A Future with Unhappy Laundromat Owners?
There are a number of things that I believe will be coming in the future of the laundromat business. There is a current wave of interest in remodeling “zombie mats” and “built from the group up laundromats.” It’s a golden age of profits and income, but could these good times end?
One item that is missing from the current “good times” is the emergence of price wars. For those who’ve been in the business for any length of time, the memory of prolonged and advanced price wars are painful memories.
As new construction and larger stores dot the laundromat marketplace, one constant has been that increasing sites has not, so far, resulted in any price wars. Uncontrolled growth will eventually result in oversaturation of the desirable higher income urban settings, which could lead to price wars.
A naive belief of many new owners is that a beautiful new laundromat with advanced features, advertising and promotion will drive the smaller and older locations to close. It will not. If the owner of the older store has signed a long-term lease, the profit from operation may diminish but the obligation to pay the rent will continue. It is cheaper to make little or no money from operating your laundromat than to pay the full amount of the lease every month. A landlord has no incentive to rush to find a new tenant when they have a long-term lease.
Today we see new jumbo-sized laundromats with 4000 to 6000 Square Feet being built, mostly with the push of new and financially secure individuals looking for a return on their money. This is a major change in our industry. In the past, the majority of laundromat owners owned a store to live on as their income, and were less than ½ the size of these new stores. The increase in the sizes of these stores contributes to the oversaturation of the best marketing areas.
Large laundromats that are counting on WashDryFold, pickup and delivery services, won’t immediately feel the effects, but if history repeats itself, price wars can spread like wildfire. Despite the myriads of benefits and services being built into many new stores, the major factor that drives self-service customers is self-service laundry PRICE.
Emerging are companies that specialize in pickup and delivery and will locate laundry processing centers in cheap, industrial locations providing increased folding and ironing benefits at much lower current costs for laundromat centered locations. I predict that laundromat based WashDryFold and pickup and delivery services will be virtually gone within ten years from current laundromat locations existing only as adjuncts to those owners who are onsite and active every day.
“Laundromat 123”