 2013, from http://goo.gl/RHv3K4
(22) 22. 2013 Franchise 500 Rankings. (Date Unknown). Entrepreneur.com. Retrieved May 15, 2013, from http://goo.gl/dqO640
(22) 22. 2013 Franchise 500 Rankings. (Date Unknown). Entrepreneur.com. Retrieved May 15, 2013, from http://goo.gl/A5Ugxe

* Speed Queen Laundromat failure rate is the number of loans per laundry that were charged off divided by total numbers of loans originated from January 2001 through June 2013, based on experience of Speed Queen Financial Services.

† Speed Queen Financial Services estimates this start-up cost range based on an average of thirty percent down payment required on total laundry store development costs for new laundry store transactions.

Laundromat Vs. Stock Market Investments

Some of the most considered investment opportunities are money markets and the stock market. While these alternative investments have advantages, such as investor flexibility, low-maintenance management and minimal investment requirements, there are many drawbacks that must be considered.

Unlike a laundromat, money markets and the stock market are highly dependent on the overall economy. During a recession, investors typically experience significant losses.

Money markets and stock markets also require a high risk level in order to see high returns. Lower risk levels are available, but they often yield lower returns. Laundromats perfectly balance the two, offering an average of 20-35% ROI (11) 11. How to Start a Coin-Operated Laundry. (2008, January 31). Entrereneur.com. Retrieved June 18, 2013, from http://goo.gl/61f9Kc with a nearly 94.5% success rate (12) 12. Speed Queen laundromat success rate is the number of NOT charged off loans per laundry divided by total numbers of loans originated from January 2001 through June 2013, based on experience of Speed Queen Financial Services. when backed by Speed Queen Financial Services.

(7) 7. Coin Laundry Industry Survey. (2003-2012). Coin Laundry Association. http://goo.gl/vB90dB
(9) 9. Dow Jones Industrial Average. (2013, June 5). Stockcharts.com. Retrieved June 18, 2013, from http://goo.gl/AGrmv3
 

Unmatched stability, unbelievable ROI

With a low capital requirement and hight ROI, coin laundry is a stable business opportunity for new investors. See how Speed Queen® is the perfect partner for profitability.

See more success stories »

 

Next Steps

Step1 Shadow

Determine your compatability
with laundromat investment

Get Aquainted
Step1 Shadow

Review financing
options

Get Financing
Step1 Shadow

Request more
information

Get More Info